Market Update
Europe Movers: Casino Guichard, Fresenius, Kingfisher, Sage Group, ThyssenKrupp
Inga Muller
22 Nov, 2023
Frankfurt
European markets advanced, the euro hovered near its three-month high, and the crude oil price was in focus ahead of the OPEC+ meeting later this weekend.
The DAX index increased 0.3% to 15,941.79, the CAC-40 index rose 0.3% to 7,246.18, and the FTSE 100 index fell 0.2% to 7,470.86.
The yield on 10-year German bonds increased to 2.58%; French bonds traded higher to 3.14%; the UK gilts increased to 4.14%; and Italian bonds inched higher to 4.33%.
Sage Group jumped 11.1% to 1,114.0 pence after the UK-based software firm launched a stock repurchase plan and reported strong revenue growth in its latest fiscal year.
Kingfisher plc declined 6.2% to 216.30 pence after the home improvement retailer lowered its profit outlook for the second time in three months.
Casino Guichard Perrachon SA decreased 0.3% to €0.81 after the grocery retailer estimated 2023 losses in its core French business.
ThyssenKrupp AG rose 6.7% to €7.07 after the German industrial engineering and steel company estimated profit in the fiscal year 2024.
The company reported a net loss of €2 billion in the fiscal year 2023 compared to €1.2 billion in income in the previous year, primarily due to impairment losses in its steel business in Europe.
Sales in the year declined to €37.5 billion from €41.1 billion, and adjusted operating earnings fell to €703 million from €2.06 billion a year ago.
The company proposed to pay a cash dividend of 15 euro cents, reflecting a free cash flow improvement to €363 million from an outflow of €476 million.
Fresenius Medical Care increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
Revenue in the third quarter declined 3% to €4.9 billion from €5.03 billion, net income fell to €84 million from €230 million, and net income dropped to 29 cents from 7 cents a year ago.
The company reiterated its 2023 revenue to grow at a low to mid-single-digit percentage rate from €19.4 billion in 2022.
The company raised its 2023 operating earnings to grow at a low single-digit percentage rate from €1.54 billion in 2022, from the previous outlook of flat to a decline in the low single-digit percentage rate.
The German company also said it had resolved its legal dispute with the U.S. Department of Defense and finalized its settlement for payment of dialysis services provided under the Tricare program to members of military service, their dependents, and retirees.
The company sought to receive payment for services provided under the Tricare program on or before January 11, 2023.
As a consequence of the settlement agreement, Fresenius anticipates a positive impact on operating income of €175 million in the fourth quarter.
European Markets Advanced Ahead of the UK Budget Review
Bridgette Randall
22 Nov, 2023
Frankfurt
European markets advanced, and investors focused on the upcoming OPEC+ meeting this weekend.
Benchmark indexes in London, Paris, and Frankfurt headed higher after the U.S. Federal Reserve's early November meeting minutes showed policymakers are still looking for more signals for the sustained decline in inflation.
Moreover, most participants preferred to keep the monetary policy stance restrictive, despite the cooling of inflation, but economic growth is still stronger than expected and wages are still rising faster than needed to slow inflation down to 2%.
Brent crude oil price was steady ahead of the OPEC+ meeting this week, and traders are anticipating Saudi Arabia and Russia to extend voluntary production cuts again.
The UK's Chancellor of the Exchequer, Jeremy Hunt, is scheduled to deliver the 2023 Autumn Budget later today, reviewing the economic progress and the government's budgetary plan for the rest of the year.
Hunt is expected to cut national insurance for about 28 million people and save the government about £5 billion a year.
Those earning about £50,000 a year could face a higher insurance cost of one percent, or about £380 a year.
Europe Indexes and Yields
The DAX index increased 0.3% to 15,941.79, the CAC-40 index rose 0.3% to 7,246.18, and the FTSE 100 index fell 0.2% to 7,470.86.
The yield on 10-year German bonds increased to 2.58%; French bonds traded higher to 3.14%; the UK gilts increased to 4.14%; and Italian bonds inched higher to 4.33%.
The euro continued to rebound and approached the high last seen in late August after the U.S. rate hike worries receded.
The euro rebounded to $1.095, the British pound at $1.254, and the U.S. dollar at 88.42 Swiss cents.
