Market Update
Europe Movers: Kering SA, Resource Stocks, Luxury Stocks, Volvo
Inga Muller
19 Jul, 2023
Frankfurt
European markets traded higher after slowing inflation trends lifted market sentiment.
Passenger car registration in the European Union increased 17.8% in June to one million units, the European Automobile Manufacturers Association reported Wednesday.
Passenger vehicle sales rose for the 11th month in a row with sales rising in Germany by 24.8%, Spain by 13.3%, and France by 11.5%.
Battery powered electric vehicles sales rose 66% to 158,300 units, accounting for 15% of total sales.
Despite the improving trend, passenger vehicle sales are still down 21% from pre-Covid sales in 2019 in the comparable period.
The DAX index increased 0.1% to 16,142.09, the CAC-40 index advanced 0.4% to 7,347.21 and the FTSE 100 index increased 1.5% to 7,567.28.
The yield on 10-year German Bunds inched higher to 2.33%, French bonds traded lower to 2.88%, the UK gilts edged up to 4.19% and Italian bonds increased to 3.99%.
Resource and mining stocks extended gains this week after crude oil prices and copper prices rebounded.
Glencore, Antofagasta, and Anglo American advanced between 1% and 2%.
Kering SA jumped 5.5% to €521.20 after the company reshuffled management structure.
Marco Bizzarri, President and CEO of Gucci since 2015 and a member of Kering’s executive committee since 2012, will leave the company effective September 23.
Francesca Bellettini, President and CEO of Yves Saint Laurent since 2013, in addition to her current role, is appointed Kering Deputy CEO, in charge of Brand Development.
Jean-François Palus, currently Kering Group Managing Director, is appointed President and CEO of Gucci for a transitional period and Jean-Marc Duplaix, Chief Financial Officer since 2012, is appointed Kering Deputy CEO, in charge of Operations and Finance.
Luxury stocks rebounded after three days of weakness in Paris trading.
LVMH, Hermes and Richemont SA gained between 1% and 2.5% and Dassault Systems, Capgemini and Michelin jumped more than 1%.
However, Publicis Groupe, Schneider Electric and ArcelorMittal dipped down 1%.
In Frankfurt trading, Siemens Healthineers, Zalando, Vonovia and Sartorius gained between 1% and 2%.
Volvo AB declined 0.2% to 223.30 Swedish krona after the commercial vehicle maker reported higher sales and earnings in its latest quarter but orders declined.
Net sales in the quarter increased 18% to 140.80 billion kronor from 118.9 billion kronor and net income rose to 10.82 kronor from 10.52 kronor and earnings per share increased to 5.30 kronor from 5.14 kronor a year ago.
New truck orders in the quarter declined 10% to 48,300 units but deliveries in the period rose 5% to 68,300 units.
Inflation Slowed In Euro Area and UK, Passenger Vehicle Sales Rebounded
Bridgette Randall
19 Jul, 2023
Frankfurt
European markets edged up after latest inflation data confirmed cooling trends of the last nine months.
Market averages in London, Paris and Frankfurt advanced after the consumer price inflation in the Euro Area was confirmed at 5.5% in June, the lowest since January 2022.
However, the core rate of inflation accelerated to 5.5% in the month from 5.4% in the preliminary estimate released by Eurostat.
Overall inflation declined because of a sharp decline in energy prices compared to a high level a year ago but core rate of inflation, which excludes volatile energy and food prices, stayed near the peak of 5.7%.
Service sector inflation rose to 5.4% from the previous estimate of 5.0%, indicating deeply entrenched inflation in the economy.
The elevated core inflation supported the European Central Bank's case of raising rate higher because the inflation rate is still well above the target rate of 2%.
UK Consumer Inflation Eased In June, Core Inflation Remained Elevated
Consumer prices in the UK declined to 7.9% in June, the lowest level since March 2022, the Office for National Statistics reported Wednesday.
Core inflation, which excludes food and energy prices, eased to 6.9% from a three-decade peak of 7.1%.
Despite the slight easing of inflation, core and overall inflation remains well above the Bank of England's target rate of 2% and supports the case for higher rates at the next meeting of policyholders.
European Passenger Vehicle Sales Rebounded In June
Passenger car registration in the European Union increased 17.8% in June to one million units, the European Automobile Manufacturers Association reported Wednesday.
Passenger vehicle sales rose for the 11th month in a row with sales rising in Germany by 24.8%, Spain by 13.3%, and France by 11.5%.
Battery powered electric vehicles sales rose 66% to 158,300 units, accounting for 15% of total sales.
