Market Update
Stocks Wavers, Bond Yields Rise, Crude Eases
Barry Adams
06 Sep, 2022
New York City
Stocks on Wall Street opened higher and kicked off a 4-day week after falling for three days in a row.
Crude oil prices eased on the expected decline in demand after China imposed tighter restrictions in several cities impacting as many as 30 million people.
Yesterday, OPEC+ announced 100,000 barrels a day supply cut as demand softens in China and rising supply from Iran and Venezuela.
The S&P 500 index decreased 0.2% to 3,917.16 and the Nasdaq Composite index declined 0.4% to 11,588,43.
Futures of crude oil declined $1.40 to $87.32 a barrel and natural gas edged down 31 cents to $8.44 a thermal unit.
The yield on 10-year Treasury notes rose 6 points to 3.26%, 30-year bonds increased 5 basis points to 3.406%, and 2-year notes advanced 4 basis points to 3.46%.
European Markets Advance, Germany's Factory Orders Fall
European markets looked beyond weak German factory orders data and gained after energy prices eased and China announced stimulus measures.
The DAX index gained 0.3% to 12,794.51, the CAC-40 index fell 0.5% to 6,064.11, and the FTSE 100 index fell 0.2% to 7,275.83.
Germany's factory orders declined at a faster pace in July on the weak domestic and the eurozone demand.
Factory orders fell 1.1% from the previous month in July Destatis reported Tuesday.
The June orders were revised to an increase of 0.3%.
The British pound edged up a fraction and traded near $1.15 after briefly falling near $1.14.
The incoming prime minister Liz Truss has inherited a weak economy, elevated energy prices, sky-high inflation and general voter apathy.
With low approval among her party members and even lower vote of confidence from voters, Truss faces challenges on multiple fronts and most political analysts anticipate the country to head to general polls in late 2023 or early 2024.
The pound is expected to continue its slide and sink to a parity with the U.S. dollar.
China Takes Steps to Support Yuan and Economic Growth
China announced a slew of stimulus measures to revive the flagging economic growth and arrest the falling yuan.
At a press conference on Monday, officials from ministries, People's Bank of China and National Development and Reform Commission highlighted details of the plan in the third quarter.
The one trillion yuan or $145 billion plan will focus on more infrastructure spending.
The People's Bank of China, after the press conference, lowered the foreign currency reserve ratio by 2 percentage points.
China's yuan closed down to a new two-year low of 6.955 against the U.S. dollar and the currency has fallen for the sixth month in a row.
Europe Movers: Assa Abloy, Aston Martin, Countryside Partnership, Volkswagen, Zurich Insurance
Bridgette Randall
05 Sep, 2022
Frankfurt
Benchmark indexes in Europe fell sharply on the first day of a week on the rising fears of natural gas rationing and the growing possibilities of a recession.
Crude oil prices rose 3% after Russia halted natural gas shipments through Nord Stream 1 following the G7 finance ministers pledge to implement a price cap on Russia's energy exports.
Brent crude oil rose $2.49 to $95.11 a barrel and natural gas prices soared as much as 20% but closed up 12.7% to 241.75 euros a megawatt hour.
Moreover, market sentiment was dented after the eurozone retail sales rose less-than-expected and the private sector contracted for the second month in a row and Switzerland's second quarter economic growth slowed more than estimated.
Retail sales in the currency union increased 0.3% in July after falling 1.0% in June, the region's statistics agency Eurostat reported Monday.
Sales declined 0.9% from a year ago, slower than 3.2% decline in June.
The S&P Global said activities in the eurozone declined after the private service sector contracted, joining the manufacturing sector in August.
The final composite output index dropped to an 18-month low of 48.9 in August from 49.9 in July.
The preliminary estimate or flash reading was 49.2.
The DAX index declined 2.2% to 12,760.28, the CAC-40 index dropped 1.2% to 6,093.22, but the FTSE 100 index rose 0.1% to 7,287.43.
The euro weakened after energy prices surged and traded at a new low of $0.99.
The British pound also edged lower to $1.15, weakest since March 2020, after rising energy prices worsened the outlook for the embattled currency.
Zurich Insurance Group declined 1% to 430 Swiss francs after the company said it plans to exercise its option to redeem 450 million pounds of its subordinated debt.
Assa Abloy AB decreased 1.5% to 214.40 Swedish kroner and the company said it agreed to acquire Brazil-based Control iD.
Headquartered in Sao Paulo, Brazil, Control iD employs about 300 people and generated sales of 130 million Brazilian real or 250 million Swedish kroner in 2021.
Countryside Partnership PLC increased 5.2% to 240.12 pence after the company agreed to be acquired by Vistry Group PLC
Based upon Vistry's Friday's closing price of 741 pence the merger represents a total implied value of 249 pence of Countryside Share, valuing the entire issued and to be issued ordinary share capital of Countryside at approximately
European Stocks Drop On Rising Recession Risks, Natural Gas Soars
Bridgette Randall
05 Sep, 2022
Frankfurt
Benchmark indexes in Europe fell sharply on the first day of a week on the rising fears of natural gas rationing and the growing possibilities of a recession.
