Global Markets
Asia
In Asia, the rebound in Hong Kong shares marked a turnaround from previous sessions, with investors responding positively to expectations of potential policy support signals from the National People’s Congress. Similarly, Chinese shares experienced fluctuations as investors awaited clarity on government policies and economic priorities.
Europe
In Europe, shares experienced gains driven by robust corporate earnings, signaling resilience in the region’s business environment despite ongoing challenges. Strong performance from key industries bolstered investor confidence, contributing to the positive momentum observed across European markets.
USA
On Wall Street, optimism prevailed as investors eagerly anticipated Federal Reserve Chair Jerome Powell’s testimony before Congress. Powell’s remarks were anticipated to offer insights into the central bank’s future monetary policy direction, particularly regarding interest rates. This anticipation fueled market optimism, leading to a rise in stock prices as investors sought clarity and guidance amidst evolving economic conditions.
Canada
Canada’s main stock index surged following the Bank of Canada’s decision to maintain its interest rates, buoyed by positive market expectations and a favorable outlook for economic stability. Concurrently, the upward trajectory was reinforced by higher crude prices, providing additional impetus to energy-related sectors and contributing to overall market gains.
Market News
Amidst these global market movements, the U.S. dollar weakened against a basket of its peers, reflecting shifts in currency dynamics influenced by factors such as monetary policy expectations, economic data releases, and geopolitical developments. A weaker dollar can have implications for various asset classes, including stocks and commodities, as it impacts trade dynamics and investor preferences.
Meanwhile, spot gold prices held near previous session’s record highs, underlining the persistent demand for safe-haven assets amidst uncertainty and volatility in financial markets. Gold, often considered a hedge against inflation and geopolitical risks, retained its allure for investors seeking stability and wealth preservation amid turbulent market conditions.
Bank of Canada
As the global economic landscape continues to evolve, central banks across the world are carefully assessing their monetary policies to navigate through uncertainties. Among these, the Bank of Canada stands at a critical juncture, expected to maintain its key overnight rate at 5% in the face of easing inflation and a sluggish economic growth trajectory. Economists anticipate the decision to hold steady, acknowledging the delicate balance required to support the economy while managing inflationary pressures.
Company Earnings
CrowdStrike Holdings Inc exceeded Wall Street expectations with its annual forecast for fiscal 2025, driven by robust enterprise spending on cybersecurity. The company anticipates adjusted profit between $3.77 and $3.97 per share, surpassing analysts’ estimates of $3.75, while projecting annual revenue between $3.92 billion and $3.99 billion, with the midpoint above estimates. First-quarter revenue is expected between $902.2 million and $905.8 million, along with profit between 89 cents and 90 cents per share, both above expectations. Fourth-quarter revenue surged 32.6% to $845.3 million, outperforming Street expectations.
JD.Com Inc, the Chinese online retailer, witnessed a surge in its shares following a fourth-quarter revenue beat and announcement of an expanded share repurchase program. Quarterly net revenue reached 306.1 billion yuan, surpassing analysts’ estimates, while the company reported net income of 3.4 billion yuan, up over 13% from the previous year. JD.com plans to repurchase up to $3 billion worth of shares over the next 36 months.
Nordstrom Inc projected annual results slightly below Wall Street expectations, signaling a slower rebound in demand despite easing inflationary pressures. The company expects 2024 revenue to fluctuate between down 2% and up 1%, compared to estimates of a slight rise. Annual profit per share is forecasted in a range of $1.65 to $2.05, falling short of analysts’ expectations. However, fourth-quarter total revenue of $4.42 billion exceeded estimates, driven by strong holiday season demand for running shoes and beauty products.
Ross Stores Inc forecasted annual profit and same-store sales below Wall Street estimates for 2024 amid cautious consumer spending due to persistent inflation. The company anticipates profit per share between $5.64 and $5.89, below market expectations, with annual same-store sales growth projected at 2% to 3%, lower than analysts’ estimates. Despite this, Ross approved a new two-year $2.1 billion stock repurchase authorization for 2024 and 2025. Fourth-quarter sales of $6.02 billion surpassed expectations on strong product assortments.
Corporate News
- Alphabet Inc (Waymo): Waymo, a subsidiary of Alphabet, announced the launch of driverless passenger services for its employees in Austin, Texas. This expansion comes at a time when its competitor, Cruise, owned by General Motors, has suspended U.S. operations due to safety concerns. Waymo’s services will cover 43 square miles in Austin, including downtown areas, with plans to extend to the public in the future.
- Anheuser-Busch Inbev SA: The Teamsters union ratified a five-year agreement with Anheuser-Busch Inbev, securing pay hikes and improved healthcare for workers at the brewer’s U.S. facilities. The agreement covers 5,000 Teamsters working at Anheuser-Busch breweries in the United States and includes wage increases, a ratification bonus, increased pension contributions, and retirement benefit restoration.
