Market Update
U.S Movers: Alphabet, Brinker International, Kellanova
Scott Peters
14 Aug, 2024
New York City
Kellanova surged 7.8% to $80.35 after the snack maker agreed to be acquired by Mars for $83.50 per share in cash, or a total consideration of $35.9 billion, including debt.
The purchase price represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of August 2, 2024.
The total consideration represents an acquisition multiple of 16.4 of adjusted operating earnings as of June 29.
Brinker International decreased 13.4% to $60.97, and the parent company of Chili's restaurant chain reported weaker-than-expected fiscal fourth quarter earnings.
The company's annual guidance fell short of market expectations.
Revenue in the quarter ending on June 26 increased to $1.2 billion from $1.1 billion, net income edged up to $57.3 million from $54.2 million, and diluted earnings per share expanded to $1.24 from $1.19 a year ago.
Comparable restaurant sales increased by 13.5%, driven by a 14.8% increase at Chili's and a 2.5% increase at Maggiano's restaurant chains.
Alphabet Class A declined 3.6% to $158.19 after a Bloomberg New report suggested that U.S. regulators are considering a break-up of mega-cap tech companies.
U.S. Benchmark Indexes Flatlined After Inflation Eased to 2.9%
Barry Adams
14 Aug, 2024
New York City
U.S. stocks were unchanged after the release of the consumer price inflation report.
The S&P 500 index and the Nasdaq Composite edged lower in active trading as closely watched consumer price inflation eased in July.
Consumer price inflation eased to 2.9% in July from 3.0% in June, and the measure of price increase dropped to the lowest level since March 2021, the Bureau of Labor Statistics reported Wednesday.
Core inflation, which excludes food and energy prices, slowed for the fourth month in a row to 3.2%.
On a monthly basis, CPI increased by 0.2%, and core inflation increased by 0.2% from 0.1% in the previous month.
A softer inflation report followed the softer producer price inflation report on Tuesday, raising hopes that the Federal Reserve is more likely to lower rates after the September policy meeting.
Investors are looking forward to the release of retail sales data on Thursday.
Despite the cooling of inflation, prices are still rising from a higher base, and the price of homes, automobiles, food, consumer services, and energy products is still higher by between 50% and 100% from the pre-pandemic levels in 2019.
Most consumers are still feeling stretched because wage gains have lagged inflation significantly over the last five years.
The Federal Reserve's premature rate reduction will only fan inflationary forces and revive price increases at a faster pace in the fourth quarter and beyond, which could stoke another round of the inflation cycle.
U.S. Indexes and Treasury Yields
The S&P 500 index fell 0.1% to 5,428.96, the Nasdaq Composite decreased 0.4% to 17,128.35, and the Russell 2000 index increased 0.1% to 2,096.66.
The yield on 2-year Treasury notes edged lower to 3.96%, 10-year Treasury notes decreased to 3.83%, and 30-year Treasury bonds inched lower to 4.13%.
WTI crude oil decreased $0.01 to $78.36 a barrel, and natural gas prices edged up 9 cents to $2.24 a thermal unit.
Gold decreased by $6.74 to $2,457.35 an ounce, and silver decreased by $0.10 to $27.72.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 102.38.
U.S. Stock Movers
Kellanova surged 7.8% to $80.35 after the snack maker agreed to be acquired by Mars for $83.50 per share in cash, or a total consideration of $35.9 billion, including debt.
The purchase price represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of August 2, 2024.
The total consideration represents an acquisition multiple of 16.4 of adjusted operating earnings as of June 29.
Brinker International decreased 13.4% to $60.97, and the parent company of Chili's restaurant chain reported weaker-than-expected fiscal fourth quarter earnings. The company's annual guidance fell short of market expectations.
Revenue in the quarter ending on June 26 increased to $1.2 billion from $1.1 billion, net income edged up to $57.3 million from $54.2 million, and diluted earnings per share expanded to $1.24 from $1.19 a year ago.
Comparable restaurant sales increased by 13.5%, driven by a 14.8% increase at Chili's and a 2.5% increase at Maggiano's restaurant chains.
Alphabet Class A declined 3.6% to $158.19 after a Bloomberg New report suggested that U.S. regulators are considering a break-up of mega-cap tech companies.
Europe Movers: Aviva, Balfour Beatty, Flutter Entertainment, Straumann Holding, TUI, ThyssenKrupp, UBS
Inga Muller
14 Aug, 2024
Frankfurt
The Eurozone's GDP in the second quarter accelerated from the previous quarter, and industrial output declined from a year ago in June. Consumer price inflation in the UK edged up in July.
The DAX index increased by 0.4% to 17,879.06; the CAC-40 index rose by 0.3% to 7,299.45; and the FTSE 100 index advanced by 0.2% to 8,253.56.
The yield on 10-year German bonds edged lower to 219%, French bonds inched down to 2.93%, the UK gilts edged lower to 3.85%, and Italian bonds inched up to 3.58%.
