Market Update
Europe Movers: Adidas, Air France, Halma, IAG, Intercontinental Hotels, SGL Carbon,
Bridgette Randall
05 May, 2023
Frankfurt
Adidas AG increased 7.3% to €167.86 after the German sportswear maker reported quarterly results ahead of expectations.
IAG or International Consolidated Airlines Group increased 1.7% to 149.55 pence after the parent of British Air and Iberian Air narrowed its first quarter pre-tax loss.
The airline group also lifted its full-year 2023 adjusted operating earnings outlook.
Air France KLM SA decreased 1.7% to €1.43 after the airline group reported a smaller first quarter loss and the company repaid €0.9 billion of its debt.
Revenue in the first quarter increased 42% to €6.3 billion and the airline group transported 19.7 million passengers, 35% higher than in the previous year.
Net loss shrank to €337 million from €552 million a year ago and the passenger load factor improved 11.8 percentage points to 86.1%.
SGL Carbon SE declined 0.6% to €8.75 after the company forecasted flat sales in 2023 compared to the previous year and adjusted operating earnings between €160 million and €180 million.
Revenue in the first quarter increased 4.7% to €283.7 million and adjusted EBITDA improved 9% to €40.1 million.
Intercontinental Hotels Group decreased 1.5% to 5,432.0 pence after the company said group chief executive Keith Barr plans to step down from the office and resign from the company board.
In addition, the company said its annual 2023 revenues are likely to exceed its previous estimate.
Halma plc declined 0.1% to 2,385.0 pence and the company agreed to acquire Poland-based Sewertronics for as much as €59 million or £52 million.
European Markets Rebounded, Eurozone Retail Orders Declined
Bridgette Randall
05 May, 2023
Frankfurt
European stock markets rebounded on the final day of the week and major indexes are set to close down after a week of volatile trading.
Investors shifted focus to corporate earnings after a busy week of economic data and central banks actions.
In the region's economic news, retail sales dropped in March after higher food prices and elevated energy costs sapped consumer spending.
German factory orders dropped to a three-year low after volatile transportation and defense orders fell sharply in March after surging in February.
Eurozone Retail Sales Dropped
The Euro Area retail sales decreased 1.2% in March from the previous month and eased 1.1% in the European Union, Eurostat reported Friday.
Seasonally adjusted retail sales dropped at a faster pace than 0.2% in February after higher food prices and interest rates weighed on the overall spending.
Across the Eurozone, retail sales dropped 2.4% in Germany, 1.4% in France, 0.3% in Italy but rose 0.7% in Spain.
On an annual basis, the calendar adjusted retail sales index decreased 3.8% in the euro area and 4.1% in the European Union.
Germany Factory Orders Drop to 3-year Low On Volatile Large Orders
German new factory orders, adjusted for prices and season factors, plunged 10.7% from the previous month in March, the Federal Statistics Office or destatis reported Friday.
February orders were downwardly revised to an increase of 4.5%.
The March orders declined the most since the peak of the coronavirus pandemic in April 2020, driven by a sharp decline of 47.4% in miscellaneous vehicle construction which includes orders for ships, rail locomotives, spacecrafts and army vehicles.
Large-scale orders had risen 55% in February from the previous month.
Excluding large-scale transportation and defense orders, new orders declined 7.7% in March from the previous month.
While new orders in the capital goods sector decreased 14.1% and in the intermediate goods area 7.5% in March 2023 compared to the previous month, new orders in the consumer goods sector increased 1.2%.
Preliminary real turnover in the manufacturing sector declined 2.9% in February after rising 1.5% in February, but rose 3.7% from a year ago.
Europe Indexes & Yields
The DAX index increased 0.7% to 15,839.18, the CAC-40 index added 0.4% to 7,370.86 and the FTSE 100 index advanced 0.4% to 7,734.90.
The yield on 10-year German Bunds inched up to 2.26%, French bonds traded slightly higher to 2.87%, the UK gilts inched higher to 3.76% and Italian bonds advanced to 4.19%.
The euro edged higher to $1.102, the British pound to $1.267 and the Swiss franc to 89.13 cents.
Brent crude rose $1.72 to $74.21 a barrel and the Dutch TTF natural gas increased €0.35 to €36.00 per MWh.
Europe Stock Movers
Adidas AG increased 7.3% to €167.86 after the German sportswear maker reported quarterly results ahead of expectations.
IAG or International Consolidated Airlines Group increased 1.7% to 149.55 pence after the parent of British Air and Iberian Air narrowed its first quarter pre-tax loss.
The airline group also lifted its full-year 2023 adjusted operating earnings outlook.
Air France KLM SA decreased 1.7% to €1.43 after the airline group reported a first quarter loss of €306 million.
SGL Carbon SE declined 0.6% to €8.75 after the company forecasted flat sales in 2023 compared to the previous year.
Intercontinental Hotels Group decreased 1.5% to 5,432.0 pence after the company said group chief executive Keith Barr plans to step down from the office and resign from the company board.
In addition, the company said its annual 2023 revenues are likely to exceed its previous estimate.
Halma plc declined 0.1% to 2,385.0 pence and the company agreed to acquire Poland-based Sewertronics for as much as €59 million or £52 million.
Investors Turn Cautious Amid Growing Bank Fears and Looming Debt Ceiling Turmoil
Barry Adams
04 May, 2023
New York City
Stocks struggled a day after the Federal Reserve raised interest rates causing more stress on the battered regional banks' balance sheets.
