Global Markets
The financial landscape on February 28th saw considerable turbulence across global markets, with various factors impacting trading sentiments and corporate decisions.
Japan
Despite Japan’s Nikkei index slightly retracting from its previous all-time peak, the overall outlook remained stable.
Europe
In Europe, shares were trading lower, driven by a wave of disappointing earnings results that weighed on overall market sentiment.
USA
On Wall Street, a cautious atmosphere prevailed as market participants awaited the imminent release of a crucial inflation report. This report held potential implications for the Federal Reserve’s future interest rate policies, thus prompting investors to adopt a more guarded approach.
Canada
In Canada, the main stock index experienced a significant downturn, largely influenced by the downward trajectory of commodity prices such as gold and oil. This decline coincided with investors’ scrutiny of the latest earnings reports from major Canadian banks.
Company Earnings:
- Baidu Inc: Fourth-quarter revenue increased by 6%, driven by growth in artificial intelligence applications and advertising. Adjusted net income rose by 44%, surpassing analyst forecasts.
- Agilent Technologies Inc: Beat Wall Street estimates for first-quarter profit and revenue, led by strong sales in life sciences and diagnostics units. Maintained full-year 2024 profit forecast but forecasted second-quarter revenue slightly below analyst expectations.
- Axon Enterprise Inc: Forecasted full-year 2024 revenue above Wall Street estimates, citing strong demand for software products and recently launched Taser 10. Reported better-than-expected profit for the fourth quarter.
- Beyond Meat Inc: Exceeded market expectations for quarterly revenue, planning to increase product prices and reduce costs in 2024. Reported an 8% increase in volumes in the quarter.
- Bumble Inc: Announced job cuts following a disappointing first-quarter revenue forecast. Expects annual revenue growth to be lower than analyst estimates.
- Devon Energy Corp: Reported a fall in fourth-quarter profit due to lower oil and gas prices. Forecasted a 2% production decrease in the first quarter due to severe winter weather.
- eBay Inc: Beat market expectations for quarterly revenue and profit, authorized an additional $2 billion share repurchase program. Provided guidance for first-quarter revenue and adjusted earnings above analyst estimates.
- Extra Space Storage Inc: Forecasted 2024 core funds from operations below analyst estimates due to declining demand for self-storage spaces. Reported fourth-quarter adjusted FFO slightly below analyst estimates.
- First Solar Inc: Swung to a profit in the fourth quarter and forecasted higher sales in 2024. Provided guidance for 2024 net sales and net income above analyst estimates.
- Splunk Inc: Topped Wall Street estimates for fourth-quarter revenue and profit, driven by strong demand for cybersecurity software and cloud solutions. Reported a significant increase in total annual recurring revenue compared to the previous year.
- Royal Bank of Canada (RBC) reported a lower first-quarter profit due to increased provisions for loans.
- National Bank of Canada reported a higher first-quarter profit, with strong performance in its financial markets unit offsetting increased provisions for credit losses.
Corporate News:
- Glencore’s Potential Acquisition: Swiss miner and commodities trader Glencore expressed interest in acquiring Shell’s oil refinery and petrochemical units in Singapore. This move comes as Shell seeks a buyer for these assets following the withdrawal of earlier suitors.
- American Airlines’ Aircraft Deal: American Airlines neared a deal for approximately 100 narrowbody jets split between Airbus and Boeing, with Airbus likely securing a slightly larger portion of the order.
- Legal Battle for Bayer: Bayer sought reconsideration from the full 11th U.S. Circuit Court of Appeals following a ruling that mandated the company to face a lawsuit from a Georgia doctor alleging that Roundup weedkiller caused his cancer.
- Apple’s Electric Car Project Cancellation: Apple discontinued its electric car project, marking the end of a decade-long endeavor.
- Eli Lilly’s Expansion Plans: Eli Lilly announced plans to introduce its blockbuster diabetes drug, Mounjaro, including its popular obesity treatment, in the Indian market by next year.
- EU Investigation into Microsoft: The European Commission initiated an investigation into whether Microsoft was impeding customers’ reliance on certain security software from its competitors.
- Corporate Earnings Highlights: Several companies reported notable earnings outcomes, including eBay, Baidu, Agilent Technologies Inc, Axon Enterprise Inc, Beyond Meat Inc, Bumble Inc, Devon Energy Corp, Extra Space Storage Inc, First Solar Inc, and Splunk Inc. These reports either surpassed or fell short of market expectations, influencing investor reactions and market trends.
Top Analyst Ratings:
- AGF Management Ltd: CIBC upgraded the rating to “outperformer” from “neutral,” citing several positive factors. They highlighted AGF’s asset management business, which is outperforming its peers, strong earnings quality, negligible net debt, and a healthy dividend supported by a comfortable payout ratio.
- Bank of Montreal: CIBC lowered the target price to C$125 from C$126 due to the company’s weak first-quarter earnings. This adjustment reflects the analyst’s assessment of the current performance and outlook for the bank.
- Bank of Nova Scotia: CIBC raised the target price to C$66 from C$63, reflecting growth in the company’s first-quarter net interest income. This increase in target price indicates optimism about the bank’s performance and potential growth.
- Autozone Inc: Jefferies increased the target price to $3,400 from $3,100, reflecting the company’s better-than-expected second-quarter earnings. This adjustment suggests confidence in Autozone’s performance and future prospects.
- Bumble Inc: JPMorgan reduced the target price to $17 from $20, citing the company’s lowered 2024 revenue outlook. This adjustment reflects concerns over a soft peak dating season in the U.S. and execution issues on new products.
- eBay Inc: Piper Sandler raised the target price to $52 from $50 based on the company’s strong fourth-quarter performance. They expect platform investments to drive gross merchandise value (GMV) growth in the second half of 2024, indicating confidence in eBay’s future growth potential.
- Flywire Corp: RBC raised the target price to $41 from $36, driven by the company’s solid fourth-quarter earnings. This adjustment reflects optimism about Flywire’s performance and prospects for growth.
- Lowe’s Companies Inc: Piper Sandler increased the target price to $264 from $245 following the company’s fourth-quarter earnings beat. They expect a healthy bounce-back in home improvement in 2025, indicating confidence in Lowe’s ability to capitalize on market opportunities.