Despite the improving trend, passenger vehicle sales are still down 21% from pre-Covid sales in 2019 in the comparable period.
Europe Indexes & Yields
The DAX index increased 0.1% to 16,142.09, the CAC-40 index advanced 0.4% to 7,347.21 and the FTSE 100 index increased 1.5% to 7,567.28.
The yield on 10-year German Bunds inched higher to 2.33%, French bonds traded lower to 2.88%, the UK gilts edged up to 4.19% and Italian bonds increased to 3.99%.
The euro edged higher to $1.12, the British pound to $1.29 and the U.S. dollar fetched 85.85 Swiss cents
Brent crude decreased $0.23 to $79.86 a barrel and the Dutch TTF natural gas decreased €1.27 to €25.80 per MWh.
Europe Stock Movers
Resource and mining stocks extended gains this week after crude oil prices and copper prices rebounded.
Glencore, Antofagasta, and Anglo American advanced between 1% and 2%.
Kering SA jumped 5.5% to €521.20 after the company reshuffled management structure.
Luxury stocks rebounded after three days of weakness in Paris trading.
LVMH, Hermes and Richemont SA gained between 1% and 2.5% and Dassault Systems, Capgemini and Michelin jumped more than 1%.
However, Publicis Groupe, Schneider Electric and ArcelorMittal dipped down 1%.
In Frankfurt trading, Siemens Healthineers, Zalando, Vonovia and Sartorius gained between 1% and 2%.
Volvo AB declined 0.2% to 223.30 Swedish krona after the commercial vehicle maker reported higher sales and earnings in its latest quarter but orders declined.
Net sales in the quarter increased 18% to 140.80 billion kronor from 118.9 billion kronor and net income rose to 10.82 kronor from 10.52 kronor and earnings per share increased to 5.30 kronor from 5.14 kronor a year ago.
New truck orders in the quarter declined 10% to 48,300 units but deliveries in the period rose 5% to 68,300 units.
S&P 500 and Nasdaq Extend 2023 Gains After Positive Earnings from Banks
Barry Adams
18 Jul, 2023
New York City
Stocks powered ahead on Wall Street after investors reviewed earnings from several banks.
The S&P 500 index and the Nasdaq Composite index advanced more than 0.5% after Bank of New York, Bank of America and PNC Financial reported better-than-expected earnings.
Large banks are reporting higher earnings largely because of higher interest rates and deposit rate increase are still lagging higher interest rates, widening net interest rate margin.
Banks also reported a decline in average deposits held in accounts, as investors searching for higher yields have other options including Treasury notes and bills.
In economic news, retail sales, not adjusted for inflation, rose in June, indicating resilient consumer spending despite higher prices.
Retail sales have been rising because in urban areas wages are faster than inflation and retail sales are not adjusted for inflation, so higher retail sales are also reflecting higher prices.
Industrial production declined for the second month in a row in June, the Federal Reserve reported Tuesday.
Industrial production, which includes output from manufacturing, utilities and mining, fell 0.5% matching the upwardly revised rate in May.
Output from manufacturing declined 0.3%, mining fell 0.2% and utilities declined 2.6%. Capacity utilization decreased to 78.9%, a rate that is below its long term average by 0.8 percentage point.
June Retail Sales Jumped 0.2%
U.S. retail sales rose 0.2% in June following an upwardly revised 0.5% increase in May, the U.S. Census Bureau reported Tuesday.
From a year ago, retail sales increased 1.5%.
Retail sales data are not adjusted for inflation and consumer spending continues to remain resilient in the face of inflation falling to a two-year low.
Core retail sales, which excludes automobiles, gasoline, food services and building materials rose 0.6%.
Furniture sales rose 1.4%, electronic appliance sales increased 1.1% and sales at non-store retailers and miscellaneous stores jumped 1.9% and 2.0% respectively.
Apparel store sales increased 0.6% and motor vehicle parts sales inched higher 0.3%.
However, gasoline station sales declined 1..1%, building materials and garden equipment sales fell 1.2%, food and beverage store sales decreased 0.7% and sports, music and book store sales eased 1.0%.
U.S. Indexes & Yields
The S&P 500 index traded higher 0.7% to 4,555.07 and the Nasdaq Composite futures edged up 0.9% to 14,367.41.
The yield on 2-year Treasury notes decreased to 4.71%, 10-year Treasury notes inched lower to 3.78% and 30-year Treasury bonds edged down to 3.91%.
Crude oil increased $1.77 to $75.90 a barrel and natural gas prices increased 12 cents to $2.63 a thermal unit.
