Market Update
Europe Movers: Glencore, HSBC, Rio Tinto
Inga Muller
21 Feb, 2024
Frankfurt
Benchmark indexes in Paris and Frankfurt traded higher, but they declined in London as investors awaited the release of the latest policy meeting minutes from the European Central Bank and the Federal Reserve.
The DAX index increased by 0.2% to 17,110.15, the CAC-40 index rose 0.2% to 7,812.65, and the FTSE 100 index inched lower by 0.9% to 7,651.08.
The yield on 10-year German bonds edged up to 2.39%; French bonds inched higher to 2.87%; the UK gilts edged higher to 4.07%; and Italian bonds inched higher to 3.87%.
HSBC Holdings declined 7.6% to 594.40 pence, despite the UK-based and China-focused global bank reporting a sharp jump in profit and announcing a stock buyback program.
The bank reported a 56% surge in its annual profit in 2023 to $22.43 billion from $14.83 billion, and income per share increased to $1.15 from 72 cents a year ago, respectively.
Revenue in 2023 rose 30% to $66.1 billion, driven by a $5.4 billion increase in net interest income and a $10.0 billion increase in non-interest income.
The net interest margin increased by 24 basis points to 1.66%, with $3.4 billion in expected credit losses and other impairment charges.
The bank announced a new $2 billion stock repurchase plan and hiked its full-year dividend to 61 U.S. cents from 32 U.S. cents a year ago.
Revenue in the fourth quarter declined 11% to $13 billion after the company reclassified its retail operation in France as "held of sale," and after-tax profit dropped by $4 billion to $0.2 billion.
The bank took an impairment charge of $3.0 billion related to its Shanghai, China-based BoCom.
Rio Tinto declined 1.8% to 5,176.0 pence after the Australia-focused mining company reported a decline in its profit.
Consolidated revenue in 2023 declined to $54.0 billion from $55.6 billion, net income dropped to $10.1 billion from $12.4 billion, and diluted earnings per share fell to $6.16 from $7.60 a year ago.
Iron ore segment revenue increased to $32.2 billion from $30.9 billion, and aluminum segment revenue edged higher to $12.3 billion from $14.1 billion a year ago, respectively.
Glencore dropped 3.7% to 377.70 pence after the mining company reported a sharp decline in its annual profit.
Revenue in 2023 declined 15% to $217.8 billion from $255.98 billion, net income attributable to shareholders plunged 75% to $4.3 billion from $17.3 billion, and basic earnings per share dropped 74% to 34 cents from $1.33 a year ago.
Earnings in 2023 declined sharply, reflecting impairment charges linked to the company's zinc and cobalt asset revaluations and sharply lower coal prices.
The company proposed a cash dividend of 13 cents per share.
UK Registers Record Budget Surplus In January, HSBC Fourth-Quarter Profit Plunges
Bridgette Randall
21 Feb, 2024
Frankfurt
European markets traded mixed as investors awaited the release of the latest policy meeting minutes from the European Central Bank and the Federal Reserve.
Benchmark indexes in Paris and Frankfurt advanced but eased in London.
Banks were in focus after HSBC reported a less-than-expected increase in its annual earnings in 2023 and Fresenius Medical Care reported flat fiscal revenue.
In Asia, market indexes closed higher after China-controlled funds stepped up intervention and bought Chinese stocks to stabilize financial markets, a day after the People's Bank of China lowered its 5-year loan prime rate by 25 basis points, the largest rate cut since the loan was introduced in 2019.
In overnight trading, benchmark indexes in the U.S. declined ahead of the release of the Federal Reserve's policy meeting minutes later today.
Moreover, tech stocks were under pressure ahead of the release of quarterly earnings from Nvidia later in the day.
UK Registers Surplus In January
The UK government registered a budget surplus in January, the largest on record for the month since record-keeping began in 1993, said the Office for National Statistics.
Central government revenue increased £3.9 billion to £111.4 billion, while expenditure increased £1.6 billion to £102.6 billion.
The budget balance usually logs surpluses in January because of self-assessed tax receipts in the month.
Public sector net borrowing, excluding public sector banks, swung to a surplus of £16.7 billion in January, higher than the £9.2 billion surplus in the month a year ago.
In the ten-month period of the current fiscal year, UK government borrowing was £96.6 billion, £3.1 billion less than in the corresponding period a year ago.
UK public sector net debt at the end of January was provisionally estimated at 96.5% of gross domestic product.
Europe Indexes and Yields
The DAX index increased by 0.2% to 17,110.15, the CAC-40 index rose 0.2% to 7,812.65, and the FTSE 100 index inched lower by 0.9% to 7,651.08.
The yield on 10-year German bonds edged up to 2.39%; French bonds inched higher to 2.87%; the UK gilts edged higher to 4.07%; and Italian bonds inched higher to 3.87%.
The euro edged higher to $1.08, the British pound inched higher to $1.261, and the U.S. dollar gained to 88.07 Swiss cents.
Brent crude decreased $0.22 to $82.09 a barrel, and the Dutch TTF natural gas declined by €0.46 to €23.71 per MWh.
