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market wrap
stock:
The Stoxx Europe 600 hit an all-time high on Thursday after Nvidia’s impressive financial results boosted global stock markets.
The DAX and CAC-40 also hit new highs, but the FTSE 100 index, which has consistently lagged its European peers in recent years, once again underperformed as bank stocks fell.
Traders ignored Federal Reserve minutes that showed policymakers wanted to avoid cutting rates too soon.
US market:
Nvidia’s results sent stock futures soaring led by technology stocks, with the AI giant’s stock rising more than 12% in premarket trading.
Other semiconductor stocks also rose following the Nvidia report. Super Micro Computers rose 13%, Arm Holdings rose 9.9% and Broadcom rose 4.4%.
Foreign exchange:
The dollar hit a 20-day low against a basket of currencies as stocks rose, upending the Fed’s cautious agenda.
“While I’m not surprised that Fed officials aren’t rushing towards an exit, I’m surprised they’re finding it difficult to get dollar bulls on board,” Swissquote said.
UniCredit Research says that EUR/USD will likely continue to struggle above 1.08 without re-approaching 1.09, but a negative surprise from a survey of euro area purchasing managers will push the pair above 1.08. I predicted that it would probably never drop below 0750.
UniCredit Research said its survey of the eurozone, UK and US could be a good test to assess the ability of many major currencies to appreciate against the dollar.
“Investors have already partially reduced their positions, as evidenced by the drop in the US dollar index below 104,” the paper said.
Bonds:
Saxo said the yield spread between Italian BTP and German Bundestags remains around 150 basis points, 15 basis points below the 10-year average, and that an increase of more than 200 basis points has been an undesirable event in the past. This is important, he added.
Saxo said the good news is that at current BTP and German bond spread levels, there is plenty of room for the European Central Bank to declare victory over inflation and continue to gradually shrink its balance sheet. Ta.
energy:
Oil prices were slightly firmer, supported by a weaker dollar and rising tensions in the Middle East.
Meanwhile, US crude inventories rose last week, according to data from API, but the demand outlook is improving as refineries work to restart operations after shutdowns, according to reports. Official inventory data from the EIA is expected to be released later Thursday.
metal:
According to MUFG, base metal prices rose and gold continued its upward streak as the Fed’s minutes provided guidance on when the central bank would ease monetary policy.
Elsewhere, China-sensitive base metals continue to decline year-to-date, but this week’s sharper-than-expected cut in loan prime rates shows Chinese authorities remain focused on supporting growth conditions this year. MUFG added that this may indicate that
MUFG said there could be upside risks to demand in 2024 if reinforced by further policy easing.
EMEA headlines
Eurozone closer to economic recovery, PMIs show
The euro zone continued to recover from the economic downturn this month, helped by a revival in the services sector, according to a survey of purchasing managers released on Thursday.
The HCOB Eurozone Composite PMI Production Index, an indicator of activity in the manufacturing and service sectors, stood at 48.9 in February, up from 47.9 in January, the lowest rate of decline in eight months. Economists polled by the Wall Street Journal had expected a slight rise to 48.5.
Nestlé warns of slowing sales growth as rising prices keep shoppers reticent
Nestlé warned that sales growth will slow this year as higher prices encourage shoppers to ease spending, after reporting full-year profits and sales that were slightly below expectations.
The Swiss maker of Kit Kat chocolate bars and Nescafé coffee said Thursday it expects organic sales to rise about 4% this year, according to consensus forecasts provided by the company, slowing from 7.2% growth in 2023 and down from the expected 4.7%. announced that it would be below.
Mercedes-Benz raises dividend despite forecast of profit decline
Mercedes-Benz Group increased its dividend despite lower sales and net profit in the fourth quarter, expecting geopolitical and macroeconomic uncertainties to reduce profits this year.
The German luxury carmaker said on Thursday its net profit fell 21.5% from a year earlier to 3.16 billion euros ($3.42 billion) as inflation and supply chain costs weighed on its bottom line. Analysts had expected net profit to end the quarter at 2.8 billion euros, according to Visible Alpha.
Anglo American cuts dividend as profits plummet due to impairment losses and low commodity prices
Anglo Americans cut its dividend after its full-year profit fell more than expected and it booked a $2.1 billion impairment charge as it battled weaker commodity markets across its portfolio.
