- Alexander Garcia
- 25 Jul, 2024
- Miami
Mega-cap tech stocks continue to correct as investors rotate to smaller-cap and cyclical stocks.
U.S. major averages rebounded, and investors reviewed the latest update on gross domestic product and additional earnings releases.
The S&P 500 index and the Nasdaq Composite jumped more than 0.6% a day after a sharp sell-off in mega-cap tech stocks following disappointing earnings from Tesla and Alphabet.
The Russell 2000 index rebounded more than 2% as investors dumped high-flying artificial intelligence-linked stocks and added exposure to smaller companies.
Ford Motor dropped as much as 15% after the vehicle maker's earnings were far lower than expectations set by some analysts; American Airlines dived 3% after weaker-than-expected earnings; and Chipotle Mexican Grill fell 3% despite the restaurant company reporting better-than-expected results.
Investors also reviewed the update on the second-quarter GDP report, which showed a significant rebound from the first quarter.
Gross domestic product expanded at an annual rate of 2.8% in the second quarter, adjusted for seasonal factors and inflation, and faster than the annual pace of 1.4% in the first quarter, the U.S. Bureau of Economic Analysis showed Thursday.
Consumer spending accelerated to 2.3% from 1.5%, and the increase in private inventories added 0.82 percentage points to the economic growth in the quarter. Nonresidential fixed investment accelerated to 5.2% from 4.4%.
On the other hand, residential investment contracted for the first time in a year by 1.4% from a rise of 16%, and international trade continued to drag on economic growth after imp76orts accelerated to 6.9% from 6.1%, faster than the increase in exports to 2% from 1.6%.
Investor expectations are high that the Federal Reserve will slow inflation towards its target rate of 2% without causing a recession, despite multiple interest rate hikes over 2022 and 2023.
A separate economic report showed, new orders for durable goods declined 6.6% from the previous month in June to $264.5 billion, after rising for four months in a row, the U.S. Census Bureau reported Thursday.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.9% to 5,443.13, the Nasdaq Composite 0.7% to 17,476.02, and the Russell 2000 index jumped 2.6% to 2,252.85.
The yield on 2-year Treasury notes edged higher to 4.43%, 10-year Treasury notes increased to 4.2%, and 30-year Treasury bonds edged higher to 4.52%.
WTI crude oil decreased $0.76 to $76.80 a barrel, and natural gas prices edged down 2 cents to $2.09 a thermal unit.
Gold decreased by $28.77 to $2,370.31 an ounce, and silver declined by $1.23 to $27.62.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.42.
U.S. Stock Movers
Southwest Airlines increased 2.4% to $27.25 after the regional airline reported better-than-expected second-quarter results.
Total operating revenue increased 4.5% to $7.4 billion from $7.0 billion, net income plunged 46% to $367 million from $683 million, and diluted earnings per share dropped to 58 cents from $1.08 a year ago.
The airline warned that its revenue per average seat mile may fall and nonfuel costs may jump by as much as 13% in the current quarter from a year ago.
American Airlines Group rose 1.4% to $10.32 after the international carrier issued a cautious outlook for the current quarter, citing lower fares because of overcapacity.
Total operating revenue in the second quarter increased 2% to $14.3 billion from $14.1 billion, net income plunged 46% to $717 million from $1.3 billion, and diluted earnings per share fell to $1.01 from $1.88 a year ago.
The company guided diluted earnings per share in the third quarter to be breakeven and in the full year to range between 70 cents and $1.30.
Chipotle Mexican Grill decreased 2% to $50.77 after the restaurant chain operator reported
Revenue in the quarter increased 18% to $3.0 billion from $2.5 billion, net income advanced to $455.6 million from $341.7 million, and diluted earnings per share rose 32% to 33 cents from 25 cents a year ago.
Comparable same-store sales increased 11.1%, and the company opened 52 new stores in 46 locations and one international licensed restaurant.
The company reiterated full-year comparable restaurant same-store sales to increase in the mid- to high-single-digit range and open between 285 and 315 stores.
During the second quarter, the company repurchased $151.4 million of stock at an average price per share of $63.52.
