Stock Market Update for Thursday February 1st, 2024

Stock Market Update for Thursday February 1st, 2024

Global Economic Overview:

  • China’s Property Market: Higher oil prices are observed, partly due to new support measures for China’s struggling property market.
  • U.S. Federal Reserve: U.S. stock indexes recover after the Federal Reserve dispels expectations of early interest-rate cuts. Economic data and big-tech earnings remain closely monitored.
  • European Shares: Mixed performance in European shares following disappointing earnings updates.
  • Asia-Pacific Markets: Japan’s Nikkei ends lower, Chinese stocks remain relatively unchanged. Private-sector survey suggests modest expansion in China’s factory activity in January.
  • Currency and Commodities: The U.S. dollar gains post-Fed’s stance on interest rates. Gold prices fall.

Canadian Stock News:

  • Rogers Communications: Exceeds expectations for quarterly wireless subscriber additions, driven by population growth and increased demand for wireless and internet services.
  • Canada’s Small Businesses: Thousands face bankruptcy risks as pandemic-era support ends, coupled with economic slowdown and high interest rates.
  • Canada Goose Holdings: Misses revenue expectations but anticipates a rebound in China to offset a U.S. slowdown. Revenue rises to C$609.9 million, missing analyst estimates.
  • City National Bank (RBC unit): Fined $65 million by the U.S. banking regulator for gaps in risk management and internal controls.
  • Trans Mountain Pipeline: Canada Energy Regulator reports no environmental or safety concerns despite construction challenges.

European Stock News:

Bank of England’s Interest Rates:

    • Britain’s central bank is expected to maintain interest rates at their highest level in nearly 16 years.
    • Investors are closely watching for hints of potential rate cuts amid the prospect of inflation returning to the Bank of England’s 2% target.
  1. Qualcomm’s Forecast:
    • Qualcomm forecasts fiscal second-quarter profit slightly above Wall Street estimates.
    • Concerns arise among investors regarding the chip maker’s Android sales in China.
  2. Adidas’ Operating Profit Outlook:
    • German sportswear maker Adidas anticipates its operating profit to nearly double, reaching around 500 million euros this year.
    • The projection follows Adidas’ separation from Kanye West and the discontinuation of its Yeezy business.
  3. Julius Baer CEO Departure:
    • Julius Baer CEO Philipp Rickenbacher is set to leave, according to a source, as the Swiss bank grapples with the consequences of its exposure to the collapsed property group Signa.
  4. Vodafone’s Rejection of Merger Offer:
    • Vodafone announces the rejection of a sweetened offer from French telecom operator Iliad to merge their Italian businesses.
    • Vodafone is exploring alternative deals in a challenging market where it faces revenue losses and generates no return on capital.

American Stock News:

  • Align Technology: Beats Q4 estimates, forecasts higher Q1 revenue due to increased demand for clear teeth aligners.
  • AvalonBay Communities: Forecasts lower full-year 2024 funds from operation (FFO) per share, impacted by rental market weaknesses in Northern California.
  • Ball Corp: Misses Q4 revenue estimates but reports profit due to cost-cutting initiatives.
  • C.H. Robinson Worldwide: Misses Q4 estimates due to lower freight demand and a competitive market.
  • Deutsche Bank: Announces job cuts, share buybacks, and dividends. Reports a 30% drop in Q4 profit but beats analyst expectations.
  • Eaton Corporation: Beats Q4 profit and revenue expectations, forecasts full-year profit above estimates.
  • ING Groep: Reports lower net interest income in Q4, forecasts lower total income for 2024.
  • Honeywell International: Misses sales estimates for Q4, forecasts a weak first quarter due to lower demand in building technologies and warehouses.
  • Merck & Co: Reports better-than-expected Q4 results on strong Keytruda sales. Forecasts 2024 sales growth of up to 6.8%.
  • MetLife: Reports a rise in Q4 adjusted profit, boosted by higher premiums and investment returns.
  • PTC Inc: Forecasts lower Q2 revenue and profit due to elevated interest rates impacting software budgets.
  • Qualcomm Inc: Forecasts fiscal Q2 profit slightly above estimates, announces chip supply deal with Samsung.
  • Qorvo Inc: Forecasts Q4 revenue and profit above estimates, anticipates a rebound in the smartphone market.
  • Royal Caribbean Group: Projects annual profit above expectations on strong demand for cruises.
  • Sanofi SA: Reports a 5% decline in Q4 operating income, citing a weaker U.S. dollar and competition for Aubagio.
  • Shell Plc: Reports a 30% drop in 2023 profit but increases dividends and share repurchases.
  • Sumitomo Mitsui Financial Group: Reports a 10.7% increase in Q3 net profit, driven by growing corporate activity.
  • Wolfspeed Inc: Forecasts Q3 revenue below estimates due to slower sales growth for electric vehicles.
  • Amer Sports Inc: Maker of Wilson tennis rackets returns to public markets with a U.S. IPO, selling shares at a discounted price.

Alphabet Inc’s Offshore Wind Power Purchase Agreement (PPA):

  • Alphabet Inc secures its largest-ever Power Purchase Agreement (PPA) for offshore wind projects off the Netherlands’ coast, aiming to green its power supply and achieve climate targets.
  • The agreement involves taking 478 MW of power from two new wind farms developed by Crosswind & Ecowende Consortia, joint ventures between Shell and Dutch utility Eneco.
  • Part of Alphabet’s commitment to operate on carbon-free energy around the clock by 2030, it also announces smaller renewable PPAs in Italy, Poland, and Belgium.