Benchmark indexes traded down and regional banks declined sharply on the growing realization that the regional banking crisis is not likely to go away anytime soon.
The ETF tracking regional banks, KRE, declined 5% reflecting investor's uneasiness with the sector.
PacWest plunged more than 40% on the news that the California bank is evaluating its strategic options including company sale.
First Horizon Corp tanked 38% after TD Bank terminated its plan to acquire the Tennessee-based bank citing possible regulatory delays for its merger plan.
Zions Bancorp declined 15.6% and Western Alliance Bancorp dropped 45.6%.
Banks of all sizes are carrying significant unrealized losses in their Treasury securities assets and banks with large percentage of deposits above the FDIC insured levels are especially vulnerable to sudden deposit outflows.
At the end of 2022, the FDIC estimated $622 billion in losses in Treasury debts held by banks of all sizes.
Stress in the regional banks is likely to worsen in the coming weeks and the crisis may persist well into 2024 as long as the Federal Reserve continues to hike rates or hold rates at elevated levels.
On Wednesday, the Federal Reserve lifted the fed funds rate by 25 basis points to a new range between 5.0% and 5.25% and left its door open for a potential rate pause at the next meeting.
The rate uncertainty was compounded by growing anxieties about the U.S. lawmakers' failure in lifting the debt ceiling.
The U.S. Treasury is expected to run out of cash as early as June and without the increase in debt ceiling the government operations may have to be closed for an unknown period.
U.S. Indexes & Yields
The S&P 500 index fell 0.6% to 4,065.10 and the Nasdaq Composite decreased 0.4% to 11,971.97.
The yield on 2-year Treasury notes declined to 3.86%, 10-year Treasury notes edged down to 3.37% and 30-year Treasury bonds held at 3.72%.
Crude oil fell 21 cents to $68.39 a barrel and natural gas prices fell 6 cents to $2.10 a thermal unit.
U.S. Stock Movers
PacWest Bancorp tanked 56.8% to $2.77 on the report that the company is looking for capital infusion, merger partner or the sale of the bank.
Zions Bancorp dropped 13.9% to $19.51 and Western Alliance declined 38.5% to $18.05.
First Horizon Crop plunged 37.6% to $9.42 after Canada-based TB Bank terminated its merger plan on the regulatory delay worries.
Johnson & Johnson decreased 0.4% to $162.34 after the company completed its spinoff of its consumer health unit Kenvue.
The company priced public offering of 172.8 million shares at $22.0 a share. Kenvue jumped 18.2% to $26.15.
Peloton Interactive Inc declined 13.7% to $7.62 after the company reported wider-than-expected loss.
Shopify Inc soared 27.9% to $59.16 after the e-commerce platform operator reported better-than-expected earnings.
The Canada-based company also announced its plan to lay off 20% of its staff.
Paramount Global Class A plunged 23.4% to $19.81 after the parent of Paramount Pictures and CBS network reported weaker-than-expected earnings.
The company also slashed its dividend to 5 cents from 24 cents per common stock as the company "moves toward streaming profitability."
Revenue in its film studio division declined 6% and television and cable properties including MTV and Comedy Central fell 8% to $5.2 billion.
Paramount said revenue in its streaming service unit, which includes Paramount+ and Pluto TV, rose 39% to $1.5 billion but losses expanded to $511 million from $456 million in the previous year.
European Stocks Turn Lower, 7th Rate Increase In Europe
European markets turned lower and the European Central Bank hiked its reference rate by 25 basis points.
Benchmark indexes in Paris and Frankfurt declined after investors digested the latest rate hike decision by the European Central Bank and the U.S. Federal Reserve.
Indexes in London edged down following weak commodities prices and crude oil drifted to a new 5-week low.
ECB Hikes Rates by 0.25%, Halts APP Reinvestments
The European Central Bank increased its reference rate by 25 basis points after lifting rates by 50 basis points for three times in a row.
After the hike, the main refinancing facility rate increased to 3.75%, marginal lending facility to 4.0% and deposit facility to 3.0% effective May 10.
In addition, the Governing Council decided to discontinue its reinvestment of cash maturing bonds purchased under the Є3.2 trillion Asset Purchase Program from July.
The balance in the program is declining by Є15 billion a month.
Policymakers noted that the headline inflation has been declining but underlying price pressures remain strong.
"At the same time, the past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain," the ECB statement released after the meeting noted.
Europe Indexes & Yields
The DAX index decreased 0.5% to 15,734.24, the CAC-40 index fell 0.9% to 7,304.77 and the FTSE 100 index fell 1.1% to 7,702.64.
The yield on 10-year German Bunds inched up to 2.26%, French bonds traded slightly higher to 2.86%, the UK gilts inched higher to 3.71% and Italian bonds advanced to 4.17%.
The euro edged higher to $1.106, the British pound to $1.257 and the Swiss franc to 88.50 cents.
Brent crude fell 5 cents to $72.28 a barrel and the Dutch TTF natural gas decreased €0.83 to €35.96 per MWh.
Europe Stock Movers
ArcelorMittal SA declined 2.2% to €25.06 after the French steel maker reported a decline in sales and earnings in its latest quarter.
Volkswagen Group increased 0.3% to €124.62 after the German automaker reported higher sales and the company confirmed its 2023 outlook.