Brent crude decreased $0.42 to $82.01 a barrel, and the Dutch TTF natural gas edged higher by €1.28 to €45.34 per MWh.
Europe Stock Movers
Sage Group jumped 11.1% to 1,114.0 pence after the UK-based software firm launched a stock repurchase plan and reported strong revenue growth in its latest fiscal year.
Kingfisher plc declined 6.2% to 216.30 pence after the home improvement retailer lowered its profit outlook for the second time in three months.
Casino Guichard Perrachon SA decreased 0.3% to €0.81 after the grocery retailer estimated 2023 losses in its core French business.
ThyssenKrupp AG rose 6.7% to €7.07 after the German industrial engineering and steel company estimated profit in the fiscal year 2024.
The company reported a net loss of €2 billion in the fiscal year 2023.
Fresenius SE increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
The German company also said it had resolved its legal dispute with the U.S. government.
Fed Not Confident Enough About Downward Inflation Path, Needs More Evidence
Barry Adams
21 Nov, 2023
New York City
Stock futures edged lower, and investors focused on retailers after the latest batch of earnings and reviewed the November meeting minutes released by the Federal Reserve.
Market indexes were little changed and lacked direction after the release of the minutes of the meeting ending on November 1.
Committee participants stressed that the current inflation "remained unacceptably high" and that further evidence would be required for them to be confident that the inflation was on a path to the 2% objective of the central bank.
A few participants noted that nominal wages are still rising at levels above the assessed levels, consistent with the sustained level of 2% inflation objective.
Investors looking for clues for the Federal Reserve to lower rates were disappointed, as most participants supported the continuation of restrictive policy and said that "the current stance of monetary policy was restrictive and was putting downward pressure on economic activity and inflation."
Most investors are anticipating the Federal Reserve holding rates for the third time in a row after the December meeting, providing a stable rate outlook all the way to the end of January 2024, when policymakers are scheduled to gather again.
The S&P 500 index and the Nasdaq advanced for five days in a row after two popular benchmark indexes advanced in Monday's trading.
Investors reacted to earnings from Zoom Video, Lowe's Companies, Best Buy, Abercrombie & Fitch, Dick's Sporting Goods, Kohl's, and Burlington Stores.
Later in the day, investors are awaiting results from Nvidia, Dell, and HP.
U.S. Existing Home Sales Dropped to a Thirteen-Year Low
U.S. existing home sales in October declined 4.1% from the previous month to a seasonally adjusted annualized rate of 3.79 million units, the National Association of Realtors reported Tuesday.
The sales dropped to the lowest level since August 2010 and dropped 14.6% from 44 million a year ago.
The lack of homes available for sale and record high mortgage rates in nearly two decades continue to weigh on the market.
Total housing inventory at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from 1.22 million a year ago.
The median existing-home price for all housing types in October was $391,800, an increase of 3.4% from $378,800 a year ago, and all four regions registered price increases.
Single-family home sales declined to a seasonally adjusted annual rate of 3.38 million in October, down 4.2% from 3.53 million in September and 14.6% from the previous year.
The median existing single-family home price was $396,100 in October, up 3.0% from October 2022.
U.S. Indexes and Yields
The S&P 500 index edged down 0.2% to 4,537.41, and the Nasdaq Composite decreased 0.7% to 14,184.93.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.42%, and 30-year Treasury bonds edged higher to 4.56%.
Crude oil decreased $0.29 to $77.53 a barrel, and natural gas prices fell 2 cent to $2.86 a thermal unit.
Gold increased $23.54 to $2,000.54 an ounce after the U.S. dollar eased on the expectations that the Federal Reserve will continue hold rates at its next meeting in December and may begin to lay ground work to lower rates in early 2024.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.
U.S. Stock Movers
Lowe's Companies dropped 5.3% to $193.59 after the home improvement retailer lowered its full-year sales and earnings outlook.
Net sales in the third quarter declined to $20.5 billion from $23.5 billion, net income soared to $1.8 billion from $154 million, and diluted earnings per share rose to $3.06 from 25 cents a year ago.
Earnings in the prior year included an impairment charge of $2.1 billion after the company sold its Canadian retail business.