As of June 30, $647.7 million was available under share repurchase authorizations, including an additional $400 million in authorized repurchases approved by the Board on June 5.
European Markets Extended Weekly Losses After a Batch of Weak Earnings
European markets extended this week's losses after a mix of weak earnings and global tech stocks rout.
Benchmark indexes in London, Paris, and Frankfurt dropped between 1% and 2%, after U.S. market indexes dropped the most in nearly two years following disappointing earnings from Tesla and Google-parent Alphabet.
Moreover, Nestle, BT Group, Centamin, Gucci-parent Kering, STMicroelectronics, Centrica, Air France-KLM, and Carrefour reported weaker-than-expected quarterly results.
Market sentiment was downbeat on the worry that demand from China for European luxury goods is not likely to improve in the near future amid persistent economic challenges and a protracted property market slump.
Closer to home, the Ifo Institute's business climate index dropped to 87.0 in July from 88.6 in June amid growing pessimism about the economic outlook in Germany, the largest economy in the eurozone.
Europe Indexes and Yields
The DAX index decreased by 0.5% to 18,298.72; the CAC-40 index declined by 1.2% to 7,427.03; and the FTSE 100 index increased by 0.4% to 8,186.35.
The yield on 10-year German bonds edged lower to 2.39%, French bonds inched lower to 3.10%, the UK gilts inched lower to 4.11%, and Italian bonds decreased to 3.77%.
The euro edged lower to $1.08; the British pound inched higher to $1.294; and the U.S. dollar weakened to 87.81 Swiss cents.
Brent crude increased $0.32 to $82.02 a barrel, and the Dutch TTF natural gas fell by €0.69 to €32.01 per MWh.
Europe Stock Movers
Nestle SA decreased 4.9% to CHF 88.96 after the Swiss food products and beverage company lowered its full-year outlook following the 3% decline in sales in the first half.
STMicroelectronics SA declined 14.7% to €31.62 after the advanced chipmaker reported lowering its outlook for the second time this year.
Centamin declined 6.1% to 121.50 pence after the gold mining company reported weaker-than-expected net income in the first half.
Centrica PLC dropped 7.2% to 132.0 pence after the company said Scott Wheway has resigned from the Chairman of the Board office and would not seek re-election as a director.
British American Tobacco rose 4.4% to 2,690.0 pence after the company's first-half results met investors' expectations.
BT Group declined 1.5% to 137.45 pence after the British telecom company said revenue in the fiscal first quarter declined.
Unilever plc increased 6.4% to 4,678.0 pence after the food products maker reported better-than-expected first-half results.
Kering SA dropped 6.4% to €279.25 after the Gucci parent issued another profit warning citing weakness in China sales.
Kering stock dropped to a seven-year low, near the level last seen in August 2017, after the luxury goods company said first-half operating income plunged 42% to €1.6 billion.
The company also issued a dire warning for the second half and added that operating earnings are likely to fall 30% from a year ago.
Gucci sales are struggling in China because of high youth unemployment and a lingering property market crisis. The luxury label accounts for about half of Kering sales and two-thirds of its profits.
Air France-KLM increased 3.3% to €8.17 despite the Franco-Dutch airline reporting second quarter earnings below market expectations.
Japanese Stock Market Indexes Plunge 3%, Yen Rebounds to a 3-month High
Market indexes in Japan extended this week's losses after a steep decline in technology stocks following the sharp sell-off in overnight trading in New York.
The Nikkei 225 and the Topix index dropped more than 3% after tech stocks fell more than 5%.
Global tech stock rout engulfed markets in Asia and Japan after Tesla and Google-parent Alphabet reported weaker-than-expected quarterly results.
Tesla said automotive unit revenue declined for the second quarter in a row, and higher discounts and financial incentives in the U.S. and China crimped operating margins.
Investors sold mega-cap stocks on the worry that the artificial intelligence-related tech stock rally may come to an end sooner-than-expected if large tech companies slowdown spending amid earnings shortfalls.
Stocks in Tokyo were under pressure after the yen continued to rally for the second consecutive week ahead of the Bank of Japan's policy meeting next week.
The yen rose to 152.06 against the U.S. dollar in the hopes that the central bank is finally ready to increase the interest rate next week and narrow the wide yield gap between the U.S. and Japan bonds.
