Market Update
U.S. Movers: Dutch Bros, FedEx, Lululemon, Nike
Scott Peters
22 Mar, 2024
New York City
Lululemon Athletica dropped 14% to $413.0 after the athleisure retailer reported strong holiday quarter sales, but its outlook for the current quarter fell short of analysts' expectations.
Net revenue in the fiscal fourth quarter ending in January increased 16% to $3.2 billion from $2.8 billion.
Net revenues in the Americas increased at a slower pace of 9%, driven by a 7% increase in comparable sales.
International revenue soared 54%, and comparable sales soared 43%, driven by a rebound in activities after China ended its COVID-19 restrictions.
Net income jumped to $669.4 million from $119.8 million, and diluted earnings per share advanced to $5.30 from 94 cents a year ago.
Inventories at the end of 2023 decreased by 9% to $1.3 billion, compared to $1.4 billion at the end of 2022.
For the first quarter of 2024, the company expects net revenue to be in the range of $2.175 billion to $2.200 billion, representing growth of 9% to 10%.
In rhe quarter, diluted earnings per share are expected to be in the range of $2.35 to $2.40.
For the full-year 2024, the retailer expects net revenue to be in the range of $10.7 billion to $10.8 billion, representing growth of 11% to 12%, or 10% to 11% excluding the 53rd week of 2024.
For the full-year 2024, diluted earnings per share are expected to be in the range of $14.00 to $14.20.
FedEx jumped 11.6% to $295.58 after the parcel delivery company reported better-than-expected quarterly results.
Net revenue in the fiscal third quarter ending in January declined to $21.7 billion from $22.2 billion, net income rose to $879 million from $771 million, and diluted earnings per share rose to $3.51 from $3.05 a year ago.
The logistics company guided fiscal 2024 revenue to decline in a low-single-digit percentage and earnings per diluted share between $15.65 and $16.65 before the mark-to-market retirement plan monthly adjustments.
The company also completed the purchase of 4.1 million shares for $1.0 billion in the quarter, and the board of directors approved another $5 billion stock buyback plan, in addition to the remaining $0.6 billion available in the previously authorized plan in 2021.
FedEx expects to repurchase an additional $500 million of common stock during the fiscal fourth quarter, which will bring the fiscal 2024 buyback total to $2.5 billion.
Dutch Bros. plunged 6% to $33.49 after the drive-through coffee chain announced the launch of a secondary offering of its shares.
TSG Consumer Partners, LP, plans to sell 8 million shares and plans to grant a 30-day option to sell an additional 1.2 million shares to its sole underwriter, Morgan Stanley.
Nike decreased 6.2% to $94.60 after the company reported mixed quarterly sales in the fiscal third quarter.
Revenue in the quarter edged slightly higher to $12.43 billion from $12.39 billion, and sales in North America rose 3% to $5.07 billion, while China sales growth slowed to 5% at $2.08 billion.
Net income in the quarter ending on February 29 was $1.17 billion, up from $1.27 billion, and diluted earnings per share decreased to 77 cents from 79 cents a year ago.
Europe Movers: BMW, Heidelberg Materials, Secunet Securities, X5 Retail
Inga Muller
22 Mar, 2024
Frankfurt
European stock market indexes rested near record highs as investors reviewed the latest monetary policy announcements from major central banks.
The DAX index decreased by 0.02% to 18,175.88, the CAC-40 index rose by 0.2% to 8,162.68, and the FTSE 100 index inched higher by 0.8% to 7,949.06.
The yield on 10-year German bonds edged down to 2.36%; French bonds inched lower to 2.83%; the UK gilts edged lower to 3.99%; and Italian bonds inched lower to 3.65%.
Heidelberg Materials increased 0.2% to €98.30, and the company proposed to increase its dividend by 15%, or 40 cents, to €3.0 per share.
The company also has a €1.2 billion stock repurchase plan ending in 2026.
X5 Retail Group traded at €6.40 after the Russia-based retailer announced its 2023 financial results.
Revenue increased 20.8% to 3.2 billion rubles from 2.6 billion rubles, and net income increased 73% to 90.2 million rubles from 32.3 million rubles.
Net selling space across all retail formats increased 12.1% to 10.2 million square meters from 9.1 million square meters.
Secunet Securities Network decreased 3% to €158.60 after the cybersecurity company reported mixed financial results in 2023 and proposed a dividend of €2.36 per share.
2023 revenue increased 13% to 393.7 million from 347.2 million, primarily driven by the sustained rise in contracts with government agencies.
Earnings before interest and taxes declined to 43.0 million from 47.0 million a year ago, driven by a change in product mix that included a lower proportion of high-margin licenses.
The company issued a cautious 2024 sales outlook, despite the high order backlog at the start of the year of 190.2 million compared to 197.6 million.
2024 sales are likely to match the sales level in the previous year because of high uncertainty related to the German federal government's budget.