Stock Movers
Morgan Stanley gained 3% to $88.88 after the financial services provider reported a smaller-than-expected decline in earnings in its latest quarter.
The company increased its quarterly dividend by 7.5% to 85 cents a common share. payable to shareholders on record on July 31 on August 15.
Bank of America jumped 2.5% to $30.01 after the bank reported better-than-expected revenue and earnings in its latest quarter results.
PNC Financial Services declined 0.6% to $126.25 after the regional bank reported lower-than-expected revenue in its latest quarter.
The bank lowered its annual net interest income increase range between 5% and 6% from the previous range between 6% and 8%.
Microsoft Corp jumped 5% to $363.05 after the company announced a monthly $30 subscription plan for a new artificial intelligence service for Microsoft 365.
Charles Schwab Corp soared 12.5% to $65.95 after the online broker reported a decline in earnings and revenues but quarterly results were ahead of market expectations.
Revenue declined 9% to $4.6 billion from $5.09 billion and net income fell 28% to $1.3 billion from $1.8 billion and diluted earnings per share decreased to 64 cents from 87 cents a year ago.
The company completed the transition of 5 million Ameritrade accounts to Charles Schwab platform in late May and all of the remaining 70% Ameritrade accounts are expected to transition over the year's end.
European Markets Turned Higher, Natural Gas and Crude Oil Rebounded
European markets were nearly unchanged and investors awaited the release of key economic data and corporate earnings later today.
Market indexes extended lackluster trading for the second day in a row after China reported weaker-than-expected economic data.
Market sentiment was also cautious on the growing worries that the European Central Bank is likely to keep its aggressive rate hike stance despite the raft of cooling inflation data.
Luxury stocks traded lower in Paris and resources stocks edged down in London for the second day following the mixed economic data.
Investors looking ahead to the start of corporate earnings season this week.
Large and small banks are in focus and investors are looking for insights in how banks are handling the stress of rising deposit costs and losses in government bonds held by banks.
Europe Indexes & Yields
The DAX index increased 0.4% to 16,125.16, the CAC-40 index advanced 0.4% to 7,319.18 and the FTSE 100 index increased 0.6% to 7,453.69.
The yield on 10-year German Bunds inched higher to 2.37%, French bonds traded lower to 2.92%, the UK gilts edged up to 4.37% and Italian bonds increased to 4.02%.
The euro edged higher to $1.12, the British pound to $1.31 and the U.S. dollar fetched 85.80 Swiss cents
Brent crude increased $1.55 to $80.07 a barrel and the Dutch TTF natural gas increased €1.97 to €27.08 per MWh.
Europe Stock Movers
Novartis AG gained 3% to CHF 87.52 after the company lifted its annual earnings outlook and mapped out a plan to spin off its generic pharmaceutical division in the fourth quarter.
The company board also approved the repurchase of $1.5 billion of its stock.
SEB AB declined 0.6% to kr 122.65 in Stockholm trading and the Swedish bank reported earnings ahead of market expectations.
Danone SA declined 0.3% to €55.06 and a day ago Russia announced to takeover a stake held by the company in its Russian subsidiary.
AstraZeneca plc gained 0.5% to 10,250 pence on a report that the U.S. Food and Drug Administration has approved the company and its partner Sanofi's antibody therapy to prevent respiratory syncytial virus in infants and toddlers.
Retail Sales Advanced In June 0.2%
Brian Turner
18 Jul, 2023
New York City
U.S. retail sales rose 0.2% in June following an upwardly revised 0.5% increase in May, the U.S. Census Bureau reported Tuesday.
Retail sales data are not adjusted for inflation and consumer spending continues to remain resilient in the face of inflation falling to a two-year low.
Core retail sales, which excludes automobiles, gasoline, food services and building materials rose 0.6%.
Furniture sales rose 1.4%, electronic appliance sales increased 1.1% and sales at non-store retailers and miscellaneous stores jumped 1.9% and 2.0% respectively.
Apparel store sales increased 0.6% and motor vehicle parts sales inched higher 0.3%.
However, gasoline station sales declined 1..1%, building materials and garden equipment sales fell 1.2%, food and beverage store sales decreased 0.7% and sports, music and book store sales eased 1.0%.
Movers: Bank of America, Bank of New York Mellon, Lockheed Martin, Morgan Stanley, PNC Financial
Scott Peters
18 Jul, 2023
New York City
The S&P 500 index traded higher 0.1% to 4,521.87 and the Nasdaq Composite futures edged up 0.9% to 14,232.68.