Casino Guichard Perrachon SA dropped 10.9% to €7.46 after the French retailer said sales declined in its latest quarter.
Adecco Group AG decreased 2.5% to CH 28.65 after the Swiss staffing company reported mixed quarterly results.
Novo Nordisk AS dropped 4.6% to kr1,069.0 after the Danish pharmaceutical company said it may curtail sale of its starter weight loss drug Wegovy to new customers.
Revenue in the quarter increased to $7.69 billion and net income was $2.86 or $1.27 per share.
Shell Plc increased 1% to 2,348.0 pence after the UK-based energy company reported higher-than-expected quarterly earnings despite the fall in energy prices.
Movers: Ferrari, First Horizon, PacWest Bancorp, Paramount Global, Peloton Interactive, Shopify
Scott Peters
04 May, 2023
New York City
PacWest Bancorp tanked 56.8% to $2.77 on the report that the company is looking for capital infusion, merger partner or the sale of the bank.
Zions Bancorp dropped 13.9% to $19.51 and Western Alliance declined 38.5% to $18.05.
First Horizon Crop plunged 37.6% to $9.42 after Canada-based TB Bank terminated its merger plan on the regulatory delay worries.
Peloton Interactive Inc declined 13.7% to $7.62 after the company reported wider-than-expected loss.
Total revenues declined 22% to 748.9 million from $964.3 million and net loss shrank 64% to $275.9 million from $757.1 million and diluted loss per share fell to 79 cents from $2.27 a year ago.
Shopify Inc soared 27.9% to $59.16 after the e-commerce platform operator reported better-than-expected earnings.
The Canada-based company also announced its plan to lay off 20% of its staff.
Revenue in the first quarter increased 25% to $1.5 billion from $1.2 billion and the company swung to net income of $68 million from a loss of $1.5 billion and diluted earnings per share was 5 cents compared to ($1.17) a year ago.
Gross merchandise volume increased 15% or $6.4 billion from a year ago to $49.6 billion, up 18% on a constant currency basis.
Gross payments volume expanded to $27.5 billion, representing 56% of GMV processed in the quarter, compared to $22.0 billion or 51% in the first quarter of 2022.
Paramount Global Class A plunged 23.4% to $19.81 after the parent of Paramount Pictures and CBS network reported weaker-than-expected earnings.
The company also slashed its dividend to 5 cents from 24 cents per common stock as the company "moves toward streaming profitability."
Revenue in its film studio division declined 6% and television and cable properties including MTV and Comedy Central fell 8% to $5.2 billion.
Paramount said revenue in its streaming service unit, which includes Paramount+ and Pluto TV, rose 39% to $1.5 billion but losses expanded to $511 million from $456 million in the previous year.
Ferrari NV increased 5.3% to $292.28 $292.28 after the luxury automaker reported solid quarterly results.
Revenue in the first quarter increased 20% to Є1.4 billion from Є1.2 billion and net income jumped Є297 million from Є239 million and diluted earnings per share increased to Є1.62 from Є1.29 a year ago.
Total vehicle shipments increased 9.7% to 3,567 from 3,251 a year ago driven by 46% surge in the Americas to 962, 12% decline to 1,534 in the EMEA region, and 39% in the China region to 396 and 19% rise to 675 in the rest of the APAC region.
Persistent Regional Bank Crisis Worries Keep Investors Guessing, Stocks Fall
Barry Adams
04 May, 2023
New York City
Benchmark indexes traded down and regional banks declined sharply on the growing realization that the regional banking crisis is not likely to go away anytime soon.
The ETF tracking regional banks, KRE, declined more than 6%.
PacWest plunged more than 40% on the news that the California bank is evaluating its strategic options including company sale.
First Horizon Corp tanked 38% after TD Bank terminated its plan to acquire the Tennessee-based bank citing possible regulatory delays for its merger plan.
Zions Bancorp declined 15.6% and Western Alliance Bancorp dropped 45.6%.
Banks of all sizes are carrying significant unrealized losses in their Treasury securities assets and banks with large percentage of deposits above the FDIC insured levels are especially vulnerable to sudden deposit outflows.
At the end of 2022, the FDIC estimated $622 billion in losses in Treasury debts held by banks of all sizes.
Stress in the regional banks is likely to worsen in the coming weeks and the crisis may persist well into 2024 as long as the Federal Reserve continues to hike rates or hold rates at elevated levels.
U.S. Indexes & Yields
The S&P 500 index fell 0.6% to 4,065.10 and the Nasdaq Composite decreased 0.4% to 11,971.97.
The yield on 2-year Treasury notes declined to 3.86%, 10-year Treasury notes edged down to 3.37% and 30-year Treasury bonds held at 3.72%.
Crude oil fell 21 cents to $68.39 a barrel and natural gas prices fell 6 cents to $2.10 a thermal unit.
U.S. Stock Movers
PacWest Bancorp tanked 56.8% to $2.77 on the report that the company is looking for capital infusion, merger partner or the sale of the bank.
Zions Bancorp dropped 13.9% to $19.51 and Western Alliance declined 38.5% to $18.05.
First Horizon Crop plunged 37.6% to $9.42 after Canada-based TB Bank terminated its merger plan on the regulatory delay worries.
Peloton Interactive Inc declined 13.7% to $7.62 after the company reported wider-than-expected loss.
Shopify Inc soared 27.9% to $59.16 after the e-commerce platform operator reported better-than-expected earnings.
