(ABM FN-Dow Jones) The European stock markets are expected to open conservatively on Monday, after the stock markets remained close to home on Friday.
Investors will be somewhat relieved by falling oil prices after Israel’s retaliatory attack on Iran over the weekend bypassed Tehran’s oil and nuclear facilities and did not disrupt energy supplies.
In addition, this week is well filled and the earnings season is in top gear, with investors receiving financial figures from five of the seven Magnificent companies, as well as growth and inflation figures from the euro zone and the US, plus two American jobs reports.
IG predicts an opening gain of 50 points for the German DAX and a plus of 18 points for the French CAC 40. The British FTSE seems to open 3 points lower.
It was a difficult week for the European stock markets, with rising bond yields as the culprit. The German ten-year yield rose by about 10 basis points last week to 2.296 percent on Friday, while the American variant rose by 14 basis points to 4.218 percent.
Rising interest rates are related to increased nervousness in the bond markets. Investors are increasingly wondering whether the weak economy in the eurozone will force the European Central Bank to cut rates by 50 basis points, while the Federal Reserve is much more reluctant to cut rates at a rapid pace.
The new Ifo index showed on Friday that German business confidence improved in October, which, according to DWS analysts, offers some hope that the manufacturing industry in Germany is picking up. Things are also looking slightly better for the services sector, but the prospects for trade remain bleak.
The Ifo composite index improved from 85.4 to 86.5. Analysts expected an index of 85.6 for October.
According to DWS, there are only small bright spots and it is too early to say that the economic malaise in Germany is over.
According to economists at Capital Economics, the likelihood of a 50 basis point interest rate cut by the ECB has increased as growth in the rest of the eurozone is also weak.
Frank Vranken of Edmond de Rothschild pointed to Thursday’s preliminary PMI figures, which showed that the euro zone is still shrinking.
“In light of such figures, ECB members are wondering whether they should go for a 50 basis point rate cut in December. Currently, markets are pricing something between 25 and 50 basis points. But the ECB continues to reiterate that this depends on the data. I think there is already enough data that calls for a larger reduction,” said the investment strategist.
On a macroeconomic level, it was further announced on Friday that consumer confidence in France has declined for the first time since April 2024. The confidence index fell from 95 to 94.
Company news
HelloFresh has lowered its revenue forecast for 2024, but profitability in the third quarter will be better than the market expects, it was announced on Friday. The share of the German meal delivery company rose more than 20 percent.
Delivery Hero fell 1.4 percent in Frankfurt and Just Eat Takeaway gained 2.9 percent in Amsterdam.
Rheinmetall was the biggest faller on the German stock exchange, with a loss of 3.5 percent.
Mercedes-Benz underperformed in the past quarter. The German car manufacturer therefore adjusted downwards the outlook for the entire year. The share fell by 1.0 percent.
Other car shares were on the rise in the DAX on Friday, with pluses of 0.7 to 4.5 percent for Porsche Automobil Holding, Porsche AG and Daimler Truck. In Paris, Renault won 2.2 percent.
Pernod Ricard lost 1.1 percent in the CAC 40. Sector colleague Remy Cointreau actually gained one percent.
Remy Cointreau achieved significantly lower turnover in the past six months and lowered the outlook. The French distiller now expects a double-digit decline in organic turnover, while previously a gradual recovery was expected throughout the year.
Sanofi’s figures showed that the pharmaceutical company performed better in the third quarter than analysts expected. In part, a rising demand for Dupixent, a remedy for certain forms of eczema, helped Sanofi achieve better-than-expected sales. The share gained 2.5 percent.
Electrolux fell 14.6 percent in Stockholm, after disappointing quarterly figures. According to Citi analysts, the figures were lower than the analyst consensus.
Euro STOXX 50 4,943.09 (+0.2%)
STOXX Europe 600 518,81 (-0,03%)
DAX 19.463,59 (+0,1%)
CAC 40 7.497,54 (-0,1%)
FTSE 100 8.248,84 (-0,3%)
SMI 12.184,00 (+0,1%)
AEX 898.82 (+0.3%)
BEL 20 4.293,15 (+0,5%)
FTSE MIB 34.776,10 (+0,2%)
IBEX 35 11.812,50 (-0,2%)
US STOCKS
Wall Street is expected to open higher on Monday, with a cooling geopolitical situation helping risk sentiment.