UBS Group AG jumped 3.5% to CHF 26.0, and the Swiss bank reported that second-quarter profit jumped to $1.1 billion.
Straumann Holding soared 12.8% to CHF 125.20 after the dental implant maker lifted its 2024 guidance.
Revenue in the first half increased 16.1% to 1.3 billion.
The company also announced the sale of its DrSmile aligner business to Barcelona-based Impress Group in exchange for a 20% stake in the dental clinic network operator in Spain, the UK, Italy, and Portugal.
Aviva plc increased 0.2% to 489.70 pence after the insurance company reported a better-than-expected 14% increase in operating profit in the first half.
Balfour Beatty decreased 2.3% to 398.82 pence, despite the construction service provider reporting an increase in earnings for the first half.
Flutter Entertainment jumped 8.7% to 15,930.0 pence, and the world's largest online betting firm reported better-than-expected second quarter results and lifted its annual outlook.
TUI AG increased 2.6% to €5.69, and the tour operator reported better-than-expected profit in the fiscal third quarter.
ThyssenKrupp declined 4% to €3.16 after the steelmaker lowered its annual profit estimate for the third time this year.
Revenue in the third quarter decreased to €9.0 billion from €9.6 billion, adjusted EBIT fell to €149 million from €243 million, and new orders slowed to €8.4 billion from €9.4 billion a year ago, respectively.
The steel company revised its annual sales to decline between 6% and 8% and adjusted EBIT to be around 500 million from the previous estimate of an "increase in the high three-digit million euros range."
European Markets Extended Recent Rally, Eurozone Second Quarter GDP Growth Confirmed at 0.3%
Bridgette Randall
14 Aug, 2024
London
European markets edged slightly higher, and investors reviewed key economic data in the eurozone and the U.K.
Benchmark indexes in Paris, London, and Frankfurt advanced after the eurozone GDP in the second quarter was confirmed to expand 0.3% from the previous quarter, matching the flash estimate.
On an annual basis, GDP expanded by 0.6% in the second quarter, following the 0.5% increase in the first quarter, Eurostat reported Wednesday.
Eurozone's industrial output, adjusted for seasonal factors, declined 3.9% on the year and gained 0.3% from the previous month in June, Eurostat reported in a separate report Wednesday.
Energy production increased 1.4%, intermediate goods production rose 0.7%, capital goods advanced 0.9%, consumer durable goods production increased 3.2%, and consumer non-durable goods production decreased 2.0%.
Consumer price inflation in the U.K. accelerated to an annual pace of 2.2% from 2.0% in June, the Office for National Statistics reported Wednesday.
Consumer prices accelerated for the first time since December, and the core rate of inflation, which excludes energy and food prices, eased to 3.3% from 3.5% in the previous month.
Europe Indexes and Yields
The DAX index increased by 0.4% to 17,879.06; the CAC-40 index rose by 0.3% to 7,299.45; and the FTSE 100 index advanced by 0.2% to 8,253.56.
The yield on 10-year German bonds edged lower to 2.19%, French bonds inched down to 2.93%, the UK gilts edged lower to 3.85%, and Italian bonds inched up to 3.58%.
The euro edged down to $1.10; the British pound inched lower to $1.282; and the U.S. dollar weakened to 86.30 Swiss cents.
Brent crude decreased $0.16 to $82.52 a barrel, and the Dutch TTF natural gas fell by €0.04 to €39.32 per MWh.
Europe Stock Movers
UBS Group AG jumped 3.5% to CHF 26.0, and the Swiss bank reported that second-quarter profit jumped to $1.1 billion.
Straumann Holding soared 12.8% to CHF 125.20 after the dental implant maker lifted its 2024 guidance.
Revenue in the first half increased 16.1% to 1.3 billion.
The company also announced the sale of its DrSmile aligner business to Barcelona-based Impress Group in exchange for a 20% stake in the dental clinic network operator in Spain, the UK, Italy, and Portugal.
Aviva plc increased 0.2% to 489.70 pence after the insurance company reported a better-than-expected 14% increase in operating profit in the first half.
Balfour Beatty decreased 2.3% to 398.82 pence, despite the construction service provider reporting an increase in earnings for the first half.
Flutter Entertainment jumped 8.7% to 15,930.0 pence, and the world's largest online betting firm reported better-than-expected second quarter results and lifted its annual outlook.
TUI AG increased 2.6% to €5.69, and the tour operator reported better-than-expected profit in the fiscal third quarter.
ThyssenKrupp declined 4% to €3.16 after the steelmaker lowered its annual profit estimate for the third time this year.
Revenue in the third quarter decreased to €9.0 billion from €9.6 billion, adjusted EBIT fell to €149 million from €243 million, and new orders slowed to €8.4 billion from €9.4 billion a year ago, respectively.