Crude oil prices rose 3% after Russia halted natural gas shipments through Nord Stream 1 following the G7 finance ministers pledge to implement a price cap on Russia's energy exports.
Brent crude oil rose $2.49 to $95.11 a barrel and natural gas prices soared as much as 20% but closed up 12.7% to 241.75 euros a megawatt hour.
Moreover, market sentiment was dented after the eurozone retail sales rose less-than-expected and the private sector contracted for the second month in a row and Switzerland's second quarter economic growth slowed more than estimated.
Retail sales in the currency union increased 0.3% in July after falling 1.0% in June, the region's statistics agency Eurostat reported Monday.
Sales declined 0.9% from a year ago, slower than 3.2% decline in June.
The S&P Global said activities in the eurozone declined after the private service sector contracted, joining the manufacturing sector in August.
The final composite output index dropped to an 18-month low of 48.9 in August from 49.9 in July.
The preliminary estimate or flash reading was 49.2.
The DAX index declined 2.2% to 12,760.28, the CAC-40 index dropped 1.2% to 6,093.22, but the FTSE 100 index rose 0.1% to 7,287.43.
The euro weakened after energy prices surged and traded at a new low of $0.99.
The British pound also edged lower to $1.15, weakest since March 2020, after rising energy prices worsened the outlook for the embattled currency.
Rising energy prices are expected to lift the U.K.'s inflation above 15% in 2023 and currency traders are fearing the pound to test its parity with the U.S. dollar.
The latest government agency data showed that consumer price inflation picked up in the U.K. to 10.1% in July.
Members of the Conservative Party elected Liz Truss as their next leader according to the voting results released by the party Monday.
Truss, the next prime minister of the U.K. replacing Boris Johnson, faces 4-decade high inflation, faltering economy and the pound and growing voters' discontent with the political leaders.
S&P 500 Down Third Week In a Row, Nasdaq Falls 6th Day Straight
Barry Adams
02 Sep, 2022
New York City
On Wall Street investors welcomed the latest jobs report but caution prevailed in the afternoon trading.
The morning surge slowly dissipated and benchmark indexes closed down, extending losses for the third week in a row as investors debated the health of the labor market.
For the week, the S&P 500 index declined 3.3% and the Nasdaq Composite fell 4.2%.
Non-farm payrolls increased 315,000 in August following the 526,000 additions in July, the Bureau of Labor Statistics said Friday.
In a broad-based hiring employers added positions across many industries.
Professional and business services including computer and system design led the job gains in the month with 86,000, followed by healthcare services with 48,000, retail trade with 44,000 , leisure and hospitality with 31,000 and manufacturing with 22,000.
Leisure and hospitality sector additions slowed down considerably after adding an average of 90,000 for the last seven months.
The unemployment rate increased to 3.7% and average hourly wages increased 0.3% from the previous month and 5.2% annually.
Historically August jobs data are volatile and in the past the statistics agency has revised the data substantially.
The BLS lowered the job additions in June to 293,000 from the previous estimate of 398,000 and July additions to 526,000 from 528,000.
Employers, corporations and governments at all levels, added 315,000 net new jobs in August, slower than the revised 526,000 increase in July.
The job growth was slowed but still solid and the gains were across many sectors in the economy, bolstering the case that the next U.S. rate hike may be moderate 50 basis points and not large 75 basis points as many had anticipated.
With more people returning to the job market, the labor participation rate increased to 62.4% from 62.1% in July.
The S&P 500 index decreased 1.1% to 3,924.26 and the Nasdaq Composite index fell 1.3% to 11,640.86.
The S&P 500 index dropped to a nearly 4-week low and the Nasdaq declined for the sixth session in a row.
Oil prices rose in the U.S. and European trading ahead of the OPEC+ meeting on Monday.
Prices rose on the expectations that the cartel will announce production cuts at the gathering of finance ministers.
Futures of crude oil increased 48 cents to $87.09 a barrel and natural gas fell 37 cents to $8.89 a thermal unit.
The yield on 10-year Treasury notes declined to 3.19% and on 2-year notes eased to 3.39%.
European Markets Jump On Smaller Rate Hike Hopes
European markets traded higher after the release of the U.S. payrolls report.
In choppy trading on Friday, benchmark indexes in the region accelerated gains after the U.S. reported a slowdown in payrolls additions.
The softer but solid jobs data lifted market indexes in New York and powered the rally in Europe.
The DAX index increased 3.3% to 13,050.27, the CAC-40 index advanced 2.2% to 6,167.51, and the FTSE 100 index added 1.9% to 7,281.19.
The euro held its parity with the U.S. dollar and the U.K. pound declined to $1.1506 ahead of the results of the Conservative party's leadership election on Monday.
Producer prices, a measure of wholesale prices, in the euro zone rose 4% in July from the previous month, the eurostat report showed on Friday.
The 4-month high increase was driven by the 9% surge in energy prices compared to 3% increase in June.
On Thursday, Swiss Federal Statistics Office reported consumer price inflation index increased 3.5% from a year ago in August.
The prices rose at a faster pace from 3.4% in July and accelerated to a 29-year high.
On a monthly basis, prices rose 0.3% in August after staying flat in July.
In stock trading, energy stocks led the gainers followed advances in technology stocks and banks.