The American stock markets ended mainly lower on Friday. This brought a difficult week to a cautious end. The Dow in particular had to absorb the blows last week after poor figures from Boeing and IBM, while the Nasdaq held up after strong results from Tesla.
Later this week, more Magnificent Seven shares will report quarterly results, namely Meta, Microsoft and Alphabet.
Meanwhile, according to investment manager Simon Wiersma of ING, American macro figures give little reason “to expect rapid interest rate cuts by the Fed.”
This uncertainty caused interest rates to rise last week. The American ten-year yield was quoted at 4.246 percent on Friday, up 16.5 basis points on a weekly basis, while the two-year variant rose by almost 15 basis points last week to 4.113 percent.
The reluctance on the stock markets is also increasing with more than a week until the American presidential elections, according to Wiersma.
Frank Vranken of Bank Edmond de Rothschild pointed to a ‘red sweep’, i.e. Donald Trump becoming president and the Republicans gaining control of Congress.
“Markets see this as inflationary and a greater geopolitical risk, not to mention the fiscal blowback,” the investment strategist said. It would be positive for the gold price. It recorded more than 2,756 points on Friday.
“Of course, a broad victory for Trump also has other consequences. It is bad for bonds, it is bad news for EU trade and for China, but it argues in favor of remaining long tech,” said Vranken.
On a macroeconomic level, attention was focused on orders for durable goods in the US on Friday. They fell by 0.8 percent in September, just like in August, where a decrease of 1.0 percent was expected.
Consumer confidence as measured by the University of Michigan rose unexpectedly in October, while short-term inflation expectations stabilized at 2.7 percent.
Oil prices rose more than 2 percent on Friday. On a weekly basis, prices rose by about four percent.
It was a volatile week for oil markets, with tensions in the Middle East, which could disrupt production and therefore boost prices, and concerns about supply and demand on the other, according to Peter Cardillo of Spartan Capital.
Company news
Tesla, which gained approximately 22 percent on Thursday after strong figures and a positive outlook from CEO Elon Musk, closed 3.3 percent higher on Friday.
“We now also know that we should not believe everything Musk says. He regularly promises more than he delivers,” says Wiersma.
Another tech giant, Nvidia, gained 0.8 percent. In the Dow, financials such as Bank of America and Goldman Sachs were under pressure and Boeing and IBM also lost again.
Colgate-Palmolive posted higher revenue and profit in the past quarter. The outlook was tightened slightly. The share still lost 4.2 percent.
Shares of Capri Holdings, owner of luxury brand Michael Kors, fell nearly 49 percent after a judge agreed to the Federal Trade Commission’s request to block its planned merger with rival Tapestry. The FTC filed a lawsuit in April 2024 to block the $8.5 billion merger, arguing that the acquisition would harm competition in the market for lower-priced handbags. Shares of Tapestry, owner of brands such as Coach and Kate Spade, rose 13.5 percent.
Western Digital saw adjusted profit exceed analyst expectations last quarter, thanks to cloud revenue that rose 153 percent from a year earlier. CEO David Goeckeler spoke positively about AI. The share rose 4.7 percent.
Spirit Airlines, which is exploring a bankruptcy filing, will reduce its workforce, trim its flight schedule and sell 23 planes for about $519 million. Shares rose 15.5 percent.
Deckers Outdoor rose 10.6 percent after the parent company of Hoka sneakers and Ugg boots reported quarterly revenue and profit that exceeded analyst expectations. Deckers expects a turnover increase of 12 percent this year.
Skechers fell by almost 4 percent despite the shoe retailer’s sales and profits being better than expected in the past quarter.
Coursera fell nearly 10 percent after the online learning platform lowered revenue expectations for this year. Jobs are also being cut to save costs.