The multinational, diversified mining company announced Thursday that its 2023 net profit fell 94% year-on-year to $283 million, due to impairments in its diamond and nickel operations and lower prices for platinum and diamonds. did.
Danone 2023 profit decreased.Guidance for 2024 in line with medium-term goals
Danone reported a decline in full-year profit and sales, but said its outlook for 2024 remained in line with its medium-term goals.
The French food company said Thursday that its net profit for 2023 was 881 million euros ($953.1 million), compared with 959 million euros a year earlier. Recurring net income excluding special items was 2.28 billion euros, an increase of 3.5% compared to the same period last year.
AXA hits target as net profit increases
Along with the share buyback, AXA has set new key financial targets for 2024-26 and increased its dividend following higher full-year net profit due to higher underlying profit and net realized capital gains.
The French insurer said on Thursday it now expects compound annual growth in underlying earnings per share to range from 6% to 8% and underlying return on equity to 14% to 16%, upstream cumulative growth from 2024 to 2026. The company announced that it has set guidelines for organic cash to exceed 21 billion euros. AXA announced that it had achieved four of its 2020-2023 financial targets and exceeded three of them.
Lloyds Bank sets aside £450m for Motor Finance Regulator review
Lloyds Banking Group has recorded a provision of 450 million pounds ($568.7 million) to prepare for the potential impact of the UK financial regulator’s review of the motor finance industry, the British lender said. The company announced it had launched a £2 billion share buyback program and achieved better-than-expected results. Expected earnings for Q4 2023.
The UK lender has put this money on hold in light of a Financial Conduct Authority investigation into historic car finance discretionary committee arrangements to which the bank is exposed through its Blackhorse brand, the UK’s largest car finance provider. did.
Rolls-Royce returns to pre-tax profit thanks to soaring sales and cost cuts
Rolls-Royce Holdings said it has returned to a pre-tax profit, boosted by cost reductions and better-than-expected sales.
The British aerospace and defense company posted a pre-tax profit of 2.43 billion pounds ($3.07 billion) in 2023, compared with a pre-tax loss of 1.5 billion pounds the previous year.
Knorr-Bremse’s stock price soars as its financial results exceed views
Knorr-Bremse stock rose after the company reported better-than-expected results and issued guidance that analysts considered better than consensus estimates.
As of 0856 GMT on Thursday, Knorr-Bremse shares were up 6.7% at 62.44 euros, offsetting losses earlier this year and taking their year-to-date rise to 6.2%.
Telefonica faces net loss due to temporary charges
Telefonica reported a fourth-quarter net loss due to one-off costs at its Spanish business and UK joint venture, but expects higher sales and profits this year.
The Spanish telecoms group on Thursday posted a net loss of 2.15 billion euros ($2.33 billion) in the fourth quarter, due to layoff provisions in Spain and British joint venture Virgin Media-O2. The company attributes this to impairment losses. In the same period last year, the company made a profit of 525 million euros.
WPP’s pre-tax profit decreased due to impairment loss
WPP reported a decline in pre-tax profit in 2023 after recording a huge impairment loss, but said the number of customers on its AI-powered platform WPP Open is rapidly increasing.
The company said the AI tool is currently being used by more than 30,000 people across the group, adding that it continues to invest in AI opportunities as outlined at its recent Capital Markets Day.
Germany’s economy is at a standstill. However, the stock looks cheap.
German stocks performed well in 2023, but have stalled this year. The Global
No wonder. Europe’s largest economy shrank last year, and Germany’s Bundesbank just predicted it would contract further in the first quarter.
Why Arm, Birkenstock and other European companies are listing their stocks in the US
The US is drawing in more companies from Europe looking to sell their shares.
The latest company to jump across the Atlantic was Britain’s Flutter Entertainment, parent company of sports betting company FanDuel and others. Flutter debuted as a secondary listing in New York on January 29th and immediately announced that it wanted to take it to a primary listing.
global news
Banking crisis may be closer than you think
As we approach the one-year anniversary of the Silicon Valley Bank’s failure, it’s too early to feel relieved.
Wall Street Pollyannas disagree, pointing out that the banking system has avoided a systemic crisis that seemed all too likely this time a year ago.
Email paul.larkins@dowjones.com
Please contact us at newsletters@dowjones.com.
(Read More) Dow Jones Newswires
February 22, 2024 05:18 ET (10:18 GMT)
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