BMW declined 0.9% to €103.86, and the luxury automaker reported strong vehicle sales and a rise in operating earnings last week.
Global vehicle sales rose 6.4% to 2.55 million from 2.34 million, and battery-operated vehicle sales jumped 74.1% to 375,716 from 215,752 a year ago.
In 2023, sales increased 9% to €155.5 million from €142.6 million, and operating earnings jumped 32% to €18.4 billion from €14.0 billion a year ago.
The company lowered its proposed dividend to €6.02 per share compared to €8.50 a year ago, but it is still within the range of the payout ratio between 30% and 40%.
European Markets Rest Near Record Highs, Bond Yield Edge Lower
Bridgette Randall
22 Mar, 2024
Frankfurt
European markets rested near record highs on the final day of the week as investors reviewed the latest central bank decisions.
Benchmark indexes in Frankfurt and Paris advanced into record territory on optimism that central banks will deliver on rate cuts in the second half of the year.
During the week, the central banks of Japan, the U.S., the UK, Norway, Switzerland, and Turkey announced their monetary policy decisions.
The U.S. Federal Reserve held its key interest rates steady for the fifth time in a row and projected at least three rate cuts in the year, and the central banks of the UK and Norway held their interest rates steady.
The Bank of Japan ended its negative interest rate regime in place since 2016 and lifted its key policy rate for the first time in 17 years, but the future rate path in Japan remains uncertain.
Turkey's central bank hiked its interest rate by 500 basis points to 50% after inflation soared to 67% in February.
Turkey has been battling high inflation levels for nearly three years, and after several reversals in policy direction, the central bank lifted interest rates by a whopping 36.5 percentage points between May 2023 and January 2024.
UK Retail Sales Stay Flat In February
The UK's retail sales volume was unchanged in February from the previous month, following the upwardly revised 3.6% increase in January, the Office for National Statistics reported on Friday.
Retail sales for the three months to February decreased by 0.4% from the previous months and dropped 1% when compared with the corresponding period a year ago.
On an annual basis, retail sales declined 0.4% in February, following a downwardly revised 0.5% increase in January.
Europe Indexes and Yields
The DAX index decreased by 0.02% to 18,175.88, the CAC-40 index rose by 0.2% to 8,162.68, and the FTSE 100 index inched higher by 0.8% to 7,949.06.
The yield on 10-year German bonds edged down to 2.36%; French bonds inched lower to 2.83%; the UK gilts edged lower to 3.99%; and Italian bonds inched lower to 3.65%.
The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.
Brent crude decreased $0.07 to $85.72 a barrel, and the Dutch TTF natural gas rose by €0.65 to €27.06 per MWh.
Europe Stock Movers
Heidelberg Materials increased 0.2% to €98.30, and the company proposed to increase its dividend by 15%, or 40 cents, to €3.0 per share.
The company also has a €1.2 billion stock repurchase plan ending in 2026.
X5 Retail Group traded at €6.40 after the Russia-based retailer announced its 2023 financial results.
Revenue increased 20.8% to 3.2 billion rubles from 2.6 billion rubles, and net income increased 73% to 90.2 million rubles from 32.3 million rubles.
Net selling space across all retail formats increased 12.1% to 10.2 million square meters from 9.1 million square meters.
Secunet Securities Network decreased 3% to €158.60 after the cybersecurity company reported mixed financial results in 2023 and proposed a dividend of €2.36 per share.
2023 revenue increased 13% to 393.7 million from 347.2 million, primarily driven by the sustained rise in contracts with government agencies.
Earnings before interest and taxes declined to 43.0 million from 47.0 million a year ago, driven by a change in product mix that included a lower proportion of high-margin licenses.
The company issued a cautious 2024 sales outlook, despite the high order backlog at the start of the year of 190.2 million compared to 197.6 million.
2024 sales are likely to match the sales level in the previous year because of high uncertainty related to the German federal government's budget.
Japan Indexes Close at New Record Highs, China Indexes Extend 3-year Losses
Arjun Pandit
22 Mar, 2024
Sydney
The Asian market closed mixed after a week of volatile trading, and major central banks' monetary policy announcements dominated news flow.
Despite the Bank of Japan ending its negative interest rate policy, the yen hovered near a three-decade low, but stocks scaled new 34-year highs.
Stocks in China continue to struggle after a slew of weak corporate earnings amplified market worries about macroeconomic conditions and weak consumer sentiment.
Market indexes in India hovered near record highs, but investors turned cautious on high valuation worries ahead of the national election in early May.
Japan Stocks Extend Weekly Gains to 6%
Benchmark indexes in Tokyo extended weekly gains after positive sentiment in Friday's trading.
Market indexes advanced after consumer price inflation and core inflation, which excludes volatile food and energy prices, rose to a four-month high of 2.8%.
The inflation report confirmed the Bank of Japan's latest move to end negative rates and hike its benchmark interest rate for the first time in 17 years.
