All eyes on Powell`s key Jackson Hole speech

US equity markets declined on Thursday, with the S&P 500 down 0.9% and the Dow falling 178 points as investors paused before Fed Chair Powell's speech. Tech shares dragged the market lower, despite energy equities outperforming due to rising oil prices. In Europe, the Eurozone’s Stoxx 50 closed flat at 4,885, unable to sustain earlier gains. Positive PMI data highlighted stronger services activity, while expectations of cheaper credit costs and potential Fed rate cuts supported sentiment. Financial shares like UniCredit and Munich Re rose, but declines in tech and energy, including ASML and TotalEnergies, tempered gains.

Summary for 23.08.2024

Asian equities declined on Friday following Wall Street's sharp selloff and ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech. Japan’s core inflation rose to 2.7%, while Bank of Japan Governor Ueda hinted at possible policy adjustments if economic conditions support it. Shares in Australia, Japan, South Korea, Hong Kong, and China all fell amid recession fears.

European equity markets are set for a mixed open while US futures rose slightly as investors await Powell’s Jackson Hole speech for rate cues, while caution persists ahead of NVIDIA earnings and concerns over labour market weakness.

Oil prices steadied early morning after rebounding amid bargain buying, though they are set for steep weekly losses due to concerns over slowing demand and potential recession. Brent crude rose 0.1% to $77.26 a barrel, and West Texas Intermediate also gained 0.1% to $72.34. The market faces pressures from weak demand forecasts, increased US oil production, and the ongoing Israel-Hamas conflict, which has had a limited impact on supply.

Japan’s core consumer price index rose 2.7% year-on-year in July, marking the third consecutive monthly increase and exceeding the Bank of Japan’s 2% target. Persistently high inflation prompted the BOJ’s hawkish shift this year, including two rate hikes, leading to a strong yen rally and disrupting financial markets by unwinding carry trades.

Thursday’s jobs data showed initial jobless claims rose slightly to 232,000 in the US, still below recent averages and indicating stable employment. Continuing claims also ticked up, suggesting it’s getting harder to find new jobs, though conditions remain healthy overall. Despite some business caution, there’s no sign of widespread layoffs.

US economic data showed mixed signals in August, with the S&P Global US Manufacturing PMI dropping to 48, marking its second consecutive contraction and the sharpest decline of the year due to reduced new orders and stagnant employment. Conversely, the S&P Global US Services PMI increased to 55.2, surpassing expectations with robust expansion in new business despite ongoing hiring challenges and stable price pressures.

Minutes of the July ECB meeting revealed that policymakers chose to keep interest rates unchanged, deciding to reassess their stance in September. The ECB provided limited guidance on future actions, acknowledging the challenge of easing restrictions without harming the economy. The minutes emphasised that the September meeting would be key for evaluating monetary policy, balancing economic support with inflation control.

Peloton Interactive’s shares soared 35.42% after reporting narrower-than-expected losses and a 0.2% sales increase for Q4, its first year-on-year growth in nine quarters. Despite surpassing revenue expectations with $643.6 million, the company’s fiscal 2025 revenue outlook fell short of estimates due to challenges in subscriber growth and an uncertain macroeconomic environment. Peloton’s restructuring efforts are showing results, but it continues to seek a new CEO.

Baidu reported mixed Q2 results, with earnings surpassing expectations but revenue slightly missing forecasts. Adjusted earnings were RMB21.02 ($2.89) per ADS, beating the estimate of RMB18.54. Revenue was RMB33.93 billion ($4.67 billion), just below the RMB34.14 billion forecast. Strong growth in the AI Cloud business offset declines in online marketing revenue.

CAVA Group, Inc. shares surged 6.6% after surpassing Q2 earnings and revenue estimates. Adjusted EPS of $0.17 exceeded forecasts, while revenue rose 35.2% YoY to $231.4 million, beating expectations. Same-restaurant sales grew 14.4%, with 18 new locations added. The company expanded its restaurant-level profit margin and raised its full-year 2024 EBITDA guidance to $109-$114 million.

