Market Update
European Markets In Five-day Slump, Rate Worries In Focus
Bridgette Randall
08 Dec, 2022
Frankfurt
European markets closed down and investors assessed the health of business in an economic slowdown environment, rising rates and stretched consumer budgets.
Investors also reviewed the latest comments from the ECB president Christine Lagarde focused on systemic risks arising from the decentralized financial systems linked with cryptocurrencies.
"Crypto-assets are exceptionally volatile and pose considerable risks to consumers.
After peaking in November 2021, the price of Bitcoin fell by almost 75% in the space of a year. And only last month we saw the chaotic collapse of FTX, a crypto-asset exchange once valued at $32 billion," highlighted Lagarde.
Czech Unemployment Stable
The Czech Republic's unemployment was stable at 3.5% in November for the second month in a row after edging up by 0.1 percentage point in September, data from the labor office showed Thursday.
Ireland's Inflation Inches Lower
Ireland's consumer price inflation declined in November but stayed above 5.0% for the fourteenth month in a row, the Central Statistics Office said Thursday.
The consumer price index declined to an annual pace of 8.9% in November after rising at 9.2% in October.
On a monthly basis, consumer prices rose 0.3%.
Hungary's Inflation Accelerates, Trade Deficit Widens
Hungary's consumer prices accelerated in November driven by higher food prices and rising costs of utilities.
Consumer price inflation increased 22.5% in November from a year ago following 21.1% in October, the Hungarian Central Statistical Office showed on Thursday.
On a monthly basis, consumer price eased to 1.8% after rising at 2.0% in October.
Trade deficit jumped to
Movers: Ciena, Express, GameStop, Ollie's Bargain, Oxford Industries, Rent the Runway
Scott Peters
08 Dec, 2022
New York City
Ciena Corporation soared 19.4% to $51.64 after the telecom gear maker said revenue in the fiscal fourth quarter fell 6.8% to $971 million and net income plunged to $57.6 million from $103.5 million or 39 cents to from 66 cents a year ago.
Express, Inc soared 31.2% to $1.28 after the company said revenue in the fiscal third quarter declined 8% to $434.1 million and net loss increased to $34.4 million from $13.1 million or 50 cents per share from 90 cents a year ago.
The company also amended and increased its revolving credit facility by $40 million to $290 million and expanded the term loan facility by $50 million to $140 million.
The struggling retailer and WHM Global also struck an intellectual property partnership and WHM plans to invest $235 million for a 60% stake.
WHM also agreed to acquire 5.4 million shares of the company priced at $4.60 a share, representing pro forma 7.4% stake in the company.
GameStop Corp increased 8.4% to $24.13 after the game console retailer said fiscal third quarter revenue fell 8.5% to $1.18 billion and net loss shrank to $94.7 million from $105.4 million and diluted loss per share fell to 31 cents from 35 cents a year ago.
In the quarter, cash flow from operating activities swung to $177 million from outflow of $293.7 million a year ago reflecting lower investment in inventories.
Ollie's Bargain Outlet Holdings Inc soared 7.1% to $51.04 after the deep discount retailer said third quarter sales increased 9% to $418.1 million and comparable store sales increased 1.9%.
Net income decreased 0.4% to $23.1 million or 37 cents compared with $23.2 million or 36 cents per diluted share a year ago.
Inventories at the end of the fiscal third quarter increased 11% to $523.7 million compared to $471.8 million a year ago reflecting higher store counts, the timing of merchandise receipts, and higher supply chain costs.
Oxford Industries decreased 2.6% to $105.40 after the parent of Tommy Bahamas and Lily Pulitzer reported quarterly results that were ahead of market expectations.
Revenue in the fiscal third quarter increased 26% to $313 million from $248 million a year ago.
Net income in the period decreased to $19.7 million from $25.98 million and diluted earnings per share fell to $1.22 from $1.54 a year ago.
The fashion apparel retailer revised higher its revenue estimate of fiscal 2022 to between $1.395 billion and $1.410 billion compared to $1.14 billion a year ago and GAPP diluted earnings per share between $9.89 and $10.04.
Revenue in the fiscal fourth quarter is expected to fall between $366 million and $381 million compared to $300 million a year ago.
Rent the Runway Inc soared 65.5% to $2.25 after the online apparel retailer platform reported were ahead of market expectations and offered an optimistic outlook.
Revenue in the third quarter increased 31% to $77.4 million and gross margin increased 7 percentage points to 41%
Net loss in the quarter shrank to $36.1 million from $87.8 million and diluted loss per share declined to 56 cents from $6.72 a year ago.
The online retailer estimated revenue in the fourth quarter between $72 million and $74 million and adjusted operating margin between 4% and 5%.
Stocks Rebound After 5 Days of Losses, Jobless Claims Rise for 8th Week
Barry Adams
08 Dec, 2022
New York City
Stocks opened higher on Wall Street as investors continue to weigh the economic slowdown outlook against how high rates have to rise to bring down the inflation to 2%.
Investor sentiment has oscillated between soft landing and stagflation scenarios as the Federal Reserve's monetary policy battles stubborn inflation.
