Global Markets React to Commodity Decline and U.S. Rate Concerns:
In Asian equities, Japan’s Nikkei closed on a positive note, buoyed by a weaker yen. China markets slump to 5-year lows as regulator promises to protect small investors.
European shares, however, displayed resilience by edging higher, driven by upbeat earnings reports
On the flip side, UK markets remained flat, grappling with concerns related to U.S. interest rates.
Canada’s main stock index experienced a decline, mirroring the downward trend in commodity prices.
USA Stock indexes faced a similar fate, with the rise in Treasury yields prompting caution among investors regarding the timing of interest rate adjustments. This cautionary stance was further exacerbated as market participants eagerly awaited quarterly reports from corporate America. .
OECD Upgrades Global Growth Outlook Amid U.S. Economic Strength:
The Organisation for Economic Co-operation and Development (OECD) provided a positive outlook for the global economy, suggesting that it is poised to perform better than initially anticipated. The improved outlook is attributed to the robust economic performance of the United States, which has managed to counterbalance weaknesses in the euro zone. The global economic landscape appears to be on a more stable trajectory, with the U.S. acting as a significant driver of growth.
Mixed Signals from China:
In China, services activity expanded at a slightly slower pace in January. A private-sector survey revealed a dip in new orders, hinting at a soft start for the world’s second-largest economy. The slowdown is attributed to tepid demand and a property slump, posing challenges for sustained economic momentum.
Corporate Developments Across Europe:
- Societe Generale, the third-largest listed bank in France, is set to cut approximately 900 jobs in the country in a bid to enhance profitability by reducing costs.
- Former Swiss finance minister Ueli Maurer defended the stance that a temporary nationalization was never a realistic option for embattled Swiss lender Credit Suisse, emphasizing the need for alternative measures during the Swiss banking crisis.
- Scandinavian airline SAS announced plans to file a second amended Chapter 11 plan of reorganization with the U.S. Bankruptcy Court. The move is part of SAS’s efforts to navigate financial challenges, having obtained the support of the Official Committee of Unsecured Creditors.
Corporate Earnings and Challenges:
- McDonald’s*, a global fast-food giant, recorded its first quarterly sales miss in nearly four years. Slow international business growth, particularly in the Middle East, China, and India, contributed to the underwhelming performance.
- Caterpillar*, a leading construction equipment manufacturer, reported higher quarterly profits driven by robust demand for large construction equipment. Increased infrastructure spending and a rebound in the U.S. residential real estate market played a significant role in Caterpillar’s positive performance.
Challenges for Canada’s Financial Landscape:
Canada’s plan to cap top lending rates for regulated institutions could inadvertently create opportunities for illicit financiers to step in and serve distressed customers. A study revealed that this measure might lead to a rise in criminal activity, adding a layer of complexity to the country’s financial regulatory landscape.
Boeing Faces Delivery Setbacks:
Boeing disclosed that it would need to address quality issues on approximately 50 undelivered 737 MAX airplanes. Supplier Spirit AeroSystems discovered two mis-drilled holes on some fuselages, potentially causing delays in near-term deliveries.
OceanaGold’s IPO Plans for Philippine Subsidiary:
OceanaGold Corp, a Toronto-listed miner, has filed for an initial public offering (IPO) of up to 7.9 billion Philippine pesos for its subsidiary operating a gold mine in the Philippines. The miner aims to sell up to a 20% stake in OceanaGold Philippines Inc, with plans to tap into new Filipino and international shareholders. The move is driven by expectations of robust cash flow and dividend payments from its Philippine gold and copper mine, the Didipio mine, which was granted a contract renewal in 2021.
More Stock News
- Abbott Laboratories Faces Lawsuit Over PediaSure Claims: A judge rejects Abbott Laboratories’ attempt to dismiss a lawsuit from a New York City grandmother. The plaintiff alleges that Abbott misled consumers by claiming its PediaSure Grow & Gain drinks were “clinically proven” to help children grow taller. The judge finds the plaintiff’s evidence-backed reasons to doubt Abbott’s marketing claims.
