- Asian Stocks Open Mixed as US Hits Fresh Highs: Markets Wrap
(Bloomberg) — Equities in Asia traded mixed Friday in a sign investor are rethinking the optimism that propelled the region’s shares higher in the prior session, as fresh signs of persistent inflation appeared in the US. Shares in Australia were little changed while Japanese stocks nudged higher. Futures contracts for Hong Kong equities declined. - Japan’s Speedier Inflation Pace Keeps BOJ’s Next Move in Focus
(Bloomberg) — Japan’s consumer inflation accelerated to the quickest pace in four months, an outcome that will keep markets focused on whether the Bank of Japan might follow its first interest rate hike since 2007 with an encore later this year. Consumer prices excluding fresh food rose 2.8% in February from a year ago, with the pace speeding up from 2% in January. - Israel Says It Will Invade Rafah No Matter What the US Says
(Bloomberg) — A top Israeli official said his country’s military is ultimately going to invade the southern Gaza city of Rafah and defeat Hamas “even if the entire world turns on Israel, including the United States.” “We are going to go in and finish this job, and anybody who doesn’t understand that doesn’t understand that the existential nerve of the Jews was touched” by the Oct. 7 attacks when Hamas operatives killed 1,200 and abducted 250, Israeli Strategic Affairs Minister Ron Dermer said on a US podcast posted online Thursday. - Global Inflation Scare Fades as SNB Leads Advance Party for Fed
(Bloomberg) — From Zurich to London to Washington, the great inflation scare that gripped the world economy after the pandemic is suddenly no longer keeping central bankers up at night. Their confidence that raging consumer prices have been tamed is such that the Federal Reserve just defied recent data to keep projecting three interest-rate cuts this year. - Prominent Modi Rival Arrested Weeks Before India’s Elections
(Bloomberg) — A key opposition leader in India, who is also the chief minister of the capital Delhi, was arrested by the federal anti-money laundering agency, just weeks before the national elections. Arvind Kejriwal was arrested by the Directorate of Enforcement, or ED, on Thursday, said Atishi, one of the leaders in the Aam Aadmi Party, in a post on X. - Trump Leads in Polls but Badly Trails in Crucial 2024 Money Race
(Bloomberg) — Donald Trump has an enthusiastic base and a polling advantage in swing states. He does not have anywhere near the amount of money as his rival, President Joe Biden. Financial woes have become a major vulnerability for the presumptive Republican nominee as he enters what is expected to be the most expensive presidential election in history. - JAPAN REACT: CPI Jump Is on Low Base but Gives BOJ Good Optics
(Bloomberg Economics) — OUR TAKE: The steep pickup in Japan’s February inflation mainly reflects a drop in the year-earlier base – not a surge in price pressures. In fact, price momentum remains sluggish without this base effect. Price increases for daily necessities such as processed food retreated. - Hedge Funds Re-Enter Long USD/JPY Calls After Rally: Traders
(Bloomberg) — Leveraged funds that unwound long USD/JPY call options Thursday following release of a Nikkei report on the BOJ re-entered the trade later in the day, as the currency pair rallied back above 151, according to traders. USD/JPY ended Thursday up 0.2% to 151.62 after having dropped to as low 150.27 earlier that day. USD/JPY has several knockout barriers between 152 and 153 with them expiring at various. - Reddit Soars 48% in Debut as AI Pitch Gets Warm Reception
(Bloomberg) — Reddit Inc. shares soared 48% above their initial public offering price, as investors embraced the social media company’s vision of profiting from the growth of artificial intelligence. The San Francisco-based company’s stock closed at $50.44 each on Thursday in New York. - Peltz Backed by ISS, Business Leaders in Disney Fight
(Bloomberg) — Nelson Peltz received the backing of an influential shareholder advisory firm and a group of business leaders in his bid to join the board of entertainment company Walt Disney Co. Institutional Shareholder Services, the proxy adviser, said in a report Thursday that Disney’s investors should vote to elect Peltz, the head of activist firm Trian Fund Management as a director at a shareholder meeting on April 3. - Accenture fell as much as 9% on Thursday, its biggest intraday fall since March 2020, after the consulting firm cut the top end of its adjusted earnings per share guidance for the full year, which missed the average analyst estimate.
SECOND QUARTER RESULTS: Adjusted EPS $2.77 vs. $2.69 y/y, estimate $2.65; EPS $2.63 vs. $2.39 y/y; Revenue $15.80 billion vs. $15.81 billion y/y, estimate $15.82 billion; Communications, Media & Technology revenue $2.65 billion, -8% y/y, estimate $2.58 billion; Financial Services revenue $2.81 billion, -6.5% y/y, estimate $2.98 billion; Product revenue $4.76 billion, +0.9% y/y, estimate $4.78 billion; Health & Public Service revenue $3.33 billion, +10% y/y, estimate $3.27 billion; Resources revenue $2.24 billion, +2.6% y/y, estimate $2.27 billion; Bookings $21.58 billion, -2.4% y/y, estimate $21.81 billion (2 estimates). - Papa John’s drops as much as 5.8%, the most intraday since November, after its chief executive, Rob Lynch, departed to assume a new position as Shake Shack’s CEO.