Deutsche Lufthansa gained 3.3% to 5.96 euros despite a one-day strike by pilots on Friday.
GEA Group increased 1.9% to 32.95 euros and the food and beverage company said it is planning to invest 70 million euros in Germany to build a pharmaceutical technology center.
Air Liquide increased 1.1% to 123.92 euros after the company confirmed its plan to exit from Russia.
Ashmore Group fell as much as 4% but closed up 8.8% to 210.80 pence after the U.K.-based asset manager reported a decline in fiscal 2022 earnings.
Caution Prevails In Asia
Asian markets marginally lower ahead of the U.S. jobs report as more cities tighten restrictions to prevent coronavirus outbreak from spreading.
Shanghai index increased fractionally and indexes in Japan and India declined marginally after volatile trading.
U.S. Jobs Report Powers European Markets Rally
Bridgette Randall
02 Sep, 2022
Frankfurt
European markets traded higher after the release of the U.S. payrolls report.
In choppy trading on Friday, benchmark indexes in the region accelerated gains after the U.S. reported a slowdown in payrolls additions.
Employers, corporations and governments at all levels, added 315,000 net new jobs in August, slower than the revised 526,000 increase in July.
The job growth was slowed but still solid and the gains were across many sectors in the economy, bolstering the case that the next U.S. rate hike may be moderate 50 basis points and not large 75 basis points as many had anticipated.
Average hourly wages rose 0.3% on a monthly basis and jobless rate jumped to 3.7% after more people returned to the job market, lifting the labor participation rate to 62.4% from 62.1% in July.
The softer but solid jobs data lifted market indexes in New York and powered the rally in Europe.
The DAX index increased 2.5% to 12,955.28, the CAC-40 index advanced 1.7% to 6,135.97, and the FTSE 100 index added 1.7% to 7,271.26.
Producer prices, a measure of wholesale prices, in the euro zone rose 4% in July from the previous month, the eurostat report showed on Friday.
The 4-month high increase was driven by the 9% surge in energy prices compared to 3% increase in June.
On Thursday, Swiss Federal Statistics Office reported consumer price inflation index increased 3.5% from a year ago in August.
The prices rose at a faster pace from 3.4% in July and accelerated to a 29-year high.
On a monthly basis, prices rose 0.3% in August after staying flat in July.
In stock trading, energy stocks led the gainers followed advances in technology stocks and banks.
Deutsche Lufthansa gained 3.3% to 5.96 euros despite a one-day strike by pilots on Friday.
GEA Group increased 1.9% to 32.95 euros and the food and beverage company said it is planning to invest 70 million euros in Germany to build a pharmaceutical technology center.
Air Liquide increased 1.1% to 123.92 euros after the company confirmed its plan to exit from Russia.
Ashmore Group fell as much as 4% but closed up 8.8% to 210.80 pence after the U.K.-based asset manager reported a decline in fiscal 2022 earnings.
Asian markets marginally lower ahead of the U.S. jobs report as more cities tighten restrictions to prevent coronavirus outbreak from spreading.
Shanghai index increased fractionally and indexes in Japan and India declined marginally after volatile trading.
1-800-Flowes.com Drops to Eight-year Low After Quarterly Results
Scott Peters
02 Sep, 2022
New York City
1-800-Flowers.com Inc declined 4.5% to $7.39 after the company reported weak quarterly results.
The online flower and gift retailer's stock dropped to a eight-year low after the company swung to a loss and highlighted operating and marketing costs struggle.
The online flower and gift retailer said revenues in the fiscal year fourth quarter ending on July 3 declined 0.2% to $485.9 million from $487 million a year ago.
Excluding sales from Vital Choice, acquisition in October 2021, total revenue for the quarter fell 1.5% from a year ago.
Revenues for the quarter increased 87.3% from $259.4 million in the fourth quarter of fiscal 2019, prior to the pandemic.
However, higher product cots and rising shipping costs negatively impacted the gross margins.
Gross profit margin in the quarter plunged 700 points to 33.7% from 40.7% a year ago, reflecting higher costs of labor, shipping, and commodities and write downs of perishable inventory.
During the quarter, the company swung to a loss of $22.3 million or 34 cents a share from net income of $13.3 million or $0.20 a diluted share a year ago.
Segment Review
The company operates three business segments - gourmet food, flowers and gifts, and the floral network BloomNet.
Gourmet Foods and Gift Baskets revenue in the quarter fell 2.4% to $148.4 million from $152.2 million a year ago.
Excluding Vital Choice, which the Company acquired in October 2021, revenue in the quarter was $142.7 million.
Revenue in the quarter was up 104.9% from the fiscal 2019 fourth quarter.
Consumer Floral & Gifts revenue in the quarter increased 0.4% to $299 million from $297.7 million in the prior year's period.
Revenues for the quarter increased 87.2% from the fiscal 2019 fourth quarter.
BloomNet revenue in the quarter increased 3.2% to $38.5 million from $37.3 million in the prior year period.
Revenue for the quarter was up 41.2% from the fiscal 2019 fourth quarter.
Annual Revenues Rise
Total net revenues for the full fiscal year 2022 increased 4% to $2.21 billion from $2.12 billion in the prior year.