- Alibaba Explores Asset Sales Amid Restructuring: Alibaba Group Holding Ltd is reportedly in talks to sell several consumer sector assets, including Freshippo and RT-Mart. This move is part of Alibaba’s broader restructuring efforts amid tightened scrutiny on IPOs in China. The company is engaging with both strategic and financial investors regarding these assets.
- Driverless Vehicles Surge in California; Concerns Arise: Completely driverless vehicles traveled nearly 3.3 million miles in California in the past year, a significant increase from the previous year. General Motors’ Cruise and Alphabet’s Waymo led the autonomous miles recorded. However, concerns are rising about the disruptive impact of robotaxis on traffic and safety, particularly in San Francisco.
- Amgen’s Obesity Drug Shows Promising Results: Amgen Inc announces positive results from animal and early-stage human trials of its experimental obesity drug, MariTide. The drug, administered through injection, demonstrated significant weight loss with an acceptable safety profile. The compound activates the GLP-1 hormone associated with fullness while blocking the GIP hormone linked to fat storage.
- Class Action Against Apple’s App Store Monopoly: A federal judge allows tens of millions of Apple customers to pursue a class action accusing the company of monopolizing the iPhone app market through its App Store. The judge’s decision follows a narrowing of the class to include Apple account holders who spent $10 or more on app or in-app content, estimating potential damages in the billions of dollars.
- Santander and Lloyds Face Allegations of Money Movement for Iran: Lloyds and Santander witness a decline in their shares as allegations surface that they were used by Iran to move money globally in a sanctions-evasion scheme. Documents reveal that the banks provided accounts to British front companies linked to a sanctioned Iranian petrochemicals firm. Lloyds also reaches an “agreement in principle” over a $1.64 billion lawsuit related to Libor manipulation.
- Bank of America Reduces CEO Compensation Amid Profit Decline: Bank of America cuts CEO Brian Moynihan’s compensation by 3.3% to $29 million for 2023 after a 4% decline in annual profit. This decision contrasts with rivals like JPMorgan Chase, which increased CEO Jamie Dimon’s pay, and Morgan Stanley, which awarded Executive Chairman James Gorman a 17% raise.
- Boeing Faces Quality Issues, Potential Delivery Delays: Boeing acknowledges that about 50 undelivered 737 MAX airplanes require additional work due to mis-drilled holes discovered by supplier Spirit AeroSystems. Quality control measures are being tightened following recent incidents. This could potentially lead to delays in the near-term deliveries of these aircraft.
- Cano Health Files for Chapter 11 Bankruptcy: Cano Health Inc files for Chapter 11 bankruptcy, revealing plans to reduce debt and explore potential offers, including a sale. The primary care provider secures $150 million in new debtor-in-possession financing. The restructuring support agreement allows the conversion of nearly $1 billion in secured debt into new debt and equity.
- Lawsuits Consolidated Against Novo Nordisk and Eli Lilly: At least 55 lawsuits accusing drugmakers Novo Nordisk and Eli Lilly of failing to warn about severe side effects linked to their diabetes and weight loss drugs, Ozempic and Mounjaro, will be centralized in a Pennsylvania federal court. Allegations include gastroparesis and intestinal obstruction.
- Acerinox to Acquire Haynes International: Spanish steelmaker Acerinox announces a deal to acquire U.S. alloys manufacturer Haynes International for $798 million. Shareholders will receive $61 per share in cash, with the transaction expected to close in the third quarter of the year.
- Consortium Finances Bid for Hollysys Automation Technologies: A consortium led by China’s Dazheng Group Acquisition secures financing for its $29.50-per-share bid for automation control system provider Hollysys Automation Technologies. The consortium, including TFI Asset Management, obtains a debt commitment of $1.5 billion and equity commitments totaling $800 million.
- EU Approves JetBlue’s Slots at Schiphol Airport: The European Commission states it would have intervened if the Dutch government had denied slots at Schiphol airport to new entrants like JetBlue. The commission emphasizes the need for new entrants on transatlantic routes to offset competition distortions by airlines with joint ventures.
