European stock markets open in green

(ABM FN-Dow Jones) European stock markets are set to open higher on Friday, ahead of US PCE inflation this afternoon.

IG predicts an opening gain of 72 points for the German DAX and a plus of 42 points for the French CAC 40. The British FTSE looks to open 56 points higher.

The stock markets in Europe ended mainly lower on Thursday, in combination with sharply rising interest rates.

Investors could also get started on Thursday with a series of quarterly figures from Europe and the other side of the Atlantic Ocean, where tech giant Meta disappointed with its outlook.

The German ten-year interest rate already rose on Wednesday and rose even further on Thursday, to 2.63 percent at the European close.

On a macroeconomic level, it was also announced on Thursday that consumer confidence in Germany became less negative in May. Confidence in France also improved further.

Company news

In Frankfurt, Deutsche Bank and Infineon did good business, while Symrise was bottom in the DAX with a loss of 4 percent. In Paris, BNP Paribas, STMicroelectronics and Sanofi were positive, but Dassault lost more than 4 percent in the CAC 40. Shares of luxury brands LVMH and Hermes were also under considerable pressure. Hermes is struggling to recover in China, according to an explanation of the quarterly figures.

BNP Paribas published better than expected figures with a lower than expected provision for bad loans. The outlook was maintained. The share rose almost one percent.

Sector peer Deutsche Bank recorded more profit in the first quarter, due to cost control and improving income from investment banking. As the leader on the German stock exchange, the share closed more than 8 percent higher.

BASF achieved an EBITDA increase in all segments in the first quarter. There were facilities in return. Fixed costs have fallen. The issue in and around the Red Sea led to less imports and therefore to stockpiling. The price closed 0.6 percent lower on Thursday.

STMicroelectronics issued a revenue warning for 2024 on Thursday that was grimmer than the market had anticipated. The turnover expectation went from 15.9 to 16.9 billion euros to 14 to 15 billion euros. The company is struggling with declining demand for chips from the automotive sector. STMicroelectronics still closed 1.1 percent higher.

Sector peer Infineon rose 3.6 percent. ASML supplied light.

BE Semiconductor Industries achieved its own outlook in the first quarter of 2024, as expected, but presented a disappointing order inflow. The share lost more than 2 percent in Amsterdam.

Unilever’s turnover grew less rapidly in the first quarter of 2024 compared to the three months before, but faster than analysts had expected. Unilever still expects underlying sales growth of 3 to 5 percent in the coming years. In addition, Unilever will deliver “a modest” improvement in underlying operating margin. The stock closed almost 6 percent higher.

Sector rival Nestlé had a weak start to the year, Bernstein analysts noted. turnover growth fell sharply in the first quarter and was well below expectations. The stock fell 2.2 percent in Zurich. The outlook was maintained.

Adyen achieved significantly higher volumes and turnover in the first quarter, but while volumes were better than expected, turnover was still somewhat disappointing. The price fell more than 18 percent.

RELX is off to a strong start this year, with a continued shift towards analytics and tools that support customer decision-making. RELX reiterated the outlook on Thursday. The share still recorded a minus of 0.7 percent.

Anglo American has received a bid from rival BHP Group. Anglo American has a market capitalization of $35 billion. The board indicated that it was studying the offer received. Anglo American shares closed more than 16 percent higher in London on Thursday and BHP Group fell more than 2 percent.

WPP reported a decline in organic revenue, but Citi Research said this could be attributed to known aspects such as greater exposure from tech customers and China. The share price of the British PR and advertising company closed almost one percent lower in London.

Euro STOXX 50 4,939.01 (-1.1%)
STOXX Europe 600 502.38 (-0.6%)
DAX 17,917.28 (-1.0%)
CAC 40 8,016.65 (-0.9%)
FTSE 100 8,078.86 (+0.5%)
SMI 11,260.61 (-1.0%)
AEX 870.27 (-0.4%)
BEL 20 3,857.94 (-0.7%)
FTSE MIB 33,939.75 (-1.0%)
IBEX 35 10,983.70 (-0.4%)

US STOCKS

Wall Street will have a green opening on Friday, with investors in New York able to respond to the results of Alphabet, Microsoft, Intel and Snap that were announced after hours on Thursday.

Alphabet posted strong results and announced a new share buyback program of $70 billion. Google’s parent company will also pay out a dividend for the first time, of $0.20 per share. Microsoft managed to beat expectations last quarter, while Snap came up with a strong outlook. Intel mainly disappointed with revenues, including those at the Data and AI business.

The American stock markets ended lower on Thursday, but the losses from earlier in the day were partly recovered.

Tech giant Meta fell sharply in after-hours trading on Wednesday, although the results were above expectations. However, Frank Vranken pointed to “weak revenue guidance” at Meta and higher-than-expected capital expenditures, which caused the share price to fall and, in response, a sharp decline in futures on Wall Street.

“But Meta wasn’t alone, IBM, another tech stock, lost more than 8 percent at market close. We wonder what the reaction will be when Google and Microsoft announce their earnings,” the expert said. Bank Edmond de Rothschild.

According to ING investment manager Simon Wiersma, the price reaction of the Meta share, which has already risen about 40 percent this year, is exaggerated.

