BHP abandons its bid for Anglo American

US equities fell sharply on Wednesday as rising bond yields, following weak bond auctions, slashed risk appetite. The Dow dropped 400 points, the S&P 500 fell 0.7%, and the Nasdaq retreated 0.6%. American Airlines plunged 13.5% on a sales outlook cut, while Nvidia gained 0.8%, continuing its post-earnings rally. Meanwhile, the Eurozone's Stoxx 50 fell 1.3% to 4,965, hitting a three-week low, with declines led by luxury brands and tech and industrial sectors amid hawkish Fed signals.

Summary for 30.05.2024

Asian equities fell on Thursday due to inflation fears and high interest rates, with tech shares leading declines. Japan's Nikkei, Hong Kong's Hang Seng, and South Korea's KOSPI dropped 1-1.5%. Major chipmakers saw significant losses, except China's Semiconductor Manufacturing International Corp, which gained on favourable policy support.

European equity markets are positioned for a bearish open while US equity futures also fell Thursday as a sharp decline in Salesforce shares afterhours weighed on the indices.

Oil prices steadied in Asian trade this morning, balancing optimism over a significant US inventory draw against caution ahead of key economic data influencing interest rates. Brent steadied at $83.61, while WTI rose slightly to $79.29. Traders await US GDP, inflation data, and upcoming OPEC+ and China PMI reports.

Germany's annual inflation rate in May edged up to 2.4%, compared to a three-year low of 2.2% in each of the previous two months, in line with expectations. This was driven by increases in services and food prices while goods costs eased. Energy prices continued to fall despite policy changes. Core inflation remained steady at 3%. EU-harmonised inflation reached 2.8%, the highest in four months.

Salesforce reported guidance for the current quarter well below analyst estimates, causing shares to drop 16% in after-hours trading. Fiscal second-quarter adjusted EPS and revenue missed expectations. Despite maintaining revenue guidance for fiscal year 2025, the company reduced annual operating margin guidance to 19.9%.

Pure Storage's first-quarter fiscal year 2025 results showcased an impressive 18% YoY revenue increase to $693.5 million, exceeding analyst predictions. Despite adjusted EPS falling short at -$0.11, subscription services revenue surged by 23%, driving overall revenue growth. CEO Charles Giancarlo's confidence in the company's capability to integrate data storage environments was underscored, with an emphasis on innovation and collaborations with NVIDIA.

Abercrombie & Fitch raised its annual sales growth forecast and reported a strong first quarter, driven by new and trendy apparel offerings, leading to a surge in shares. Comparable sales for Abercrombie and Hollister rose significantly, and the company benefited from easing inflationary pressures. Adjusted profit exceeded analyst estimates.

UiPath Inc. reported strong first-quarter earnings, beating EPS and revenue expectations. However, soft guidance for Q2 and FY2025, with lower-than-expected revenue projections, led to a sharp decline in afterhours trading. CEO Rob Enslin's resignation, effective 1st June, and founder Daniel Dines' return as CEO added to investor concerns.

Agilent Technologies Inc. reported Q2 EPS slightly above expectations but missed revenue estimates, leading to a 13% share drop. Lower-than-expected guidance for Q3 and full-year 2024, citing slower market recovery, further impacted investor sentiment. Agilent plans cost reductions, stock repurchases, and leverages diversified business for future growth.

HP Inc surpassed Wall Street expectations for second-quarter revenue, indicating a recovery in the PC market as consumers upgrade systems. CEO Enrique Lores anticipates a significant portion of PC sales to come from "AI PCs" by 2025. Education sector drove Q2 sales, with personal systems segment up 3% while printing segment declined 8%. HP raised fiscal 2024 adjusted profit outlook.

BHP Group abandoned its $49 billion bid for Anglo American after facing rejection and shareholder caution. The complex deal, requiring Anglo to spin off South African assets, faced challenges despite BHP CEO Mike Henry's reshaping efforts. Analysts praised BHP's discipline, while the company now focuses on its own growth opportunities in iron ore and copper.

ConocoPhillips has agreed to acquire Marathon Oil for $22.5 billion in an all-equity deal, marking another significant consolidation in the energy sector. The acquisition, expected to close in Q4 2024, aims to bolster reserves and capitalise on operational synergies, with ConocoPhillips targeting $500 million in cost savings within the first year.

The US Department of Defence awarded Palantir a $480 million contract for the Maven Smart System prototype, extending their collaboration. Maven accelerates intelligence analysis by integrating data from diverse sources. However, AI-assisted target identification has faced criticism in the tech industry over concerns about building systems for war and the potential lack of human oversight.

Activist investor Nelson Peltz sold his entire stake in Walt Disney Company at $120 per share, making approximately $1 billion. This follows Trian Partners' loss in a proxy battle at Disney in April, where they failed to secure board seats. Despite Peltz's criticisms, Disney's shares have increased by 11% this year.

Visa and Mastercard agreed to pay $197 million to settle a class-action lawsuit accusing them of keeping ATM cash access fees artificially high since 2007. The settlement, subject to court approval, involves consumers who used bank-operated ATMs. Plaintiffs alleged Visa and Mastercard's rules caused them to pay inflated access fees.

HSBC has finalised the transfer of ownership of its Russian unit to Expobank, concluding a two-year negotiation process. The move comes after receiving approval from Russian President Vladimir Putin in February. Expobank confirmed the completion of the deal, with the unit set to continue operations under a new name.

UiPath Inc. reported strong first-quarter earnings, beating EPS and revenue expectations. However, soft guidance for Q2 and FY2025, with lower-than-expected revenue projections, led to a sharp decline in afterhours trading. CEO Rob Enslin's resignation, effective 1st June, and founder Daniel Dines' return as CEO added to investor concerns.

Banca Monte dei Paschi di Siena shares plummeted over 7% yesterday following reports of a judge requesting prosecutors to investigate fraud allegations related to the bank's 2017 rescue. The probe focuses on potential false accounting methods used to conceal insolvency, impacting Italy's plans to divest its stake amid share price gains.

Bank of America reaffirmed Apple as a top pick with a "Buy" rating and a price target of $230, citing the upcoming shift to AI-enabled "IntelliPhones." They anticipate a substantial multi-year upgrade cycle, likening it to the introduction of smartphones, driven by advanced AI capabilities and personalized user experiences.

Bank of America raised Dell Technologies Inc.'s price target to $180, attributing it to robust AI momentum and new product launches at Dell Technologies World 2024. The bank reiterated its "Buy" rating, citing strong demand for AI servers and storage, driving optimism for the fiscal second quarter of 2025.

Norwegian Cruise Line received an upgrade to Buy from Hold by Truist, with a new price target of $21. This follows another recent upgrade by Mizuho. Truist cited encouraging trends in the cruise sector post-COVID, with potential earnings upside driven by strong booking and pricing trends. They also highlighted Norwegian Cruise’s potential for revenue growth and monetizing Great Stirrup Cay.

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