This increase reflected growth across all three business segments, and includes the contributions from Vital Choice and Personalization Mall.
On a pro forma basis, total net revenues grew 2.5% compared with the prior year and total net revenues grew 76.8% compared with total net revenues of $1.25 billion in fiscal 2019, prior to the pandemic.
The company acquired Personalization Mail in August 2020 for $252 million from Bed Bath & Beyond and purchased Vital Choice for $20 million in October 2021.
Prior to the acquisition, Personalization Mall revenues in 2019 were approximately $150 million and Vital Choice revenues in 2020 were $28 million.
Guidance and Outlook
Based on the performance of the first two months of the current fiscal quarter. the company guided fiscal first quarter revenues to fall between 3% and 6% citing cautious customer reflecting higher food and energy prices.
The online retailer anticipates on an annual basis costs for labor, shipping, commodities, and digital marketing will remain high through the fiscal first quarter and estimated adjusted operating or EBITDA loss between $28 million and $33 million.
In the fiscal year, the company estimates reduced capital expenditures as well as lower working capital needs from a year ago and generate "substantial positive year-over-year free cash flow."
In the fiscal year 2022 free cash outflow was $61 million compared to positive free cash flow of $118 million in the fiscal 2021.
August Payrolls Additions Slow to 315,000
Brian Turner
02 Sep, 2022
New York City
Non-farm payrolls increased 315,000 in August following the 526,000 additions in July, the Bureau of Labor Statistics said Friday.
In a broad-based hiring employers added positions across many industries.
Professional and business services including computer and system design led the job gains in the month with 86,000, followed by healthcare services with 48,000, retail trade with 44,000 , leisure and hospitality with 31,000 and manufacturing with 22,000.
Leisure and hospitality sector additions slowed down considerably after adding an average of 90,000 for the last seven months.
The unemployment rate increased to 3.7% and average hourly wages increased 0.3% from the previous month and 5.2% annually.
The jobless rate increased after labor force participation rate expanded to 62.4% from 62.1% in July.
Historically August jobs data are volatile and in the past the statistics agency has revised the data substantially.
The BLS lowered the job additions in June to 293,000 from the previous estimate of 398,000 and July additions to 526,000 from 528,000.
Movers: 1800Flowers, Bed Bath & Beyond, Broadcom, Lululemon, Pagerduty, Starbucks
Barry Adams
02 Sep, 2022
New York City
Energy stocks led the gainers after crude oil prices jumped 3% and natural gas prices hovered near $9 a thermal unit.
Hess Corp, Marathon Oil, Baker Hughes, Schlumberger and Devon Energy led the most active list gainers with a rise between 2% and 4%.
Dish Network, Generac, Zebra Technologies, 3M, ADP and Equinix led the most active decliners with a loss between 2% and 5%.
1-800-Flowers.com Inc declined 4.5% to $7.39 after the company reported weak quarterly results.
The online flower and gift retailer's stock dropped to a low last seen in 2015.
The online flower and gift retailer said revenues in the fiscal year fourth quarter ending on July 3 declined to $485.9 million from $487 million a year ago.
During the quarter, the company swung to a loss of $22.3 million or 34 cents a share from net income of $13.3 million or $0.20 a diluted share a year ago.
Bed Bath & Beyond declined 5.5% to $8.22 and the retailer announced a business and financial restructuring plan a few days ago.
Broadcom Inc rose 2.2% to $503.31 after the chipmaker reported better-than-expected quarterly results.
Revenues in the fiscal year third quarter ending on July 1 increased 25% to $8.5 billion.
Net income rose to $3.1 billion from $1.9 billion and diluted earnings per share increased to $7.15 from $4.20 a year ago.
During the quarter, the company also repurchased and eliminated 3.2 million shares for $1,792 billion.
The company also guided revenues in the fiscal fourth quarter ending in October to be $8.9 billion.
DXC Technology jumped 3.7% to $27.69 in an active trading after the company canceled its presentation to investors at a conference organized by Deutsche Bank.
The move prompted a speculation that the company may be in a merger discussion with a potential suitor.
Lululemon Athletica Inc surged 7.2% to $316.34 after the company reported better-than-expected quarterly results. The fitness apparel retailer also offered a positive annual outlook.
Pagerduty Inc declined 1.0% to $23.86 after the cloud computing company reported better-than-expected results.
The software as a service provider said the number of customers paying more than $100,000 a year jumped 38% from a year ago.
Starbucks Corp declined 1.6% to $83.96 after the company appointed Laxman Narasimhan as its new chief executive.
Narasimhan will join the company from October 1 and work with the founder and interim chief executive Howard Schultz before he takes over the role from April 1, 2023.
Job Growth Slowed but Solid Despite Rising Interest Rates
Barry Adams
02 Sep, 2022
New York City
On Wall Street stocks opened higher after the latest jobs report showed the pace of hiring decline in August, meeting the market expectations.
Non-farm payrolls increased 315,000 in August following the 526,000 additions in July, the Bureau of Labor Statistics said Friday.
In a broad-based hiring employers added positions across many industries.