However, Japan's future rate path is uncertain, and the central bank is expected to keep an accommodative stance in the near future, which could add more volatility to the yen.
The Nikkei 225 Stock Average gained 0.2% to 40,914.29, and the Topix index advanced 0.5% to 2,811.21.
For the week, the Nikkei advanced 5.7% and the Topix gained 5.4%.
The yen hovered near 151 against the U.S. dollar as investors worried that the large rate differential between the two currencies was likely to persist well into 2025.
Technology, financial services, and automotive sector stocks were among the leading gainers.
Tokyo Electron, Advantest, Screen Holdings, SoftBank, Mitsubishi UFJ, Mitsui & Company, Marubeni, Toyota Motor, and Honda Motor advanced between 0.5% and 3%.
China Indexes Plunge After Weak Earnings
Stocks in Shanghai and Hong Kong dropped sharply after a slew of corporate earnings missed investors' expectations.
Benchmark indexes wiped out this week's gains after investors shifted their focus to corporate earnings following the Chinese government's policy measures and the U.S. Federal Reserve's dovish interest rate outlook.
Investors have been on the edge amid growing worries that corporations may face challenging times over the next several years as the authoritarian Chinese government announced plans to support government-controlled companies at the expense of the private sector.
Moreover, the Chinese leadership has repeatedly stressed that national security and international military expansion are higher priorities than domestic economic development.
At lunch break, the CSI 300 index dropped 1.5% to 3,527.58, and the Hang Seng index plunged 3% to 16,350.56.
Ping An Insurance plunged 7.5% to HK$33.0 after China's largest insurance company by market capitalization said 2023 net income declined 23% from a year ago after the weaknesses in its asset management and technology units outweighed the strength in its core insurance business.
CNOOC Ltd., the offshore energy driller, plunged 5.6% to HK$17.20, and Orient Overseas, the international shipping company, plunged 15% to HK$101.70 after both companies reported weaker-than-expected earnings.
Samsonite International dopped 8.9% to HK$27.95 after the luggage maker announced its plans for a secondary listing and ended its discussions to go private.
CK Hutchison Holdings declined 3.7% to HK$38.90 after the port-to-telecom company reported 2023 earnings from continuing operations declined 9% from a year ago.
CK Asset Holdings Ltd. plunged 11.8% to HK$32.45 after the listed property arm controlled by billionaire Li Ka Shing reported a 11.6% decline in 2023 profit.
For the week, the CSI 300 decreased 1% and the Hang Seng index dropped 1.7%, extending their 3-year losses to 39.6% and 46%, respectively.
Major Central Banks Announce Rate Decisions This Week
The U.S. Federal Reserve held its interest rates steady for the fifth time in a row and reiterated its target of three rate cuts in 2024.
After the announcement, market indexes in the U.S., Europe, Japan, India, South Korea, and Hong Kong jumped between 1% and 2.3%.
The Bank of England held its interest rate steady at 5.25%, and the Norges Bank left its policy rate of 4.5% unrevised.
However, the Swiss National Bank unexpectedly cut its policy rate by 25 basis points to 1.5% and signaled economic growth of around 1% in the current year.
The SNB is the first major central bank to end its policy tightening bias.
Turkey's central bank hiked its interest rate by a large 500 basis points to 50% from 45% after inflation in February soared to 67%.
Turkey has been battling high inflation for more than three years, and after several reversals in monetary policy direction, the central bank lifted its benchmark rate by a whopping 36.5 percentage points between May 2023 and January 2024.
Earlier in the week, the Bank of Japan ended its negative rate policy and lifted interest rates for the first time in 17 years.
India Indexes Struggle Amid Cautious Trading
Benchmark indexes in Mumbai lacked direction in Friday's trading as investors reviewed monetary policy decisions from major central banks.
The Sensex and the Nifty indexes edged higher in early trading following a surge of more than 1% in the previous session after the U.S. Federal Reserve held its interest rates steady for the fifth time in a row and reiterated its target of three rate cuts in 2024.
After the announcement, market indexes in the U.S., Europe, Japan, India, South Korea, and Hong Kong jumped between 1% and 2.3%.
The Sensex index decreased 0.3% to 72,432.17, and the Nifty index edged down 0.2% to 21,956.15.
For the week, the Sensex and the Nifty indexes are set to close down 0.3%.
Dow, S&P 500 and Nasdaq Composite Trade at New Record Highs, U.S. Sues Apple
Barry Adams
21 Mar, 2024
New York City
Stocks continued to march higher on Wall Street on the second day and the widely followed S&P 500 and the Nasdaq advanced to new record highs.
Positive market sentiment ruled for the second day in a row in Thursday's trading after the Federal Reserve signaled possible rate cuts this year.