Europe Stock Movers
HSBC Holdings declined 7.6% to 594.40 pence, despite the UK-based and China-focused global bank reporting a sharp jump in profit and announcing a stock buyback program.
The bank reported a 56% surge in its annual profit in 2023 to $22.43 billion from $14.83 billion, and income per share increased to $1.15 from 72 cents a year ago, respectively.
Revenue in 2023 rose 30% to $66.1 billion, driven by a $5.4 billion increase in net interest income and a $10.0 billion increase in non-interest income.
Net interest margin increased by 24 basis points to 1.66%, and expected credit losses and other impairment charges were $3.4 billion.
The bank announced a new $2 billion stock repurchase plan and hiked its full-year dividend to 61 U.S. cents from 32 U.S. cents a year ago.
Revenue in the fourth quarter declined 11% to $13 billion after the company reclassified its retail operation in France as "held of sale" and after-tax profit dropped by $4 billion to $0.2 billion.
The bank took an impairment charge of $3.0 billion related to its associate Shanghai, China based BoCom.
Capital One Discover Merger Faces High Regulatory Hurdles, Walmart to Buy Vizio
Scott Peters
21 Feb, 2024
New York City
Capital One Financial decreased 3% to $133.0 after the company agreed to acquire Discover Financial in an all-stock deal for $35.3 billion.
The deal was announced late Monday, and after the merger, Capital One shareholders would control 60% and Discover Financial shareholders would control 40% of the combined company.
The deal would create the largest U.S. credit card issuer with an estimated $250 billion in card balances, but with the merger, Capital One will have access to a critical payment processing network.
The merger of two companies is expected to find favor among lawmakers, as many in the U.S. Congress have labeled Visa and Mastercard, a duopoly dominating credit and debit card payment processing.
The transaction is expected to deliver a return on invested capital of 16% in 2027, with an internal rate of return in excess of 20%, and the deal is expected to be more than 15% accretive to adjusted non-GAAP earnings per share in 2027, Capital One said in a note to investors.
Despite the merger of two large credit card issuers, cost and network synergies are not likely to emerge for another three years.
The transaction is expected to generate expense synergies of $1.5 billion in 2027, driven by 26% of Discover operating expenses, plus 10% of Discover marketing expenses, and by common business functions partially offset by targeted investments in the Discover network.
The acquisition is expected to generate network synergies of $1.2 billion in 2027, driven by adding Capital One debit purchase volume and selected credit card purchase volume to the Discover network.
The complex regulatory hurdles were not overlooked by the market, and Discover Financial added 12.2% to $124.42, far lower than the implied merger price of $140 a share.
In a second deal announced this week, Walmart said it plans to acquire smart TV maker Vizio for $2.3 billion and boost its advertising business through the ad-free streaming content on its television sets.
Vizio jumped 16% to $11.06 and extended its two-day gain to over 40% when the news of a possible deal emerged.
China Steps Up Market Intervention, Japan Trade Gap Shrinks In January
Arjun Pandit
20 Feb, 2024
Mumbai
In Asia, market indexes lacked direction, but benchmark indexes soared more than 2% in Shanghai and Hong Kong after bargain hunters snapped up tech and healthcare stocks.
In overnight trading, tech stocks were under pressure in New York ahead of the release of Nvidia earnings.
But markets in mainland China and Hong Kong soared after government-controlled funds stepped up buying to stabilize financial markets.
The Nikkei 225 decreased 0.3% to 38,260.93, and the Topix index fell 0.2% to 2,626.49 following the weakness in tech stocks.
A private survey conducted by Reuters Tankan showed a sharp decline in business confidence in February.
The confidence indicator dropped to -1 from +6 in January, highlighting interest rate uncertainties and persistent weakness in the yen.
The private survey is considered a leading indicator of the Bank of Japan's official survey.
Japan Trade Gap Shrinks after Exports Rebounded
Japan's exports surged 11.9% to 7,332.65 billion yen, the fastest increase in exports since November 2022, the Ministry of Finance reported Wednesday.
Exports soared on the back of higher shipments of transportation equipment, passenger cars, and semiconductor and electrical machinery and equipment.
The trade deficit narrowed to 1,758.3 billion yen from 3,506 billion yen after imports declined 9.6% to 9,090 billion yen from a year ago, respectively.
China Intervention Lifts Shanghai and Hong Kong Indexes
Benchmark indexes in Shanghai and Hong Kong advanced to multi-week highs following the largest cut in the 5-year loan prime rate of 25 basis points since the introduction of the rate in 2019.
Moreover, mainland-controlled funds stepped up investing in stocks, as reflected in the rising assets of exchange-traded funds, indicating intervention by the government.
The CSI 300 index increased 1.8% to 3,472.68, and the Hang Seng index soared 3% to 16,735.92.
The Hang Seng index jumped to a seven-week high after property developers rose on speculation that the government is set to announce additional measures to facilitate property demand and ease the tax burden.
Longfor Group, China Resources Land, China Vanke, Henderson Land, New World Development, Wharf REIC, and Sun Hung Kai Properties advanced between 4% and 6%.
HSBC Holdings increased 1.6% to HK$63.30 after the bank reported a 56% surge in its annual profit in 2023 to $22.43 billion from $14.83 billion, and income per share increased to $1.15.