Archer-Daniels-Midland Co’s Acquisition of Fuerst Day Lawson Ltd:

  • ADM completes the acquisition of Fuerst Day Lawson Ltd, a U.K.-based company specializing in flavors and specialty ingredients for food-service customers in Europe.
  • The acquisition is part of ADM’s strategy to expand its Nutrition segment, which is currently under scrutiny due to a government inquiry and internal investigation.

Boeing Co & Spirit AeroSystems Holdings Inc’s FAA Audit:

  • The FAA announces an audit of 737 MAX manufacturing, covering all elements of production at Boeing and fuselage production at Spirit AeroSystems.
  • The audit aims to examine production processes at Boeing’s facility in Renton, Washington, and at Spirit in Wichita, Kansas, ensuring enhanced oversight following the 737 MAX crashes.

Cadence Design Systems Inc’s AI Supercomputer for Simulations:

  • Cadence Design Systems introduces the Millennium M1, an AI supercomputer designed for simulating airflow over jets and other equipment.
  • The system accelerates tests, allowing engineers to run more simulations and uses AI to analyze data for identifying design improvements.

Globalink Investment Inc’s Merger with Alps Global Holding Berhad:

  • Alps Global Holding Berhad agrees to go public in the U.S. through a merger with a blank-check company, Globalink Investment, valuing the biotechnology company at $1.6 billion.
  • The merged company will be named “Alps Life Science Inc” and is expected to be listed on the Nasdaq.

GSK Plc’s Settlement and Lawsuit:

  • GSK agrees to settle another lawsuit in California alleging that its discontinued heartburn drug Zantac caused cancer. The terms are confidential, and GSK does not admit liability.
  • Separately, a lawsuit accusing a former GSK unit and Pfizer of misleading consumers about ChapStick products will proceed as a class action.

Hesai Group’s Inclusion in U.S. Defense Department List:

  • The United States adds Hesai Group and other Chinese companies to a list highlighting firms allegedly working with Beijing’s military. Hesai Group denies ties with any military.

Humana Inc & UnitedHealth Group Inc:

  • The U.S. government proposes a 2025 reimbursement rate for Medicare Advantage plans run by private insurers, reflecting an effective growth rate of 2.44% and a total increase of 3.7%.

JPMorgan Chase & Co’s China Chief Executive’s Retirement:

  • JPMorgan Chase’s China Chief Executive, Mark Leung, announces retirement at the end of 2024 after 25 years with the bank.

KKR & Co Inc’s Infrastructure Fund for Asia Pacific:

  • KKR & Co Inc raises $6.4 billion for its fund focused on infrastructure and energy-related investments in the Asia Pacific region.

Kyverna Therapeutics’ U.S. IPO:

  • Kyverna Therapeutics aims for a market valuation of up to $711 million in its U.S. IPO. The company plans to raise up to $211.3 million.

New York Community Bancorp Inc’s Moody’s Review:

  • Moody’s places New York Community Bancorp on review for a possible downgrade following the bank’s decision to cut its dividend by 70% to strengthen its balance sheet.

Norfolk Southern Corp’s Stake Acquisition and Board Challenge:

  • Ancora Holdings-led investor group, with a $1 billion stake, challenges Norfolk Southern CEO Alan Shaw, expressing concerns about a train derailment and operating targets.

Nvidia Corp’s China-Specific AI Chip and Competition with Huawei:

  • Nvidia takes pre-orders for a new China-specific AI chip, the H20, competing with Huawei’s Ascend 910B in the Chinese market.

Paramount Global’s Potential Acquisition by Byron Allen:

  • Byron Allen focuses on acquiring Paramount Global’s television networks and stations in a $14 billion offer, intending to sell key assets while retaining Paramount’s CBS broadcast network.

Tesla Inc’s Shareholder Vote on State of Incorporation and Battery Facility Expansion:

  • Tesla to hold a shareholder vote to transfer its state of incorporation to Texas from Delaware. Simultaneously, expanding its battery facility in Nevada for cheaper lithium iron phosphate batteries (LFP).

Walt Disney Co’s India Media Business Merger and Trian Fund Management’s Proxy Filing:

  • Reliance reportedly close to merging its India media business with Walt Disney, with Trian Fund Management urging shareholders not to re-elect two board directors.

Woodside Energy Group Ltd’s Merger with Santos and Allan Gray Australia’s Opposition:

  • Woodside Energy Group faces opposition from Allan Gray Australia against its proposed $57 billion merger with Santos, citing concerns over dilution of value for Woodside shareholders.

Analyst Recommendations Summary:

  1. CGI Inc (Target Price: C$170): RBC raises the target price from C$155 to C$170, citing first-quarter results that met expectations.
  2. Lightspeed Commerce Inc (Target Price: C$27): CIBC increases the target price from C$24 to C$27, anticipating accelerated subscription growth and improved free cash flow in the third-quarter earnings.
  3. AT&T Inc (Target Price: $21): JPMorgan raises the target price from $18 to $21, recognizing consistent execution in wireless and broadband businesses.
  4. Boeing Co (Target Price: $215): Wells Fargo reduces the target price from $225 to $215, expressing concerns about potential impacts from the FAA’s safety audit after the fourth-quarter earnings call.
  5. Mastercard Inc (Target Price: $530): Evercore ISI raises the target price from $520 to $530, based on better-than-expected fourth-quarter earnings.
  6. Thermo Fisher Scientific Inc (Target Price: $612): TD Cowen raises the target price from $590 to $612, noting the company’s favorable position for long-term earnings growth within its peer group.
  7. Qualcomm Inc (Target Price: $165): Piper Sandler increases the target price from $140 to $165, expressing confidence in the company’s consistent revenue and earnings growth.

 

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