The S&P 500 index and the Nasdaq Composite scaled higher from the record close in Wednesday's session after the Federal Reserve held its key lending rate range between 5.25% and 5.50% and lifted the economic growth outlook to 2.1%.
The Federal Reserve reiterated its December projection of possible rate cuts of as much as 75 basis points, despite the central bank lifting its economic growth outlook and estimating elevated inflation in the remainder of the year.
For now, investors are celebrating the Fed's projection, but rate cuts are not guaranteed, and overall inflation is likely to spike in the months ahead.
Crude oil prices have been on the rise for the last five weeks, and supply chain disruptions because of the ongoing disruptions of the shipping lanes in the Red Sea are also likely to contribute to overall inflation.
Moreover, goods inflation is still elevated, and price pressures are building up in the service sector and broadening in the U.S. economy.
Across the Atlantic, the Bank of England and Norges Bank held their policy rates at 5.25% and 4.5% on Thursday, as expected, respectively.
However, the Swiss National Bank lowered its key lending rates by 25 basis points to 1.5%, leading other major central banks to cut rates first.
Meanwhile, Turkey's central bank lifted its one-week repo rate from 45% to 50% after inflation in February soared to 67% in the financially challenged nation.
Turkey reversed its loose monetary policy after inflation soared and the central bank lifted its interest rates by 36.5 percentage points between May 2023 and January 2024.
U.S. Indexes and Yields
The S&P 500 index increased 0.4% to 5,256.10, and the Nasdaq Composite rose 0.9% to 16,516.09.
The yield on 2-year Treasury notes decreased to 4.59%, 10-year Treasury notes inched down to 4.24%, and 30-year Treasury bonds edged down to 4.42%.
WTI crude oil decreased $0.17 to $81.17 a barrel, and natural gas prices decreased 1 cent to $1.68 a thermal unit.
Gold increased by $18.69 to $2,204.53 an ounce, and silver fell 22 cents to $25.34.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.60.
Existing Home Sales Rebounded In February
Existing-home sales advanced 9.5% in February to a seasonally adjusted annual rate of 4.38 million, the largest monthly increase since February 2023.
Home sales declined 3.3% from a year ago as buyers struggled with affordability issues and tight inventory conditions, the National Association of Realtors reported Thursday.
The median existing-home sales price jumped 5.7% from a year ago to $384,500, extending annual price increase to the eight month in a row.
The inventory of unsold existing homes advanced 5.9% from the previous month to 1.07 million, or the equivalent of 2.9 months' supply at the current monthly sales pace.
U.S. Stock Movers
Micron Technology increased 17.2% to $112.75 after the advanced chipmaker reported better-than-expected quarterly results.
Five Below declined 12.5% to $182.85 after the deep discount retailer reported lower-than-expected revenue and earnings in the fiscal quarter, dominated by holiday sales.
The company also estimated weaker-than-anticipated revenue and earnings in the fiscal first quarter and full year.
Darden Restaurants declined 5.9% to $164.32 after the owner of Olive Garden and other chains reported weaker-than-expected revenue and earnings in its later quarter.
Revenue in the fiscal third quarter was $2.97 billion, with a profit of $312.9 million, or $2.60 per share.
The company estimated full-year revenue of $11.4 billion and diluted earnings per share between $8.80 and $8.90.
Accenture dropped 6.5% to $356.50 after the information services provider's revenue outlook outweighed earnings in the fiscal second quarter.
Apple declined 3.6% to $172.18 after the Justice Department sued the iPhone maker alleging that the company's monopolistic policies are harming consumers, suppliers and rivals.
European Markets Scale New Record Highs
European stock market indexes hovered at multi-year highs as investors reviewed monetary policy decisions from several central banks.
Benchmark indexes in Germany and France closed at new record highs, and the index in London jumped 2% after the Bank of England's rate decision.
The Bank of England left its Bank Rate at 5.25% in a majority vote 8-1 decision after the committee members awaited for more evidence of weakening inflationary pressures.
U.S. Federal Reserve Holds Rates Steady, Lifts Growth Estimate
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Swiss National Bank Cuts Rates by 0.25%
The Swiss National Bank unexpectedly lowered its key lending rate for the first time in nine years, making it the first major central bank to ease monetary policy.
The central bank cut its key lending rate by 25 basis points to 1.5%, citing reduced inflationary pressures and an appreciation of the Swiss franc in real terms over the past year.
The central bank also estimated an annual inflation rate of 1.4% in 2024, 1.2% in 2025, and 1.1% in 2026.
Despite the low inflation, the economy is expected to struggle, and annual economic growth in 2024 is expected to hover around 1.0%.
Norges Bank Holds Rates Steady at 4.5%
The Monetary Policy and Financial Stability Committee of Norges Bank decided to keep the policy rate unchanged at 4.5% at its meeting on Thursday.
The central bank reiterated the need to keep rates elevated as inflation is slowing but still too high; the depreciation of the Norwegian krone and high business costs and wage growth are keeping the inflation elevated.