Professional and business services including computer and system design led the job gains in the month with 86,000, followed by healthcare services with 48,000, retail trade with 44,000 , leisure and hospitality with 31,000 and manufacturing with 22,000.
Leisure and hospitality sector additions slowed down considerably after adding an average of 90,000 for the last seven months.
The unemployment rate increased to 3.7% and average hourly wages increased 0.3% from the previous month and 5.2% annually.
Historically August jobs data are volatile and in the past the statistics agency has revised the data substantially.
The BLS lowered the job additions in June to 293,000 from the previous estimate of 398,000 and July additions to 526,000 from 528,000.
The S&P 500 index increased 0.4% to 3,985.42 and the Nasdaq Composite index gained 0.3% to 11,821.86.
Oil prices rose in the U.S. and European trading ahead of the OPEC+ meeting on Monday.
Prices rose on the expectations that the cartel will announce production cuts at the gathering of finance ministers.
Futures of crude oil increased $2.50 to $89.10 a barrel and natural gas fell 27 cents to $8.99 a thermal unit.
The yield on 10-year Treasury notes declined to 3.21% and on 2-year notes eased to 3.41%.
Across the Atlantic, European markets traded higher after the release of the U.S. payrolls report.
The DAX index increased 2.5% to 12,955.28, the CAC-40 index advanced 1.7% to 6,135.97, and the FTSE 100 index added 1.7% to 7,271.26.
Producer prices, a measure of wholesale prices, in the euro zone rose 4% in July from the previous month, the eurostat report showed on Friday.
The 4-month high increase was driven by the 9% surge in energy prices compared to 3% increase in June.
Asian markets marginally lower ahead of the U.S. jobs report as more cities tighten restrictions to prevent coronavirus outbreak from spreading.
Shanghai index increased fractionally and indexes in Japan and India declined marginally after volatile trading.
Global Markets Struggle, Oil Falls On Rate-hike and China Worries
Barry Adams
01 Sep, 2022
New York City
Benchmark indexes closed mixed in volatile trading on Wall Street and bond yields continued to rise.
Tech-heavy Nasdaq fell for the fifth day in a row and bond yields rose to a 10-week highs not seen since 2007.
Market worries were also compounded by another lockdown in China and factory activities declined for the first time in three months in August.
Chengdu announced a lockdown for its 21 million residents to prevent the Covid-19 virus variant from spreading.
In the northeast, Dalian with a population of 5.7 million and in the south Shenzhen with a population of 12.6 million have implemented stricter restrictions on mobility and social gathering.
Benchmark index extended losses ahead of the jobs report on Friday and on the ongoing worries of the future rate hikes.
Investors are looking for clues on the health of the jobs market, consumer spending and energy prices.
So far, consumer spending has remained stable but the spending pattern is shifting and amid high energy and food price inflation many are limiting purchases to basic and necessary items.
However, if interest rates continue to rise and energy prices remain elevated, job market conditions are likely to turn unfavorable and economic growth will slow down further.
Weekly initial jobless claims declined to 232,000 for the week ending on August 27 and continuing claims increased 26,000 from the previous week to 1,44 million, the Labor Department reported Thursday.
A separate report from the labor department showed that unit labor costs rose 10.2% in the second quarter from the previous three-month period.
On an annual basis, unit labor cost rose 9.3% at the end of the second quarter.
The S&P 500 index increased 0.3% to 3,966.85 and the Nasdaq Composite fell 0.9% to 11,785.13.
Futures of crude oil prices declined $3.26 to $86.27 and natural gas rose 6 cents to $9.19 a thermal unit.
Bond yields rose to a two-month high ahead of highly anticipated jobs report on Friday
The yield on 10-year Treasury notes rose to 3.26% and on 2-year Treasury notes inched up to 3.51%.
Ciena Corp declined 10.4% to $45.47 after the networking equipment maker reported weaker-than-expected quarterly results.
In addition, the company said parts shortages are preventing the company from meeting its customer demands.
Lands' End, Inc declined 15.3% to $11.70 after the apparel retailer said quarterly loss narrowed but expenses and inventories rose.
For the second quarter, net revenue fell 8.6% to $351.2 million from $384.1 million a year ago.
The company swung to a net loss of $2.2 million or 7 cents a diluted share compared to net income of $16.2 million or 48 cents a diluted share last year.
For fiscal 2022, the apparel retailer guided revenue to be between $1.60 billion and $1.64 billion and net income between $16.5 million and $23.5 million, and diluted earnings per share between $0.49 and $0.70.
Signet Jewelers Ltd dropped 12.2% to $57.20 despite the retailer reaffirming its full-year outlook and exceeding quarterly earnings estimates.
Total sales declined 1.9% to $1.8 billion and same store sales fell 8.2% from a year ago.
Diluted earnings per share declined to $2.58 from $3.60 a year ago.
Signet lowered its full-year fiscal 2023 annual revenues to between $7.6 billion and $7.7 billion and diluted earnings per share between $10.98 and $11.57.
European Stock Indexes at 6-week Low, Yields at 8-year High
European markets declined on the first day of September and all major indexes in the region fell as investors debated the direction of interest rates and health of the economy.
Moreover, market sentiment was dented by additional lockdown and a contraction in Chinese factory activities.
