- Asian Stocks Decline After Hawkish Powell Comments: Markets Wrap
(Bloomberg) — Asian stocks declined following hawkish comments by Jerome Powell that helped fuel a third straight drop in the S&P 500 and saw two-year Treasury yields briefly climb to 5%. MSCI’s Asia Pacific Index dropped as much as 0.4%, on track to erase all of its gains for the year. - China’s Fixing Strategy Paves Way for Yuan to Test 7.3 Level
(Bloomberg) — China’s second attempt in a month to loosen its grip on the yuan is opening up the door for the currency to test a psychological milestone that hasn’t been seen since November. The yuan will weaken to test 7.30 per dollar by the end of this quarter, according to 10 analysts polled by Bloomberg after Beijing moved to guide the managed currency weaker Tuesday. - Austin Talks With China Counterpart as Nations’ Ties Improve
(Bloomberg) — Secretary of Defense Lloyd Austin spoke with his Chinese counterpart as the two countries continue a push to stabilize ties. Austin and Chinese Defense Minister Dong Jun discussed freedom of navigation in the South China Sea, “provocations” by North Korea and Russia’s war in Ukraine, according to a statement from the Pentagon. - US to Sanction Iranian Drone Program After Attack on Israel
(Bloomberg) — The US will impose new sanctions on Iran targeting the country’s missile and drone program following its weekend attack on Israel that threatened to push the Middle East into a wider conflict. - Powell Signals Rate-Cut Delay After Run of Inflation Surprises
(Bloomberg) — Federal Reserve Chair Jerome Powell signalled policymakers will wait longer than previously anticipated to cut interest rates following a series of surprisingly high inflation readings. Powell pointed to the lack of additional progress made on inflation after the rapid decline seen at the end of last year, noting it will likely take more time for officials to gain the necessary confidence that price growth is headed towards the Fed’s 2 per cent goal before lower borrowing costs. - Japan’s Exports Get Boost From China Aided by Yen Tailwind
(Bloomberg) — Japan’s exports grew for a fourth consecutive month as the weak yen provided a tailwind and demand in China picked up, giving the economy a needed boost as domestic consumption sags. Exports gained 7.3% in March from a year earlier, with growth slightly decelerating from February’s 7.8% gain, the finance ministry reported Wednesday. - Hunt Says Rate Cuts Would Lift UK Mood, Hints at Fall Vote
(Bloomberg) — UK Chancellor of the Exchequer Jeremy Hunt said the prospect of interest rate cuts later this year would lift the mood of voters, hinting that Prime Minister Rishi Sunak won’t call a general election until the fall. - US Yields at 2024 Highs Lure Some Buyers Even as Shorts Dominate
(Bloomberg) — The highest US yields since November are beginning to attract some opportunistic buyers, even as negative sentiment remains firmly entrenched throughout the Treasury bond market. The latest client survey from JPMorgan Chase & Co. showed that investors were net long on Treasuries by the most in three weeks as of Monday. - BofA Shares Drop as Charge-Offs for Soured Loans Top Estimates
(Bloomberg) — Bank of America Corp. reported elevated expenses and charge-offs for soured loans that were higher than analysts expected, failing to satisfy investors with a gain in its trading business. Charge-offs totalled $1.5 billion, up 26% from the last three months of 2023, Bank of America said in a statement Tuesday. - Morgan Stanley Traders Rally Past Estimates as Profits Jump
(Bloomberg) — Morgan Stanley’s traders delivered first-quarter revenue that exceeded expectations as its wealth management juggernaut also got back on track — both handing a key win for its new leader Ted Pick. Revenue from the trading business came in at $5.33 billion, cruising past analyst estimates and following the blowout earnings from Goldman Sachs Group Inc. - Won’s Fall Draws Korea Auto Bets From Fund That Dodged Chip Rout
(Bloomberg) — A hedge fund that successfully dodged this week’s rout in South Korean chip stocks is turning its focus to automakers on bets that a weaker won will offer support. This month and next will likely be a “very painful time” for Asian stock traders, said Jung in Yun, chief executive officer at Fibonacci Asset Management Global in Singapore. - LVMH ADRs rose 3.1%, with the luxury goods retailer reporting just a slight miss in first-quarter organic sales. Investors may have been bracing for a worse performance given its peer Kering warned last month that its quarterly comparable sales will decline about around 10% year over year.