“The policy rate will likely need to be maintained at the current level for some time ahead in order to bring inflation back to the 2 percent target within a reasonable time horizon," said Governor Ida Wolden Bache.
The central bank projected that inflation is expected to remain elevated over the next six months before moderating in the final quarter of the year, and economic growth is expected to "remain low" in the first half of the year before picking up.
Hybrid Car Market Share Expands In the EU
New car sales advanced for the second month in a row in February in the European Union, driven by strong demand in its four largest markets, especially France and Italy.
The new car registration increase slowed to 10.1% from 883,608 units a year ago, following a 12.1% rebound in January.
Passenger car sales rose 13% in France, 12.8% in Italy, 9.9% in Spain, and 5.4% in Germany.
The market share of hybrid electric cars expanded 2.47% to 28.9%, and battery electric car sales increased 9% with a stable market share of 12%.
However, diesel car sales contracted 5.1% and its market share eased to 12.9%, and petrol car sales increased 6.1% but its market share fell to 35.5% from 36.9% in the previous month.
Europe Indexes and Yields
The DAX index increased by 0.9% to 18,172.93, the CAC-40 index rose by 0.2% to 8,177.26, and the FTSE 100 index inched higher by 1.9% to 7,882.55.
The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.
The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.
Brent crude decreased $0.59 to $85.35 a barrel, and the Dutch TTF natural gas fell by €1.33 to €26.42 per MWh.
Europe Stock Movers
Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February.
Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions.
Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook.
3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively.
Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society.
The Nationwide Building Society jumped 1% to £135.73.
Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates.
Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025.
Asian Markets Rebound Tracking U.S. Rate Driven Rally In New York
Asian markets advanced, tracking gains in New York after the Federal Reserve held rates steady as widely expected.
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Stocks on Wall Street soared and powered a global market rally after the central bank's solid economic growth outlook with moderating inflation and interest rate expectations.
Japan Indexes Close at New 34-year Record Highs
Market indexes in Japan advanced following the U.S. Federal Reserve's rate decisions and the central bank confirming inflationary forces had eased "substantially."
Market sentiment was also positive after exports rose for the third month in a row in February, and manufacturing activities contracted at the slowest pace since November in March.
The au Jibun Bank Japan Manufacturing PMI increased to 48.2 in March from a final 47.2 in the previous month, which was the lowest level since August 2020, according to the preliminary report by S&P Global.
Factory activities contracted for the tenth consecutive month, the weakest drop since last November.
The Nikkei 225 Stock Average jumped 1.9% to 40,777.70, and the Topix index advanced 1.5% to 2,792.94 and traded at a 34-year high.
The yen traded around 151 against the U.S. dollar after the U.S. rate decision.
Tech stocks led the gainers, with Softbank, Tokyo Electron, Advantest, and Screen Holdings gaining between 3% and 5%.
Banks also scaled higher for the second week in a row in the hopes that the Bank of Japan will continue with its rate hike campaign.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group gained between 2% and 4%.
Japan's Exports Rise 8% In February
Japan's trade deficit decreased sharply to 379,358 billion yen, or $2.5 billion, in February from 928.908 billion in the same period of the prior year.
Exports advanced by 7.8% from a year ago to 8,249.21 billion, or $55 billion, driven by strong demand from the U.S. and China and higher shipments of automobiles and electrical machinery.
China-bound shipments increased only 2.5%, suggesting moderate demand growth, while exports to the U.S. and European Union advanced 18.4% and 14.6%, respectively.
Exports advanced for the third month in a row, imports increased for the first time in eleven months, and trade balances swung to deficit for the second month in a row, the Ministry of Finance reported Thursday.
However, the weak prices of energy products drove the increase in imports at a slower pace of 0.5% from a year ago (8,628.57 billion, or $60 billion), following the recovery in domestic demand.
In 2023, Japan reported a trade deficit of 9.29 trillion yen, the third trade gap in a row reflecting the elevated price of energy in international markets.
Hong Kong Property Stocks Soar After the HKMA Holds Rates Steady
Stock market indexes in Shanghai and Hong Kong diverged after the U.S. Federal Reserve announced its rate decision.
Stocks on the mainland changed little in the absence of local economic news, but property stocks soared on the hopes that interest rates would be lower in the months ahead, following the lower U.S. interest rate outlook.
The Hong Kong Monetary Authority, which tracks U.S. monetary policy, left its interest rate unchanged at 5.75% on Thursday, as the city's currency is pegged to the U.S. dollar.
The CSI 300 index decreased 0.05% to 3,582.50, and the Hang Seng index soared 2.2% to 16,905.51.
Longfor Group, China Vanke, China Resources Land, and Henderson Land gained between 3% and 6%.
Tech stocks also participated in the market rally, and Tencent Holdings, JD.com, Alibaba Group, Meituan, and Baidu advanced between 2% and 4%.