Major averages the S&P 500 and the Nasdaq Composite indexes have declined for five days in a row and investors are hoping that the Federal Reserve will moderate rate increase to 50 basis points after the policy meeting next week.
The S&P 500 index increased 0.8% to 3,965.61 and the Nasdaq Composite index advanced 1.1% to 11,082.18.
Crude Oil Rebounds, Gasoline at One-year Low
The unleaded gasoline price at pump stations fell to $3.329 a gallon, below the $3.343 price a year ago despite geopolitical tensions in Europe and OPEC+ production cuts, AAA said Thursday.
Crude oil traded higher $1.75 to $73.79 a barrel and natural gas increased 21 cents to $5.93 a thermal unit.
Treasury Yields Stay Near 2-month Low
The U.S. Treasury note yields inched higher but traded near 2-month lows and the spread between 2-year and 10-year debt held at 0.8 percentage points.
The yield on 2-year Treasury notes increased to 4.30%, 10-year Treasury notes inched up to 3.37% and 30-year Treasury bonds edged up to 3.45%.
Weekly Jobless Claims Rise
Initial jobless claims increased to 230,000 and continuing claims rose 62,000 to 1.67 million for the week ending November 26, the U.S. Department of Labor said Thursday.
Continuing claims increased for the eighth week in a row and the claims were the largest since early February.
U.S. Stock Movers
GameStop Corp increased 8.4% to $24.13 after the game console retailer said fiscal third quarter revenue fell 8.5% to $1.18 billion and net loss shrank to $94.7 million from $105.4 million and diluted loss per share fell to 31 cents from 35 cents a year ago.
In the quarter, cash flow from operating activities swung to $177 million from outflow of $293.7 million a year ago reflecting lower investment in inventories.
Ciena Corporation soared 19.4% to $51.64 after the telecom gear maker said revenue in the fiscal fourth quarter fell 6.8% to $971 million and net income plunged to $57.6 million from $103.5 million or 39 cents to from 66 cents a year ago.
Express, Inc soared 31.2% to $1.28 after the company said revenue in the fiscal third quarter declined 8% to $434.1 million and net loss increased to $34.4 million from $13.1 million or 50 cents per share from 90 cents a year ago.
The company also amended and increased its revolving credit facility by $40 million to $290 million and expanded the term loan facility by $50 million to $140 million.
The struggling retailer and WHM Global also struck an intellectual property partnership and WHM plans to invest $235 million for a 60% stake.
WHM also agreed to acquire 5.4 million shares of the company priced at $4.60 a share, representing pro forma 7.4% stake in the company.
Market Volatility Returns, Oil Drips to New Low, Freight Rates Plunge
Barry Adams
07 Dec, 2022
New York City
Stocks on Wall Street lacked direction as investors shifted focus to weakening economic conditions abroad and rising rate worries at home.
Investors are in a holding pattern ahead of rate decisions next week from the U.S. Federal Reserve, European Central Bank and the Bank of England.
Central banks around the world slowed or halted the pace of rate hikes and policymakers are worried about the upcoming global economic slowdown.
The Bank of Canada lifted its key lending rate by 50 basis points to 4.25% and the Reserve Bank of India raised its rate at a slower pace of 35 basis points to 6.25% but the Banco Central Do Brasil left its Selic rate at 13.75%.
The central bank in Canada at its last meeting in 2022 pushed the rates to the highest level since 2008 and increased rates by 400 basis points since March.
Container Freight Rates Plunge
In another sign of a global slowdown, the Baltic Dry Index, a measure of container freight rate, plunged 90% from a year ago, reflecting the falling demand for container traffic from China to the U.S. West Coast.
Freight rates to the West Coast from China are approaching pre-pandemic levels but rates are still 32% higher for shipments from China to the U.S. East Coast ports.
Volatile Stock Market Indexes
Stock market indexes traded sideways in choppy trading and took cue from the trading in bond and energy markets.
The S&P 500 index declined 0.2% to 3,933.92 and the Nasdaq Composite index fell 0.5% to 10,958.55.
Recession Worries Depress Bond Yields
The yield on U.S. Treasuries drifted lower as rate-path worries and economic slowdown worries overshadowed elevated inflation anxieties.
The yield on 2-year Treasury notes decreased to 4.30%, 10-year Treasury notes eased to 3.47% and 30-year Treasury bonds declined to 3.47%.
Crude Oil Drops to One-year Low
Crude oil prices eased for the fourth day in a row amid global slowdown worries. The price dropped to a one-year low on demand worries from China and rising supply from the shale gas producers.
Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown.
Crude oil dropped $1.72 to $72.46 a barrel and natural gas edged up 33 cents to $5.80 a thermal unit.
Mortgage Rates Ease
The average mortgage rate fell 8 basis points to 6.41% for 30-year fixed-rate mortgages for conforming loan balances with 20% down payment, the Mortgage Bankers Association said Wednesday.
U.S. Stock Movers
Lowe's announced a new $15 billion stock repurchase program with no expiration date in addition to the previous program's balance of $6.4 billion as of December 6, 2022.