S&P 500 index 5.808,12 (-0,03%)
Dow Jones index 42.114,40 (-0,6%)
Nasdaq Composite 18.518,61 (+0,6%)
ASIA
Asian stock markets were mostly higher on Monday morning, with the Nikkei 225 rising, supported by a weak yen amid political uncertainty as the ruling LDP lost its parliamentary majority in elections this weekend. China reported its worst industrial earnings since the pandemic. Industrial profits in China fell 27.1 percent year-on-year in September.
Nikkei 225 38.656,83 (+2,0%)
Shanghai Composite 3.308,51 (+0,3%)
Hang Seng 20,618.40 (+0.2%)
VALUE
The euro/dollar was trading at 1.0784 this morning. On Friday evening the currency pair was trading at 1.0795.
USD/JPY Yen 153,65
EUR/USD Euro 1,0784
EUR/JPY Yen 165.73
MACRO-AGENDA:
– No agenda items
COMPANY NEWS:
07:00 KPN – Third quarter figures
07:00 Philips – Third quarter figures
09:00 OCI – Ex-dividend
Bron: ABM Financial News
ABM Financial News is a supplier of stock market news, video and data, both for real-time trading platforms and dealing rooms and for online and offline media publications. The information in this article is not intended as professional investment advice or as a recommendation to make certain investments.
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Market Shenanigans: A European Stock Roundup
Welcome, dear audience, to the financial circus where clowns are often the only ones who leave with more money than they came with! Today, the European stock markets are expected to strut onto the stage with the grace of a drunken giraffe, opening conservatively after Friday’s YAWN-fest left investors closer to home than a cat on a rainy day.
Oil Prices and More: The Dance of Tension
But fear not! Investors are about to be *somewhat* relieved (a spectacular achievement in this world, akin to finding an extra fry at the bottom of your takeout bag) thanks to falling oil prices post-Israel’s weekend drama with Iran. Rest assured, Tehran’s oil and nuclear facilities were left intact, meaning our energy supplies are safe, at least for now. Let’s just hope the oil won’t start taking a U-turn on us anytime soon, or we’ll all be devouring cold, soggy toast for dinner!
The Magnificent Seven: Earnings Season Approaches
And talking about dressing things up, earnings season is upon us, and five of the seven “Magnificent companies” are ready to report. Will they be as dazzling as a Kardashian on a red carpet, or will they leave us with more questions than answers? Alongside this excitement, we have inflation and growth figures from the eurozone and the US, plus a couple of American jobs reports. You know, for that little sprinkle of existential dread we all crave!
Bonds Ahoy: Rising Yields and Investor Anxiety
Last week was quite the ride on the European stock market rollercoaster—bond yields were the real party poopers! The German ten-year yield hopped up nearly 10 basis points (because why not?) to reach 2.296 percent, while the American variant climbed a few more stairs to 4.218 percent. It’s like watching your favorite soap opera: full of suspense, never-ending plot twists, and the constant question, “Will they or won’t they?”—in this case, the ECB cutting rates.
Optimism, Sort Of: The Ifo Index Strikes Again
The Ifo index threw out some glimmers of hope on Friday, as German business confidence danced its way up from 85.4 to 86.5. Now, if only the manufacturing industry would join the party, we might have a celebration! But hold your horses; according to analysts at DWS, the party hats might be reserved for a smaller gathering. It’s too early to say the economic malaise is over; they clearly missed out on the “celebrate small wins” seminars!
Mixed Signals from Company News
And in the glorious world of company stocks: HelloFresh decided it was time to lower its revenue forecast for 2024 while announcing its third-quarter profitability would exceed expectations—naturally, shares sky-rocketed more than 20%. Kind of makes you think the stock market is just one big game of pin the tail on the donkey, where only the lucky ones blindfolded find the right target!
A Rollercoaster Continuation in America’s Market
Meanwhile, the American stock markets look primed to open higher today, as the geopolitical situation cools down faster than a microwave mishap at family dinners. Yet last week, they ended on a note of pouting like a child who didn’t get dessert. The Dow was particularly hard hit—poor thing just closed its eyes and hoped for better numbers after Boeing and IBM’s poor showings.
The Asian Market: A Mixed Bag
And in Asia, stock markets are mostly higher, with the Nikkei 225 taking a leap forward, no doubt encouraged by a weak yen and political uncertainty that makes the average family drama look like a quaint tale of sunshine and rainbows! Meanwhile, in China, industrial profits plummeted by 27.1 percent—talk about a lumberjack who just stubbed his toe!