FIRST QUARTER RESULTS: Organic revenue +3%, estimate +3.28%. Fashion & Leather Goods organic sales +2%, estimate +3.22%. Wines & Spirits organic sales -12%, estimate -8.66%. Perfumes & Cosmetics organic sales +7%, estimate +6.72%. Watches & Jewelry organic sales -2%, estimate -0.75%. Selective Retailing organic sales +11%, estimate +10.5%. US organic revenue +2%, estimate +3.01%. Asia excluding Japan organic revenue -6%, estimate +4.14%. Japan organic revenue +32%, estimate +14.7%. Europe organic revenue +2%, estimate +3.49%. RBC (outperform). - UBS shares declined by 2.7% after Swiss finance minister Karin Keller-Sutter told Tages-Anzeiger that new Swiss financial regulations could increase capital requirements for the lender by $15b to $25b.
Swiss Finance Minister Karin Keller-Sutter is aiming for systematically important lenders to have full capital backing against their foreign units, according to a person familiar with the matter. Keller-Sutter told Tages-Anzeiger that a hit in the range of $15 billion to $25 billion was “plausible.” Regardless of the nominal sum, she prefers a backing for foreign subsidiaries that’s closer to 100%, the person said. - ArcelorMittal shares dropped 6.9% after Deutsche Bank downgraded the stock to hold from buy, saying a demand rebound in many of the steelmaker’s core markets remains “soft.”
Analyst Bastian Synagowitz says weak Chinese data continues to weigh on steel and iron ore markets. Broker cuts its Ebitda expectations for 2024 to 2026 by 10%-13%; PT cut to €29 from €31. Says timing and context of ArcelorMittal’s recent stake buy in Vallourec “may lead investors to question” how the company allocates capital toward M&A. - Tesla stock fell 2.7% as two of the electric carmaker’s top executives leave amid the company’s largest-ever round of job cuts.
The sluggish demand for EVs has led the company to cut its global headcount by more than 10%
JPMorgan analyst Ryan Brinkman: Tesla’s >10% global job cuts undermine “hypergrowth narrative”. This move will “further dispel notion” that the big 1Q delivery miss was somehow a supply issue. “Demand has fallen far short of bullish forecasts”. Wedbush Securities analyst Daniel Ives: Baglino’s exit is “an absolute gut punch loss”. - UnitedHealth climbed 5.2% after the health insurer reported an adjusted profit for the first quarter that exceeded the average analyst estimate. The firm also reaffirmed its profit outlook for the full year, with Wall Street analysts calling the overall report better than feared.
FIRST QUARTER RESULTS: Revenue $99.8 billion, +8.6% y/y, estimate $99.21 billion. Adjusted EPS $6.91 vs. $6.26 y/y, estimate $6.59. YEAR FORECAST: Still sees adjusted EPS $27.50 to $28. - Johnson & Johnson shares slipped 2.1% after the health giant reported first-quarter results. JPMorgan sees the earnings update as “in-line with expectations and having no major surprises.”
FIRST QUARTER RESULTS: Adjusted EPS $2.71, estimate $2.65. Sales $21.38 billion, estimate $21.39 billion. YEAR FORECAST: Sees sales $88 billion to $88.4 billion. Sees adjusted operating EPS $10.60 to $10.75, saw $10.55 to $10.75. JPMorgan, Chris Schott (neutral): Says 1Q results met expectations on the top line, driven by a beat from Innovative Medicines offset by a slight miss from MedTech. Sees the underlying business as well positioned and capable of generating 5%+ sustained top-line growth. - Barrick Gold shares declined 5.1% after the miner reported preliminary first-quarter gold sales volume that missed expectations. RBC Capital Markets and Canaccord Genuity noted that copper and gold production came in under their expectations.
FIRST QUARTER RESULTS: Gold sales volume 910,000 oz, -4.6% y/y, estimate 968,641. Gold production 940,000 oz, estimate 978, 404.RBC Capital Markets, Josh Wolfson (outperform): Gold production came in slightly lower than expected; meanwhile, copper production was substantially below forecasts due to lower grades at Lumwana copper mine. - Super Micro Computer shares gained 10.6% on Tuesday after Loop Capital more than doubled its price target on the computer server maker’s shares to a Wall Street high of $1,500 from $600.
The broker says the hike reflects bullish sentiment surrounding generative AI exposure. Analyst Ananda Baruah says the stock’s valuation will remain a conversation point.
Menu