Japan Stock Movers
The Nikkei 225 stock average closed down 3.3% to 37,869.51, and the Topix index dropped 3% to 37,869.51.
Tokyo Electron decreased 4.2% to ¥29,010.0, Advantest rose 6% to ¥5,708.0, Screen Holdings fell 2.6% to ¥13,000.0.
Softbank fell 9.4% to ¥9,365.0, Renesas Electronics plunged 13.6% to ¥2,583.50, and Hitachi dropped 9.5% to ¥3,078.0.
Kawasaki Heavy Industries declined 9.1% to ¥5,358.0, Mitsubishi Heavy Industries decreased 6.2% to ¥1,735.50, and Japan Steel Works dropped 5.2% to ¥4,156.0.
Financial stocks were among the leading decliners amid growing expectations that the Bank of Japan is likely to raise interest at the end of the next policy meeting on July 31.
Mitsubishi UFJ Financial Group dropped 3.9% to ¥1,675.0, Sumitomo Mitsui Financial decreased 4.3% to ¥10,440.0, and Mizuho Financial Group fell 4.6% to ¥3,249.0.
China indexes Drop 2% Following Global Tech Stock Rout
China stock indexes joined the world market sell-off after benchmark indexes on Wall Street dropped sharply in overnight trading.
The Hang Seng index dropped nearly 2%, and the CSI index decreased 1% after tech stocks fell more than 3% following losses in New York.
The S&P 500 index and the Nasdaq Composite dropped 2.3% and 3.7% at close on Wednesday after Tesla and Google-parent Alphabet reported weaker-than-expected quarterly results.
Benchmark indexes in Japan declined by 3.3%, and they in South Korea fell by 1.8%.
Market sentiment was negative amid a protracted property market crisis, a lack of coherent policy measures from Chinese leadership, and weakening consumer confidence.
Investors' expectations are low ahead of the Politburo meeting, a meeting of Chinese top leaders to discuss policy alternatives and finalize new measures to revive long-term economic growth.
China is undergoing a secular decline in economic growth from above 9% to less than 3% as the economy faces demographic challenges, globalization of Chinese businesses, steady capital outflow, and a lack of financial headroom amid huge government debt.
The People's Bank of China unexpectedly cut its one-year loan prime rate by 20 basis points to 2.3% from 2.5%, the first rate cut for this loan facility in a year and the largest since April 2020.
On Monday, the central bank trimmed its short-term lending rates by 10 basis points as policymakers offered supportive measures to increase lending to the industrial economy.
China Stock Movers
The Hang Seng index declined 1.9% to 16,984.85, and the CSI 300 index dropped 0.7% to 3,393.96.
Tech stocks led the decline in Hong Kong and Shanghai following the market selloff in New York.
Alibaba Group fell 0.7% to HK $73.65, Baidu dropped 2.8% to HK $85.30, and Tencent Holdings decreased 3% to HK $352.0.
Electric vehicle makers were under pressure for the second day in a row after Tesla reported a decline in revenue in its automotive unit for the second quarter in a row.
BYD decreased 1% to HK $231.0, Li Auto fell 1.7% to HK $73.20, and Xpeng declined 1.9% to HK $31.65.
Chow Tai Fook Jewellery declined 1.4% to HK $7.28, and the specialty retailer extended losses for the second day in a row after the company reported a 20% decline in sales in the second quarter on Wednesday.
- Scott Peters
- 25 Jul, 2024
- New York City
Southwest Airlines increased 2.4% to $27.25 after the regional airline reported better-than-expected second-quarter results.
Total operating revenue increased 4.5% to $7.4 billion from $7.0 billion, net income plunged 46% to $367 million from $683 million, and diluted earnings per share dropped to 58 cents from $1.08 a year ago.
The airline warned that its revenue per average seat mile may fall and nonfuel costs may jump by as much as 13% in the current quarter from a year ago.
American Airlines Group rose 1.4% to $10.32 after the international carrier issued a cautious outlook for the current quarter, citing lower fares because of overcapacity.