India Indexes Rebound 1%
Stocks in Mumbai rebounded and participated in the global market rally after the U.S. Federal Reserve held its interest rates steady.
The Sensex and the Nifty indexes jumped as much as 1%, the Indian rupee held firm near its one-month low, and the yield on Indian government bonds held steady.
The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.
U.S. Movers: Accenture, Darden Restaurants, Five Below, Micron Technology
Scott Peters
21 Mar, 2024
New York City
Micron Technology increased 17.2% to $112.75 after the advanced chipmaker reported better-than-expected quarterly results, driven by demand for artificial intelligence applications and tight supply.
Revenue in the fiscal second quarter ending in February soared to $5.8 billion from $3.7 billion, net income swung to a profit of $793 million from a loss of $2.3 billion, and diluted earnings per share were 71 cents compared to a loss of $2.12 a year ago.
The company anticipated tight market conditions to persist in the fiscal third quarter and estimated revenue of about $6.6 billion with a band of $200 million and diluted earnings per share of 17 cents with a band of 7 cents.
Five Below declined 12.5% to $182.85 after the deep discount retailer reported lower-than-expected revenue and earnings in the fiscal quarter, dominated by holiday sales.
Revenue in the fiscal fourth quarter ended February 3 increased 19.1% to $1.34 billion from $1.12 billion, net income rose to $202.2 million from $171.3 million, and diluted earnings per share rose to $3.65 from $3.02 a year ago.
Net sales in the 53rd week were $48.1 million and represented approximately $0.15 cents in diluted earnings per share.
The company also estimated weaker-than-anticipated revenue and earnings in the fiscal first quarter and full year.
Net sales in the fiscal first quarter are expected to range between $826 million and $846 million, net income between $32 million and $38 million, and diluted earnings per share between 58 cents and 69 cents.
The company's guidance is based on comparable sales to increase between flat and 2%.
For the full year of fiscal 2024, net sales are estimated in the range of $3.97 billion and $4.07 billion, net income between $318 million and $346 million, and diluted earnings per share between $5.71 and $6.22.
Darden Restaurants declined 5.9% to $164.32 after the owner of Olive Garden and other chains reported weaker-than-expected revenue and earnings in its latest quarter.
Revenue in the fiscal third quarter increased 6.8% to $2.97 billion from $2.79 billion, net income rose to $312.9 million from $286.6 million, and diluted earnings per share advanced to $2.60 from $2.34 a year ago.
The total sales increase was driven by sales from the addition of 79 company-owned Ruth's Chris Steak House restaurants and 53 other net new restaurants, partially offset by a blended same-restaurant sales decrease of 1.0%.
The company estimated full-year revenue of $11.4 billion and diluted earnings per share between $8.80 and $8.90.
The company's board of directors declared a quarterly cash dividend of $1.31 per share payable on May 1 to shareholders on record on April 10.
The retail chain in the quarter repurchased 0.2 million shares for $33 million, and the company's board authorized a new share repurchase plan of $1 billion.
Accenture dropped 6.5% to $356.50 after the information services provider's revenue outlook outweighed earnings in the fiscal second quarter.
Revenue in the second quarter was flat at $15.8 billion, net income increased to $1.7 billion from $1.55 billion, and diluted earnings per share rose to $2.63 from $2.39 a year ago.
New bookings for the quarter were $21.6 billion, with consulting bookings of $10.5 billion and managed services bookings of $11.1 billion.
The company declared a quarterly cash dividend of $1.29 per share payable on May 15 to shareholders on record on April 18.
During the quarter, the company repurchased or redeemed 3.8 million shares for a total of $1.3 billion, and about $4.6 billion were still available under the stock repurchase plan as of February 29.
The company guided fiscal third quarter revenue between $16.25 billion and $16.85 billion, falling between negative 1% and positive 3% when measured in local currency from a year ago.
The company also estimated annual revenue growth to be in the range of 1% to 3%, compared to a previous estimate between 2% and 5%, assuming no impact of foreign currency translation on its results.
U.S. Major Averages Inch Higher In Record Territory Amid Rate Cut Expectations
Barry Adams
21 Mar, 2024
New York City
Positive market sentiment ruled for the second day in a row in Thursday's trading after the Federal Reserve signaled possible rate cuts this year.
The S&P 500 index and the Nasdaq Composite scaled higher from the record close in Wednesday's session after the Federal Reserve held its key lending rate range between 5.25% and 5.50% and lifted the economic growth outlook to 2.1%.
The Federal Reserve reiterated its December projection of possible rate cuts of as much as 75 basis points, despite the central bank lifting its economic growth outlook and estimating elevated inflation in the remainder of the year.
For now, investors are celebrating the Fed's projection, but rate cuts are not guaranteed, and overall inflation is likely to spike in the months ahead.