“Sometimes investors just need a small excuse to take profits, which is usually not a good strategy,” said Wiersma, who reported additional investments in AI by Meta, “from $37 billion to $40 billion this year,” good news finds for chip companies.

On a macroeconomic level, attention was paid on Thursday to the provisional growth figures for the first quarter in the United States. The American economy grew by 1.6 percent in the first three months of 2024. Economists expected growth of more than 2 percent. In the fourth quarter, the American economy grew by 3.4 percent.

Swissquote Bank stated that a disappointing growth figure is bad for the prospects of companies, but is favorable for an interest rate cut.

However, the corresponding PCE indicator showed an inflation of 3.4 percent and a core inflation of 3.7 percent for the first quarter, the US government figures further showed. That was 1.8 and 2.0 percent respectively in the fourth quarter.

“This means that core PCE inflation for March [vrijdag] is also higher than expected,” market analyst Philip Marey of Rabobank told ABM Financial News.

The PCE inflation for the month of March, which is published this afternoon, is expected to be 2.6 percent inflation, from 2.5 percent in February. Core inflation is said to have cooled slightly, from 2.8 to 2.7 percent.

The chance of an interest rate cut before September is now “virtually nil”, according to economists at ING. According to the CME FedWatch Tool, a small majority of the market is now anticipating a first rate cut during the Fed meeting in September.

The chance of two interest rate cuts in 2024 is also decreasing, perhaps also in view of the presidential elections in November, where the Federal Reserve may not want to influence politics. Next week, on May 1, the Fed will likely maintain interest rates at current levels.

Furthermore, 207,000 new claims for unemployment benefits were filed in the US last week, compared to 212,000 the week before. It was anticipated in advance that 215,000 new aid applications would be received. Pending home sales increased in March, while a stable level was expected.

The ten-year yield in the US rose to 4.71 percent on Thursday, making it the highest point this year.

Oil prices rose towards the settlement. Manish Raj of Velandera Energy Partners pointed out that “a lot of people had sold short and when they all tried to close their positions,” oil prices got a boost.

Company news

Meta Platforms, the parent company of Facebook and Instagram, reported record first-quarter revenue on Wednesday evening but spooked investors with predictions of rising costs. The company is spending billions to catch up with its peers in artificial intelligence. The share lost more than 10 percent on Thursday.

IBM’s quarterly revenue fell short of expectations. IBM also announced a $6.4 billion deal to buy cloud software company HashiCorp. Shares of IBM lost 8 percent on Thursday, while HashiCorp rose 4.5 percent.

Dow Inc. recorded lower turnover in the first quarter and profit also shrank, despite the fact that the margin increased. The stock lost almost one percent.

Harley-Davidson recorded lower sales in the first quarter of 2024, because fewer motorcycles were delivered and prices fell. The share lost 16 percent.

American Airlines posted record revenue in the first quarter of 2024, but results were still below expectations. The share rose approximately one and a half percent.

Caterpillar lost approximately 7.0 percent. In contrast to the profit, last quarter’s turnover was slightly disappointing compared to analyst expectations.

Ford’s quarterly results beat expectations as sales of full-size trucks to large commercial fleets offset struggles in the EV sector. Shares rose almost one percent.

Restaurant chain Chipotle Mexican Grill saw sales and margins increase last quarter. The shares rose more than 6 percent.

Hertz shares fell more than 19 percent on Thursday after the car rental company reported a stronger-than-expected loss. The big miss was mainly due to the purchase of too many expensive electric vehicles.

S&P 500 index 5,048.42 (-0.5%)
Dow Jones index 38,085.80 (-1.0%)
Nasdaq Composite 15,611.76 (-0.6%)

ASIA

The Asian stock markets were in the green on Friday.

Nikkei 225 38,038.36 (+1.1%)
Shanghai Composite 3,076.92 (+0.8%)
Hang Seng 17,626.75 (+2.0%)

CURRENCIES

The euro/dollar was trading at 1.0721 this morning. On Thursday evening the currency pair was trading at 1.0732.

USD/JPY Yen 156.17
EUR/USD Euro 1.0721
EUR/JPY Yen 167.45

MACRO AGENDA:
07:00 Bank of Japan – Interest rate decision (Jap)
08:45 Consumer confidence – April (Fra)
2:30 PM Personal Spending and PCE Inflation – March (US)
4:00 PM Michigan Consumer Confidence – April final (USA)

COMPANY NEWS:
07:00 IMCD – First quarter figures (NL)
07:00 Signify – First quarter figures (NL)
08:00 TotalEnergies – First quarter figures (Fra)
09:00 ASML – Ex-dividend
09:00 CVC IPO (expected)
13:00 AbbVie – First quarter figures (US)
1:00 PM Colgate-Palmolive – First Quarter Figures (US)
1:00 PM Chevron – First Quarter Figures (US)
13:00 ExxonMobil – First quarter figures (US)

Source: ABM Financial News

ABM Financial News is a supplier of stock market news, video and data, both for real-time trading platforms and dealing rooms and for online and offline media publications. The information in this article is not intended as professional investment advice or as a recommendation to make certain investments.