The bank announced a new $2 billion stock repurchase plan and hiked its full-year dividend to 61 U.S. cents from 32 U.S. cents a year ago.
India Stocks Inch Higher Amid Positive Sentiment
Stocks in Mumbai turned up in early trading, and bond yields decreased as investors reviewed the latest report from the Reserve Bank of India.
The state-of-the-economy report released by the RBI highlighted favorable macroeconomic conditions but urged Indian private sector companies to take advantage of stable interest rates.
The report urged private companies to increase capital expenditure and take advantage of the central government's plan to reduce its borrowing in the current financial year.
The report also stressed that net interest rate margins for banks are likely to shrink in the coming months as the recent interest rate hikes work through the financial system and force banks to increase deposit and certificate of deposit rates.
But the report highlighted rising unsecured loans issued by banks to nonbank finance and credit card companies, despite the recent hike in risk capital weights by the central bank.
The Sensex index increased 15.22 points to 73,072.62, and the Nifty index rose 6.55 points to 22,203.50.
On the Mumbai stock exchange, 177 stocks traded at their 52-week highs and 4 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds decreased to 7.06%, and the Indian rupee strengthened to ₹82.88 against the U.S. dollar.
Devyani International increased 0.6% to ₹166.20, and Yum Restaurant India plans to sell a 4.4% stake in the company in a block deal with a floor price of 153.50 per share.
Hindalco Industries gained 0.05% to ₹512.0, and the group company's U.S.-based subsidiary Novelis filed with the U.S. financial regulator to list its stock in New York.
ABB India gained 0.9% to ₹4,528.85 after the company reported positive quarterly results.
Revenue in the December quarter rose 35% to ₹2,757 crore, and after-tax income advanced 13% to ₹345 crore from a year ago, respectively.
India Movers: ABB India, Devyani International, Hindalco, TVS Supply Chain, Union Bank of India, Zee Entertainment
Arun Goswami
20 Feb, 2024
Mumbai
Stocks in Mumbai advanced in early trading, and bond yields held firm as investors await the release of the latest monetary policy meeting minutes later in the week.
The Sensex index increased 15.22 points to 73,072.62, and the Nifty index rose 6.55 points to 22,203.50.
On the Mumbai stock exchange, 177 stocks traded at their 52-week highs and 4 stocks traded at their 52-week lows.
Devyani International increased 0.6% to ₹166.20, and Yum Restaurant India plans to sell a 4.4% stake in the company in a block deal with a floor price of 153.50 per share.
Zee Entertainment rose 6.6% to ₹190.40 after the company was said to revive its deal with Sony Group.
A new report, without citing sources, suggested that the company promoters may have diverted as much as ₹2,000 crore from the company, about ten times more than previously estimated, according to a revised estimate by the SEBI investigation.
Hindalco Industries gained 0.05% to ₹512.0, and the group company's U.S.-based subsidiary Novelis flied to list its stock in New York.
TVS Supply Chain Solutions increased 3.6% to ₹197.0 after the company signed a contract extension with Rolls Royce for a parts distribution center in Singapore until 2029.
Union Bank of India increased 0.03% to ₹141.20, and the company's board approved a plan to raise ₹3,000 crore.
ABB India gained 0.9% to ₹4,528.85 after the company reported positive quarterly results.
Revenue in the December quarter rose 35% to ₹2,757 crore, and after-tax income advanced 13% to ₹345 crore from a year ago, respectively.
Investor Sentiment Turns Cautious Ahead of Nvidia Earnings
Barry Adams
20 Feb, 2024
New York City
Stocks on Wall Street declined as investors returned from a three-day weekend and reviewed the latest earnings reports.
The S&P 500 and the Nasdaq Composite declined 0.6% and 1.1% respectively after Nvidia plunged 6% ahead of its quarterly earning report tomorrow.
Valuation worries dragged down tech stocks and Apple, Microsoft, Amazon, Netflix, and Taiwan Semiconductor, and AMD dropped between 1.5% and 6%.
Treasury yields turned lower after investors reassessed the interest rate path after two reports suggested hot inflation and a decline in retail sales in January.
The market mood has been positive despite the ongoing interest rate uncertainties, but investors are getting more comfortable with elevated inflation and higher interest rates as long as corporate earnings are growing.
U.S. indexes and yields
The S&P 500 index decreased 0.6% to 4,974.98, and the Nasdaq Composite fell 1.1% to 15,587.58.
The yield on 2-year Treasury notes decreased to 4.60%, 10-year Treasury notes inched down to 4.27%, and 30-year Treasury bonds edged down to 4.45%.
WTI crude oil decreased $1.30 to $77.15 a barrel, and natural gas prices increased 3 cents to $1.59 a thermal unit and rebounded from a low last seen in September 2020.
Gold increased by $10.04 to $2,027.60 an ounce after the U.S. dollar gained in international trading.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.08.
U.S. Stock Movers
Walmart increased 2.9% to $175.36 after the general merchandise and grocery retailer reported better-than-expected revenue and earnings in the fourth quarter.
Separately, Walmart said it plans to acquire smart TV maker Vizio for $2.3 billion and boost its advertising business through the ad-free streaming content on its television sets.