Conclusion: Where Do We Stand?
To wrap it up in a nice little bow: it’s a mixed bag of highs and lows, cheers and jeers, as the markets create a tapestry of volatility wider than your aunt’s bingo scorecard. So grab your popcorn, settle in, and prepare for another week of thrilling stock market drama. After all, as our favorite comedians would say, the only guarantee in life is that the market will keep giving us material—some of it absurd, and some of it just plain ridiculous!
(ABM FN-Dow Jones) European stock markets are anticipated to open with a cautious stance on Monday, following a week where the bourses remained relatively stagnant on Friday. Global investors are likely to experience a minor sense of relief as oil prices have dipped, especially following Israel’s retaliatory strikes on Iran during the weekend that notably avoided targeting Tehran’s crucial oil and nuclear infrastructures, consequently ensuring energy supply stability.
This upcoming week is packed with significant financial disclosures as earnings season hits full stride, with five out of the seven prominent tech companies, collectively known as the Magnificent Seven, set to unveil their quarterly results. In addition, market participants are eagerly awaiting vital growth and inflation data from both the eurozone and the United States, including two pivotal American jobs reports that could sway decision-making.
Market analyst IG forecasts a positive opening outlook for the German DAX, suggesting a gain of 50 points, while the French CAC 40 is projected to rise by 18 points. In contrast, the British FTSE 100 appears poised for a slightly lesser opening, with a predicted drop of 3 points.
Last week proved challenging for European stock markets, attributed largely to climbing bond yields that have incited investor anxiety. The yield on Germany’s 10-year bond experienced a notable increase of approximately 10 basis points, ending the week at 2.296 percent, while its American counterpart rose by 14 basis points to reach 4.218 percent. This uptick in yields correlates with heightened anxiety amid the bond markets.
Concerns loom over whether the fragile economic climate in the eurozone will compel the European Central Bank to implement a significant rate cut, potentially slashing rates by 50 basis points. In contrast, the Federal Reserve appears more reticent to make swift rate reductions, leading to a market environment steeped in uncertainty.
The latest Ifo index revealed a slight uptick in German business confidence for October, which analysts at DWS view as a glimmer of hope for the beleaguered manufacturing sector in Germany. Although there are signs of improvement within the services sector, the outlook for trade remains bleak, suggesting that challenges persist.
The Ifo composite index rose from 85.4 to 86.5, surpassing analysts’ expectations of 85.6 for the month. However, DWS cautions that these indications should be viewed with skepticism, urging that it remains premature to declare the end of Germany’s economic sluggishness.
Economic analysts at Capital Economics point to a heightened likelihood of a 50 basis point interest rate cut by the ECB, given the weakening growth across the eurozone. Frank Vranken, a strategist at Bank Edmond de Rothschild, highlighted the preliminary PMI figures released on Thursday, indicating that the eurozone continues to experience contraction.
The investment strategist emphasized that delivery times will be influenced by recent data, posing questions for ECB members regarding the appropriateness of a 50 basis point reduction in rates come December. Presently, the market anticipates rate adjustments ranging from 25 to 50 basis points. Nonetheless, the ECB consistently maintains that such decisions depend on forthcoming data—data that may already substantiate the case for a more substantial reduction.
On the consumer side of the economy, macroeconomic figures revealed a decline in consumer confidence in France for the first time since April, with the confidence index dropping from 95 to 94.
Company news
HelloFresh made headlines by revising its revenue forecast downwards for 2024, yet it surprised analysts with stronger-than-anticipated profitability in the third quarter. Subsequently, shares of the German meal delivery service surged by over 20 percent.
In the broader stock market, Delivery Hero saw a decline of 1.4 percent in Frankfurt, while Just Eat Takeaway reported a 2.9 percent rise in Amsterdam. Rheinmetall emerged as the largest loser on the German exchange, suffering a 3.5 percent drop.