The steel company revised its annual sales to decline between 6% and 8% and adjusted EBIT to be around 500 million from the previous estimate of an "increase in the high three-digit million euros range."
Japan Indexes Extend 2-day Rally, Prime Minister Kishida Plans to Step Down
Akira Ito
14 Aug, 2024
Tokyo
Market indexes in Tokyo extended gains for the second day in a row following a sharp rebound in overnight trading in New York.
The Nikkei 225 index gained 0.7% and the Topix index advanced more than 1%, driven by a rise in tech and financial stocks.
Market sentiment recovered for the second day in a row, but enthusiasm was tempered amid lingering worries about the rate path and the appropriate level of the yen-dollar exchange rate.
Investors have been on edge after the Bank of Japan unexpectedly raised rates at the end of July and signaled more rate hikes to follow, supporting the strengthening of the yen.
However, investors are still worried that the yen may face renewed pressure because of the large yield gap between the Japanese and U.S. bonds.
That rate gap could shrink in the fourth quarter if the U.S. Federal Reserve lowers rates by as much as 75 basis points and the Bank of Japan lifts rates by another 25 basis points.
The yen closed at 147.15 against the U.S. dollar in Tokyo trading.
Benchmark indexes experienced a wild swing in the last week after the BoJ's hawkish outlook, coupled with economic slowdown worries in the U.S.
On the economic front, the Reuters Tankan Survey showed business sentiment among manufacturing companies weakened in August amid lackluster demand from China.
Prime Minister Fumio Kishida informed leaders of the Liberal Democratic Party that he is not planning to seek reelection at the end of his three-year term in September.
Kishida's move now shifts the focus to younger leaders at the party's election next month.
Japan Movers
The Nikkei 225 Stock Average jumped 0.7% to 36,495.29, and the Topix index gained 1.2% to 2,584.10.
Tech and semiconductor equipment makers rebounded for the second day in a row after the Nasdaq Composite jumped more than 2% in overnight trading.
Advantest, Tokyo Electron, Screen Holdings, Lasertec, and SoftBank advanced between 2% and 4%.
Mercari dropped 7.4% to ¥2,013.50, and the online marketplace operator signaled challenges in its U.S. operations.
The company said revenue in the financial year ending in June increased 9% and core operating profit advanced 13% from a year ago, respectively.
China's Weak Credit Demand Highlights Changing and Slowing Economic Activities, Market Indexes Halt 5-Day Rally
Li Chen
14 Aug, 2024
Hong Kong
Stocks in China faced headwinds as weak demand for new loans raised additional worries about the economic growth outlook.
The Hang Seng index decreased 0.4% and the CSI 300 index fell 0.5% as investors awaited the release of retail sales and industrial output data on Thursday.
The Hang Seng halted its five-day rally amid worries about the macroeconomic backdrop and weak outlook for corporate earnings.
China's new loans plunged 88% to 260 billion yuan, or $36.3 billion, in July, driven by weak credit demand, the People's Bank of China reported late Tuesday.
New loans in June were 2.13 trillion yuan and 345.9 billion yuan a year earlier.
The weakness in corporate loans and residential mortgage loans dragged the overall demand for new credit, driven by seasonal factors that also played a role, as July is generally a weak month for new loans.
China's new loan demand is on the slide as new residential property construction plunges and demand from local government financing vehicles sharply falls.
Investors are bracing for more weak economic data on Thursday, and retail sales are likely to rise less than 3% and manufacturing production is expected to show broad weakness despite the strong export shipments.
China Stock Movers
The Hang Seng index declined 0.4% to 17,110.23 and the CSI 300 index dropped 0.5% to 3,316.61.
Tencent Holdings declined 2.7% to HK $370.40, Alibaba Holding decreased 0.3% to HK $78.40, and Baidu fell 0.2% to HK $82.45.
Zhejiang Weihua New Material soared 40% to 23.81 yuan on its first day of trading in Shanghai, and the maker of fluorinated fine chemicals raised 1.5 billion yuan in an initial public offering.
4-Day Market Rally Gathers Momentum On Wall Street, World Markets Follow
Alexander Garcia
13 Aug, 2024
Miami
Benchmark indexes raced to one-month high levels as market sentiment stabilized after wild swings in the previous week.
Stocks advanced in a broad rally as investors bid up stocks after the release of the producer price inflation report.
The S&P 500 index gained 1.5% and the Nasdaq Composite jumped 2.7% as investors kept hopes of a rate cut alive after producer price inflation slowed in July.
Factory gate prices rose 0.1% on the month in July, slower than the 0.2% rise in June, and core PPI was unchanged from the prior month, the U.S. Bureau of Labor Statistics reported Tuesday.
On an annual basis, producer price inflation rose at a slower pace of 2.2% from an upwardly revised 2.7% in June.
A softer increase in producer prices also raised hopes that consumer price inflation, scheduled to be released on Wednesday, will also rise at a slower pace of 0.2% from the previous month in July and 3% from a year ago.