Vizio jumped 16% to $11.06 and extended its two-day gain to over 40% when the news of a possible deal emerged.
Home Depot decreased 2.6% to $352.70 after the specialty retailer reported better-than-expected revenue and earnings in the fourth quarter despite consumers retrenching from larger do-it-yourself projects.
Capital One Financial decreased 3% to $133.0 after the company agreed to acquire Discover Financial in an all-stock deal for $35.3 billion.
The deal was announced late Monday, and after the merger, Capital One shareholders would control 60% and Discover Financial shareholders would control 40% of the combined company.
European Markets Traded Sideways Ahead of Policy Meeting Minutes
European markets traded mixed as investors overlooked interest rate uncertainties and shifted their focus to another batch of earnings.
Benchmark indexes in Germany edged lower, but in Paris and London they advanced.
Market indexes in Paris and Frankfurt hovered near record highs, but anxious investors awaited the release of the latest policy meeting minutes.
Eurozone Current Account Swings to Surplus in 2023
The Eurozone current account surplus rose to a six-month high in December, the European Central Bank reported Tuesday.
The current account surplus rose to €32 billion from €22 billion in the previous month, the highest level since last June.
The goods surplus in the month rose to €35 billion from €32 billion, and the service surplus eased to €16 billion from €17 billion a year ago.
The primary income shortfall in the month declined to €5 billion from €13 billion, and the secondary income shortfall decreased to €13 billion from €14 billion a year ago.
In the full-year 2023, the current account surplus increased to €260 billion, or 1.8% of the eurozone GDP, from a deficit of €82 billion, or 0.6% of GDP, in 2022.
EU Passenger Car Registration Jumped In January
Passenger car registration in the European Union rose 12.1% from a year ago in January to 851,700 units, the European Automobile Manufacturers Association reported Tuesday.
Despite higher interest rates and rising costs of living, buyers returned to acquire new vehicles.
Among major markets in the region, passenger car registrations in Germany soared 19.1%, followed by Italy with an increase of 10.6%, France 9.2%, and Spain 7.3%.
Battery electric vehicle sales rebounded 28.9% to 92,700 units, comprising 10.9% of all registrations and rebounding from a 16.9% decline in December.
In January, the petrol car market expanded by 4%, driven by an increase of 26.7% in Italy and a 16.9% rise in Germany.
Despite maintaining its lead with 35.2% of the market in January, the share of gasoline cars decreased from 37.9% in the same month in 2023.
Diesel car registration continued to shrink as buyers opted for hybrids or other models of passenger cars.
The EU diesel car market shrank by 4.9% in January, with a decline of 23.4% in France, 10.2% in Spain, and 8.7% in Italy.
However, Germany diverged from this trend with an increase of 4.3%.
In January, diesel car registrations were 114,415 units, shrinking its market share to 13.4% from 15.8% in the month a year ago.
Europe Indexes and Yields
The DAX index decreased by 0.1% to 17,075.65, the CAC-40 index rose 0.4% to 7,802.45, and the FTSE 100 index inched lower by 0.1% to 7,719.21.
The yield on 10-year German bonds edged down to 2.37%; French bonds inched higher to 2.84%; the UK gilts edged lower to 4.05%; and Italian bonds inched higher to 3.86%.
The euro edged higher to $1.08, the British pound inched higher to $1.263, and the U.S. dollar gained to 88.06 Swiss cents.
Brent crude decreased $1.22 to $82.27 a barrel, and the Dutch TTF natural gas increased by €0.24 to €23.94 per MWh.
Europe Stock Movers
Barclays PLC increased 5.7% to 157.50 pence after the UK-based bank reported weak quarterly results.
Total revenue in the fourth quarter declined 3% to £5.6 billion from £5.8 billion, and net income attributable to shareholders swung to a loss of £111 million from a profit of £1.04 billion a year ago.
The financial services company also said it plans to return £10 billion to shareholders between 2024 and 2026 through stock buybacks and dividends.
Fresenius Medical Care decreased 0.3% to €26.51 despite the Germany dialysis firm reporting stronger-than-expected fourth quarter results.
Revenue in the fourth quarter was flat at €4.98 billion, net income advanced to €188 million from €139 million, and basic earnings per share jumped 35% to 64 cents from 47 cents a year ago.
The company estimated 2024 revenue growth at "a low- to mid-single-digit percent rate" and operating income at a "mid- to high-teen percent rate" compared to a year ago, respectively.
China's Rate-cut Fails to Lift Market Mood In Asia
Asian markets traded down amid global interest rate worries and persistent weakness in Chinese markets amid growing tensions with the U.S.
Market indexes in Tokyo, Shanghai, Hong Kong, Mumbai, and Seoul traded down after U.S. Treasury yields edged higher.
Moreover, the latest rate cut by China failed to support market enthusiasm because investors are looking for stronger measures and long-term policy measures to support the property market and lift consumer sentiment.
European markets closed down in lackluster trading in Monday's trading, and the U.S. financial markets were closed to celebrate President's Day.
Market sentiment in Asian markets was cautious after U.S. Treasury yields spiked higher.