Morgan Stanley gained 3% to $88.88 after the financial services provider reported a smaller-than-expected decline in earnings in its latest quarter.
Net revenues in the second quarter increased 2% to $13.5 billion and net income declined 13% to $2.2 billion from $2.5 billion and diluted earnings per share dropped to $1.24 from $1.39 a year ago.
Revenue in the wealth management segment revenue increased 16% to $6.6 billion from $5.7 billion, institutional securities segment declined 8% to $5.6 billion from $6.1 billion and investment management dropped 9% to $1.3 billion from $1.4 billion.
Return on average tangible common equity decreased to 12.1% from 13.8% and tangible book value edged up to $40.79 from $40.07.
The company increased its quarterly dividend by 7.5% to 85 cents a common share. payable to shareholders on record on July 31 on August 15.
Bank of America jumped 2.5% to $30.01 after the bank reported better-than-expected revenue and earnings in its latest quarter results.
Revenue, net of interest expense, increased 11% to $25.2 billion from $22.7 billion and net income rose 19% to $7.4 billion from $6.2 billion and diluted earnings per share increased to 88 cents from 72 cents a year ago.
Provision of credit losses increased by $602 million to $1.1 billion. average deposit balance declined 7% to $1.9 trillion and average loan and lease balance increased 3% to $1.0 trillion.
PNC Financial Services declined 0.6% to $126.25 after the regional bank reported lower-than-expected revenue in its latest quarter.
Revenue increased to $5.3 billion from $5.1 billion and net income edged up $1.5 billion from $1.49 billion and diluted earnings per share edged down to $3.36 from $3.39 a year ago.
Tangible book value per share increased to $77.80 from $74.39 from a year ago.
Average loans in the quarter increased to $324.5 billion from $304.8 billion and average deposits declined to $425.7 billion from $446.5 billion from a year ago.
Net interest rate margin expanded to 2.79% from 2.5%.
The bank lowered its annual net interest income increase range between 5% and 6% from the previous range between 6% and 8%.
Bank of New York Mellon Corp increased 4.5% to $45.52 after the bank reported better-than-expected quarterly results.
Revenue increased 5% to $4.5 billion and net interest income rose 33% to $1.1 billion from $824 million a year ago. Net income rose 24% to $1.06 billion from $864 million and diluted earnings per share advanced to $1.30 from $1.03 a year ago.
Provision for credit losses declined to $5 million from $47 million a year ago.
Average loans declined 8% to $63.4 billion from $69.0 billion and average deposits fell 11% to $277 billion from $311 billion a year ago.
The company returned $745 million to shareholders, including $448 million common stock repurchase.
Lockheed Martin Corp fell 0.04% to $469.76 after the defense contractor reported quarterly results met some investors' expectations.
Revenue in the second quarter edged up 8% to $16.7 billion from $15.4 billion and net income rose to $1.7 billion from $309 million and diluted earnings per share advanced to $6.63 from $1.16 a year ago.
Order backlog increased to record high $158 billion.
Free cash flow declined to $771 million from $1.027 billion a year ago.
The company revised higher its annual sales range to between $66.25 billion and $66.75 billion from the previous estimate between $65.0 billion and $66.0 billion released in April.
S&P 500 and Nasdaq Jump Ahead After Investors Overlook Weak Retail Sales
Barry Adams
18 Jul, 2023
New York City
Stocks lacked direction in early trading as investors reviewed a fresh batch of corporate earnings and retail sales data.
Retail sales, not adjusted for inflation, rose in June, but increased less than expected.
Consumer spending has been resilient despite prices staying higher than pre-Covid level.
On the earnings front, Morgan Stanley reported better-than-expected earnings but lower than a year ago, Bank of America advanced after reporting better-than-expected revenue and earnings and Lockheed Martin after quarterly results were ahead of expectations.
June Retail Sales Jumped 0.2%
U.S. retail sales rose 0.2% in June following an upwardly revised 0.5% increase in May, the U.S. Census Bureau reported Tuesday.
Retail sales data are not adjusted for inflation and consumer spending continues to remain resilient in the face of inflation falling to a two-year low.
Core retail sales, which excludes automobiles, gasoline, food services and building materials rose 0.6%.
Furniture sales rose 1.4%, electronic appliance sales increased 1.1% and sales at non-store retailers and miscellaneous stores jumped 1.9% and 2.0% respectively.
Apparel store sales increased 0.6% and motor vehicle parts sales inched higher 0.3%.
However, gasoline station sales declined 1..1%, building materials and garden equipment sales fell 1.2%, food and beverage store sales decreased 0.7% and sports, music and book store sales eased 1.0%.