Investors are counting on at least a 25 basis point cut in interest rate after the September policy meeting, but those hopes may be in vain if inflation fails to weaken to 2%, the target level set by the Fed's policymakers.
U.S. Indexes and Treasury Yields
The S&P 500 index gained 1.4% to 5,424.24, the Nasdaq Composite advanced 2.2% to 17,159.31, and the Russell 2000 index increased 1.2% to 2,086.34.
The yield on 2-year Treasury notes edged lower to 3.98%, 10-year Treasury notes increased to 3.98%, and 30-year Treasury bonds inched lower to 4.19%.
WTI crude oil decreased $1.36 to $78.69 a barrel, and natural gas prices edged down 3 cents to $2.15 a thermal unit.
Gold increased by $5.70 to $2,469.02 an ounce, and silver decreased by $0.24 to $27.76.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 103.01.
U.S. Stock Movers
Starbucks surged 16% to $89.47 after the coffee chain announced a surprise CEO change, replacing Laxman Narasimhan with Brian Niccol, the current CEO of Chipotle Mexican Grill.
Laxman appears to have been forced out by the company under mounting pressure from activist investors Starboard Value and Elliott Investment.
Chipotle Mexican Grill dropped 8.6% to $51.06.
Home Depot dropped 1.5% to $340.43, and the home improvement retailer estimated a larger comparable same-store sales decline in 2024.
The retailer estimated comparable sales to fall between 3% and 4% from the previous estimate of a 1% decline.
Total revenue is expected to rise between 2.5% and 3.5%, higher than the previous estimate of a 1% increase.
Super Micro Computer increased 2.9% to $555.91 and extended its two-day gains to 10%.
The server and data storage company plunged 20% after reporting weaker-than-expected quarterly earnings, but sales were ahead of market expectations.
ON Holding AG decreased 0.5% to $39.35, and the Swiss athletic apparel and accessories company reported better-than-expected revenue in the second quarter, but earnings per share missed analyst expectations.
Revenue increased 28% to CHF 567.7 million, income increased eightfold to CHF 30.8 million from CHF 3.3 million, and basic earnings per share soared to 10 Swiss cents from 1 cent a year ago.
European Indexes Lacked Direction, Investor Sentiment Plunged
European markets lacked direction in Tuesday's trading, and investors awaited the release of key economic data in the eurozone, the U.S., and the U.K.
Benchmark indexes in Paris, London, and Frankfurt headed lower and extended recent losses amid rate path uncertainties and a weak economic outlook.
The U.K. jobless rate eased to 4.2% in the three months to June from 4.4% in the period to May, according to the latest data released by the Office for National Statistics.
Regular pay excluding bonuses increased 5.4% to £645 per week in three months to June, according to a separate report released by the ONS.
The weekly pay increase slowed from 5.8% in the previous three-month period ending in May.
Adjusted for inflation, regular weekly pay, excluding bonus, increased to 2.4%, slower than 2.5% in the previous three-month period.
The ZEW Indicator of Economic Sentiment for the eurozone decreased for the second month in a row in August 2024, falling 25.8 points to a nine-month low of 17.9.
The weakening domestic economic backdrop, rising tensions in the Middle East, and ongoing war in Ukraine contributed to the deterioration in sentiment for the second month in a row.
In the meantime, the indicator of the current economic situation increased by 3.7 points to -32.4, and inflation expectations edged up by 2 points to -39.1.
Europe Indexes and Yields
The DAX index increased by 0.4% to 17,812.45; the CAC-40 index rose by 0.4% to 7,275.87; and the FTSE 100 index gained by 0.3% to 8,235.23.
The yield on 10-year German bonds edged lower to 2.20%, French bonds inched down to 2.95%, the UK gilts edged lower to 3.90%, and Italian bonds inched up to 3.61%.
The euro edged down to $1.09; the British pound inched lower to $1.272; and the U.S. dollar weakened to 86.69 Swiss cents.
Brent crude decreased $1.32 to $80.96 a barrel, and the Dutch TTF natural gas fell by €0.45 to €39.36 per MWh.
Europe Stock Movers
Just Group soared 17% to 137.20 pence after the retirement income and services provider reported better-than-expected first-half results and lifted its 2024 estimates.
Dowlais Group decreased 8% to 53.85 pence after the UK-based automotive parts maker reported a wider loss in the first half and the company lowered its annual revenue outlook.
Valneva SE increased 5.2% to €3.23, and the French biotech company's net income in the first half swung to profit and confirmed its annual revenue outlook.
Brenntag declined 1% to €63.22, and the German chemical distributor lowered its full-year estimate.
Evotec SE gained 3.4% to €5.58, and the German drug maker achieved a significant milestone in its partnership with Bristol Myers Squibb, triggering a performance-based payment of $75 million.
HelloFresh SE jumped 10.9% to €5.99 after the meal-kit provider reported better-than-expected results in the second quarter.