After a sustained campaign by central bankers in the last five days, investors are betting that the next rate hike at the policymakers' meeting on Sept 8 could be as large as 75 basis points.
Bond yield across the euro zone rose ahead of the rate setting committee's meeting next week.
The German Bund yields rose to 1.57%, the U.K. bonds inched closer to 2.9%, and Italian bonds nearly touched 3.94%.
The bond yields in the euro zone rose to the levels last seen in 2014.
Commodities and energy prices inched lower on the worries that the demand from China may remain soft on the ongoing lockdown and weakening factory activities.
Brent crude oil declined $3.43 to $92.21 a barrel and natural gas futures increased 1.3% to 243.0 euros per megawatt hour.
The DAX index fell 1.6% to 12,160.23, the CAC-40 index dropped 1.5% to 6,034.12, and the FTSE 100 index fell 1.9% to 7,148.50.
Mining companies led the decliners in London trading after gold, silver and copper fell between 1% and 3% after weak Chinese data.
Anglo American, Antofagasta, and Glencore declined between 4% and 6%.
Rio Tinto plc declined 3.6% to 4,600 pence in London trading after it agreed to acquire Turquoise Hill Resources for $3.3 billion.
Reckitt Benckiser Group declined 4.9% to 6,323.55 pence after the company said its chief executive officer Laxman Narasimhan has decided to leave the company for personal reasons.
Later in the day, Starbucks announced the appointment of Narasimhan as its new chief executive from April 1, 2023.
Deutsche Lufthansa AG declined 3.2% to 5.75 euros after the pilots union announced a one-day strike on September 2 following a ground staff strike in July.
Pernod Ricard increased 0.5% to 184.40 euros after the spirits group reported its annual results.
Organic sales in the fiscal year fourth quarter ending in June increased 14% to 2.3 billion euros and fiscal year 2022 sales rose 17% to 10.7 billion euros.
The company proposed to increase dividend 32% to 4.12 euros in the fiscal year 2022.
The spirit group also guided capital expenditure to increase 7% in the fiscal 2023 and proposed to buyback between 500 million and 750 million of its stocks.
Hermes declined 2.5% to 1,250 euros and LVMH dropped 2.3% to 632.80 euros on the worries of a slowdown in China.
Asian markets declined on the worries that the newly imposed restrictions on gathering and traveling may slowdown the economic activities further.
Hong Kong's Hang Seng Index dropped 1.8% to 19,597.31 and Shanghai Composite Index declined 0.5% to 3,184.98.
Stock indexes fell to a one-month low in Tokyo after manufacturing activities rose at the slowest pace in a year in August.
The Nikkei 225 Index plunged 1.5% to 27,661.47 and the broader Topix declined 1.4% to 1,935.49.
Tokyo Electron and Advantest declined between 3% and 4% after the U.S. more restrictions in selling advanced chips to China.
Stocks turned lower on Dalal Street after economy expanded at a slower-than-expected pace in June quarter.
Gross domestic product in the fiscal first quarter 2023 shot up 13.5% from a year ago but below the 16% estimate from the Reserve Bank of India.
The robust rebound was driven by the rise in consumer activities but the international trade deficit weighed on the growth.
Australian market indexes fell 2% on the commodities demand worries after China imposed more lockdowns and restrictions impacting as many as 30 million people.
European Markets Drop to 6-week Low, Bond Yields at 8-year High
Bridgette Randall
01 Sep, 2022
Frankfurt
European markets declined on the first day of September and all major indexes in the region fell as investors debated the direction of interest rates and health of the economy.
Moreover, market sentiment was dented by additional lockdown and a contraction in Chinese factory activities.
After a sustained campaign by central bankers in the last five days, investors are betting that the next rate hike at the policymakers' meeting on Sept 8 could be as large as 75 basis points.
Bond yield across the euro zone rose ahead of the rate setting committee's meeting next week.
The German Bund yields rose to 1.57%, the U.K. bonds inched closer to 2.9%, and Italian bonds nearly touched 3.94%.
The bond yields in the euro zone rose to the levels last seen in 2014.
Commodities and energy prices inched lower on the worries that the demand from China may remain soft on the ongoing lockdown and weakening factory activities.
Brent crude oil declined $3.43 to $92.21 a barrel and natural gas futures increased 1.3% to 243.0 euros per megawatt hour.
The DAX index fell 1.6% to 12,160.23, the CAC-40 index dropped 1.5% to 6,034.12, and the FTSE 100 index fell 1.9% to 7,148.50.
Mining companies led the decliners in London trading after gold, silver and copper fell between 1% and 3% after weak Chinese data.
Anglo American, Antofagasta, and Glencore declined between 4% and 6%.
Rio Tinto plc declined 3.6% to 4,600 pence in London trading after it agreed to acquire Turquoise Hill Resources for $3.3 billion.
Reckitt Benckiser Group declined 4.9% to 6,323.55 pence after the company said its chief executive officer Laxman Narasimhan has decided to leave the company for personal reasons.
Later in the day, Starbucks announced the appointment of Narasimhan as its new chief executive from April 1, 2023.
Deutsche Lufthansa AG declined 3.2% to 5.75 euros after the pilots union announced a one-day strike on September 2 following a ground staff strike in July.