Papa John’s says Lynch to be succeeded by Ravi Thanawala as Interim CEO while the Board of Directors conducts a comprehensive external search. Co. still sees 2024 Adj. Operating Income between $153m and $163m. Papa John’s anticipates opening 100 to 140 new international restaurants. - The US Justice Department and 16 attorneys general sued Apple Inc., accusing the iPhone maker of violating antitrust laws by blocking rivals from accessing hardware and software features on its popular devices.
The suit, filed Thursday in New Jersey federal court, marks the culmination of a five-year probe into the world’s second-most-valuable technology company. The Biden administration has made competition a cornerstone of its economic policy, with Silicon Valley becoming a key focus. The lawsuit alleges that Apple has used its power over app distribution on the iPhone to thwart innovations that would have made it easier for consumers to switch phones. The company has refused to support cross-platform messaging apps, limited third-party digital wallets and non-Apple smartwatches and blocked mobile cloud streaming services. The company said the lawsuit was “wrong on the facts and the law,” warned that it would “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology” and vowed to “vigorously defend against it.” - The current backdrop for software stocks is similar to the pre-pandemic years, according to KeyBanc Capital Markets, which notes that this type of setup has produced above-average returns and lower volatility.
The broker begins coverage on several companies, including Microsoft and ServiceNow, which are given overweight recommendations as they are seen as early beneficiaries of artificial intelligence. Meanwhile, Adobe is rated underweight, a rare sell-equivalent recommendation for the stock. Currently, the setup for software sector “looks positive,” analysts led by Jackson Ader write, noting that it shares characteristics from several pre-pandemic years that preceded an outperformance of the broader S&P 500. Stocks initiated at overweight, along with Microsoft and ServiceNow, include: SAP, Oracle, ZoomInfo, Monday.com, Sprout, Sprinklr and Semrush. - Broadcom rose as much as 7% on Thursday as analysts were positive about the chipmaker’s opportunities following its AI event. Cowen raised its rating to outperform from market perform.
Broadcom’s rally makes it the biggest point gainer on the S&P 500 Index.
Cowen analyst Matthew Ramsay (raised to outperform from market perform): Upgrade comes after the company’s “Enabling AI Infrastructure” event in San Jose; The rating reflects “potential upside from both custom silicon and back-end AI networking” and the possible upside to revenue and synergies as VMWare is integrated; PT set to $1,500 from $1,400, new target implies a 18% increase from last closing price. Piper Sandler analyst Harsh Kumar (overweight): Broadcom is “extremely well positioned” in networking as well as custom accelerators; “AI is a decade long trend and Broadcom is well positioned having active participation in all of the relevant connectivity products”. - Nike Inc.’s shares fell more than 5% in after-market trading, after warning that sales will be negatively impacted this year as it shifts its sneaker offerings to realign shopper demand.
A restructuring plan was outlined in December 2023 to cut $2 billion in costs over the next three years in response to weaker sales and announced layoffs of 2% of its global workforce in February 2024 as part of the plan. On a brighter note, Nike reported revenue of $12.4 billion for the quarter ended February 29, beating analyst’s expectations of $12.3 billion. - 3i Group shares gain as much as 4.4%, reaching record highs, after its Action unit reported 21% like-for-like sales growth vs. a year earlier, which analysts note shows continued strength.
Morgan Stanley (overweight, PT 2,827p): Analysts led by Bruce Hamilton model 7.5% like-for-like growth in 2024, previously having seen ~5%; Continued outperformance leaves scope for raised expectations linked the four-year plan laid out last year. RBC (outperform, PT 2,650p): Early 2024 trading shows “continued strong performance” from Action, while store rollout program shows good momentum and “resilience” in 3i’s wider portfolio, according to analysts led by Manjari Dhar; Focus of capital markets day (starting 10 a.m. UK time) expected to be Action’s mid-term targets, particularly for Ebitda margin. 3i Group’s portfolio company Action had a “strong start” to 2024 across all its geographies, according to a statement. - FedEx Corp. topped Wall Street’s third-quarter profit expectations and announced a new $5 billion share buyback plan as the courier said it’s seeing results from a plan to cut costs and boost margins.
Adjusted earnings were $3.86 a share for the period ending Feb. 29, FedEx said Thursday in a statement. That’s better than analysts’ average prediction of $3.46 in estimates compiled by Bloomberg. Sales of $21.7 billion fell slightly short of estimates. Chief Executive Officer Raj Subramaniam is in the process of restructuring the company’s delivery networks, part of a sweeping plan that has included tens of thousands of job cuts. The overhaul, announced last year, marks a shift from the strategy of founder Fred Smith, who started FedEx in 1971 and long defended a two-network approach as a competitive advantage. “We are making meaningful progress on our transformation,” Subramaniam said in the statement.
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