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On Tuesday, U.S. equities staged a late comeback, closing flat to higher despite early losses driven by rising yields, crude oil prices, and a stronger dollar. The S&P 500 dipped slightly by 2.78 points to 5,851.20, while the Nasdaq Composite gained 33.12 points to 18,573.13. Meanwhile, European markets remained cautious, with technology shares rising 0.9% due to SAP's positive revenue forecast, while Maersk fell around 2%, and utilities and telecommunications declined by 1.6% and 1%, respectively.
Summary for 23.10.2024
Asian equities showed mixed performance on Wednesday, influenced by rising U.S. Treasury yields and uncertainty surrounding the presidential election. Hong Kong's Hang Seng index led gains, rallying 1.7% due to strong IPO activity, particularly from China Resources Beverage. Chinese markets also rose on stimulus measures, while broader Asian markets remained muted, with Japan's indices flat ahead of elections and a Bank of Japan meeting.
European markets are set to open slightly higher, with the Stoxx 50 likely reflecting gains as the DAX and CAC are projected to rise. Meanwhile, U.S. equities futures dipped amid rising Treasury yields, election uncertainty, and geopolitical tensions. Focus is on Tesla's Q3 earnings, along with results from AT&T, IBM, Coca-Cola, and Bank of America, amid caution over a tight presidential race.
Oil prices fell in Asian trade on Wednesday after data showed a larger-than-expected build in U.S. inventories, raising concerns about cooling fuel demand. Market focus remained on U.S. diplomatic efforts to ease Middle East tensions, while recent dollar strength also pressured crude. Traders are watching for more economic cues from China amid concerns over slowing demand from the world’s top oil importer.
The IMF projects global GDP growth to remain around 3% annually, noting resilience amid lingering challenges. A shift from goods to services consumption is underway, benefitting advanced and emerging markets. However, inflation remains a concern, especially in services, prompting central banks to delay easing monetary policies. The IMF urges governments to implement structural reforms to enhance long-term growth and fiscal stability.
U.S. Treasury Secretary Janet Yellen and IMF chief economist Pierre-Olivier Gourinchas expressed doubts about China’s recent stimulus, noting it lacks measures to boost domestic demand and address property sector issues. They emphasised that low consumer spending in China drives trade surpluses, rather than industrial policy. Yellen warned that Chinese subsidies threaten U.S. jobs, while Gourinchas called for stronger social safety nets to increase Chinese consumption.
McDonald’s shares fell almost 6% in after-hours trading Tuesday after the Centers for Disease Control and Prevention reported an E. coli outbreak linked to its Quarter Pounder burgers, causing one death and 10 hospitalisations across 10 states. The CDC identified 49 cases, leading McDonald’s to pull ingredients for the burgers, which will no longer be available in some states.
L'Oréal reported a 3.4% rise in third-quarter sales to €10.28 billion, missing expectations due to weak consumer confidence in China, where sales fell 6.5%. CEO Nicolas Hieronimus noted that while the company outperformed a negative market, it was insufficient. The slowdown in the luxury segment and emerging markets, alongside reduced demand for certain products, raises concerns for future growth.
GE Aerospace's shares fell 9% after the company reported supply-chain constraints impacting jet engine deliveries, leading to a decline in revenue. Deliveries of LEAP engines are now expected to drop 10% this year, down from previous estimates of flat growth. Despite these challenges, GE Aerospace raised its full-year profit outlook, forecasting adjusted profits of $4.20 to $4.35 per share.
Moody's raised its full-year adjusted profit forecast above Wall Street estimates, reporting a nearly 31% increase in third-quarter earnings, driven by strong demand for its research and analytics products. Total revenue surged to $1.81 billion, up from $1.47 billion a year prior. The company expects fiscal year 2024 adjusted EPS between $11.90 and $12.10, exceeding analysts' expectations.
Fiserv reported third-quarter EPS of $2.30, exceeding the analyst estimate of $2.26, with revenue of $5.22 billion compared to the consensus of $4.91 billion. For FY 2024, the company anticipates EPS between $8.73 and $8.80, slightly above the analyst consensus of $8.75. Fiserv’s shares closed at $199.67, rising 23% over the past three months and 82% year-over-year.
Freeport-McMoRan reported a better-than-expected quarterly profit, driven by a 13.2% increase in average copper prices to $4.30 per pound, despite a 3.1% drop in production to 1.05 billion pounds. The company noted strong demand for power cables and building wire linked to data centres in the U.S. Additionally, it plans to postpone copper sales from its Manyar smelter in Indonesia until Q2 2025 due to a recent fire.