Pernod Ricard increased 0.5% to 184.40 euros after the spirits group reported its annual results.
Organic sales in the fiscal year fourth quarter ending in June increased 14% to 2.3 billion euros and fiscal year 2022 sales rose 17% to 10.7 billion euros.
The company proposed to increase dividend 32% to 4.12 euros in the fiscal year 2022.
The spirit group also guided capital expenditure to increase 7% in the fiscal 2023 and proposed to buyback between 500 million and 750 million of its stocks.
Hermes declined 2.5% to 1,250 euros and LVMH dropped 2.3% to 632.80 euros on the worries of a slowdown in China.
Signet Jewelers Lowered Annual Outlook, Cash Flow Turns Negative
Scott Peters
01 Sep, 2022
New York City
Signet Jewelers Ltd dropped 11.4% to $57.29 despite the retailer reaffirming its full-year outlook and exceeding quarterly earnings estimates.
Same store sales declined more than anticipated as higher prices deterred customers and lowered the number of transactions in the quarter.
Total sales declined 1.9% to $1.8 billion and same store sales fell 8.2% from a year ago.
North America sales declined 1.8% to $1.6 billion on 8.7% decline in same store sales.
International sales plunged 14.6% to $111.6 million on 1.5% decline in same store sales.
Gross margin, declined 220 basis points from a year ago, was $664.7 million or 37.9% of total sales.
Operating income was $186.8 million or 10.6% of sales compared to $225.4 million or 12.6% of sales last year.
Diluted earnings per share declined to $2.58 from $3.60 a year ago.
Inventories
Inventories at the end of the quarter increased to $2.2 billion from $2 billion last year.
Cash Flow
On larger purchases of inventories in the quarter, cash outflow was $114.9 million compared to cash inflow of 458.5 million a year ago.
Free cash outflow in the quarter was $173.1 million from cash inflow of $426.3 million last year.
Dividends and Stock Repurchase
The company declared a dividend of 20 cents a share to shareholders on record of October 28 and payable on November 25.
In the first-half ending on July 30, Signet repurchased approximately 4.7 million shares at an average cost per share of $72.14 or $341 million including $22.8 million during the second quarter and $50 million from the completion of the accelerated share repurchase program from fiscal 2022.
Approximately $622.4 million are still available for stock repurchase from its share authorization program.
Outlook and Guidance
Signet lowered its full-year fiscal 2023 annual revenues to fall between $7.6 billion and $7.7 billion and diluted earnings per share between $10.98 and $11.57.
The company previously guided annual revenues between $8.03 billion and $8.25 billon and diluted earnings per share between $12.47 and $13.47.
The above guidance excludes $190 million of legal charges, $11 million charges for the acquired inventories, and $133 million for the buyout of substantially all U.K. pension obligations.
The guidance also excludes planned capital expenses of up to $250 million.
Retail Footprint
During the quarter, Signet opened 23 new stores and closed 36 and ended with 2,493 stores in North America.
The retailer added one store and closed 9 and ended with 340 international stores.
At the end of the second quarter, Signet operated 2,833 jewelry stores covering 4.2 million square feet of selling space.
Lands' End Swings to Q2 Loss After Gross Margin Drops
Scott Peters
01 Sep, 2022
New York City
Lands' End, Inc declined 14% to $11.87 after the apparel retailer said quarterly loss narrowed but expenses and inventories rose.
For the second quarter, net revenue fell 8.6% to $351.2 million from $384.1 million a year ago.
Online sales declined 16% in the second quarter driven by 14.4% fall in the U.S. sales and 23.9% drop in international sales.
Gross margin decreased approximately 530 basis points to 41.0% from 46.3%, driven by $11.7 million higher transportation expenses and higher promotional activities.
Net Inventories increased to $569.2 million at the end of the quarter from $464.3 million last year.
The company swung to a net loss of $2.2 million or 7 cents a diluted share compared to net income of $16.2 million or 48 cents a diluted share last year.
Cash Flow
Earlier receipt of goods for fall and holiday seasons negatively impacted cash flows.
In the second quarter, net cash used in operations was $117.5 million compared to net cash provided by operations of $30.5 million.
Stock Repurchase Program
During the second quarter, the company repurchased $2.4 million of its common stock under its previously announced $50 million share repurchase program.
Guidance and Outlook
For fiscal 2022, the apparel retailer guided revenue to be between $1.60 billion and $1.64 billion and net income between $16.5 million and $23.5 million, and diluted earnings per share between $0.49 and $0.70.
For the third quarter of fiscal 2022, the retailer guided net revenues in the range between $375 million and $390 million and net income between $1 million and $4 million and diluted earnings per share between 3 cents and 12 cents.
Approximately $9 million and $35 million expenses in the third quarter and full-year outlooks are due to incremental transportation expenses linked to supply chain disruption and the rising share of air freight.
Movers: AMD, Ciena Corp, Lands' End, MongoDB, Nividia, Signet Jewelers
Barry Adams
01 Sep, 2022
New York City
Stocks fell for the fifth day in a row and bond yields rose to a 10-week highs not seen since 2007.