The Canada-based company also announced its plan to lay off 20% of its staff.
Paramount Global Class A plunged 23.4% to $19.81 after the parent of Paramount Pictures and CBS network reported weaker-than-expected earnings.
The company also slashed its dividend to 5 cents from 24 cents per common stock as the company "moves toward streaming profitability."
Revenue in its film studio division declined 6% and television and cable properties including MTV and Comedy Central fell 8% to $5.2 billion.
Paramount said revenue in its streaming service unit, which includes Paramount+ and Pluto TV, rose 39% to $1.5 billion but losses expanded to $511 million from $456 million in the previous year.
ECB Hikes Rates by 0.25%, European Markets Turn Lower
Bridgette Randall
04 May, 2023
Frankfurt
European markets turned lower and the European Central Bank hiked its reference rate by 25 basis points.
Benchmark indexes in Paris and Frankfurt declined after investors digested the latest rate hike decision by the European Central Bank and the U.S. Federal Reserve.
Indexes in London edged down following weak commodities prices and crude oil drifted to a new 5-week low.
ECB Hikes Rates by 0.25%, Halts APP Reinvestments
The European Central Bank increased its reference rate by 25 basis points after lifting rates by 50 basis points for three times in a row.
After the hike, the main refinancing facility rate increased to 3.75%, marginal lending facility to 4.0% and deposit facility to 3.0% effective May 10.
In addition, the Governing Council decided to discontinue its reinvestment of cash maturing bonds purchased under the Є3.2 trillion Asset Purchase Program from July.
The balance in the program is declining by Є15 billion a month.
Policymakers noted that the headline inflation has been declining but underlying price pressures remain strong.
"At the same time, the past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain," the ECB statement released after the meeting noted.
Federal Reserve Lifts Fed Funds Rate by 0.25%
On Wednesday, the Federal Reserve lifted the fed funds rate by 25 basis points to a new range between 5.0% and 5.25% and left its door open for a potential rate pause at the next meeting.
Stocks in New York closed down in a volatile session after the rate decision because the Fed did not provide any indication of future rate path trajectory and how high rates have to go.
The rate uncertainty was compounded by growing anxieties about the U.S. lawmakers' failure in lifting the debt ceiling.
The U.S. Treasury is expected to run out of cash as early as June and without the increase in debt ceiling the government operations may have to be closed for an unknown period.
Europe Indexes & Yields
The DAX index decreased 0.7% to 15,699.79, the CAC-40 index fell 0.9% to 7,337.21 and the FTSE 100 index fell 0.8% to 7,724.85.
The yield on 10-year German Bunds inched up to 2.26%, French bonds traded slightly higher to 2.86%, the UK gilts inched higher to 3.71% and Italian bonds advanced to 4.17%.
The euro edged higher to $1.106, the British pound to $1.257 and the Swiss franc to 88.50 cents.
Brent crude rose 13 cents to $72.45 a barrel and the Dutch TTF natural gas decreased €0.63 to €36.16 per MWh.
Europe Stock Movers
ArcelorMittal SA declined 2.2% to €25.06 after the French steel maker reported a decline in sales and earnings in its latest quarter.
Volkswagen Group increased 0.3% to €124.62 after the German automaker reported higher sales and the company confirmed its 2023 outlook.
Casino Guichard Perrachon SA dropped 10.9% to €7.46 after the French retailer said sales declined in its latest quarter.
Adecco Group AG decreased 2.5% to CH 28.65 after the Swiss staffing company reported mixed quarterly results.
Novo Nordisk AS dropped 4.6% to kr1,069.0 after the Danish pharmaceutical company said it may curtail sale of its starter weight loss drug Wegovy to new customers.
Revenue in the quarter increased to $7.69 billion and net income was $2.86 or $1.27 per share.
Shell Plc increased 1% to 2,348.0 pence after the UK-based energy company reported higher-than-expected quarterly earnings despite the fall in energy prices.
Fed Funds Rate Hike Failed to Settle Rate Path Debate, Stocks Turned Lower In Choppy Trading
Barry Adams
03 May, 2023
New York City
Stocks opened higher and stayed in the plus territory despite volatile trading after the Federal Reserve hiked its key lending rate range.
As widely anticipated, the Federal Reserve lifted the fed funds target range by 25 basis points to between 5.0% and 5.25% and increased the borrowing cost to the highest since September 2007.
The 10th rate increase was widely expected and in a unanimous decision the rate setting committee agreed to revise rates higher but also left the door open to pause future rate hikes.
Investors looking for the Fed to pause after the todays' rate hike got a stronger reassurance after the post-meeting statement removed a statement that supported the need for additional rate increases.
In the FOMC statement released after the meeting the Federal Reserve reiterated its commitment to lower inflation to 2% but showed flexibility to increase rates, if the economic and inflation data suggested the need for it.
The Fed's statement excluded the previously included sentence "some additional policy firming may be appropriate,” which was interpreted by some investors that the central bank is open to the possibility of rate hike pause.
The intense rate pause-or-hike debate has rattled the stock and bond market for weeks with no clear direction for the rate path going forward, but showed no sign of easing either after the rate decision.
Short term U.S. Treasury yields stayed above 5% and the yields on bonds maturing between 2 and 30 years drifted slightly lower, confirming that investors are still not sure which way rates are heading.
Moreover, investors are becoming more concerned about the lack of progress in lifting the federal government debt ceiling with the government expected to run out of money as early as early June.