- Lockheed Martin Signs Agreements for THAAD System in Saudi Arabia: Lockheed Martin signs agreements for Saudi Arabian companies to manufacture parts of its Terminal High Altitude Area Defense (THAAD) system. The move is intended to enhance manufacturing capabilities in Saudi Arabia and transfer expertise to strengthen the country’s defense industry.
- Meta Platforms’ Oversight Board Finds Facebook Video Does Not Violate Rules: Meta Platforms’ Oversight Board rules that a Facebook video suggesting U.S. President Joe Biden is a pedophile does not violate the company’s current rules. However, the board criticizes the rules as “incoherent” and too narrowly focused on AI-generated content, suggesting updates to cover both audio and video content.
- Rubrik Plans IPO Amid U.S. Fraud Investigation: Rubrik, the cybersecurity software startup in which Microsoft invested, plans to go public in New York as early as April. The company is handling a U.S. fraud investigation into one of its former employees, cooperating with authorities and aiming to conclude the probe by March for a successful IPO.
- Nokia Signs 5G Patent License Agreement with Vivo: Nokia announces a multi-year 5G patent license agreement with Chinese smartphone vendor Vivo. The agreement resolves all pending patent litigation between the two companies, with net sales from the deal expected to be recognized in the first quarter of 2024.
- Guinea Lawmakers Approve Simandou Iron Ore Project Deal: Lawmakers in Guinea approve a joint development deal for the Simandou iron ore project, involving Rio Tinto, the junta-led government, and Winning Consortium Simandou. Rio Tinto owns two of the four Simandou mining blocks as part of its Simfer joint venture with China’s Chalco Iron Ore Holdings.
- Shell Finalizes Investment in Gas Supply Facility in Nigeria: Shell makes a final investment decision to build a gas supply facility in Nigeria to feed a fertilizer plant owned by Aliko Dangote, Africa’s richest man. The facility will supply 100 million standard cubic feet of gas per day for ten years to the Dangote Fertiliser and Petrochemical plant.
- Sony and Zee Entertainment Legal Battle Continues: Zee Entertainment can pursue its application to enforce a $10 billion merger with Sony’s Indian unit after the Singapore International Arbitration Centre rejects Sony’s emergency petition for a stay. The legal dispute over the merger is now
Top Analyst Ratings
Methanex Corp (MEOH):
Previous Target Price: $49
New Target Price: $50
Analyst Firm: Piper Sandler
Analysis: Piper Sandler raises the target price for Methanex Corp to $50 from $49, expressing confidence in consistent earnings over the next two years. This optimism is based on expectations of modest pricing and margin improvement.
Charter Communications Inc (CHTR):
Previous Target Price: $445
New Target Price: $370
Analyst Firm: JPMorgan
Analysis: JPMorgan reduces the target price for Charter Communications Inc to $370 from $445, citing concerns about weaker broadband subscriber trends and a slowdown in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Chevron Corp (CVX):
Previous Target Price: $185
New Target Price: $190
Analyst Firm: RBC
Analysis: RBC increases the target price for Chevron Corp to $190 from $185. The adjustment follows the company’s strong fourth-quarter earnings, attributed to lower corporate costs.
Church & Dwight Co Inc (CHD):
Previous Target Price: $95
New Target Price: $96
Analyst Firm: JPMorgan
Analysis: JPMorgan raises the target price for Church & Dwight Co Inc to $96 from $95. The adjustment comes after the company’s positive fourth-quarter earnings, highlighting its focus on international expansion and its ability to scale acquisitions.
Nvidia Corp (NVDA):
Previous Target Price: $625
New Target Price: $800
Analyst Firm: Goldman Sachs
Analysis: Goldman Sachs increases the target price for Nvidia Corp to $800 from $625. The adjustment is based on the expectation of consistent growth driven by continued spending on Gen AI infrastructure by large cloud service providers.
Tesla Inc (TSLA):
Previous Target Price: $295
New Target Price: $225
Analyst Firm: Piper Sandler
Analysis: Piper Sandler reduces the target price for Tesla Inc to $225 from $295. The adjustment is made in anticipation of increased price cuts, with concerns about the impact of an aging product lineup on the automotive gross margin in 2024.