Tokyo Stocks Drifted Lower Amid Weakness In Banks and Tech Stocks
The Nikkei index decreased 0.1% to 38,413.66, and the benchmark index traded just below a 34-year high as investors reassessed the possibility of a near-term rate cut.
The Bank of Japan has been sending mixed signals, but most investors are hoping that the central bank is ready to end its ultra-loose monetary policy after the end of wage negotiations at large corporations over the next two months.
Tech stocks were among the leading gainers, and Screen Holdings, Advantest, and Tokyo Electron gained between 0.5% and 4.0%.
Banks were in focus for the second week in a row after investors scaled back bets on the end of ultra-loose monetary policy.
Banks are likely to be big winners as interest rates rise, lifting the net interest rate margin.
Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial decreased between 0.5% and 1.5%.
Three leading automobile exporters, Honda Motor, Toyota Motor, and Nissan, traded mixed after the yen rebounded to above 150 against the U.S. dollar.
Fanuc and Yaskawa Electric jumped more than 3%.
China Lowered Rates to Spur Property Market
China lowered its interest rate for the first time since June 2023, hoping that the lower rate may revive the moribund property market.
The People's Bank of China lowered its 5-year loan prime rate by 25 basis points to 3.95%, the largest cut since the rate was introduced in 2019.
Just a few days ago, China held its one-year loan prime rate at 3.45%, and both one-year and 5-year rates are at record low levels.
The CSI 300 index decreased 0.4% to 3,389.40, and the Hang Seng index dropped 0.1% to 16,134.47.
China also offered about 160 billion yuan, or $22.2 billion, to local developers and supported the completion of housing projects, the state-controlled broadcaster CCTV reported Tuesday.
Despite the record low interest rates, property market confidence remains weak due to worries about a lack of large stimulus from the government and long-term measures to revive market confidence.
Longfor Group rose HK$9.03, China Vanke advanced 0.7% to $6.17, and China Resources Land decreased 2.8% to HK$24.15.
Electric vehicle makers were among the leading decliners after BYD lowered prices on plug-in hybrid cars by 20% for its new models.
The lower price by the industry leader is likely to spark another round of cuts by other players.
BYD declined 3.8% to HK$179.30, Li Auto fell 1.4% to HK$123.0, and Geely Automobile Holdings dropped 2.2% to HK$7.92.
China's FDI Drops to a Three Decade Low
Foreign direct investment in China declined for the second year in a row, the State Administration of Foreign Exchange reported Sunday.
Rising tensions with the U.S. and the arbitrary spying charges on foreign companies by Chinese authorities have kept many from investing in China. Foreign direct investment dropped 80% from the previous year to $33 billion in 2023.
The foreign direct investment declined for the second year and dropped to 10% of $344 in 2021.
Net foreign direct investment, which includes outflow, has dropped to the level seen in the early nineties as foreign investors stay away from the world's second-largest economy after the government prioritized national security and raised uncertainties about the anti-spying laws.
India Stocks Struggled to Advance After Mixed Earnings Season
Stocks in Mumbai traded lower, the bond yield edged higher, and the Indian rupee held firm in Tuesday's trading.
The Sensex and the Nifty indexes traded down as investors reviewed the last batch of fiscal third quarter earnings results over the last week.
The Sensex index decreased 73.10 points to 72,634.99, and the Nifty index fell 44.55 points to 22,077.70.
On the Mumbai stock exchange, 178 stocks traded at their 52-week highs and 2 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds increased to 7.10%, and the Indian rupee strengthened to ₹83.10 against the U.S. dollar.
U.S. Movers: Capital One Financial, Discover Financial, Home Depot, Walmart, Vizio
Scott Peters
20 Feb, 2024
New York City
Walmart increased 2.9% to $175.36 after the general merchandise and grocery retailer reported better-than-expected revenue and earnings in the fourth quarter.
Total revenues in the fourth quarter increased 5.7% to $173.4 billion from $164.0 billion, consolidated net income declined to $5.5 billion from $6.3 billion, and diluted earnings per share decreased to $2.03 from $2.32 a year ago.
For the full fiscal year 2023 ending in January, revenue rose 6% to $648.1 billion from $611.3 billion, net income advanced 32.8% to $15.5 billion from $11.7 billion, and diluted earnings per share rose 32.8% to $5.76 from $4.29 a year ago.
The company guided fiscal first quarter sales to increase between 4% and 5% and adjusted earnings per share before the split to range between $1.48 and $1.56 or post-split between 49 cents and 52 cents.
Walmart stock is set to be split 3-to-1 on February 23; after the close, the stock split will be awarded to shareholders on record on February 22.
Separately, Walmart said it plans to acquire smart TV maker Vizio for $2.3 billion and boost its advertising business through the ad-free streaming content on its television sets.
Vizio jumped 16% to $11.06 and extended its two-day gain to over 40% when the news of a possible deal emerged.
Home Depot decreased 2.6% to $352.70 after the specialty retailer reported better-than-expected revenue and earnings in the fourth quarter despite consumers retrenching from larger do-it-yourself projects.
Revenue in the fiscal fourth quarter ending in January declined 2.9% to $34.8 billion, net income dropped 16.7% to $2.8 billion from $3.4 billion, and diluted earnings per share fell 14.5% to $2.82 from $3.30 a year ago.