- Apple Inc: Apple modified its proposals to comply with EU tech rules after criticism from app developers. Changes include allowing developers to sign up to new terms at the developer account level and introducing a one-time option for developers to switch back to Apple’s standard business terms for their EU apps. Apple also scrapped a demand for a letter of credit from developers creating a rival app marketplace.
- Authentic Brands Group Inc: 888 Holdings terminated its deal with Sports Illustrated (SI) and plans to sell or exit its direct-to-consumer U.S. operations due to intense competition and low margins. The termination includes a termination fee of about $25 million and is expected to save 888 about $6 million to $7 million per year in 2024 and 2025.
- Banco Bilbao Vizcaya Argentaria SA: BBVA placed $2 billion in senior debt in the U.S. market, selling a five-year senior “preferred” bond and an 11-year senior “non-preferred” bond. The issuance attracted significant demand and closed with favorable spreads above U.S. Treasury rates.
- Blackstone Inc: A consortium of investors, including Blackstone and Thomson Reuters, sold about 1.9 billion pounds of shares in London Stock Exchange Group. The move capitalizes on rising interest in LSEG’s transition into a financial data powerhouse.
- Boeing Co & Spirit AeroSystems Holdings Inc: Emirates Airlines expressed support for a possible Boeing takeover of Spirit AeroSystems, stating it would be a positive step towards resolving factory issues at Boeing. Emirates Airline President Tim Clark emphasized the importance of addressing production and quality concerns at Boeing.
- Carlyle Group Inc: Carlyle Group initiated the sale process of Japanese cosmetics supplier Tokiwa Corp, which could value the company at $800 million. Potential buyers include private equity firms and companies in the cosmetics industry.
- Dexcom Inc: Dexcom’s device, Stelo, became the first continuous glucose monitor available over the counter, approved by the U.S. Food and Drug Administration. The device is intended for patients 18 years and older who do not use insulin.
- GSK plc: The World Health Organization reported that resistance to GSK’s HIV drug dolutegravir has exceeded levels observed during trials. Data showed resistance ranging from 3.9% to 8.6%, raising concerns about the drug’s efficacy.
- Johnson & Johnson: A trial over claims that Johnson & Johnson’s talc products cause cancer ended in a mistrial, as a Florida state court jury could not reach a verdict. The lawsuit was brought by a plaintiff who alleged that J&J’s talc-based baby powder led to ovarian cancer.
- Microsoft Corp: Image creation tools powered by AI from companies like Microsoft and OpenAI could be used to produce photos promoting election or voting-related disinformation, according to a report. The Center for Countering Digital Hate used generative AI tools to create images raising concerns about misinformation ahead of the U.S. presidential election.
- Morgan Stanley: Morgan Stanley laid off about 9% of its staff at its asset management business unit in China, as the country’s stock market struggles dampen prospects for the fund sector.
- Target Corp: Target announced plans to open more than 300 full-size stores over the next decade, marking a shift in strategy following years of store closures. The new stores will focus on food sections, aiming to boost annual sales by $15 billion.
- TotalEnergies SE: TotalEnergies and QatarEnergy agreed to buy a stake in a license to seek oil and gas off South Africa, part of their plans to develop the Orange basin area in neighboring Namibia. The deal involves a 33% stake for TotalEnergies and a 24% stake for QatarEnergy.
- Toyota Motor Corp: Toyota announced an $11 billion investment in Brazil, including the production of a new vehicle specially designed for the country’s market. The investment will be made in two parts by 2030, with $5 billion expected until 2026.
- UBS Group AG: UBS CEO criticized European regulators for allowing U.S. banks to gain prominence since the financial crisis, contrasting with Europe’s approach of limiting banks’ growth. UBS has cut staff at its China fund unit, reflecting challenges in the country’s stock market.
Top Analyst Ratings:
- First Quantum Minerals Ltd: JPMorgan increased the target price to C$12 from C$11, reflecting the company’s refinancing and recapitalization initiatives.
- Sun Life Financial Inc: Jefferies raised the target price to C$83 from C$82, anticipating additional earnings leverage from the DentaQuest acquisition.
- Crowdstrike Holdings Inc: Bernstein raised the target price to $397 from $334, citing the company’s strong fourth-quarter performance and positive full-year guidance.
- Ferguson Plc: Barclays raised the target price to $236 from $208, encouraged by the company’s quarter-to-date commentary and expecting higher organic growth in the second half of fiscal year 2024.
- Honeywell International Inc: Berenberg upgraded the rating to buy from hold, citing the company’s ambitious long-term outlook targets.
- Nordstrom Inc: JPMorgan increased the target price to $15 from $14, driven by the company’s fourth-quarter earnings beat and solid revenue growth.
- Target Corp: RBC raised the target price to $191 from $157, believing the company is well positioned to deliver earnings per share at the upper end of its full-year 2024 guidance range.