U.S. Indexes & Yields
The S&P 500 index traded higher 0.1% to 4,521.87 and the Nasdaq Composite futures edged up 0.9% to 14,232.68.
The yield on 2-year Treasury notes decreased to 4.71%, 10-year Treasury notes inched lower to 3.78% and 30-year Treasury bonds edged down to 3.91%.
Crude oil decreased $0.27 to $74.41 a barrel and natural gas prices increased 8 cents to $2.59 a thermal unit.
Stock Movers
Morgan Stanley gained 3% to $88.88 after the financial services provider reported a smaller-than-expected decline in earnings in its latest quarter.
The company increased its quarterly dividend by 7.5% to 85 cents a common share. payable to shareholders on record on July 31 on August 15.
Bank of America jumped 2.5% to $30.01 after the bank reported better-than-expected revenue and earnings in its latest quarter results.
PNC Financial Services declined 0.6% to $126.25 after the regional bank reported lower-than-expected revenue in its latest quarter.
The bank lowered its annual net interest income increase range between 5% and 6% from the previous range between 6% and 8%.
Europe Movers: AstraZeneca, Danone, Novartis, SEB
Inga Muller
18 Jul, 2023
Frankfurt
European markets lacked direction and investors remained focused on the start of the corporate earnings season.
The DAX index decreased 0.05% to 16,060.51, the CAC-40 index advanced 0.02% to 7,293.26 and the FTSE 100 index increased 0.05% to 7,410.06.
The yield on 10-year German Bunds inched higher to 2.37%, French bonds traded lower to 2.92%, the UK gilts edged up to 4.37% and Italian bonds increased to 4.02%.
Novartis AG gained 3% to CHF 87.52 after the company lifted its annual earnings outlook and mapped out a plan to spin off its generic pharmaceutical division in the fourth quarter.
The company board also approved the repurchase of $1.5 billion of its stock.
SEB AB declined 0.6% to kr 122.65 in Stockholm trading and the Swedish bank reported earnings ahead of market expectations.
Danone SA declined 0.3% to €55.06 and a day ago Russia announced to takeover a stake held by the company in its Russian subsidiary.
AstraZeneca plc gained 0.5% to 10,250 pence on a report that the U.S. Food and Drug Administration has approved the company and its partner Sanofi's antibody therapy to prevent respiratory syncytial virus in infants and toddlers.
European Markets Trade Sideways, Euro and Pound Traded 16-month Highs
Bridgette Randall
18 Jul, 2023
Frankfurt
European markets were nearly unchanged and investors awaited the release of key economic data and corporate earnings later today.
Market indexes extended lackluster trading for the second day in a row after China reported weaker-than-expected economic data.
Market sentiment was also cautious on the growing worries that the European Central Bank is likely to keep its aggressive rate hike stance despite the raft of cooling inflation data.
Luxury stocks traded lower in Paris and resources stocks edged down in London for the second day following the mixed economic data.
Investors looking ahead to the start of corporate earnings season this week.
Large and small banks are in focus and investors are looking for insights in how banks are handling the stress of rising deposit costs and losses in government bonds held by banks.
Europe Indexes & Yields
The DAX index decreased 0.05% to 16,060.51, the CAC-40 index advanced 0.02% to 7,293.26 and the FTSE 100 index increased 0.05% to 7,410.06.
The yield on 10-year German Bunds inched higher to 2.37%, French bonds traded lower to 2.92%, the UK gilts edged up to 4.37% and Italian bonds increased to 4.02%.
The euro edged higher to $1.12, the British pound to $1.31 and the U.S. dollar fetched 85.80 Swiss cents
Brent crude decreased $0.17 to $78.67 a barrel and the Dutch TTF natural gas decreased €0.17 to €25.28 per MWh.
Europe Stock Movers
Novartis AG gained 3% to CHF 87.52 after the company lifted its annual earnings outlook and mapped out a plan to spin off its generic pharmaceutical division in the fourth quarter.
The company board also approved the repurchase of $1.5 billion of its stock.
SEB AB declined 0.6% to kr 122.65 in Stockholm trading and the Swedish bank reported earnings ahead of market expectations.
Danone SA declined 0.3% to €55.06 and a day ago Russia announced to takeover a stake held by the company in its Russian subsidiary.
AstraZeneca plc gained 0.5% to 10,250 pence on a report that the U.S. Food and Drug Administration has approved the company and its partner Sanofi's antibody therapy to prevent respiratory syncytial virus in infants and toddlers.