Positive Earnings Support Market Gains Across Atlantic

Alexander Garcia
23 Apr, 2024
Miami

Benchmark indexes on Wall Street advanced as investors reviewed a fresh batch of earnings. 

The S&P 500 index and the Nasdaq Composite advanced more than 0.3% in early trading, crude oil prices lacked direction, and gold extended its recent losses.

Earnings were in focus, and investors reacted to the latest results from General Motors, GE Aerospace, PepsiCo, UPS, and JetBlue. 

After the close today, Tesla is scheduled to release its quarterly results, and on Wednesday, Meta Platforms is expected to release its results, and on Thursday, Microsoft and Alphabet are expected to report their results. 

Later in the week, investors are also awaiting the release of the first-quarter GDP growth and personal consumption expenditure index data. 

On the economic front, investors reacted to new home sales and business activity survey data. 

U.S. business activity in April rose at the slowest pace since December, the latest survey from S&P Global showed Tuesday. 

The U.S. Composite PMI rose to 50.9 in April from 52.1 in the previous month, after both manufacturing and service sectors expanded at a slower pace. 

 

New Home Sales Advanced in March 

Single-family new home sales increased 8.8% to 693,000 in March from 637,000 in February, the U.S. Census Bureau and the Department of Housing and Urban Development reported Tuesday. 

Sales from a year ago increased by 8.3%. 

New home sales increased to the highest level in six months from an upwardly revised 5.1% decrease in February. 

The median sales price of new houses sold in March was $430,700, and the average sales price was $524,800.

At the end of March, about 477,000 homes were listed for sale, representing about 8.3 months of supply at the current sales rate. 

Sales in the Northeast jumped 27% to an annual rate of 46,000, in the Midwest, 5.3% to a 79,000 rate, in the South, 7.7% to 391,000, and in the West, 8.6% to 177,000.

New homes sold in 2023 totaled 666,000, and sales in the first quarter of 2024 increased 4.4% to 181,000 from 174,000 in the period a year ago. 

 

U.S. indexes and yields

The S&P 500 index increased 1.1% to 5,066.37, and the Nasdaq Composite advanced 1.5% to 15,689,42. 

The yield on 2-year Treasury notes edged higher to 5.0%, 10-year Treasury notes inched up to 4.64%, and 30-year Treasury bonds edged lower to 4.74%.

WTI crude oil rose $0.64 to $82.75 a barrel, and natural gas prices decreased 1 cent to $1.77 a thermal unit.

Gold decreased by $9.94 to $2,323.93 an ounce, and silver fell 4 cents to $27.26. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.72.

 

U.S. Stock Movers

UPS increased 1.6% to $147.30 after the parcel delivery company reported better-than-expected quarterly earnings. 

Revenue in the first quarter declined 5.3% to $21.7 billion from $22.9 billion, net income plunged 41.3% to $1.1 billion from $1.9 billion, and diluted earnings per share dropped to $1.30 from $2.19 a year ago. 

The company reiterated its 2024 outlook and said consolidated revenue would range from approximately $92.0 billion to $94.5 billion and consolidated operating margin would fall between 10.0% and 10.6%. 

General Motors increased 4.9% to $45.35 after the vehicle maker reported sharply higher revenue and earnings in the first quarter. 

Revenue increased 7.6% to $43.3 billion from $39.0 billion, net income attributable to shareholders rose 24.4% to $2.98 billion to $2.35 billion, and diluted earnings per share advanced to $2.56 from $1.69 a year ago. 

The vehicle maker updated its full-year 2024 earnings outlook to a new range between $10.1 billion and $11.5 billion from the previous estimated range between $9.8 billion and $11.2 billion. 

JetBlue dropped 10.5% to $6.75 after the regional airline reported a wider loss in the first quarter. 

Revenue in the quarter declined 5.1% to $2.2 billion from $2.3 billion, net loss expanded to $716 million from $192 million, and diluted loss per share increased to $2.11 from 58 cents a year ago, respectively. 

The company estimated second-quarter revenue to fall between 6.5% and 10.5% and capital expenditures of $550 million. 

 

European Markets Rebound, FTSE 100 Index Hits Record New High

European markets advanced after geopolitical tensions eased, crude oil prices continued to drift lower, and there was growing optimism about corporate earnings. 