Baker Hughes reported third-quarter earnings of $0.67 per share, exceeding analyst expectations of $0.61, while revenue of $6.9 billion fell short of the $7.21 billion forecast. The company saw a 23% year-over-year increase in adjusted EBITDA to $1.21 billion, with margins at a record high. Baker Hughes maintained its full-year EBITDA guidance and highlighted strong orders, particularly in gas infrastructure and offshore projects.
Sherwin-Williams shares dropped over 5% after Q3 earnings missed expectations, with EPS at $3.37 versus a forecast of $3.55, and revenue of $6.16 billion falling short of the $6.2 billion estimate. While the Consumer Brands Group exceeded sales expectations, the Performance Coatings Group slightly missed. The company projected full-year EPS between $11.10 and $11.40, below the $11.50 estimate, but remains optimistic about future growth.
Enphase Energy shares fell over 12% in after-hours trading after reporting third-quarter adjusted earnings of $0.65, missing expectations of $0.78. Revenue of $380.9 million also fell short of the $392.1 million forecast, down 30.9% year-over-year. For Q4, the company expects revenue between $360 million and $400 million, well below analyst estimates. Despite a sequential U.S. revenue increase, European sales declined by 15%.
Philip Morris International shares surged to record highs after the company raised its annual profit forecast and exceeded third-quarter estimates, driven by higher prices and strong demand for smoking alternatives like IQOS and ZYN. U.S. ZYN shipments grew 41.4%, and PMI reported quarterly revenue of $9.91 billion, surpassing analyst expectations. The adjusted profit of $1.91 per share also beat estimates.
Lockheed Martin raised its 2024 profit forecast to $26.65 per share, but shares fell 6% due to challenges with the F-35 fighter jet program, including payment delays and contract negotiations. Despite a 3% rise in profit, overall revenue of $17.10 billion missed analyst expectations. The company anticipates improved sales of $71.25 billion amid rising global defence spending.
RTX raised its 2024 profit and sales forecasts, citing strong demand for aircraft repairs and defence systems. The aerospace and defence giant expects adjusted profit per share between $5.50 and $5.58 and revenue of $79.25 to $79.75 billion. In the third quarter, RTX reported a profit of $1.45 per share and adjusted sales of $20.1 billion, surpassing estimates.
Frontier Airlines is considering a renewed bid for Spirit Airlines, according to the Wall Street Journal, although discussions are in early stages and a deal may not materialise. If reached, it could coincide with Spirit's restructuring during bankruptcy. Spirit’s financial struggles have intensified following the collapse of its $3.8 billion merger with JetBlue, prompting talks with bondholders regarding potential bankruptcy.
ASML's CEO, Christophe Fouquet, anticipates 2026 will be a growth year for the company, despite a projected slowdown in 2025 due to weak electronics markets, excluding AI-related chips. He noted ongoing pressure from the U.S. government on exports to China, expecting future China sales to drop to 20% of total revenue. Fouquet highlighted debates in Europe regarding national security versus trade policy amid U.S.-China competition.
Shares of Advanced Micro Devices dropped over 2% after Morgan Stanley raised concerns about the company's AI supply chain strategy, noting a reduction in CoWoS wafer bookings at TSMC for 2025 amid uncertainty around MI325 demand. In contrast, Nvidia has swiftly absorbed the vacated capacity, highlighting its strong position in the AI market.
Peloton will begin selling its Bike+ at Costco starting November 1, with prices set at $1,999 in stores and $2,199 online, offering significant discounts from its usual $2,495 price. The collaboration aims to attract younger, affluent consumers as Peloton shifts focus to profitability amid declining sales. The deal is temporary, reflecting the seasonal nature of fitness equipment sales, but may expand in the future.
JPMorgan Chase CEO Jamie Dimon is open to considering a government role, potentially as Treasury Secretary, if Democratic Vice President Kamala Harris wins the presidential election, according to the New York Times. Although he previously stated the likelihood of such a position was "almost nil," sources indicate he may reconsider if a significant opportunity arises, irrespective of political affiliation.
BTIG downgraded Deckers Outdoor from Buy to Neutral, citing slowing growth in its UGG and HOKA brands. Analysts noted soft holiday trends and increased competition in the running shoe market, leading to concerns about Deckers' equity valuation. Data indicated a decline in UGG’s direct-to-consumer sales and a slowdown in HOKA’s growth, prompting BTIG to recommend a cautious approach for investors.
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