Crude oil prices have been on the rise for the last five weeks, and supply chain disruptions because of the ongoing disruptions of the shipping lanes in the Red Sea are also likely to contribute to overall inflation.
Moreover, goods inflation is still elevated, and price pressures are building up in the service sector and broadening in the U.S. economy.
Across the Atlantic, the Bank of England and Norges Bank held their policy rates at 5.25% and 4.5% on Thursday, as expected, respectively.
However, the Swiss National Bank lowered its key lending rates by 25 basis points to 1.5%, leading other major central banks to cut rates first.
Meanwhile, Turkey's central bank lifted its one-week repo rate from 45% to 50% after inflation in February soared to 67% in the financially challenged nation.
Turkey reversed its loose monetary policy after inflation soared and the central bank lifted its interest rates by 36.5 percentage points between May 2023 and January 2024.
U.S. Indexes and Yields
The S&P 500 index increased 0.4% to 5,256.10, and the Nasdaq Composite rose 0.9% to 16,516.09.
The yield on 2-year Treasury notes decreased to 4.59%, 10-year Treasury notes inched down to 4.24%, and 30-year Treasury bonds edged down to 4.42%.
WTI crude oil decreased $0.17 to $81.17 a barrel, and natural gas prices decreased 1 cent to $1.68 a thermal unit.
Gold increased by $18.69 to $2,204.53 an ounce, and silver fell 22 cents to $25.34.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.60.
U.S. Stock Movers
Micron Technology increased 17.2% to $112.75 after the advanced chipmaker reported better-than-expected quarterly results.
Five Below declined 12.5% to $182.85 after the deep discount retailer reported lower-than-expected revenue and earnings in the fiscal quarter, dominated by holiday sales.
The company also estimated weaker-than-anticipated revenue and earnings in the fiscal first quarter and full year.
Darden Restaurants declined 5.9% to $164.32 after the owner of Olive Garden and other chains reported weaker-than-expected revenue and earnings in its later quarter.
Revenue in the fiscal third quarter was $2.97 billion, with a profit of $312.9 million, or $2.60 per share.
The company estimated full-year revenue of $11.4 billion and diluted earnings per share between $8.80 and $8.90.
Accenture dropped 6.5% to $356.50 after the information services provider's revenue outlook outweighed earnings in the fiscal second quarter.
Europe Movers: 3i Group, Automakers, Barclays, Centamin, Nationwide Building Society, Next, Veolia, Virgin Money UK
Inga Muller
21 Mar, 2024
Frankfurt
European markets traded at new intraday record highs after the U.S. Federal Reserve reiterated its estimate to cut rates as many as three times this year.
The Swiss National Bank led other major central banks and cut its key lending rate by 25 basis points to 1.5%, while the Norges Bank held its policy rate at 4.5%, citing elevated inflationary pressures.
The DAX index increased by 0.5% to 18,101.10, the CAC-40 index rose by 0.05% to 8,164.23, and the FTSE 100 index inched higher by 0.9% to 7,809.41.
The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.
Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February.
Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions.
Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook.
3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively.
Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society.
The Nationwide Building Society jumped 1% to £135.73.
Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates.
Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025.
European Markets Trade at Record Highs; Switzerland Leads with a First Rate Cut
Bridgette Randall
21 Mar, 2024
Frankfurt
European stock market indexes hovered at multi-year highs as investors reviewed monetary policy decisions from several central banks.
Benchmark indexes in Germany and France traded at new record intraday highs, and the index in London jumped 1% ahead of the Bank of England's rate decision.
U.S. Federal Reserve Holds Rates Steady, Lifts Growth Estimate
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Swiss National Bank Cuts Rates by 0.25%
The Swiss National Bank unexpectedly lowered its key lending rate for the first time in nine years, making it the first major central bank to ease monetary policy.
The central bank cut its key lending rate by 25 basis points to 1.5%, citing reduced inflationary pressures and an appreciation of the Swiss franc in real terms over the past year.
The central bank also estimated an annual inflation rate of 1.4% in 2024, 1.2% in 2025, and 1.1% in 2026.
Despite the low inflation, the economy is expected to struggle, and annual economic growth in 2024 is expected to hover around 1.0%.
Norges Bank Holds Rates Steady at 4.5%
The Monetary Policy and Financial Stability Committee of Norges Bank decided to keep the policy rate unchanged at 4.5% at its meeting on Thursday.
The central bank reiterated the need to keep rates elevated as inflation is slowing but still too high; the depreciation of the Norwegian krone and high business costs and wage growth are keeping the inflation elevated.
“The policy rate will likely need to be maintained at the current level for some time ahead in order to bring inflation back to the 2 percent target within a reasonable time horizon," said Governor Ida Wolden Bache.
The central bank projected that inflation is expected to remain elevated over the next six months before moderating in the final quarter of the year, and economic growth is expected to "remain low" in the first half of the year before picking up.