Benchmark indexes in Frankfurt and Paris rebounded, and the key index in the UK rose to a new record high in hopes of improving corporate results. 

 

Eurozone Private Sector Activity Growth Picks Up

On the economic front, the eurozone business activity growth outlook improved for the fourth month in a row, and activities expanded for the second consecutive month. 

The HCOB Eurozone Composite PMI increased to 51.4 in April from 50.3 in March, the fastest increase since March 2023, S&P Global noted in its preliminary estimate on Tuesday. 

Manufacturing output continued to contract, but at the slowest pace in a year, and service sector output expanded at the fastest pace in 11 months. 

Among the leading economies of the currency union, business activities in Germany returned to growth after contracting for nine months in a row, and output declined at the slowest pace in 11 months in France. 

 

UK Service Growth Offsets Manufacturing Downturn 

Elsewhere in the region, the UK's composite purchasing manager's index rose to an 11-month high in April to 54.0 from 52.8, S&P Global reported Tuesday. 

The preliminary business activity estimates are likely to be revised after the second assessment. 

The flash manufacturing PMI fell to 48.7 in April from 50.3 in the previous month, reflecting lower customer demand and inventory destocking. 

The flash service PMI rose to 54.9 in April from 53.1 in the previous month, indicating a sustained increase in activities in the sector driven by rising demand. 

The business activity growth results are based on a survey conducted among 650 manufacturers and 650 service providers between April 11 and 19.

 

Europe Indexes and Yields

The DAX index increased by 1.3% to 18,100.51; the CAC-40 index rose by 0.7% to 8,094.36; and the FTSE 100 index inched higher by 0.2% to a new record of 8,046.73.

The yield on 10-year German bonds edged down to 2.48%; French bonds inched lower to 2.97%; the UK gilts edged lower to 4.21%; and Italian bonds inched higher to 3.79%.

The euro edged higher to $1.066; the British pound inched higher to $1.236; and the U.S. dollar edged higher to 91.16 Swiss cents.

Brent crude increased $0.09 to $87.89 a barrel, and the Dutch TTF natural gas fell by €0.61 to €28.55 per MWh.

 

Europe Stock Movers

SAP AG increased 4.4% to €173.10 after the German software and cloud services provider reaffirmed its 2024 outlook and said cloud services revenue rose 24% to €3.93 billion. 

JD Sports Fashion PLC rose 5.4% to 125.20 pence after the company proposed to acquire the U.S.-based Hibbett for $1.08 billion. 

Anglo American declined 1.9% to 2,119.0 pence after the mining company lowered its diamond production outlook. 

Kuehne & Nagle declined 2.8% to CHF 247.30 after the Swiss logistics company reported first-quarter earnings declined 40%. 

Novartis AG rose 4.4% to CHF 91.18 after the Swiss drugmaker raised its full-year outlook. 

Renault SA decreased 0.7% to €47.11 after the French automaker reported a slight increase in revenue in the first quarter. 

Associated British Foods plc soared 9.3% to 2,737.89 pence after the diversified conglomerate said first-half profit increased by 39%. 

The increase in profit was driven by the strength of the sugar and retail businesses at Primark. 

Taylor Wimpey rose 0.9% to 133.30 pence after the homebuilder reaffirmed its 2024 outlook, easing worries that higher interest rates may negatively impact sales. 

 

Japan Stocks Extend Gains 

Stocks in Tokyo advanced for the second day in a row amid easing tensions in the Middle East, and investors reviewed the latest update on the manufacturing industry. 

The Nikkei 225 Stock Average rose 0.5% to 37,607.78, and the Topix index advanced 0.2% to 2,668.53. 

Moreover, the Japanese yen dropped to a new 34-year low of 154.85, prompting another verbal intervention from Finance Minister Shunichi Suzuki. 

Most traders in Tokyo are looking for the yen to drop as low as 170 before the government steps up currency market intervention.  

 

Manufacturing Contraction Slows but Service Expansion Accelerates 

The au Jibun Bank Japan Manufacturing Purchasing Manager's Index increased to 49.9 in April from 48.2 in March, S&P Global reported Tuesday. 

Manufacturing activities contracted for the eleventh month in a row but fell at the slowest pace in April. 

The rising cost of inputs forced the average selling price to increase at the fastest pace in nine months. 