Japan Indexes Soared 3% After Wholesale Inflation Accelerated In July
Investors bid up stocks following a three-day holiday as market sentiment stabilized after wild swings in the previous week.
The Nikkei 225 stock average gained 3%, and the Topix index gained 2.6%.
Market sentiment turned positive after a week of tumultuous trading that saw the Nikkei plunge 12.4%, recording the single-largest point decline, but managed to recover the losses in the following session, in the record point gains.
Bank of Japan's unexpected rate cut and hawkish rate outlook contributed to the wild swings in markets last week, forcing Deputy Governor of the Bank of Japan Shinichi Uchida to comment that the central bank will refrain from raising rates when markets are unstable, calming market nerves.
The yen traded at 147.67 against the U.S. dollar and weakened from the eight-month high as investors worried that the Bank of Japan's reluctance to lift rates will continue to keep pressure on the yen.
Market sentiment was also bolstered after the producer price index increased 3% in July, the Bank of Japan reported Tuesday.
Producer prices increased after energy costs rose, driven by the ending of government subsidies.
Producer prices accelerated for the sixth month in a row and increased to 3% for the first time since August 2023, after the yen-denominated costs of imported goods and materials soared 10.8%.
Producer price inflation in June was 2.9%.
Weaker yen has contributed to higher prices for imported food, fuel, and materials, but the recent rebound in the yen may slow inflation in the months ahead.
Japan Stock Movers
The Nikkei 225 stock average jumped 3% to 36,096.44, and the Topix index advanced 2.6% to 2,546.76.
Tech stocks were among the leading gainers Tuesday's trading following the rebound in artificial intelligence-linked stocks in New York.
Tokyo Electron gained 6.3% to ¥27,430.0, Advantest Corp. jumped 7.3% to ¥6,217.0, and Screen Holdings increased 7.3% to ¥10,390.0.
Rakuten Group advanced 8.8% to ¥847.90, and Trend Micro jumped 5.4% to ¥8157.0.
Mitsubishi UFJ Financial increased 1.7% to ¥1,435.0, Sumitomo Mitsui advanced 3.6% to ¥9,296.0, and Mizuho Financial gained 2.7% to ¥2,855.0.
Sharp Corp. declined 5.7% to ¥817.60 and Nippon Express declined 2.5% to ¥6,717.0.
Meiji Holdings dropped 5.2% to ¥3,452.0, and the company reported better-than-expected June quarter revenue of 279 billion yen and earnings per share of 50.23 yen.
Hong Kong Indexes Extended 5-day Rally
Benchmark indexes in Shanghai and Hong Kong struggled to advance amid ongoing economic growth worries and mixed corporate performance.
The Hang Seng Index added 0.2%, but the CSI 300 index edged down 0.2% as investors awaited the release of a flood of economic data later in the week.
The Hang Seng index extended gains for the fifth session in a row, and the benchmark index rebounded but hovered near its three-month low.
Moreover, trading contracted on the Hong Kong Stock Exchange, and stock trading volume dropped to a six-month low of HK $70.3 billion or US$9 billion on Monday, according to the data available from the exchange.
China's statistics bureau is scheduled to release retail sales, industrial output, fixed asset investment, and home price data later in the week.
Market sentiment has been cautious after consumer price inflation advanced for the sixth month in a row in July, but producer price inflation declined for the 22nd month in a row, confirming the deflation trend.
Investors are also worried that the recent gains in exports may come to a halt in the second half as punitive tariffs kick in in the U.S. and Europe, contributing to the economic slowdown in the period.
China Stock Movers
The Hang Seng index increased 0.3% to 17,155.99, and the CSI 300 index fell 0.2% to 3,320.61.
Tencent Holdings jumped 1% to HK $378.60, and the diversified Internet services provider is scheduled to release its earnings on Wednesday.
Investors are estimating earnings to jump more than 50% in the second quarter compared to a year ago.
Country Garden Services decreased 5.5% to HK $4.44, and the company said profit in the first half declined 37% from a year ago to 1.7 billion yuan, or $237 million.
Country Garden Services estimated first-half revenue between 20.9 billion yuan and 21.2 billion yuan and net income between 1.47 billion yuan and 1.65 billion yuan.
The company said it lowered its revenue estimate because of property market weakness and reduced investment income.
Despite the current market weakness, the company expects over $12.2 billion in cash reserves at the end of the first half, as it plans to tighten its risk management and cut costs to improve profitability.
U.S. Movers: Chipotle Mexican Grill, Home Depot, On Holdings, Starbucks, Super Micro Computer
Scott Peters
13 Aug, 2024
New York City
Starbucks surged 16% to $89.47 after the coffee chain announced a surprise CEO change, replacing Laxman Narasimhan with Brian Niccol, the current CEO of Chipotle Mexican Grill.
Laxman was forced out by the company under mounting pressure from activist investors Starboard Value and Elliott Investment.