Total sales in the fiscal year 2023 decreased by 3% to $152.7 billion, comparable sales fell by 3.2%, and comparable sales in the U.S. decreased by 3.5%.
Net earnings in the year decreased 11.5% to $15.1 billion from $171. billion, and diluted earnings per share fell 9.5% to $15.11 from $16.69 per diluted share in fiscal 2022.
The company's board of directors approved a 7.7% increase in its quarterly dividend to $2.25, payable on March 21 to shareholders on record on March 7.
The company estimated total sales in fiscal 2024 to increase by 1%, including the 53rd week, but comparable sales declined by 1.0% in the 52-week period.
The retailer estimated diluted earnings per share to increase by 1% for the 53-week period.
Capital One Financial decreased 3% to $133.0 after the company agreed to acquire Discover Financial in an all-stock deal for $35.3 billion.
The deal was announced late Monday, and after the merger, Capital One shareholders would control 60% and Discover Financial shareholders would control 40% of the combined company.
Treasury Yields Ease and Stocks Meander On Merger Monday
Barry Adams
20 Feb, 2024
New York City
Stocks on Wall Street edged slightly lower in early trading as investors returned from a three-day weekend and reviewed the latest earnings reports.
Treasury yields turned lower after investors reassessed the interest rate path after two reports suggested hot inflation and a decline in retail sales in January.
The market mood has been positive despite the ongoing interest rate uncertainties, but increasingly investors are getting more comfortable with elevated inflation and higher interest rates as long as corporate earnings are rising.
The S&P 500 index has been hovering near a record high, and the Nasdaq Composite is only 1% away from its record high in November 2021.
U.S. indexes and yields
The S&P 500 index decreased 0.4% to 5,001.25, and the Nasdaq Composite fell 0.5% to 15,695.04.
The yield on 2-year Treasury notes decreased to 4.60%, 10-year Treasury notes inched down to 4.27%, and 30-year Treasury bonds edged down to 4.45%.
WTI crude oil decreased $0.93 to $77.55 a barrel, and natural gas prices increased 3 cents to $1.59 a thermal unit and rebounded from a low last seen in September 2020.
Gold increased by $10.04 to $2,027.60 an ounce after the U.S. dollar gained in international trading.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.08.
U.S. Stock Movers
Walmart increased 2.9% to $175.36 after the general merchandise and grocery retailer reported better-than-expected revenue and earnings in the fourth quarter.
Separately, Walmart said it plans to acquire smart TV maker Vizio for $2.3 billion and boost its advertising business through the ad-free streaming content on its television sets.
Vizio jumped 16% to $11.06 and extended its two-day gain to over 40% when the news of a possible deal emerged.
Home Depot decreased 2.6% to $352.70 after the specialty retailer reported better-than-expected revenue and earnings in the fourth quarter despite consumers retrenching from larger do-it-yourself projects.
Capital One Financial decreased 3% to $133.0 after the company agreed to acquire Discover Financial in an all-stock deal for $35.3 billion.
The deal was announced late Monday, and after the merger, Capital One shareholders would control 60% and Discover Financial shareholders would control 40% of the combined company.
Europe Movers: Barclays, Fresenius Medical Care, InterContinental Hotels
Inga Muller
20 Feb, 2024
Frankfurt
European markets traded sideways, and investors reacted to earnings from domestic corporations.
In addition, EU passenger car sales rebounded in January, and the current account swung to surplus in 2023 from a deficit in 2022.
The DAX index decreased by 0.2% to 17,057.49, the CAC-40 index rose 0.3% to 7,792.92, and the FTSE 100 index inched higher by 0.04% to 7,731.61.
The yield on 10-year German bonds edged down to 2.37%; French bonds inched higher to 2.84%; the UK gilts edged lower to 4.05%; and Italian bonds inched higher to 3.86%.
Barclays PLC increased 5.7% to 157.50 pence after the UK-based bank reported weak quarterly results.
Total revenue in the fourth quarter declined 3% to £5.6 billion from £5.8 billion, and net income attributable to shareholders swung to a loss of £111 million from a profit of £1.04 billion a year ago.
The financial services company also said it plans to return £10 billion to shareholders between 2024 and 2026 through stock buybacks and dividends.
Fresenius Medical Care decreased 0.3% to €26.51 despite the Germany dialysis firm reporting stronger-than-expected fourth quarter results.
Revenue in the fourth quarter was flat at €4.98 billion, net income advanced to €188 million from €139 million, and basic earnings per share jumped 35% to 64 cents from 47 cents a year ago.
The company estimated 2024 revenue growth at "a low- to mid-single-digit percent rate" and operating income at a "mid- to high-teen percent rate" compared to a year ago, respectively.
InterContinental Hotels Group rose 3.8% to 8,216.0 pence after the company reported strong financial results.
Revenue in 2023 increased 18% to $4.6 billion from $3.9 billion, net income soared 99.5% to $750 million from $356 million, and basic earnings per share advanced 114% to $4.43 from $2.07 a year ago.
In 2023, the company completed a stock buyback of $750 million and paid $245 million in dividends.