During the quarter, the company repurchased approximately 7.3 million shares for $1.6 billion and paid $642 million in dividends.
Comparable sales in the quarter declined 7.4% after the pandemic-fueled demand for home improvement projects moderated.
The company lowered its full-year 52-week sales estimate to $86 billion from the previous estimate range of $87 billion to $89 billion.
Comparable sales are expected to decline 5% from the previously estimated range of 2% to 4%.
The company also lowered its adjusted diluted earnings per share estimate to $13.0 from the previous estimate between $13.20 and $13.60.
European Markets Hovered Near Flatline
European markets struggled to advance, and the euro hovered near the three-month high.
Benchmark indexes in Frankfurt, Paris, and London traded sideways ahead of comments from several European Central Bank officials and the release of minutes of the November meeting by the U.S. Federal Reserve.
Positive market sentiment over the last two weeks drove market indexes higher after interest rate hike worries receded, and the stable interest rate outlook also supported market enthusiasm.
Investors also welcomed the increase in vehicle sales in October, suggesting resilient consumer spending.
EU Passenger Vehicle Sales Expanded Fifteenth Consecutive Month
Vehicle sales in the European Union continued to expand as buyers returned to purchase electric vehicles and producers faced a few supply chain issues, the European Automobile Manufacturers Association reported today.
New vehicle sales rose for the fifteenth month in a row.
Passenger vehicle sales in October jumped 14.6% from a year ago to 855,484 units, and the market share of fully electric vehicles increased to 14.2% from 12% in the previous month.
Battery-powered electric vehicle sales for the ten months to October jumped to 14%, surpassing diesel vehicles for the first time.
Three of the four largest vehicle markets in the European Union posted double-digit gains.
Vehicle registration in France rose 21.9%, Italy gained 20%, and Spain advanced 18.1%.
UK Public Sector Borrowing Expands
The UK's public sector net borrowing, excluding banks, increased to £14.9 billion, compared to £10.5 billion a year ago, the Office for National Statistics reported Tuesday.
The net borrowing in October was the second largest in the month since record-keeping began in 1993.
The UK government's total spending increased 7.7% to £99.8 because higher family benefits offset the ending of energy subsidies.
In addition, the government's revenue increased by 3.3% to £85.2 billion, driven by a £2.7 billion increase in central government tax revenue.
Despite the increase in net borrowings in the last three months in a row, borrowing between April and October totaled £98.3 billion, £17 billion less than estimated by the Office for Budget Responsibility.
Europe Indexes and Yields
The DAX index increased 0.1% to 15,900.53, the CAC-40 index fell 0.3% to 7,229.45, and the FTSE 100 index fell 0.2% to 7,481.99.
The yield on 10-year German bonds increased to 2.592%; French bonds traded lower to 3.152%; the UK gilts increased to 4.11%; and Italian bonds inched lower to 4.32%.
The euro continued to rebound and approached the high last seen in late August after the U.S. rate hike worries receded.
The euro rebounded to $1.094, the British pound at $1.253, and the U.S. dollar at 88.38 Swiss cents.
Brent crude decreased $0.42 to $81.89 a barrel, and the Dutch TTF natural gas edged lower by €2.02 to €43.41 per MWh.
Europe Stock Movers
Sonova Holding AG increased 7.5% to CHF 251.40 despite the Swiss hearing aid maker lowering its annual core profit forecast.
CRH PLC increased 1.8% to 4,827.0 pence after the building materials solution provider agreed to acquire a cement plant and 20 ready concrete mix plants in Texas from Martin Marietta Materials, Inc. for $2.1 billion.
International Consolidated Airlines Group decreased 2.4% to 159.85 pence, despite the parent company of British Air reaffirming its annual outlook.
Cranswick plc increased 1.5% to 3,700.0 pence after the meat producer estimated its annual profit near the upper end of the estimated range by analysts.
Rheinmetall AG jumped 4% to €292.80 after the German defense contractor released its mid-term strategy.
Banca Monte dei Paschi di Siena SpA dropped 8.5% to €2.81 after the Italian government sold its 25% stake in the bailed-out bank.
U.S. Existing Home Sales Dropped to a Thirteen-Year Low
Brian Turner
21 Nov, 2023
New York City
U.S. existing home sales in October declined 4.1% from the previous month to a seasonally adjusted annualized rate of 3.79 million units, the National Association of Realtors reported Tuesday.