With both political parties showing no urgency to settle their difference, the federal government may be heading for closure as early as in five week.
Regional banking crisis has gripped much of the market sentiment for the last month and regional banks declined in today's trading on the worries that higher rates will only deepen the crisis and may spread to commercial real estate.
Private Sector Job Gains Accelerated In April
Private sector hiring accelerated in April, contrary to the expectations of a cooler job market, payroll processing firm ADP reported Wednesday.
Payrolls expanded 296,000 in April from the downwardly revised 142,000 in March, reflecting the strongest monthly gain since July 2022.
Annual pay increase slowed to 6.7% from a year ago, slower than the increase above 7% for months.
"Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines", said Nela Richardson, chief economist, ADP.
Job gains were evenly distributed among employers of all sizes and a total of 243,000 were added by businesses employing less than 500.
The services sector added 229,000 jobs led by an increase in leisure and hospitality industries by 154,000, education and health services by 69,000, trade, transportation and utilities by 32,000, and information industry by 2,000.
On the other hand the goods-producing industry added 67,000 jobs driven by gains in the construction industry of 53,000 and mining industry of 52,000 but the manufacturing industry trimmed 38,000 jobs.
U.S. Indexes & Yields
The S&P 500 index rose 0.1% to 4,126.16 and the Nasdaq Composite increased 0.1% to 12,102.25.
The yield on 2-year Treasury notes declined to 3.97%, 10-year Treasury notes edged down to 3.40% and 30-year Treasury bonds held at 3.69%.
Crude oil fell $2.0 to $69.77 a barrel and natural gas prices fell2 cents to $2.18 a thermal unit.
U.S. Stock Movers
Advanced Micro Devices Inc fell 7.2% to $83.50 and the semiconductor company forecasted demand weakness to persist in the second quarter.
Revenue in the first quarter declined 9% to $5.4 billion from $5.9 billion and gross margin fell to 44% from 48% a year ago.
The company swung to a net loss of $139 million from $786 million and diluted earnings per share fell to ($0.09) from 56 cents a year ago.
For the second quarter of 2023, AMD expects revenue to be approximately $5.3 billion, plus or minus $300 million and non-GAAP gross margin to be approximately 50%.
Client group, which includes PC makers, sales plunged 65% to $739 million from $2.1 billion. Data center sales inched slightly higher to $1.295 billion from $1.293 and the company hinted for higher sales in the second half.
Gaming segment sales, which includes sales to console makers and graphics chips, edged lower to $1.8 billion from $1.9 billion and embedded segment, which includes networking chips, sales jumped to $1.5 billion from $595 million a year ago.
Starbucks Corp declined 4.2% $109.66 after the coffee chain operator reiterated its annual earnings outlook and comparable store sales in China rebounded following the ending of zero-Covid policy.
Revenue in the first quarter rose 14% to $8.7 billion from $7.6 billion after sales picked up in China following the end of zero-Covid policy.
Net earnings attributable to shareholders increased to $908.3 million from $674.5 million and diluted earnings per share to 79 cents from 58 cents a year ago.
Expeditors International of Washington Inc was nearly unchanged at $113.24 after the company estimated weak demand conditions for ocean and air cargo freights to persist in the current quarter.
Revenue in the first quarter plunged 44% to $2.6 billion following the steep drop in rates and volumes.
Net income dropped 35% to $226.01 million from $346.1 million and diluted earnings per share fell to $1.45 from $2.05 a year ago.
In the quarter, the company repurchased 2.0 million shares at an average price of $108.98 a share.
European Markets Rebounded
European markets reversed 1% decline in the previous session after traders returned to increase positions in industrial and financial companies.
The European Central Bank is also expected to increase its key lending rate by at least 25 basis points at the conclusion of its policy meeting on Thursday.
Investors reacted to corporate news and Lufthansa reported a surge in revenue on the rebound in travel demand. Porsche reported higher sales driven by an increase in vehicle deliveries and BNP Paribas reported higher-than-expected first quarter total revenue.
Euro Area Jobless Rate Drops to New Low
The jobless rate in the Euro Area declined to 6.5% in March, the lowest rate on record, Eurostat reported Wednesday.
The rate declined from 6.6% in February and fell from 6.8% in March 2022.
The statistical agency estimated that 12.960 million in the EU, including 11.010 million in the euro area, were unemployed in March.
From the previous month, unemployment decreased by 155,000 in the EU and by 121,000 in the euro area and from a year ago unemployment decreased 353,000 in the EU and 365,000 in the euro area.
In March, the youth unemployment rate eased to 14.3% both in the EU and in the euro area, down from 14.5% and 14.4% respectively in the previous month.
Spain led the jobless rate in the currency union with 12.8%, followed by 10.9% in Greece, 7.8% in Italy and 7.3% in Sweden. Germany recorded an unemployment rate of 2.8% and the Netherlands 3.5% and France 6.9%.
Europe Indexes & Yields
The DAX index increased 0.6% to 15,815.06, the CAC-40 index advanced 0.3% to 7,403.83 and the FTSE 100 index added 0.2% to 7,788.37.
The yield on 10-year German Bunds eased to 2.23%, French bonds to 2.83%, the UK gilts to 3.65% and Italian bonds to 4.12%.
The euro hovered near a one-year high against the dollar as the U.S. economy faced banking turmoil.