The hospitality group also announced a new stock repurchase program of $800 million and plans to return to shareholders about $1 billion, including dividends, in 2024.
The company increased its final dividend by 10% to $1.04, increasing its total dividend in 2023 to $1.523 per share.
Eurozone Current Account Swings to Surplus, EU Passenger Car Sales Rebound
Bridgette Randall
20 Feb, 2024
New York City
European markets traded mixed as investors overlooked interest rate uncertainties and shifted their focus to another batch of earnings.
Benchmark indexes in Germany edged lower, but in Paris and London they advanced.
Market indexes in Paris and Frankfurt hovered near record highs, but anxious investors awaited the release of the latest policy meeting minutes.
Eurozone Current Account Swings to Surplus in 2023
The Eurozone current account surplus rose to a six-month high in December, the European Central Bank reported Tuesday.
The current account surplus rose to €32 billion from €22 billion in the previous month, the highest level since last June.
The goods surplus in the month rose to €35 billion from €32 billion, and the service surplus eased to €16 billion from €17 billion a year ago.
The primary income shortfall in the month declined to €5 billion from €13 billion, and the secondary income shortfall decreased to €13 billion from €14 billion a year ago.
In the full-year 2023, the current account surplus increased to €260 billion, or 1.8% of the eurozone GDP, from a deficit of €82 billion, or 0.6% of GDP, in 2022.
EU Passenger Car Registration Jumped In January
Passenger car registration in the European Union rose 12.1% from a year ago in January to 851,700 units, the European Automobile Manufacturers Association reported Tuesday.
Despite higher interest rates and rising costs of living, buyers returned to acquire new vehicles.
Among major markets in the region, passenger car registrations in Germany soared 19.1%, followed by Italy with an increase of 10.6%, France 9.2%, and Spain 7.3%.
Battery electric vehicle sales rebounded 28.9% to 92,700 units, comprising 10.9% of all registrations and rebounding from a 16.9% decline in December.
In January, the petrol car market expanded by 4%, driven by an increase of 26.7% in Italy and a 16.9% rise in Germany.
Despite maintaining its lead with 35.2% of the market in January, the share of gasoline cars decreased from 37.9% in the same month in 2023.
Diesel car registration continued to shrink as buyers opted for hybrids or other models of passenger cars.
The EU diesel car market shrank by 4.9% in January, with a decline of 23.4% in France, 10.2% in Spain, and 8.7% in Italy.
However, Germany diverged from this trend with an increase of 4.3%.
In January, diesel car registrations were 114,415 units, shrinking its market share to 13.4% from 15.8% in the month a year ago.
Europe Indexes and Yields
The DAX index decreased by 0.2% to 17,057.49, the CAC-40 index rose 0.3% to 7,792.92, and the FTSE 100 index inched higher by 0.04% to 7,731.61.
The yield on 10-year German bonds edged down to 2.37%; French bonds inched higher to 2.84%; the UK gilts edged lower to 4.05%; and Italian bonds inched higher to 3.86%.
The euro edged higher to $1.08, the British pound inched higher to $1.263, and the U.S. dollar gained to 88.06 Swiss cents.
Brent crude decreased $0.43 to $83.09 a barrel, and the Dutch TTF natural gas increased by €0.19 to €23.89 per MWh.
Europe Stock Movers
Barclays PLC increased 5.7% to 157.50 pence after the UK-based bank reported weak quarterly results.
Total revenue in the fourth quarter declined 3% to £5.6 billion from £5.8 billion, and net income attributable to shareholders swung to a loss of £111 million from a profit of £1.04 billion a year ago.
The financial services company also said it plans to return £10 billion to shareholders between 2024 and 2026 through stock buybacks and dividends.
Fresenius Medical Care decreased 0.3% to €26.51 despite the Germany dialysis firm reporting stronger-than-expected fourth quarter results.
Revenue in the fourth quarter was flat at €4.98 billion, net income advanced to €188 million from €139 million, and basic earnings per share jumped 35% to 64 cents from 47 cents a year ago.
The company estimated 2024 revenue growth at "a low- to mid-single-digit percent rate" and operating income at a "mid- to high-teen percent rate" compared to a year ago, respectively.
China Cuts 5-year Loan Rate to Revive Property Market, Asian Markets Drift Lower
Arjun Pandit
20 Feb, 2024
Mumbai
Asian markets traded down amid global interest rate worries and persistent weakness in Chinese markets amid growing tensions with the U.S.
Market indexes in Tokyo, Shanghai, Hong Kong, Mumbai, and Seoul traded down after U.S. Treasury yields edged higher.
Moreover, the latest rate cut by China failed to support market enthusiasm because investors are looking for stronger measures and long-term policy measures to support the property market and lift consumer sentiment.
European markets closed down in lackluster trading in Monday's trading, and the U.S. financial markets were closed to celebrate President's Day.
Market sentiment in Asian markets was cautious after U.S. Treasury yields spiked higher.
Tokyo Stocks Drifted Lower Amid Weakness In Banks and Tech Stocks
The Nikkei index decreased 0.1% to 38,413.66, and the benchmark index traded just below a 34-year high as investors reassessed the possibility of a near-term rate cut.