Toll Brothers rose 1.6% to $46.70 after the luxury home builder said the fiscal fourth quarter sales increased 23.3% to $3.7 billion and net income rose to $640.5 million from $374.3 million or $5.63 from $3.02 a share from a year ago.
Thor Industries increased 3.5% to $87.10 after the recreation vehicle maker said net sales in the fiscal first quarter increased 21.5% to $3.11 billion and net income declined to $136.2 million from $242.2 million or $2.53 from $4.34 a year ago.
MongoDB soared 27% to $184.32 after the database developer said the fiscal third quarter revenue increased 47% to $333.6 million and net income rose to $84.8 million from $81.3 million or $1.23 from $1.22 a diluted share a year ago.
Non-GAAP net income increased to $18.7 million or $0.23 per share based on 80.4 million diluted weighted-average shares outstanding from $2.6 million or $0.03 per share in the year-ago period.
European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.
Resource stocks led the decliners on the worries that rising interest rates and ongoing inflation pressures spreading to the service sector are expected to keep consumer demand in check.
European Bond Yields at 3-month Lows
Bond yield across the eurozone and the UK dropped and German yields neared a 3-month low.
Interest rates will rise but are "very near" the neutral level, said ECB policymaker Constantinos Herodotou on Tuesday and adding to the chorus of policymakers suggesting higher rates.
The European Central Bank and the Bank of England are expected to announce rate decisions next week.
The yield on 10-year German Bunds declined to 1.77%, French bonds fell to 2.2%, the UK Gilts eased to 3.04% and Italian bonds inched lower to 3.6%.
German Industrial Production Eases
German industrial production eased 0.1%after adjusting for seasonal factors and calendar in October from the previous month, the preliminary data from Destatis showed.
In September, production rose 1.1% from the previous month.
Industrial production was unchanged in October from a year ago.
Natural Gas Based Electricity Production Rises In Germany
Germany stepped up its electricity production using coal, renewable sources and natural gas in the third quarter, a separate report from Destatis showed Wednesday.
About 36% of the electricity produced and fed into the grid in Germany in the third quarter of 2022 came from coal-fired power plants compared to 31.9% in a similar period a year ago.
Electricity production from natural gas, too, rose despite high gas prices., an increase of 4.5% from a year ago and accounted for 9.2% of the electricity compared to 8.8% a year ago.
This was the first time since the second quarter of 2021 that more electricity was produced from natural gas than in the same period a year earlier.
UK Home Price Fall Extend to Third Month
Home prices in the U.K. declined for the third month in a row in November, according to an index tracked by S&P Global, Lloyds Bank and Halifax.
Home price index dropped 2.3% on a monthly basis, the steepest decline in 14 years, and annual pace of increase slowed to 4.7% from 8.2%
Home prices fell in all regions and the average home price declined 2.3% to
Global Gloom Grips European Markets, Brent Crude Drops Below $80
Bridgette Randall
07 Dec, 2022
Frankfurt
European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.
Resource stocks led the decliners on the worries that rising interest rates and ongoing inflation pressures spreading to the service sector are expected to keep consumer demand in check.
Bond Yields
Bond yield across the eurozone and the UK dropped and German yields neared a 3-month low.
Interest rates will rise but are "very near" the neutral level, said ECB policymaker Constantinos Herodotou on Tuesday and adding to the chorus of policymakers suggesting higher rates.
The European Central Bank and the Bank of England are expected to announce rate decisions next week.
The yield on 10-year German Bunds declined to 1.77%, French bonds fell to 2.2%, the UK Gilts eased to 3.04% and Italian bonds inched lower to 3.6%.
Crude Oil Drops to 2022- Low
Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown and the latest data from China's international trade added to the market gloom.
Brent crude oil declined 2.2% to $77.57 and the Dutch TTF natural gas futures rose 8% to 149.40 euros per MWh.
German Industrial Production Eases
German industrial production eased 0.1%after adjusting for seasonal factors and calendar in October from the previous month, the preliminary data from Destatis showed.
In September, production rose 1.1% from the previous month.
Industrial production was unchanged in October from a year ago.
Natural Gas Based Electricity Production Rises In Germany
Germany stepped up its electricity production using coal, renewable sources and natural gas in the third quarter, a separate report from Destatis showed Wednesday.
About 36% of the electricity produced and fed into the grid in Germany in the third quarter of 2022 came from coal-fired power plants compared to 31.9% in a similar period a year ago.
Electricity production from natural gas, too, rose despite high gas prices., an increase of 4.5% from a year ago and accounted for 9.2% of the electricity compared to 8.8% a year ago.
This was the first time since the second quarter of 2021 that more electricity was produced from natural gas than in the same period a year earlier.
UK Home Price Fall Extend to Third Month
Home prices in the U.K. declined for the third month in a row in November, according to an index tracked by S&P Global, Lloyds Bank and Halifax.
Home price index dropped 2.3% on a monthly basis, the steepest decline in 14 years, and annual pace of increase slowed to 4.7% from 8.2%
Home prices fell in all regions and the average home price declined 2.3% to