The euro edged higher to $1.103, the British pound to $1.256 and the Swiss franc to 88.86 cents.
Brent crude fell $2.78 to $72.56 a barrel and the Dutch TTF natural gas decreased €0.75 to €36.79 per MWh.
Europe Stock Movers
Deutsche Lufthansa AG declined 1.7% to €9.47 after the German airline reported a surge in revenue in the first quarter.
Revenue in the first quarter soared 40% to €7.0 billion from €5.0 billion a year ago.
Net profit shrank 20% to €467 million from €520 million and diluted earnings per share fell to 39 cents from 49 cents a year ago.
The passenger count increased 64% to 21.6 million and passenger load factor jumped 14.3 percentage points to 79.7% from 65.4% but cargo load factor declined to 58.7% from 68.1% a year ago.
BNP Paribas SA increased a fraction to €57.0 after the French bank reported higher-than-expected revenue.
Revenue in the first quarter increased 1.4% to €12.03 billion from €11.87 billion a year ago.
Pre-tax net income from continuing operations in the quarter declined 9.4% to €2.37 billion from €2.62 billion a year ago.
Porsche Automobil Holding SE increased 0.3% to €49.76 after the company reported higher deliveries in the first quarter.
First quarter revenue rose 25.5% to €10.10 billion from €8.04 billion a year ago and operating profit rose 25.4% from €1.47 billion to €1.84 billion.
Vehicle deliveries in the quarter increased 18% to 80,767 from 68,426 a year ago.
Fed Funds Target Rate Range Raised by 25 Basis Points
Brian Turner
03 May, 2023
New York City
The Federal Reserve lifted the fed funds target range by 25 basis points to between 5.0% and 5.25% and increased the borrowing cost to the highest since September 2007.
The 10th rate increase was widely expected and in a unanimous decision rate setting committee agreed to revise rates higher but also left the door open to pause future rate hikes.
In the FOMC statement released after the meeting the Federal Reserve reiterated its commitment to lower inflation to 2% but showed flexibility to increase rates, if the economic and inflation data suggested the need for it.
The Fed's statement did not include the previous note "some additional policy firming may be appropriate,” which was interpreted by some investors that the central bank is open to the possibility of rate hike pause.
Movers: AMD, Expeditors International, Ford Motor, Generac, Match Group, Starbucks
Scott Peters
03 May, 2023
New York City
Advanced Micro Devices Inc fell 7.2% to $83.50 and the semiconductor company forecasted demand weakness to persist in the second quarter.
Revenue in the first quarter declined 9% to $5.4 billion from $5.9 billion and gross margin fell to 44% from 48% a year ago.
The company swung to a net loss of $139 million from $786 million and diluted earnings per share fell to ($0.09) from 56 cents a year ago.
For the second quarter of 2023, AMD expects revenue to be approximately $5.3 billion, plus or minus $300 million and non-GAAP gross margin to be approximately 50%.
Client group, which includes PC makers, sales plunged 65% to $739 million from $2.1 billion. Data center sales inched slightly higher to $1.295 billion from $1.293 and the company hinted for higher sales in the second half.
Gaming segment sales, which includes sales to console makers and graphics chips, edged lower to $1.8 billion from $1.9 billion and embedded segment, which includes networking chips, sales jumped to $1.5 billion from $595 million a year ago.
Starbucks Corp declined 4.2% $109.66 after the coffee chain operator reiterated its annual earnings outlook and comparable store sales in China rebounded following the ending of zero-Covid policy.
Revenue in the first quarter rose 14% to $8.7 billion from $7.6 billion after sales picked up in China following the end of zero-Covid policy.
Net earnings attributable to shareholders increased to $908.3 million from $674.5 million and diluted earnings per share to 79 cents from 58 cents a year ago.
Expeditors International of Washington Inc was nearly unchanged at $113.24 after the company estimated weak demand conditions for ocean and air cargo freights to persist in the current quarter.
Revenue in the first quarter plunged 44% to $2.6 billion following the steep drop in rates and volumes.
Net income dropped 35% to $226.01 million from $346.1 million and diluted earnings per share fell to $1.45 from $2.05 a year ago.
In the quarter, the company repurchased 2.0 million shares at an average price of $108.98 a share.
Match Group increased 4.8% to $36.25 after the online dating site reported mixed quarterly results.
Total revenue in the first quarter declined 1% to $787.1 million from $798.6 million a year ago.
Net earnings plunged to $120.8 million from $186.5 million and diluted earnings per share declined to 42 cents from 60 cents a year ago.
Tinder revenue was flat at $441 million and Hinge revenue increased 27% driven both by increase in payers and revenue per payer.
Ford Motor Company increased 1.4% to $11.96 after the company swung to profit in the first quarter.
Revenue in the first quarter increased 20% to $41.5 billion from $34.5 billion a year ago.
The automaker swung to a profit of $1.8 billion from a loss of $3.1 billion and diluted earnings per share was 44 cents compared to ($0.78) a year ago.
Net income of $1.8 billion compared to a net loss in the 2022 period that was primarily attributable to a change in the mark-to-market value of the company’s investment in electric vehicle maker Rivian.
Ford's adjusted earnings before interest and taxes, or EBIT, were $3.4 billion, an increase of 45% and margin of 8.1%.
Ford reiterated its 2023 outlook released in February and estimated adjusted EBIT of $9 billion to $11 billion and adjusted free cash flow of about $6 billion.