Benchmark index extended losses ahead of the jobs report on Friday and on the ongoing worries of the future rate hikes.
The S&P 500 index declined 1.3% to 3,906.45 and the Nasdaq Composite fell 1.9% to 11,585.91.
Futures of crude oil prices declined $1.16 to $88.41 and natural gas rose 16 cents to $9.29 a thermal unit.
Bond yields rose to a two-month high ahead of highly anticipated jobs report on Friday
The yield on 10-year Treasury notes rose to 3.28% and on 2-year Treasury notes inched up to 3.52%.
Chipmakers fell after the U.S. restricted sale of some of the advanced chips to China.
Nvidia Corp declined 11.5% to $133.93 after the company said new U.S. licensing requirements are expected to impact sales by $400 million.
Advanced Micro Devices fell 6.8% to $79.08 and the company also confirmed its sales are also likely to be impacted by the new U.S. restrictions.
Ciena Corp declined 9% to $45.97 after the networking equipment maker reported weaker-than-expected quarterly results.
In addition, the company said parts shortages are preventing the company from meeting its customer demands.
Lands' End, Inc declined 14% to $11.87 after the apparel retailer said quarterly loss narrowed but expenses and inventories rose.
For the second quarter, net revenue fell 8.6% to $351.2 million from $384.1 million a year ago.
The company swung to a net loss of $2.2 million or 7 cents a diluted share compared to net income of $16.2 million or 48 cents a diluted share last year.
For fiscal 2022, the apparel retailer guided revenue to be between $1.60 billion and $1.64 billion and net income between $16.5 million and $23.5 million, and diluted earnings per share between $0.49 and $0.70.
Mongo DB plunged 24.7% to $243.25 after the cloud computing company reported quarterly results that met analysts' expectations but its annual outlook fell short of expectations.
The company estimated fiscal 2023 revenues between $1.196 billion and $1.206 billion compared to the previous range between $1.172 billion and $1.192 billion.
The company revised its adjusted operating loss between $8 million and $13 million from the previous range between a profit of $1 million and a loss of $9 million.
Signet Jewelers Ltd dropped 11.4% to $57.29 despite the retailer reaffirming its full-year outlook and exceeding quarterly earnings estimates.
Total sales declined 1.9% to $1.8 billion and same store sales fell 8.2% from a year ago.
Diluted earnings per share declined to $2.58 from $3.60 a year ago.
Signet reaffirmed its full-year fiscal 2023 annual revenues to fall between $7.6 billion and $7.7 billion and diluted earnings per share between $10.98 and $11.57.
U.S. Stocks Sink Ahead of Jobs Report
Barry Adams
01 Sep, 2022
New York City
Stocks continued their downward slide for the fifth day in a row and bond yields rose to a 10-week highs not seen since 2007.
Benchmark index extended losses ahead of the jobs report on Friday and on the ongoing worries of the future rate hikes.
Investors are looking for clues on the health of the jobs market, consumer spending and energy prices.
So far, consumer spending has remained stable but the spending pattern is shifting and amid high energy and food price inflation many are limiting purchases to basic and necessary items.
However, if interest rates continue to rise and energy prices remain elevated, job market conditions are likely to turn unfavorable and economic growth will slow down further.
Weekly initial jobless claims declined to 232,000 for the week ending on August 27 and continuing claims increased 26,000 from the previous week to 1,44 million, the Labor Department reported Thursday.
A separate report from the labor department showed that unit labor costs rose 10.2% in the second quarter from the previous three-month period.
On an annual basis, unit labor cost rose 9.3% at the end of the second quarter.
The S&P 500 index declined 1.3% to 3,906.45 and the Nasdaq Composite fell 1.9% to 11,585.91.
Futures of crude oil prices declined $1.16 to $88.41 and natural gas rose 16 cents to $9.29 a thermal unit.
Bond yields rose to a two-month high ahead of highly anticipated jobs report on Friday
The yield on 10-year Treasury notes rose to 3.28% and on 2-year Treasury notes inched up to 3.52%.
Ciena Corp declined 9% to $45.97 after the networking equipment maker reported weaker-than-expected quarterly results.
In addition, the company said parts shortages are preventing the company from meeting its customer demands.
Lands' End, Inc declined 14% to $11.87 after the apparel retailer said quarterly loss narrowed but expenses and inventories rose.
For the second quarter, net revenue fell 8.6% to $351.2 million from $384.1 million a year ago.
The company swung to a net loss of $2.2 million or 7 cents a diluted share compared to net income of $16.2 million or 48 cents a diluted share last year.
For fiscal 2022, the apparel retailer guided revenue to be between $1.60 billion and $1.64 billion and net income between $16.5 million and $23.5 million, and diluted earnings per share between $0.49 and $0.70.
Signet Jewelers Ltd dropped 11.4% to $57.29 despite the retailer reaffirming its full-year outlook and exceeding quarterly earnings estimates.
Total sales declined 1.9% to $1.8 billion and same store sales fell 8.2% from a year ago.
Diluted earnings per share declined to $2.58 from $3.60 a year ago.
Signet reaffirmed its full-year fiscal 2023 annual revenues to fall between $7.6 billion and $7.7 billion and diluted earnings per share between $10.98 and $11.57.