Mercedes-Benz’s third-quarter performance fell short of expectations, prompting the German automaker to lower its annual outlook. The company’s stock reflects this setback with a 1.0 percent decrease. However, other automotive shares within the DAX showed resilience, with Porsche Automobil Holding, Porsche AG, and Daimler Truck achieving gains between 0.7 and 4.5 percent. In Paris, Renault shares climbed by 2.2 percent.
Slightly less favorably, Pernod Ricard’s stock fell by 1.1 percent within the CAC 40 index, while competitor Rémy Cointreau recorded a gain of one percent. Despite facing significantly reduced revenues in the past half-year, Rémy Cointreau edged expectations lower, anticipating a double-digit decline in organic turnover, marking a stark contrast to earlier projections of a gradual recovery.
Sanofi also made news, reporting a strong third-quarter performance, aided by rising demand for Dupixent, a treatment for certain skin conditions. This favorable outcome led to a 2.5 percent increase in the company’s shares. Conversely, Electrolux experienced a steep drop of 14.6 percent in Stockholm after posting disappointing quarterly results that underperformed analyst consensus expectations.
US STOCKS
In the United States, Wall Street is projected to witness an upward turn on Monday, credited to a stabilizing geopolitical climate that is positively impacting risk sentiment.
The American stock exchanges closed predominantly lower on Friday, culminating a week filled with turbulence. Notably, the Dow Jones faced significant challenges after lackluster performances from prominent firms such as Boeing and IBM, while the Nasdaq was buoyed by robust results from Tesla.
Looking ahead, the week promises more earnings reports from notable tech giants including Meta, Microsoft, and Alphabet. Investment manager Simon Wiersma from ING notes that current macroeconomic indicators in the U.S. do not suggest an imminent series of interest rate cuts by the Federal Reserve, which has led to rising interest rates last week. The ten-year American yield climbed to 4.246 percent, an increase of 16.5 basis points, while the two-year yield surged nearly 15 basis points to reach 4.113 percent.
Investor apprehension is further exacerbated with the countdown to the impending American presidential elections, as noted by Wiersma. Frank Vranken identifies the potential for a ‘red sweep’, where Donald Trump regains the presidency alongside Republicans controlling Congress, that markets perceive as inflationary and carrying heightened geopolitical risks.
The broader economic landscape reveals that orders for durable goods in the U.S. exhibited a decline of 0.8 percent in September, mirroring the decline witnessed in August where a 1.0 percent drop had been forecasted. In a contrasting indicator, consumer confidence measured by the University of Michigan rose unexpectedly for October, while short-term inflation expectations stabilized at 2.7 percent.
Oil prices experienced an uptick of over 2 percent on Friday, marking a weekly increase of around four percent amidst a backdrop of volatile market conditions influenced by Middle Eastern tensions, which pose potential disruptions to crude production and further complicate supply-demand dynamics.
Company news
Tesla continued its momentum, closing 3.3 percent higher following a significant 22 percent surge after reporting impressive figures and an optimistic outlook from CEO Elon Musk. However, analysts caution against overextending trust in Musk’s projections, noting the disparity between promises and actual results.
Nvidia followed suit with a 0.8 percent rise, though financials within the Dow, including Bank of America and Goldman Sachs, struggled; Boeing and IBM both faced renewed losses. Colgate-Palmolive reported increased revenue and profits in their latest quarter but saw shares tumble by 4.2 percent, reflecting market caution.
Capri Holdings, owner of the renowned Michael Kors brand, witnessed its shares plummet nearly 49 percent after a judge approved the Federal Trade Commission’s request to block its proposed $8.5 billion merger with Tapestry, indicating significant concerns over competition in the lower-priced handbag market. Tapestry’s shares responded positively, climbing 13.5 percent as a result.
In a more favorable outcome, Western Digital’s adjusted profits surpassed analyst expectations last quarter, driven by a staggering 153 percent surge in cloud-related revenue. This led to a 4.7 percent rise in shares, reflecting positive sentiment regarding AI’s integration. In contrast, Spirit Airlines, currently navigating potential bankruptcy, announced workforce reductions and plans to sell 23 aircraft for approximately $519 million; its shares gained 15.5 percent amidst this restructure.