The au Jibun Bank flash Japan Services Purchasing Manager's Index increased to 54.6 in April from a final 54.1 in the previous month, S&P Global reported Tuesday. 

The service sector expanded for the 20th consecutive month and at the strongest pace since May 2023. 

 

Japan Stock Movers

The market in Asia advanced for the second consecutive day this week, tracking gains in overnight trading on Wall Street. 

Benchmark indexes in Seoul rose 0.1%, and in Sydney they advanced 0.4%. 

The market index in Shanghai declined 0.4%, but the reference index in Hong Kong advanced 0.6% following an increase of 1.8% in the previous session. 

In Tokyo stock trading, tech stocks led the decliners, with Advantest, Tokyo Electron, and Screen Holdings falling between 0.5% and 1.5%. 

SoftBank fell 0.3% to ¥7,490.0, and Uniqlo parent Fast Retailing jumped 1.6% to ¥42,120.0. 

Financial stocks led gainers ahead of the Bank of Japan's monetary policy decisions on Friday. 

Sumitomo Mitsui Financial, Mitsubishi UFJ Financial, and Mizuho Financial gained between 0.2% and 0.6%. 

Among the leading automakers, Toyota Motor decreased ¥3,510.0, Honda Motor declined 0.6% to ¥1,763.0, and Nissan Motor rose 0.07% to ¥550.80. 

Honda Motor is nearing an agreement with the Canadian government to set up an electric vehicle manufacturing plant, according to Nikkei. 

Honda is likely to invest as much as C$14 billion over the years and manufacture electric batteries at a plant, following the lead of other automakers, Volkswagen and Stellantis. 

 

China Indexes Lacked Direction

The market index in Shanghai declined 0.4%, but the reference index in Hong Kong advanced 0.6% following an increase of 1.8% in the previous session. 

Market sentiment was positive for the second day in a row after China's financial regulatory agency announced supportive measures to facilitate the listing of mainland Chinese companies on the Hong Kong Stock Exchange. 

Moreover, the market sentiment was bolstered by gains in overnight trading in New York on the hopes of better-than-expected quarterly results from leading tech companies including Apple, Microsoft, Meta Platforms, and Alphabet. 

The market in Asia advanced for the second consecutive day this week, tracking gains in overnight trading on Wall Street. 

Benchmark indexes in Tokyo edged up 0.2%, in Seoul they rose 0.1%, and in Sydney they advanced 0.4%. 

The CSI index fell 0.6% to 3,511.05, and the Hang Seng index rose 1.6% to 16,782.71. 

Tech companies led the gainers in Hong Kong: Tencent Holdings rose 3.1% to HK$330.20, Baidu jumped 1.7% to HK$95.55, and JD.com advanced 6% to HK$106.60. 

WH Group advanced 5.5% to HK$5.78 after China's largest meat processor and pork producer said operating profit soared 37% in the first quarter. 

 

Li Ning Quarterly Sales Rise

Li Ning Co. gained 5.1% to HK$18.38 after the sports equipment and sportswear company said overall sales rose by a low single-digit in the first quarter. 

Retail and wholesale sales declined in the "low single-digit," with retail sales increasing in the mid-single-digit  and wholesale sales declining by the "mid single-digit."

Online sales soared in the "low twenties" in the quarter. 

Same-store sales across the network of stores, excluding Li Ning Young stores, declined by "mid-single-digit" from a year ago. 

The company's sales in 2023 increased to 27.6 billion yuan from 35.8 billion yuan, and profit attributable to shareholders declined to 3.2 billion yuan from 4.1 billion yuan a year ago, respectively. 

 

Baicha Baidao IPO Plunges 35% 

The two newly listed companies still faced headwinds on the first day of trading in Hong Kong. 

Tianjing Construction Development Group plunged 25% to HK$1.85, and Sichuan Baicha Baidao Industrial dropped 35% to HK$11.20. 

Sichuan Baicha Baidao, the bubble tea store retail chain, priced its offering at HK$17.50 per share and raised HK$2.5 billion, or $330 million, in the largest Hong Kong's initial public offering in 2024 so far. 

The Chengdu-based tea store chain's ChaPanda stores saw rapid expansion of its network to 8.000 locations in 2023 from 500 in 2019.