The sales dropped to the lowest level since August 2010 and dropped 14.6% from 44 million a year ago.
The lack of homes available for sale and record high mortgage rates in nearly two decades continue to weigh on the market.
Total housing inventory at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from 1.22 million a year ago.
The median existing-home price for all housing types in October was $391,800, an increase of 3.4% from $378,800 a year ago, and all four regions registered price increases.
Single-family home sales declined to a seasonally adjusted annual rate of 3.38 million in October, down 4.2% from 3.53 million in September and 14.6% from the previous year.
The median existing single-family home price was $396,100 in October, up 3.0% from October 2022.
U.S. Movers: Abercrombie & Fitch, Best Buy, Lowe's, Zoom Video
Scott Peters
21 Nov, 2023
New York City
Lowe's Companies dropped 5.3% to $193.59 after the home improvement retailer lowered its full-year sales and earnings outlook.
Net sales in the third quarter declined to $20.5 billion from $23.5 billion, net income soared to $1.8 billion from $154 million, and diluted earnings per share rose to $3.06 from 25 cents a year ago.
Earnings in the prior year included an impairment charge of $2.1 billion after the company sold its Canadian retail business.
During the quarter, the company repurchased approximately 7.3 million shares for $1.6 billion and paid $642 million in dividends.
Comparable sales in the quarter declined 7.4% after the pandemic-fueled demand for home improvement projects moderated.
The company lowered its full-year 52-week sales estimate to $86 billion from the previous estimate range of $87 billion to $89 billion.
Comparable sales are expected to decline 5% from the previously estimated range of 2% to 4%.
The company also lowered its adjusted diluted earnings per share estimate to $13.0 from the previous estimate between $13.20 and $13.60.
Zoom Video Communication declined 1.4% to $65.03 after the company released quarterly results.
Revenue in the fiscal third quarter ending in October increased 3.2% to $1.2 billion from $1.1 billion, net income advanced to $141.2 million from $48.2 million, and diluted earnings per share rose to 47 cents from 16 cents a year ago.
Enterprise subscribers continued to expand and rose 5% from a year ago to 219,700.
About 3,731 customers, an increase of 13.5% from a year ago, paid more than $100,000 in the trailing twelve months.
The company guided fiscal fourth quarter revenue between $1.125 billion and $1.130 billion, and non-GAAP diluted earnings per share are estimated between $1.13 and $1.15.
Zoom lifted its fiscal year 2024 revenue estimate to between $4.506 billion and $4.511 billion, and non-GAAP diluted earnings per share to between $4.93 and $4.95.
Best Buy Company declined 5.2% to $64.60 after the retailer lowered its annual and quarterly sales outlook.
Revenue in the third quarter declined to $9.7 billion from $10.6 billion, net income fell to $263 million from $277 million, and diluted earnings per share declined to $1.21 from $1.22 a year ago.
Domestic comparable sales declined 7.3% after falling 10.5% in the quarter a year ago, and the company said comparable sales tend to fall between 3% and 7%.
However, the retailer said non-GAAP operating costs in the quarter are likely to rise between 4.7% and 5.0%, matching the increase of 4.8% in the quarter a year ago.
Best Buy estimated fiscal year 2024 revenue for 53 weeks to range between $43.1 billion and $43.7 billion, lower than the previous estimate between $43.8 billion and $44.5 billion.
Comparable sales in the fiscal year are expected to fall between 6.0% and 7.5%, compared to the previous estimate of a decrease between 4.5% and 6.0%.
Abercrombie & Fitch declined 4.9% to 68.0 after the retailer reported quarterly results.
Net sales in the fiscal third quarter increased 20% to $1.1 billion from $880 million, and the retailer swung to a net income of $97.7 million from a loss of $718 million, and diluted earnings per share were $1.83 compared to a loss of 4 cents per share a year ago.
Comparable sales across both brands increased 16% after a 26% jump in Abercrombie & Fitch and a 7% rise in Hollister stores.
Sales in the fiscal fourth quarter are expected to rise in low double-digits from $1.2 billion a year ago, and the retailer said operating margins are estimated to improve from the previous year because of higher retail prices and lower freight costs.
