U.S. equity markets closed mixed on Thursday, with the Dow Jones Industrial Average reaching a record high, up 0.37%. The S&P 500 slipped 0.02%, while the Nasdaq Composite gained 0.04%. European equities also saw a mixed performance; the Euro STOXX 50 rose 0.8%, buoyed by strong earnings from tech giants and the European Central Bank's 25 basis point cut in borrowing costs to 3.25%.

Summary for 18.10.2024

Asian equities showed mixed performance on Friday following weak Chinese economic data. Mainland Chinese blue chips fell 0.25% as property shares declined after new home prices dropped at the fastest rate since 2015. Hong Kong's Hang Seng rose 0.42%, driven by tech shares, while Taiwan's benchmark climbed 2.57% on strong TSMC earnings. Japan's Nikkei gained 0.37%, but Australia's and South Korea's markets slipped.

European markets are expected to open mixed, with investors weighing global economic data and upcoming U.S. tech earnings. U.S. equity futures rose slightly, driven by gains in technology shares after strong earnings from Netflix and TSMC. S&P 500 and Nasdaq 100 futures edged higher, while Dow futures steadied, reflecting optimism around tech performance ahead of key earnings reports from major firms next week.

Crude oil futures edged up on Friday, supported by a drop in U.S. inventories and Middle East tensions, though they faced their biggest weekly decline since early September. Concerns over rising supply, record U.S. production, and OPEC+ plans to ease cuts in 2025 contributed to the drop. Demand forecasts were lowered, with uncertainties around China's stimulus and global economic slowdown impacting future demand.

Gold prices hit a record high, driven by safe-haven demand amid U.S. election uncertainty and Middle East tensions, as well as a rate cut by the European Central Bank. Spot gold rose to $2,705.26 an ounce. Despite a stronger dollar, gold gained as markets anticipate further global rate cuts. Other precious metals showed mixed performance, while copper remained weak amid underwhelming Chinese stimulus.

China's economy grew 4.6% year-on-year in Q3, slightly below the previous quarter's 4.7%, bringing year-to-date growth to 4.8%, still under the 5% annual target. Despite recent stimulus efforts, concerns remain over deflation, weak spending, and the property market downturn. Industrial production and retail sales exceeded expectations in September, and unemployment fell to 5.1%, signalling some economic resilience.

Japan's annual inflation rate decreased to 2.5% in September, down from 3.0% in August, marking the lowest level since April. Key contributors to the decline included slower increases in electricity and gas prices, alongside moderated costs for food, transport, and household items. Core inflation also fell to 2.4%, while the CPI dropped 0.3% month-over-month, the first decline since February 2023.

U.S. retail sales rose 0.4% month-over-month in September, surpassing August's 0.1% increase and exceeding expectations of 0.3%. The largest gains came from miscellaneous store retailers (4%), clothing (1.5%), and health and personal care stores (1.1%). However, electronics and appliance stores saw a 3.3% decline. Excluding food services, auto dealers, building materials, and gasoline stations, sales surged 0.7%, the highest increase in three months.

The ECB reduced its key interest rates by 25 basis points yesterday, following previous cuts in September and June. The deposit facility, main refinancing, and marginal lending rates are now 3.25%, 3.40%, and 3.65%, respectively. Despite short-term inflation increases, the ECB anticipates a decline toward its 2% target in 2025, while maintaining a flexible approach to monetary policy.

The U.S. Commerce Department is investigating TSMC over potential export rule breaches for allegedly producing chips for Huawei, which is blacklisted due to national security concerns. TSMC asserts compliance with regulations. U.S. restrictions prevent Huawei from using U.S. technology without approval, while recent bipartisan efforts aim to curb Huawei's access to American chip equipment.

Netflix gained 5.1 million streaming subscribers in Q3, exceeding estimates by over 1 million, leading to a 5.0% rise in shares. Revenue reached $9.825 billion, surpassing forecasts, while operating margins improved to 30%. The ad-supported service now accounts for over 50% of sign-ups. Despite slower subscriber growth compared to last year, the company anticipates stronger additions in the holiday season with the return of "Squid Game."

Intuitive Surgical Inc. shares surged 6.1% after reporting Q3 earnings that exceeded expectations. The company achieved adjusted earnings per share of $1.84, surpassing the $1.64 consensus, and revenue of $2.04 billion, up 17% year-over-year. da Vinci procedures grew 18%, with 379 new system placements. CEO Gary Guthart highlighted strong customer adoption of the da Vinci 5 system and a solid cash position of $8.31 billion.

Schneider Electric announced its acquisition of a controlling stake in Motivair Corporation for $850 million. Motivair, a provider of advanced liquid cooling solutions, is expected to enhance Schneider's data centre capabilities. Analysts project the acquisition will boost Schneider's data centre sales by 3% and see the global liquid cooling market grow significantly, from $997 million in 2023 to $27.8 billion by 2030.

Pernod Ricard reported a disappointing first quarter for fiscal 2025, with organic revenue falling 5.9%, primarily due to a significant decline in China, where sales dropped 26%. Despite weaker-than-expected results, the company maintained its full-year guidance, anticipating a return to sales growth. While challenges persist in China and the U.S., strong performances in markets like Japan, Canada, and Brazil provided some positive outlook.

Airbus shares rose 3.9% to €140.58, driven by speculation of a major order from Etihad Airways and a price target upgrade from JP Morgan to €180 from €172. Despite flat aircraft deliveries in Q3, Airbus implemented cost-saving measures, achieving €100-200 million in unexpected savings. Analysts highlighted the robust backlog and cost-cutting in the Defence & Space division as key factors supporting long-term growth.

Nestlé is restructuring its leadership and operations after lowering its full-year sales outlook due to weaker than expected nine-month sales growth. The company faces challenges from rising costs and stiff competition in the packaged food industry. New CEO Laurent Freixe plans to streamline the executive board and merge regional units to revive innovation and restore consumer confidence amid a soft demand environment.

Mizuho downgraded Fortinet to Underperform from Neutral, citing ongoing growth challenges and concerns about meeting future expectations. The firm's analysis revealed limited adoption of Fortinet's SASE solutions, with revenue growth projected to drop to 10-11% in 2024 from 32% in 2022. Although Fortinet remains profitable, Mizuho expects operating margins to be capped in the low 30s and maintained a price target of $68.

Bernstein analysts have lowered Boeing's price target to $195 from $207 due to the financial impact of a month-long strike involving over 30,000 employees. The labour action has increased expenses and raised concerns about Boeing's bond rating. The company plans to raise up to $25 billion through debt and equity offerings while implementing job cuts of 10% and delaying the 777X plane deliveries by a year.

Daiwa Capital Markets downgraded Uber Technologies from Outperform to Neutral, citing limited valuation upside and risks from Tesla’s robotaxi model. Analysts expressed concerns about revenue per mile reduction and pricing control challenges. They emphasised the difficulty of sustaining growth amid a shift to a lower-margin, high-volume model, especially in dense urban areas favorable for robotaxi operations.

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.