Chipotle Mexican Grill dropped 8.6% to $51.06.
Home Depot dropped 1.5% to $340.43, and the home improvement retailer estimated a larger comparable same-store sales decline in 2024.
The retailer estimated comparable sales to fall between 3% and 4% from the previous estimate of a 1% decline.
Total revenue is expected to rise between 2.5% and 3.5%, higher than the previous estimate of a 1% increase.
Super Micro Computer increased 2.9% to $555.91 and extended its two-day gains to 10%.
The server and data storage company plunged 20% after reporting weaker-than-expected quarterly earnings, but sales were ahead of market expectations.
On Holding AG decreased 0.5% to $39.35, and the Swiss athletic apparel and accessories company reported better-than-expected revenue in the second quarter, but earnings per share missed analyst expectations.
Revenue increased 28% to CHF 567.7 million, income increased eightfold to CHF 30.8 million from CHF 3.3 million, and basic earnings per share soared to 10 Swiss cents from 1 cent a year ago.
Wall Street Indexes Jumped After Benign Wholesale Inflation Report
Barry Adams
13 Aug, 2024
New York City
Stocks advanced in a broad rally as investors bid up stocks after the release of the producer price inflation report.
The S&P 500 index gained 0.7% and the Nasdaq Composite jumped 1.4% as investors kept hopes of a rate cut alive after producer price inflation slowed in July.
Factory gate prices rose 0.1% on the month in July, slower than the 0.2% rise in June, and core PPI was unchanged from the prior month, the U.S. Bureau of Labor Statistics reported Tuesday.
On an annual basis, producer price inflation rose at a slower pace of 2.2% from an upwardly revised 2.7% in June.
A softer increase in producer prices also raised hopes that consumer price inflation, scheduled to be released on Wednesday, will also rise at a slower pace of 0.2% from the previous month in July and 3% from a year ago.
U.S. Indexes and Treasury Yields
The S&P 500 index gained 0.7% to 5,386.57, the Nasdaq Composite advanced 1.4% to 17,014.70, and the Russell 2000 index increased 0.8% to 2,079.04.
The yield on 2-year Treasury notes edged lower to 3.98%, 10-year Treasury notes increased to 3.98%, and 30-year Treasury bonds inched lower to 4.19%.
WTI crude oil decreased $0.28 to $79.76 a barrel, and natural gas prices edged up 2 cents to $2.20 a thermal unit.
Gold increased by $9.09 to $2,466.54 an ounce, and silver decreased by $0.31 to $27.69.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 103.01.
U.S. Stock Movers
Starbucks surged 16% to $89.47 after the coffee chain announced a surprise CEO change, replacing Laxman Narasimhan with Brian Niccol, the current CEO of Chipotle Mexican Grill.
Laxman was forced out by the company under mounting pressure from activist investors Starboard Value and Elliott Investment.
Chipotle Mexican Grill dropped 8.6% to $51.06.
Home Depot dropped 1.5% to $340.43, and the home improvement retailer estimated a larger comparable same-store sales decline in 2024.
The retailer estimated comparable sales to fall between 3% and 4% from the previous estimate of a 1% decline.
Total revenue is expected to rise between 2.5% and 3.5%, higher than the previous estimate of a 1% increase.
Super Micro Computer increased 2.9% to $555.91 and extended its two-day gains to 10%.
The server and data storage company plunged 20% after reporting weaker-than-expected quarterly earnings, but sales were ahead of market expectations.
ON Holding AG decreased 0.5% to $39.35, and the Swiss athletic apparel and accessories company reported better-than-expected revenue in the second quarter, but earnings per share missed analyst expectations.
Revenue increased 28% to CHF 567.7 million, income increased eightfold to CHF 30.8 million from CHF 3.3 million, and basic earnings per share soared to 10 Swiss cents from 1 cent a year ago.
Europe Movers: Brenntag, Dowlais Group, Evotec, HelloFresh, Just Group, Valneva
Inga Muller
13 Aug, 2024
Frankfurt
European markets struggled to advance amid rate path uncertainties and weakening investor sentiment.
The DAX index decreased by 0.2% to 17,689.34; the CAC-40 index fell by 0.3% to 7,233.12; and the FTSE 100 index decreased by 0.1% to 8,197.14.
The yield on 10-year German bonds edged lower to 2.20%, French bonds inched down to 2.95%, the UK gilts edged lower to 3.90%, and Italian bonds inched up to 3.61%.
Just Group soared 17% to 137.20 pence after the retirement income and services provider reported better-than-expected first-half results and lifted its 2024 estimates.
Dowlais Group decreased 8% to 53.85 pence after the UK-based automotive parts maker reported a wider loss in the first half and the company lowered its annual revenue outlook.
Valneva SE increased 5.2% to €3.23, and the French biotech company's net income in the first half swung to profit and confirmed its annual revenue outlook.
Brenntag SE declined 1% to €63.22, and the German chemical distributor lowered its full-year estimate.