Generac Holdings Inc soared 15.1% to $118.34 after the energy company reported positive quarterly results.
Net sales in the first quarter declined 22% to $888 million from $1.14 billion a year ago.
Net income in the quarter dropped to $12 million from $114 million and diluted earnings per share plunged to 5 cents from $1.57 a year ago.
Investors Await Rate Decision and Fed Comments, Private Sector Job Gains Accelerate
Barry Adams
03 May, 2023
New York City
Stocks drifted lower in early trading as investors await Fed's rate decision and commentary in the afternoon.
Most investors are anticipating the Federal Reserve to increase its key lending rate range higher by 25 basis points and traders are awaiting deeper insights about the rate trajectory.
Will the Fed pause after the presumed rate hike today or will central bank continue its rate hike campaign?
The intense debate has rattled the stock and bond markets for weeks with no clear direction for the rate path going forward.
Moreover, investors are becoming more concerned about the lack of progress in lifting the federal government debt ceiling with the government expected to run out of money as early as early June.
With both political parties showing no urgency to settle their difference, the federal government may be heading for closure as early as in five week.
Regional banking crisis has gripped much of the market sentiment for the last month and regional banks declined in today's trading on the worries that higher rates will only deepen the crisis and may spread to commercial real estate.
Private Sector Job Gains Accelerated In April
Private sector hiring accelerated in April, contrary to the expectations of a cooler job market, payroll processing firm ADP reported Wednesday.
Payrolls expanded 296,000 in April from the downwardly revised 142,000 in March, reflecting the strongest monthly gain since July 2022.
Annual pay increase slowed to 6.7% from a year ago, slower than the increase above 7% for months.
"Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines", said Nela Richardson, chief economist, ADP.
Job gains were evenly distributed among employers of all sizes and a total of 243,000 were added by businesses employing less than 500.
The services sector added 229,000 jobs led by an increase in leisure and hospitality industries by 154,000, education and health services by 69,000, trade, transportation and utilities by 32,000, and information industry by 2,000.
On the other hand the goods-producing industry added 67,000 jobs driven by gains in the construction industry of 53,000 and mining industry of 52,000 but the manufacturing industry trimmed 38,000 jobs.
U.S. Indexes & Yields
The S&P 500 index rose 0.1% to 4,126.16 and the Nasdaq Composite increased 0.1% to 12,102.25.
The yield on 2-year Treasury notes declined to 3.97%, 10-year Treasury notes edged down to 3.40% and 30-year Treasury bonds held at 3.69%.
Crude oil fell $2.0 to $69.77 a barrel and natural gas prices fell2 cents to $2.18 a thermal unit.
U.S. Stock Movers
Advanced Micro Devices Inc fell 7.2% to $83.50 and the semiconductor company forecasted demand weakness to persist in the second quarter.
Revenue in the first quarter declined 9% to $5.4 billion from $5.9 billion and gross margin fell to 44% from 48% a year ago.
The company swung to a net loss of $139 million from $786 million and diluted earnings per share fell to ($0.09) from 56 cents a year ago.
For the second quarter of 2023, AMD expects revenue to be approximately $5.3 billion, plus or minus $300 million and non-GAAP gross margin to be approximately 50%.
Client group, which includes PC makers, sales plunged 65% to $739 million from $2.1 billion. Data center sales inched slightly higher to $1.295 billion from $1.293 and the company hinted for higher sales in the second half.
Gaming segment sales, which includes sales to console makers and graphics chips, edged lower to $1.8 billion from $1.9 billion and embedded segment, which includes networking chips, sales jumped to $1.5 billion from $595 million a year ago.
Starbucks Corp declined 4.2% $109.66 after the coffee chain operator reiterated its annual earnings outlook and comparable store sales in China rebounded following the ending of zero-Covid policy.
Revenue in the first quarter rose 14% to $8.7 billion from $7.6 billion after sales picked up in China following the end of zero-Covid policy.
Net earnings attributable to shareholders increased to $908.3 million from $674.5 million and diluted earnings per share to 79 cents from 58 cents a year ago.
Expeditors International of Washington Inc was nearly unchanged at $113.24 after the company estimated weak demand conditions for ocean and air cargo freights to persist in the current quarter.
Revenue in the first quarter plunged 44% to $2.6 billion following the steep drop in rates and volumes.
Net income dropped 35% to $226.01 million from $346.1 million and diluted earnings per share fell to $1.45 from $2.05 a year ago.
In the quarter, the company repurchased 2.0 million shares at an average price of $108.98 a share.
Private Sector Job Gains Accelerated In April
Brian Turner
03 May, 2023
New York City
Private sector hiring accelerated in April, contrary to the expectations of a cooler job market, payroll processing firm ADP reported Wednesday.
Payrolls expanded 296,000 in April from the downwardly revised 142,000 in March, reflecting the strongest monthly gain since July 2022.
Annual pay increase slowed to 6.7% from a year ago, slower than the increase above 7% for months.
"Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines", said Nela Richardson, chief economist, ADP.
Job gains were evenly distributed among employers of all sizes and a total of 243,000 were added by businesses employing less than 500.
The services sector added 229,000 jobs led by an increase in leisure and hospitality industries by 154,000, education and health services by 69,000, trade, transportation and utilities by 32,000, and information industry by 2,000.
On the other hand the goods-producing industry added 67,000 jobs driven by gains in the construction industry of 53,000 and mining industry of 52,000 but the manufacturing industry trimmed 38,000 jobs.