The company lifted its 2023 sales growth outlook to between 12% and 14% from $3.7 billion in 2022, compared to the previous growth estimate of 10%.
Abercrombie revised its operating margin to be around 10%, up from the previous estimate between 8% and 9%, which includes the 250 basis point benefits of lower freight costs.
Stocks Rested After S&P 500 and Nasdaq Advanced Five Consecutive Days
Barry Adams
21 Nov, 2023
New York City
Stock futures edged lower, and investors awaited another batch of earnings and the Federal Reserve meeting minutes.
The S&P 500 index and the Nasdaq advanced for five days in a row after two popular benchmark indexes advanced in Monday's trading.
Investors reviewed earnings from Zoom Video and Lowe's Companies and are awaiting results from Nvidia, Dell, and HP later in the day.
The Federal Reserve is also scheduled to release the minutes of a two-day meeting ending November 1 at 2 p.m. ET.
Market participants are hoping to get more clues in the decision-making of policymakers' and looking for signs of the rate path ahead.
Most investors are anticipating the Federal Reserve holding rates for the third time in a row after the December meeting, providing a stable rate outlook all the way to the end of January 2024, when policymakers are scheduled to gather again.
U.S. Indexes and Yields
The S&P 500 index edged up 0.01% to 4,547.03, and the Nasdaq Composite increased 0.02% to 14,284.05.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.42%, and 30-year Treasury bonds edged higher to 4.56%.
Crude oil decreased $0.35 to $77.46 a barrel, and natural gas prices fell 0.1 cent to $2.88 a thermal unit.
Gold increased $8.88 to $1,987.08 an ounce after Treasury yields dropped further away from 2007-highs of 5% reached in October.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.
U.S. Stock Movers
Lowe's Companies dropped 5.3% to $193.59 after the home improvement retailer lowered its full-year sales and earnings outlook.
Net sales in the third quarter declined to $20.5 billion from $23.5 billion, net income soared to $1.8 billion from $154 million, and diluted earnings per share rose to $3.06 from 25 cents a year ago.
Earnings in the prior year included an impairment charge of $2.1 billion after the company sold its Canadian retail business.
During the quarter, the company repurchased approximately 7.3 million shares for $1.6 billion and paid $642 million in dividends.
Comparable sales in the quarter declined 7.4% after the pandemic-fueled demand for home improvement projects moderated.
The company lowered its full-year 52-week sales estimate to $86 billion from the previous estimate range of $87 billion to $89 billion.
Comparable sales are expected to decline 5% from the previously estimated range of 2% to 4%.
The company also lowered its adjusted diluted earnings per share estimate to $13.0 from the previous estimate between $13.20 and $13.60.
Europe Movers: BMPS, CRH, Cranswick, ICA Group, Rheinmetall, Sonova
Inga Muller
21 Nov, 2023
Frankfurt
Benchmark indexes across Europe lacked direction, and the euro and the Swiss franc hovered near a three-month high.
The DAX index increased 0.1% to 15,915.55, the CAC-40 index fell 0.3% to 7,226.51, and the FTSE 100 index fell 0.5% to 7,461.70.
The yield on 10-year German bonds increased to 2.592%; French bonds traded lower to 3.152%; the UK gilts increased to 4.11%; and Italian bonds inched lower to 4.32%.
Sonova Holding AG increased 7.5% to CHF 251.40 despite the Swiss hearing aid maker lowering its annual core profit forecast.
CRH PLC increased 1.8% to 4,827.0 pence after the building materials solution provider agreed to acquire a cement plant and 20 ready concrete mix plants in Texas from Martin Marietta Materials, Inc. for $2.1 billion.
International Consolidated Airlines Group decreased 2.4% to 159.85 pence, despite the parent company of British Air reaffirming its annual outlook.
Cranswick plc increased 1.5% to 3,700.0 pence after the meat producer estimated its annual profit near the upper end of the estimated range by analysts.
Rheinmetall AG jumped 4% to €292.80 after the German defense contractor released its mid-term strategy.
Banca Monte dei Paschi di Siena SpA dropped 8.5% to €2.81 after the Italian government sold its 25% stake in the bailed-out bank.