Evotec SE gained 3.4% to €5.58, and the German drug maker achieved a significant milestone in its partnership with Bristol Myers Squibb, triggering a performance-based payment of $75 million.
HelloFresh SE jumped 10.9% to €5.99 after the meal-kit provider reported better-than-expected results in the second quarter.
European Indexes Lacked Direction, Investor Sentiment Plunged Amid Rising Geopolitical Tensions
Bridgette Randall
13 Aug, 2024
London
European markets lacked direction in Tuesday's trading, and investors awaited the release of key economic data in the eurozone, the U.S., and the U.K.
Benchmark indexes in Paris, London, and Frankfurt headed lower and extended recent losses amid rate path uncertainties and a weak economic outlook.
The U.K. jobless rate eased to 4.2% in the three months to June from 4.4% in the period to May, according to the latest data released by the Office for National Statistics.
Regular pay excluding bonuses increased 5.4% to £645 per week in three months to June, according to a separate report released by the ONS.
The weekly pay increase slowed from 5.8% in the previous three-month period ending in May.
Adjusted for inflation, regular weekly pay, excluding bonus, increased to 2.4%, slower than 2.5% in the previous three-month period.
The ZEW Indicator of Economic Sentiment for the eurozone decreased for the second month in a row in August 2024, falling 25.8 points to a nine-month low of 17.9.
The weakening domestic economic backdrop, rising tensions in the Middle East, and ongoing war in Ukraine contributed to the deterioration in sentiment for the second month in a row.
In the meantime, the indicator of the current economic situation increased by 3.7 points to -32.4, and inflation expectations edged up by 2 points to -39.1.
Europe Indexes and Yields
The DAX index decreased by 0.2% to 17,689.34; the CAC-40 index fell by 0.3% to 7,233.12; and the FTSE 100 index decreased by 0.1% to 8,197.14.
The yield on 10-year German bonds edged lower to 2.20%, French bonds inched down to 2.95%, the UK gilts edged lower to 3.90%, and Italian bonds inched up to 3.61%.
The euro edged down to $1.09; the British pound inched lower to $1.272; and the U.S. dollar weakened to 86.69 Swiss cents.
Brent crude decreased $0.69 to $82.03 a barrel, and the Dutch TTF natural gas fell by €0.41 to €39.41 per MWh.
Europe Stock Movers
Just Group soared 17% to 137.20 pence after the retirement income and services provider reported better-than-expected first-half results and lifted its 2024 estimates.
Dowlais Group decreased 8% to 53.85 pence after the UK-based automotive parts maker reported a wider loss in the first half and the company lowered its annual revenue outlook.
Valneva SE increased 5.2% to €3.23, and the French biotech company's net income in the first half swung to profit and confirmed its annual revenue outlook.
Brenntag declined 1% to €63.22, and the German chemical distributor lowered its full-year estimate.
Evotec SE gained 3.4% to €5.58, and the German drug maker achieved a significant milestone in its partnership with Bristol Myers Squibb, triggering a performance-based payment of $75 million.
HelloFresh SE jumped 10.9% to €5.99 after the meal-kit provider reported better-than-expected results in the second quarter.
Japan Indexes Soared 3%, Producer Price Inflation Accelerated In July
Akira Ito
13 Aug, 2024
Tokyo
Investors bid up stocks after trading resumed following a three-day holiday as market sentiment stabilized after wild swings in the previous week.
The Nikkei 225 stock average gained 3%, and the Topix index gained 2.6%.
Market sentiment turned positive after a week of tumultuous trading that saw the Nikkei plunge 12.4%, recording the single-largest point decline, but managed to recover the losses in the following session, in the record point gains.
Bank of Japan's unexpected rate cut and hawkish rate outlook contributed to the wild swings in markets last week, forcing Deputy Governor of the Bank of Japan Shinichi Uchida to comment that the central bank will refrain from raising rates when markets are unstable, calming market nerves.
The yen traded at 147.67 against the U.S. dollar and weakened from the eight-month high as investors worried that the Bank of Japan's reluctance to lift rates will continue to keep pressure on the yen.
Market sentiment was also bolstered after the producer price index increased 3% in July, the Bank of Japan reported Tuesday.
Producer prices increased after energy costs rose, driven by the ending of government subsidies.
Producer prices accelerated for the sixth month in a row and increased to 3% for the first time since August 2023, after the yen-denominated costs of imported goods and materials soared 10.8%.
Producer price inflation in June was 2.9%.
Weaker yen has contributed to higher prices for imported food, fuel, and materials, but the recent rebound in the yen may slow inflation in the months ahead.
Japan Stock Movers
The Nikkei 225 stock average jumped 3% to 36,096.44, and the Topix index advanced 2.6% to 2,546.76.
Tech stocks were among the leading gainers Tuesday's trading following the rebound in artificial intelligence-linked stocks in New York.
