1. Asian Stocks Rebound with Earnings, Data in Focus: Markets Wrap
(Bloomberg) — Asian stocks opened higher as focus shifted to a slew of company earnings and economic data this week for insight into the direction of central bank policy. Benchmarks in Japan, Australia and South Korea all rose more than 1% early Monday, partially recovering after last week’s slump.
2. Salesforce Talks with Informatica Said to Cool Over Price
(Bloomberg) — Salesforce Inc.’s takeover talks with Informatica Inc. have cooled with both parties struggling to agree to terms, according to a person familiar with the matter. Software giant Salesforce and data management company Informatica have been unable to agree on price, the person said, asking not to be identified discussing confidential information.
3. TikTok Braces for US Divest-or-Ban Law — And a Fresh Legal Fight
(Bloomberg) — After years of working to assure the US government that its popular social media app isn’t a threat to national security, TikTok’s loss in that fight now seems almost inevitable. The US House of Representatives on Saturday put legislation requiring TikTok’s Chinese parent company, Byte Dance Ltd., to divest its ownership stake in the app on a fast track to become law, tying it to a crucial aid package for Ukraine and Israel.
4. China Braces for Worst as It Becomes Punching Bag in US Election
(Bloomberg) — With Beijing already becoming a top target in the US election campaign, President Xi Jinping’s government is resisting any move that could backfire on the world’s second-largest economy. China’s restraint was on display last week after President Joe Biden blasted Beijing as “xenophobic” and vowed to triple tariffs on Chinese steel and aluminium exports.
5. US Aid Gives Kyiv Respite But Battlefield Shift Remains Far Off
(Bloomberg) — US approval of more than $60 billion in aid throws a lifeline to Ukraine’s beleaguered military, though it’s unlikely to turn the tide in the war on its own. Much will depend on how quickly US assistance can get to the front line after the House of Representatives approved the military and economic assistance on Saturday.
6. Inflation Mindset Taking Root in Japan Boosts Case for BOJ Hikes
(Bloomberg) — Higher inflationary expectations and price tolerance are taking root in Japan, a development that supports the central bank’s moves to normalize policy and raise interest rates further. A recent survey by Tsutomu Watanabe, a leading inflation expert in the nation, found that Japanese consumers’ tolerance of price changes is holding up and is higher than levels seen among shoppers in some other major economies.
7. Fed’s Preferred Price Gauge to Back Rate-Cut Patience: Eco Week
(Bloomberg) — Federal Reserve officials are about to get further confirmation that progress against inflation has stalled, supporting what appears to be a shift in tone to keep interest rates higher for longer than previously anticipated. Policymakers’ preferred inflation gauge — the personal consumption expenditures price index — probably stayed elevated in March, according to data due in the coming week.
8. Chinese Banks Hold Lending Rates With Yuan Under Pressure
(Bloomberg) — Banks in China maintained their benchmark lending rates on Monday, following the Chinese central bank’s recent decision to stand pat on monetary policy. The one-year loan prime rate was held at 3.45%, in line with almost all of the forecasts from economists surveyed by Bloomberg News. The five-year rate, a reference for mortgages, was kept at 3.95%.
9. ECB’s Villeroy Says Oil Uncertainty Won’t Stop June Rate Cut
(Bloomberg) — The European Central Bank won’t be swayed from a first interest-rate cut in June by oil price uncertainty, Governing Council member Francois Villeroy de Galhau said.
10. Dollar’s Extended Reign Delivers Stark Wake-Up Call for Markets
(Bloomberg) — The world’s financial markets are encountering a force they didn’t bet on for 2024: A strong dollar is back and looks set to stay. Having entered the year predicting the greenback would decline, investors have been forced into a rethink by a red-hot US economy and sticky inflation requiring the Federal Reserve to hold off cutting interest rates.
11. Super Micro Computer Inc. shares are seeing their biggest drop in about two months on Friday, leading a sharp decline among technology stocks with exposure to artificial intelligence.
The maker of servers sank as much as 20%, its biggest intraday drop since August. The stock is also trading at its lowest since February. Shares of the company, a favourite play on artificial intelligence, have lost more than a third of their value since a March peak, though they remain up about 160% this year.