Europe Movers: BNP Paribas, Deutsche Lufthansa, Porsche, Stellantis, UniCredit
Bridgette Randall
03 May, 2023
New York City
Deutsche Lufthansa AG declined 1.7% to €9.47 after the German airline reported a surge in revenue in the first quarter.
Revenue in the first quarter soared 40% to €7.0 billion from €5.0 billion a year ago.
Net profit shrank 20% to €467 million from €520 million and diluted earnings per share fell to 39 cents from 49 cents a year ago.
The passenger count increased 64% to 21.6 million and passenger load factor jumped 14.3 percentage points to 79.7% from 65.4% but cargo load factor declined to 58.7% from 68.1% a year ago.
The airline expanded its passenger capacity by 30% in the first quarter from the previous year, but still 25% below its 2019 pre-crisis level.
BNP Paribas SA increased a fraction to €57.0 after the French bank reported higher-than-expected revenue.
Revenue in the first quarter increased 1.4% to €12.03 billion from €11.87 billion a year ago.
Pre-tax net income from continuing operations in the quarter declined 9.4% to €2.37 billion from €2.62 billion a year ago.
Porsche Automobil Holding SE increased 0.3% to €49.76 after the company reported higher deliveries in the first quarter.
First quarter revenue rose 25.5% to €10.10 billion from €8.04 billion a year ago and operating profit rose 25.4% from €1.47 billion to €1.84 billion.
Vehicle deliveries in the quarter increased 18% to 80,767 from 68,426 a year ago.
Stellantis NV declined 1.1% to €14.56 after the Italian automaker reported a 14% increase in its first quarter revenue.
UniCredit SpA soared 5.6% to €18.62 after the Italian bank revised its full-year outlook and reported a 56% jump in net revenue in the first quarter.
European Markets Rebounded, Euro Area Jobless Rate Dropped to New Low
Bridgette Randall
03 May, 2023
Frankfurt
European markets reversed 1% decline in the previous session after traders returned to increase positions in industrial and financial companies.
The Federal Reserve is widely expected to announce its rate decision later in the day and discuss rate path and the U.S. economy's health at a press conference at 2:30 p.m. ET.
The European Central Bank is also expected to increase its key lending rate by at least 25 basis points at the conclusion of its policy meeting on Thursday.
Investors reacted to corporate news and Lufthansa reported a surge in revenue on the rebound in travel demand. Porsche reported higher sales driven by an increase in vehicle deliveries and BNP Paribas reported higher-than-expected first quarter total revenue.
Euro Area Jobless Rate Drops to New Low
The jobless rate in the Euro Area declined to 6.5% in March, the lowest rate on record, Eurostat reported Wednesday.
The rate declined from 6.6% in February and fell from 6.8% in March 2022.
The statistical agency estimated that 12.960 million in the EU, including 11.010 million in the euro area, were unemployed in March.
From the previous month, unemployment decreased by 155,000 in the EU and by 121,000 in the euro area and from a year ago unemployment decreased 353,000 in the EU and 365,000 in the euro area.
In March, the youth unemployment rate eased to 14.3% both in the EU and in the euro area, down from 14.5% and 14.4% respectively in the previous month.
Spain led the jobless rate in the currency union with 12.8%, followed by 10.9% in Greece, 7.8% in Italy and 7.3% in Sweden. Germany recorded an unemployment rate of 2.8% and the Netherlands 3.5% and France 6.9%.
Europe Indexes & Yields
The DAX index increased 0.7% to 15,842.68, the CAC-40 index advanced 0.8% to 7,441.40 and the FTSE 100 index added 0.2% to 7,793.97.
The yield on 10-year German Bunds eased to 2.23%, French bonds to 2.83%, the UK gilts to 3.65% and Italian bonds to 4.12%.
The euro hovered near a one-year high against the dollar as the U.S. economy faced banking turmoil.
The euro edged higher to $1.103, the British pound to $1.256 and the Swiss franc to 88.86 cents.
Brent crude fell $2.13 to $73.15 a barrel and the Dutch TTF natural gas decreased €0.64 to €36.89 per MWh.
Europe Stock Movers
Deutsche Lufthansa AG declined 1.7% to €9.47 after the German airline reported a surge in revenue in the first quarter.
Revenue in the first quarter soared 40% to €7.0 billion from €5.0 billion a year ago.
Net profit shrank 20% to €467 million from €520 million and diluted earnings per share fell to 39 cents from 49 cents a year ago.
The passenger count increased 64% to 21.6 million and passenger load factor jumped 14.3 percentage points to 79.7% from 65.4% but cargo load factor declined to 58.7% from 68.1% a year ago.
BNP Paribas SA increased a fraction to €57.0 after the French bank reported higher-than-expected revenue.
Revenue in the first quarter increased 1.4% to €12.03 billion from €11.87 billion a year ago.
Pre-tax net income from continuing operations in the quarter declined 9.4% to €2.37 billion from €2.62 billion a year ago.
Porsche Automobil Holding SE increased 0.3% to €49.76 after the company reported higher deliveries in the first quarter.
First quarter revenue rose 25.5% to €10.10 billion from €8.04 billion a year ago and operating profit rose 25.4% from €1.47 billion to €1.84 billion.
Vehicle deliveries in the quarter increased 18% to 80,767 from 68,426 a year ago.