Tokyo Electron gained 6.3% to ¥27,430.0, Advantest Corp. jumped 7.3% to ¥6,217.0, and Screen Holdings increased 7.3% to ¥10,390.0.
Rakuten Group advanced 8.8% to ¥847.90, and Trend Micro jumped 5.4% to ¥8157.0.
Mitsubishi UFJ Financial increased 1.7% to ¥1,435.0, Sumitomo Mitsui advanced 3.6% to ¥9,296.0, and Mizuho Financial gained 2.7% to ¥2,855.0.
Sharp Corp. declined 5.7% to ¥817.60 and Nippon Express declined 2.5% to ¥6,717.0.
Meiji Holdings dropped 5.2% to ¥3,452.0, and the company reported better-than-expected June quarter revenue of 279 billion yen and earnings per share of 50.23 yen.
Hang Seng Index Extended 5-day Rally, Mainland China Indexes Struggled Amid Weak Earnings Outlook
Li Chen
13 Aug, 2024
Hong Kong
Benchmark indexes in Shanghai and Hong Kong struggled to advance amid ongoing economic growth worries and mixed corporate performance.
The Hang Seng Index added 0.2%, but the CSI 300 index edged down 0.2% as investors awaited the release of a flood of economic data later in the week.
The Hang Seng index extended gains for the fifth session in a row, and the benchmark index rebounded but hovered near its three-month low.
Moreover, trading contracted on the Hong Kong Stock Exchange, and stock trading volume dropped to a six-month low of HK $70.3 billion or US$9 billion on Monday, according to the data available from the exchange.
China's statistics bureau is scheduled to release retail sales, industrial output, fixed asset investment, and home price data later in the week.
Market sentiment has been cautious after consumer price inflation advanced for the sixth month in a row in July, but producer price inflation declined for the 22nd month in a row, confirming the deflation trend.
Investors are also worried that the recent gains in exports may come to a halt in the second half as punitive tariffs kick in in the U.S. and Europe, contributing to the economic slowdown in the period.
China Stock Movers
The Hang Seng index increased 0.3% to 17,155.99, and the CSI 300 index fell 0.2% to 3,320.61.
Tencent Holdings jumped 1% to HK $378.60, and the diversified Internet services provider is scheduled to release its earnings on Wednesday.
Investors are estimating earnings to jump more than 50% in the second quarter compared to a year ago.
Country Garden Services decreased 5.5% to HK $4.44, and the company said profit in the first half declined 37% from a year ago to 1.7 billion yuan, or $237 million.
Country Garden Services estimated first-half revenue between 20.9 billion yuan and 21.2 billion yuan and net income between 1.47 billion yuan and 1.65 billion yuan.
The company said it lowered its revenue estimate because of property market weakness and reduced investment income.
Despite the current market weakness, the company expects over $12.2 billion in cash reserves at the end of the first half, as it plans to tighten its risk management and cut costs to improve profitability.
India Movers: Balrampur Chini, Hindustan Copper, IRFC, NMDC, Power Grid
Arun Goswami
13 Aug, 2024
Mumbai
Consumer price inflation slowed in July because of a higher food price base effect, and industrial output slowed in June, driven by a slowdown in government spending during the national election period.
The Sensex index decreased by 0.2% to 79,504.21, and the Nifty index fell 0.2% to 24,301.20.
On the Mumbai stock exchange, 122 stocks traded at their 52-week highs, and 10 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched lower to 6.88%, and the Indian rupee weakened to ₹83.95 against the U.S. dollar.
Power Grid Corporation increased 0.3% to ₹342.0, and the company said it won a contract to build and operate a power transmission network connecting Rajasthan REZ Phase II for a 20 GW power supply.
Balrampur Chini Mills gained 0.2% to ₹497.15, and the sugar producer reported a decline in profit in the June quarter because of the shortage of sugarcane crops.
Revenue increased 2.3% to ₹1,421.6 crore from ₹1,389.6 crore, but net income declined 4.6% to ₹70.2 crore from ₹73.50 crore a year ago.
Hindustan Copper added 4.2% to ₹315.45, and the mining company said consolidated net income in the June quarter more than doubled.
Revenue increased to ₹500.4 crore from ₹384.7 crore, and net income soared to ₹113.4 crore from ₹47.3 crore a year ago, respectively.
NMDC advanced 1% to ₹232.09, and the iron ore mining company reported flat consolidated revenue in the June quarter.
Demand for iron ore was driven by higher infrastructure spending by the government.
Revenue stood at ₹5,414.2 crore, and net income increased 19% to ₹1,971 crore from ₹1,652.2 crore a year ago.
IRFC gained 2.2% to ₹188.52, and the railway finance company reported a slight increase in earnings in the June quarter.
Revenue increased 1.4% to ₹6,765.63 crore from ₹6,673.87 crore, and net income advanced 1.6% to ₹1,576.83 crore from ₹1,551.27 crore a year ago, respectively.