“People seemed to think the AI trade would go up forever. It got crowded and now it is unwinding something fierce,” said Dennis Dick, a proprietary trader at Triple D Trading. “This is just a tech wreck, a rotation out of tech and the idea of tech as a safety trade. The AI trade in particular is unwinding.”
12. Nvidia shares are falling on Friday, with the chipmaker on track to close below a key technical level for the first time in months.
Stock down 1.5%, dropping below its 50-day moving average, a key level for short-term momentum trends
The stock hasn’t closed below this level since November. Nvidia is up nearly 70% this year, though it has declined 11% off a recent peak.
13. Hong Kong Bankers Face More Job Cuts on China Slowdown, High Pay
(Bloomberg) — Hong Kong investment bankers could face more job cuts as the slowdown in China deals persists and employers look to trim highly compensated staff, according to Bloomberg Intelligence. An estimated 200 Hong Kong bankers lost their jobs in the past year, senior analyst Francis Chan wrote in a report published Monday.
14. Apple shares are falling on Friday, extending a recent selloff that has put the iPhone maker on track for its lowest close in about a year.
Shares down as much as 1.1% in their fifth straight negative session. On an intraday basis, the stock is trading at its lowest since May 4, and on track for its lowest close since April 26, 2023. The stock is down 14% this year, pressured by growth concerns, especially for its iPhone in China.
15. Proctor & Gamble Co.’s (P&G) shares fell after the company reported a mixed quarter as earnings beat but sales missed. The company reported net sales of $20.20 billion, +1% YoY, short of the estimates of $20.43 billion.
Core earning per shares of $1.52 +11% YoY vs. $1.37 YoY, beating estimates of $1.41. P&G also reports an organic revenue of +3%, short of estimates of +3.71%. The company’s CFO, Andre Schulten, attributed the company’s results to currency volatility, ongoing weakness in China and P&G’s SK-II beauty brand.
16. American Express Co. (Amex) shares closed 6.2% higher after reporting a beat in both top and bottom line.
Revenue hit $15.8 billion +11% YoY vs estimates of $15.77 billion, EPS of $3.33 beating estimates of $2.96. CEO Steve Squeri believes the company will continue to attract high-spending, high credit-quality customers and guided FY2024 revenue growth to range 9-11%, EPS at $12.65-13.15 and EPS growth to range between 13-17%.
17. L’Oreal shares rise as much as 6% in Paris after the cosmetics maker’s like-for-like sales beat in the first quarter, quelling worries over a slowdown in the beauty market. Analysts were positive on firm’s performance in Europe, and are hoping for a strong showing in the second half of the year.
Jefferies (underperform, PT €355): Amid a “noisy” few weeks on beauty with fears of a market slowdown, L’Oreal’s results should drive shares higher, analyst Molly Wylenzek says; Luxe division missed slightly but was more than offset by continued strength in consumer products; North Asia was light, but more than offset by Europe. Evercore ISI (in line, PT €450): L’Oreal is off to a strong start, analyst Robert Ottenstein writes, with a bias to an acceleration in the second half; L’Oreal’s growth firmed up sequentially in the US by capitalizing on shifts in retail.
18. PPG Industries shares slump as much as 4.1%, the most intraday since March 2023, after the company forecast adjusted earnings per share for the second quarter that trailed the average analyst estimate.
Citi (buy, PT $161)” Analyst Patrick Cunningham says he expects “a neutral to small negative reaction” in the shares given PPG’s in-line quarter, below consensus 2Q guide, and small concerns with volume around the portfolio. “A mixed quarter as organic sales growth under-performed in most segments, but margins held up well on input cost moderating and stronger manufacturing performance”. SECOND QUARTER FORECAST: Sees adjusted EPS $2.42 to $2.52, estimate $2.53 (Bloomberg Consensus); Sees effective tax rate 23.5% to 24.5%, estimate 23.1%. YEAR FORECAST: Still sees adjusted EPS $8.34 to $8.59, estimate $8.45.