Intuit Inc. reported Q4 earnings of $1.99 per share, surpassing estimates, and revenue of $3.18 billion, exceeding forecasts. For fiscal year 2025, the company projected adjusted EPS of $19.16 to $19.36 and revenue of $18.16 billion to $18.35 billion, both above Wall Street expectations. Intuit also raised its quarterly dividend by 16% and repurchased $2 billion in stock during the year.

Workday Inc. reported strong Q2 results with adjusted EPS of $1.75 and revenue of $2.09 billion, exceeding estimates and marking a 16.7% YoY increase. However, its guidance for Q3 and fiscal year 2025 fell short of investor expectations. The company anticipates 16% growth in Q3 subscription revenue and maintained its full-year subscription revenue forecast. Workday also announced a new $1 billion share repurchase program.

The D.C. Court of Appeals revived a lawsuit against Amazon, alleging its pricing policies unfairly restrict competition by penalising suppliers and third-party sellers. The court overturned a previous dismissal, finding the claims plausible. Amazon disputes the ruling, asserting its policies benefit consumers. This case adds to Amazon’s legal challenges, including similar claims from the FTC and states.

AstraZeneca has warned it might move its UK vaccine manufacturing site to the US due to a deadlock with the new Labour government over reduced state aid. The UK’s financial minister plans to cut support from £90 million to £40 million, potentially affecting AstraZeneca’s plans for its Speke facility. Despite this, AstraZeneca remains committed to the UK and is in talks with the government.

Advance Auto Parts announced it will sell its Worldpac unit to Carlyle Group for $1.5 billion, aiming to streamline operations. However, it also lowered its annual sales and profit forecasts, causing shares to drop 17.5%. The company expects 2024 net sales between $11.15 billion and $11.25 billion, and annual EPS of $2 to $2.50, down from previous projections.

BMW led the European battery electric vehicle (BEV) market for the first time in July, surpassing Tesla with 14,869 sales. This marks a significant shift as traditional automakers gain ground due to uncertainties over EV incentives and subsidies. BMW's sales rose 35% year-on-year, while Tesla's fell 16%. Overall EV registrations declined 6% from July 2023, with market share slipping to 13.5%.

Loop Capital analysts reported stronger-than-expected iPhone shipments for Apple in the September quarter, projecting 52.5 million units, above initial estimates of 49.2 million. The firm maintained a Buy rating and $300 price target, noting a surge in iPhone 15 orders and excitement for the iPhone 16. Revised average selling prices for the quarter are higher than Wall Street's projections, enhancing Apple's revenue outlook.

Piper Sandler upgraded Estee Lauder to Overweight from Neutral, raising its price target to $114 from $95 after a positive assessment of the company's fiscal Q4 earnings. The analysts, buoyed by management insights and a favourable view of the prestige beauty market, see limited downside and increased confidence in Estee Lauder’s valuation and future prospects. They view the recent management change as a positive development.

Northland Capital Markets initiated coverage of Palantir with a Market Perform rating and a $35 price target. They highlight Palantir’s AI operating system and Ontology software as key to addressing fragmented AI efforts. Northland believes Palantir’s platform offers significant value by making enterprise data more accessible and usable. They see Palantir well-positioned in the growing AI market and recommend buying on dips.

RBC Capital Markets views Puma's recent Q2 challenges as an opportunity for potential near-term gains. Despite setbacks from the EEMEA wholesale sector and higher finance expenses, RBC notes that this could lead to a rebound, driven by expected strong revenue growth in Q4. Analysts have slightly reduced Puma's EPS estimates and price target but remain optimistic about future performance.

Citi analysts expect Lululemon to lower its full-year guidance due to recent execution issues and increased competition. The company, reporting Q2 earnings on 29th August, is predicted to meet EPS estimates but face challenges from pulling the Breezethrough legging launch. Citi forecasts a reduced EPS of $13.24 for FY 2024, down from prior guidance, and anticipates a cut in sales growth and SG&A expenses.

For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.