Deckers Outdoor saw impressive gains of 10.6 percent after reporting quarterly results that exceeded analyst expectations, projecting a 12 percent revenue increase for the fiscal year. Conversely, Skechers’ stock fell by almost 4 percent despite posting stronger-than-expected sales and profits for the previous quarter. Meanwhile, Coursera’s shares plunged nearly 10 percent following lower revenue expectations for the year and the announcement of job cuts.
ASIA
Asian stock markets showed positive movement on Monday morning, exemplified by the Nikkei 225, which rose as the weak yen contributed to optimism amid political uncertainty stemming from the ruling Liberal Democratic Party’s loss of parliamentary majority in weekend elections. However, China reported a troubling statistic, revealing its industrial profits plummeted 27.1 percent year-on-year in September—the worst performance since the onset of the pandemic.
VALUE
The euro/dollar exchange rate was noted at 1.0784 this morning, a slight decline from Friday evening’s rate of 1.0795.
MACRO-AGENDA:
– No agenda items
COMPANY NEWS:
07:00 KPN – Third quarter figures
07:00 Philips – Third quarter figures
09:00 OCI – Ex-dividend
Bron: ABM Financial News
Percent increase in share price for the company. CEO David Goeckeler’s positive remarks on AI also contributed to investor optimism.
Spirit Airlines enjoyed a 15.5 percent boost in its share price despite exploring a bankruptcy filing. The company announced plans to cut its workforce, reduce its flight schedule, and sell 23 planes, generating about $519 million. This proactive approach seemingly reassured investors about its financial management during turbulent times.
Deckers Outdoor, which owns popular brands like Hoka sneakers and Ugg boots, saw its shares rise 10.6 percent after reporting quarterly revenue and profits that exceeded analyst expectations. The company also projected a 12 percent increase in turnover for the year, further fueling confidence in its future performance.
In contrast, Skechers shares dropped nearly 4 percent despite reporting better-than-expected sales and profits for the past quarter. This decline highlights the unpredictable nature of market reactions, with investors possibly being more cautious about the brand’s long-term outlook.
Coursera experienced a significant drop of nearly 10 percent after the online learning platform revised its revenue expectations downward for the year and announced job cuts to reduce costs.
As trading progresses, investors are likely to keep a close eye on macroeconomic data releases. In the U.S. markets, the focus will be on upcoming earnings reports from major tech companies and economic indicators that may influence Federal Reserve interest rate decisions.
the financial landscape appears to be one of cautious optimism, with positive developments in certain sectors contrasting with challenges faced by others. Market participants will continue to navigate this complex environment, weighing risks and opportunities as they arise.
Hich reported better-than-expected quarterly results, saw its shares jump by 10.6 percent, driven largely by a projected revenue increase of 12 percent for the fiscal year. This positive sentiment reflects growing confidence in the company’s performance, even amid broader market volatility.
In other company news, **HelloFresh** made headlines as it revised its revenue forecasts downwards for 2024 while exceeding profitability expectations for the third quarter, leading to a notable 20% surge in its stock price. This demonstrates how sometimes disappointing forecasts on revenue can lead to investor optimism if the underlying profitability is strong.
**Sanofi** reported robust third-quarter results, bolstered by increasing demand for its Dupixent treatment, with shares climbing 2.5%. Conversely, **Electrolux** faced challenging times, seeing its stock plunge by 14.6% due to disappointing quarterly results that fell short of analyst forecasts.
On the American side, **Tesla’s** strong performance continued, with shares increasing by 3.3% after an impressive reporting period. However, the company still faces scrutiny over the reliability of CEO Elon Musk’s optimistic projections. Meanwhile, **Colgate-Palmolive** experienced a revenue rise yet saw a decline in stock value by 4.2%, showcasing the delicate balance between sales performance and investor expectations.
In the Asian markets, the Nikkei 225 saw a positive rise, attributed partly to a weak yen and political uncertainty affecting optimism, though China’s industrial profit decline paints a more troubling picture regarding economic recovery.
the upcoming week promises to be pivotal for financial markets, with earnings reports from major companies, geopolitical concerns easing somewhat, and macroeconomic data likely to influence investor sentiment significantly. Volatility is expected to remain a theme as market participants navigate through mixed signals from various sectors and regions.
