US equities continued their climb on Tuesday, propelled by positive earnings sentiment. The S&P 500 rose 1.2%, the Dow Jones gained 263 points, and the Nasdaq climbed 1.6%. Companies like GM, GE Aerospace, UPS, and Lockheed Martin surpassed expectations, boosting the market mood. Meanwhile, the Stoxx 50 in the Euro Area climbed 1.4% lifted by strong earnings from Novartis and SAP, while the region’s PMI data showed a rise in services activity and weakness in manufacturing.

Summary for 24.04.2024

Asian equity markets mostly advanced this morning, extending recent gains and taking cues from a strong lead on Wall Street. Upbeat quarterly reports boosted market sentiment. Japanese equities led gains, up about 2%, while Australian, South Korean, and Hong Kong equities climbed between 0.2% to 1.9%. However, Chinese equities were sluggish. Australia’s consumer price index fell to 3.6% in Q1 from 4.1% in the previous quarter, slowing for the fifth straight quarter but above forecasts of 3.4%.

European markets are set to open in positive territory today, building on gains seen since the start of the week. Similarly, US equity futures climbed higher early morning as investors responded positively to upbeat corporate earnings reports, including strong performances from Tesla, Visa, and Texas Instruments, with over 75% of S&P 500 companies surpassing market expectations.

Oil prices rose as industry data showed a surprise drop in US crude stocks last week, signalling strong demand. Brent crude futures edged up to $88.51 a barrel, and US West Texas Intermediate crude futures rose to $83.45. Expectations of interest rate cuts in the UK and EU also buoyed prices. Geopolitical tensions in the Middle East had little impact on trading.

Australia's year-on-year inflation rate for Q1 2024 was 3.6%, lower than the previous quarter's 4.1% but above the expected 3.4%. Goods and services inflation both slowed, with most components showing moderation, except for education. Meanwhile, the monthly CPI for March increased by 3.5%, mainly due to higher housing and transport prices, pushing inflation outside the RBA's target range of 2-3%.

US business activity cooled in April to a four-month low, with the S&P Global Composite PMI falling to 50.9 from 52.1 in March, indicating weaker demand. Despite slightly easing inflation, input prices rose sharply. Manufacturing entered contraction territory, while the services sector saw a modest dip, raising concerns about the economic outlook.

In April, euro zone's service sector saw rapid expansion, driving overall business activity to its highest level in nearly a year, as shown by HCOB's PMI. However, manufacturing declined unexpectedly, indicating a divide between the two sectors. Germany and France showed contrasting performances, while Britain's growth exceeded expectations, boosting optimism across the euro zone.

The US Senate voted to pass a bill requiring Chinese owner ByteDance to divest TikTok's US operations within nine months or face a ban. The move addresses concerns over data security and surveillance. Despite TikTok's objections, President Biden is expected to sign the bill into law.

Tesla is speeding up the launch of more affordable cars to boost demand, planning to produce new models this year, far earlier than expected. This announcement led to a 13% surge in shares, countering a disappointing quarter. Elon Musk stated Tesla aims to operate robotaxis and enable owners to rent their vehicles, likening it to Airbnb.

Visa's second-quarter results surpassed Wall Street estimates, with consumer spending remaining strong despite concerns about the economy. While international travel, particularly in Asia-Pacific, lags, e-commerce growth offsets weakness. Visa expects "low double-digit" revenue growth for the current quarter and reaffirmed its 2024 forecasts, signalling confidence in future performance.

Shares of Spotify surged 11% in regular market trading Tuesday as the company exceeded expectations in Q1 2024. It reported EUR 0.97 earnings per share, beating estimates of EUR 0.64, with revenue at EUR 3.64 billion, slightly above the consensus. Gross margin outperformed at 27.6%. However, Monthly Active Users (MAUs) and premium subscribers missed estimates.

General Motors beat Wall Street targets in its quarterly results and raised its annual forecast due to stable pricing and demand for gasoline vehicles. Despite struggles in China and with EVs, GM's net income rose to $3 billion, with adjusted earnings per share of $2.62 exceeding expectations. GM plans to increase investment in EVs.

PepsiCo exceeded Wall Street expectations for first-quarter revenue and profit, driven by strong demand for its sodas and snacks in international markets. While facing a slowdown in the United States due to strained budgets, the company's average prices increased by 5%. PepsiCo expects improvement in its North America business over time.

Baker Hughes exceeded analysts' expectations for first-quarter profit, driven by higher international drilling demand. International rig count increased by 5.4%, boosting total revenue from the international segment to $2.79 billion. Despite a decline in North America revenue due to low natural gas prices, Baker Hughes increased its quarterly dividend and repurchased shares.

Lockheed Martin exceeded Wall Street expectations for first-quarter sales and profit, driven by increased demand for weapons amid geopolitical tensions. Sales in its missiles and fire control unit surged, while the aeronautics business, which makes the F-35 fighter jets, also saw growth. The company remains confident in meeting its full-year financial targets.

Freeport-McMoRan surpassed first-quarter profit expectations with increased copper production, particularly in Indonesia, and lower costs. The company is working with the Indonesian government to continue exports amid raw material export bans. Strong gold prices and higher sales volumes also contributed to its positive performance.

UPS expects its new USPS air cargo contract to be profitable from the first year onward, replacing FedEx. UPS's unified network allows for more cost-efficient operations compared to FedEx's hub and spoke model. The deal is expected to significantly increase UPS's USPS business, with revenues estimated around $1.5 billion annually.

Kering expects a sharp 40% to 45% decline in first-half operating profit, following a 10% drop in first-quarter sales, driven by weakened demand for its star brand Gucci. Sales at Gucci fell 18% due to transition challenges and weak store traffic, particularly in Asia. Kering's shares have fallen 18% since March.

Renault expects sales growth to pick up this year, driven by new model launches as part of its turnaround plan. Despite challenges in the EV market and pressure from competitors like Tesla, Renault aims to lower EV costs by 40% by 2027. The company reaffirmed its 2024 profit margin and cash flow forecasts.

Halliburton expects growth in its international business this year due to increased demand for equipment and services, particularly in Latin America. However, North American revenue is forecasted to remain flat, impacted by weak natural gas prices and reduced drilling activity, despite exceeding profit estimates for the first quarter.

Alphabet is expected to announce its first-quarter earnings results, with anticipation around a possible dividend announcement following Meta's recent move. Despite its strong performance, Alphabet still lags behind Microsoft, Apple, and NVIDIA in market capitalisation. Analysts believe a dividend could be likely given the company's strong cash flow.

JPMorgan Chase CEO Jamie Dimon expressed confidence in the strong US economy, highlighting robust employment and healthy consumer finances. However, he warned about rising national debt, inflation, and geopolitical conflicts. Dimon advocated for more practitioners in government and discussed various policy issues, including military power and economic growth

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