Hybrid Car Market Share Expands In the EU
New car sales advanced for the second month in a row in February in the European Union, driven by strong demand in its four largest markets, especially France and Italy.
The new car registration increase slowed to 10.1% from 883,608 units a year ago, following a 12.1% rebound in January.
Passenger car sales rose 13% in France, 12.8% in Italy, 9.9% in Spain, and 5.4% in Germany.
The market share of hybrid electric cars expanded 2.47% to 28.9%, and battery electric car sales increased 9% with a stable market share of 12%.
However, diesel car sales contracted 5.1% and its market share eased to 12.9%, and petrol car sales increased 6.1% but its market share fell to 35.5% from 36.9% in the previous month.
Europe Indexes and Yields
The DAX index increased by 0.5% to 18,101.10, the CAC-40 index rose by 0.05% to 8,164.23, and the FTSE 100 index inched higher by 0.9% to 7,809.41.
The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.
The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.
Brent crude decreased $0.19 to $85.74 a barrel, and the Dutch TTF natural gas fell by €0.54 to €28.20 per MWh.
Europe Stock Movers
Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February.
Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions.
Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook.
3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively.
Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society.
The Nationwide Building Society jumped 1% to £135.73.
Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates.
Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025.
Asian Markets Rebound After U.S. Rate Decision; Japan's Exports Jump 8%
Arjun Pandit
21 Mar, 2024
Mumbai
Asian markets advanced, tracking gains in New York after the Federal Reserve held rates steady as widely expected.
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Stocks on Wall Street soared and powered a global market rally after the central bank's solid economic growth outlook with moderating inflation and interest rate expectations.
Japan Indexes Close at New 34-year Record Highs
Market indexes in Japan advanced following the U.S. Federal Reserve's rate decisions and the central bank confirming inflationary forces had eased "substantially."
Market sentiment was also positive after exports rose for the third month in a row in February, and manufacturing activities contracted at the slowest pace since November in March.
The au Jibun Bank Japan Manufacturing PMI increased to 48.2 in March from a final 47.2 in the previous month, which was the lowest level since August 2020, according to the preliminary report by S&P Global.
Factory activities contracted for the tenth consecutive month, the weakest drop since last November.
The Nikkei 225 Stock Average jumped 1.9% to 40,777.70, and the Topix index advanced 1.5% to 2,792.94 and traded at a 34-year high.
The yen traded around 151 against the U.S. dollar after the U.S. rate decision.
Tech stocks led the gainers, with Softbank, Tokyo Electron, Advantest, and Screen Holdings gaining between 3% and 5%.
Banks also scaled higher for the second week in a row in the hopes that the Bank of Japan will continue with its rate hike campaign.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group gained between 2% and 4%.
Japan's Exports Rise 8% In February
Japan's trade deficit decreased sharply to 379,358 billion yen, or $2.5 billion, in February from 928.908 billion in the same period of the prior year.
Exports advanced by 7.8% from a year ago to 8,249.21 billion, or $55 billion, driven by strong demand from the U.S. and China and higher shipments of automobiles and electrical machinery.
China-bound shipments increased only 2.5%, suggesting moderate demand growth, while exports to the U.S. and European Union advanced 18.4% and 14.6%, respectively.
Exports advanced for the third month in a row, imports increased for the first time in eleven months, and trade balances swung to deficit for the second month in a row, the Ministry of Finance reported Thursday.
However, the weak prices of energy products drove the increase in imports at a slower pace of 0.5% from a year ago (8,628.57 billion, or $60 billion), following the recovery in domestic demand.
In 2023, Japan reported a trade deficit of 9.29 trillion yen, the third trade gap in a row reflecting the elevated price of energy in international markets.
Hong Kong Property Stocks Soar After the HKMA Holds Rates Steady
Stock market indexes in Shanghai and Hong Kong diverged after the U.S. Federal Reserve announced its rate decision.
Stocks on the mainland changed little in the absence of local economic news, but property stocks soared on the hopes that interest rates would be lower in the months ahead, following the lower U.S. interest rate outlook.
The Hong Kong Monetary Authority, which tracks U.S. monetary policy, left its interest rate unchanged at 5.75% on Thursday, as the city's currency is pegged to the U.S. dollar.
The CSI 300 index decreased 0.05% to 3,582.50, and the Hang Seng index soared 2.2% to 16,905.51.
Longfor Group, China Vanke, China Resources Land, and Henderson Land gained between 3% and 6%.
Tech stocks also participated in the market rally, and Tencent Holdings, JD.com, Alibaba Group, Meituan, and Baidu advanced between 2% and 4%.
India Indexes Rebound 1%
Stocks in Mumbai rebounded and participated in the global market rally after the U.S. Federal Reserve held its interest rates steady.
The Sensex and the Nifty indexes jumped as much as 1%, the Indian rupee held firm near its one-month low, and the yield on Indian government bonds held steady.
The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.