The Bank of Japan has been sending mixed signals, but most investors are hoping that the central bank is ready to end its ultra-loose monetary policy after the end of wage negotiations at large corporations over the next two months.
Tech stocks were among the leading gainers, and Screen Holdings, Advantest, and Tokyo Electron gained between 0.5% and 4.0%.
Banks were in focus for the second week in a row after investors scaled back bets on the end of ultra-loose monetary policy.
Banks are likely to be big winners as interest rates rise, lifting the net interest rate margin.
Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial decreased between 0.5% and 1.5%.
Three leading automobile exporters, Honda Motor, Toyota Motor, and Nissan, traded mixed after the yen rebounded to above 150 against the U.S. dollar.
Fanuc and Yaskawa Electric jumped more than 3%.
China Lowered Rates to Spur Property Market
China lowered its interest rate for the first time since June 2023, hoping that the lower rate may revive the moribund property market.
The People's Bank of China lowered its 5-year loan prime rate by 25 basis points to 3.95%, the largest cut since the rate was introduced in 2019.
Just a few days ago, China held its one-year loan prime rate at 3.45%, and both one-year and 5-year rates are at record low levels.
The CSI 300 index decreased 0.4% to 3,389.40, and the Hang Seng index dropped 0.1% to 16,134.47.
China also offered about 160 billion yuan, or $22.2 billion, to local developers and supported the completion of housing projects, the state-controlled broadcaster CCTV reported Tuesday.
Despite the record low interest rates, property market confidence remains weak due to worries about a lack of large stimulus from the government and long-term measures to revive market confidence.
Longfor Group rose HK$9.03, China Vanke advanced 0.7% to $6.17, and China Resources Land decreased 2.8% to HK$24.15.
Electric vehicle makers were among the leading decliners after BYD lowered prices on plug-in hybrid cars by 20% for its new models.
The lower price by the industry leader is likely to spark another round of cuts by other players.
BYD declined 3.8% to HK$179.30, Li Auto fell 1.4% to HK$123.0, and Geely Automobile Holdings dropped 2.2% to HK$7.92.
FDI In China Eased Second Consecutive Year
Foreign direct investment in China declined for the second year in a row, the State Administration of Foreign Exchange reported Sunday.
Rising tensions with the U.S. and the arbitrary spying charges on foreign companies by Chinese authorities have kept many from investing in China. Foreign direct investment dropped 80% from the previous year to $33 billion in 2023.
The foreign direct investment declined for the second year and dropped to 10% of $344 in 2021.
India Stocks Struggled to Advance After Mixed Earnings Season
Stocks in Mumbai traded lower, the bond yield edged higher, and the Indian rupee held firm in Tuesday's trading.
The Sensex and the Nifty indexes traded down as investors reviewed the last batch of fiscal third quarter earnings results over the last week.
The Sensex index decreased 73.10 points to 72,634.99, and the Nifty index fell 44.55 points to 22,077.70.
On the Mumbai stock exchange, 178 stocks traded at their 52-week highs and 2 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds increased to 7.10%, and the Indian rupee strengthened to ₹83.10 against the U.S. dollar.
India Movers: Balrampur Chini, CIE Automotive, Morepen, NBCC, Oriental Rail Infra, PowerGrid
Arun Goswami
20 Feb, 2024
Mumbai
Stocks in Mumbai traded in a tight range after the end of the earnings season last week, and bond yields held steady amid the weakness in markets in Europe and Asia.
The Sensex index decreased 73.10 points to 72,634.99, and the Nifty index fell 44.55 points to 22,077.70.
On the Mumbai stock exchange, 178 stocks traded at their 52-week highs and 2 stocks traded at their 52-week lows.
Balrampur Chini Mills declined to ₹387.50, and the company said it plans to invest about ₹2,000 crore over the next 30 months in the manufacturing of ply lactic acid.
CIE Automotive declined 1.7% to ₹475.05 despite the company swinging to a profit in its latest quarterly results.
Net income in the December quarter swung to a profit of 169 crore from a loss of 658 crore a year ago.
Oriental Rail Infrastructure rose 1.3% to ₹264.10 ahead of the company's board meeting on February 22.
The board plans to review the allotment of 50.6 lakh shares and 75 lakh warrants convertible to shares at a price of 169 per share.
Morepen Labs jumped 0.8% to ₹54.55, and the company board is scheduled to meet on February 22 to discuss various fund-raising plans.
ESAF Small Finance Bank jumped 0.1% to ₹64.90, and the company board is scheduled to meet on February 23 to review a proposal to issue non-convertible debentures through private placement.
NBCC advanced 1.1% to ₹142.95 after the company secured orders worth ₹3,690 crore.
Whirlpool of India decreased 3% to ₹142.95 ahead of the company's parent Whirlpool's Corporation's sale of a stake in the company through a block trade.
The company plans to sell 3.04 crore shares in a bock trade at a price of ₹1,230 crore per share today, according to a report.
Power Grid Corporation rose 3.2% to ₹286.65 after the company's board approved the investment of 656 crore in two power projects.
The Northern Region project is expected to be completed by November 2025 at a cost of 525 crore and the installation of a transformer at Bhiwani, Haryana by November 2025 at a cost of 141 crore.