Total operating revenue in the second quarter increased 2% to $14.3 billion from $14.1 billion, net income plunged 46% to $717 million from $1.3 billion, and diluted earnings per share fell to $1.01 from $1.88 a year ago.
The company guided diluted earnings per share in the third quarter to be breakeven and in the full year to range between 70 cents and $1.30.
Chipotle Mexican Grill decreased 2% to $50.77 after the restaurant chain operator reported quarterly results that exceeded market expectations.
Revenue in the quarter increased 18% to $3.0 billion from $2.5 billion, net income advanced to $455.6 million from $341.7 million, and diluted earnings per share rose 32% to 33 cents from 25 cents a year ago.
Comparable same-store sales increased 11.1%, and the company opened 52 new stores in 46 locations and one international licensed restaurant.
The company reiterated full-year comparable restaurant same-store sales to increase in the mid- to high-single-digit range and open between 285 and 315 stores.
During the second quarter, the company repurchased $151.4 million of stock at an average price per share of $63.52.
As of June 30, $647.7 million was available under share repurchase authorizations, including an additional $400 million in authorized repurchases approved by the Board on June 5.
ServiceNow soared 13.4% to $832.03 after the company reported solid second-quarter results.
Total revenue increased 22% to $2.6 billion from $2.2 billion, net income declined to $262 million from $1.04 billion, and diluted earnings per share fell to $1.26 from $5.08 a year ago.
In the quarter a year ago, the company received a one-time tax benefit of $870 million.
The company reported 88 transactions over $1 million in net new annual contract revenue, or ACV, in Q2 2024, a 26% jump from a year ago, adding to the company's large backlog.
The remaining performance obligations, or RPO, increased 31% from a year ago to $18.6 billion.
The company revised its subscription revenue guidance to a range of $2.66 billion to $2.67 billion, from a prior range of $2.525 billion to $2.530 billion.
- Barry Adams
- 25 Jul, 2024
- New York City
U.S. major averages were steady after investors reviewed the latest update on gross domestic product and additional earnings releases.
The S&P 500 index and the Nasdaq Composite were nearly unchanged in early trading a day after a sharp sell-off in mega-cap tech stocks following disappointing earnings from Tesla and Alphabet.
Ford Motor dropped as much as 15% after the vehicle maker's earnings were far lower than expectations set by some analysts; American Airlines dived 3% after weaker-than-expected earnings; and Chipotle Mexican Grill fell 3% despite the restaurant company reporting better-than-expected results.
Investors also reviewed the update on the second-quarter GDP report, which showed a significant rebound from the first quarter.
Gross domestic product expanded at an annual rate of 2.8% in the second quarter, faster than the annual pace of 1.4% in the first quarter, the U.S. Bureau of Economic Analysis showed Thursday.
Consumer spending accelerated to 2.3% from 1.5%, and the increase in private inventories added 0.82 percentage points to the economic growth in the quarter. Nonresidential fixed investment accelerated to 5.2% from 4.4%.
On the other hand, residential investment contracted for the first time in a year by 1.4% from a rise of 16%, and international trade continued to drag on economic growth after imports accelerated to 6.9% from 6.1%, faster than the increase in exports to 2% from 1.6%.
New orders for durable goods declined 6.6% from the previous month in June to $264.5 billion, after rising for four months in a row, the U.S. Census Bureau reported Thursday.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.4% to 5,481.04, the Nasdaq Composite fell 0.1% to 17,206.36, and the Russell 2000 index fell 0.1% to 2,205.98.
The yield on 2-year Treasury notes edged higher to 4.43%, 10-year Treasury notes increased to 4.2%, and 30-year Treasury bonds edged higher to 4.52%.
WTI crude oil decreased $0.76 to $76.80 a barrel, and natural gas prices edged down 2 cents to $2.09 a thermal unit.
Gold decreased by $28.77 to $2,370.31 an ounce, and silver declined by $1.23 to $27.62.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.42.
U.S. Stock Movers
Southwest Airlines increased 2.4% to $27.25 after the regional airline reported better-than-expected second-quarter results.
Total operating revenue increased 4.5% to $7.4 billion from $7.0 billion, net income plunged 46% to $367 million from $683 million, and diluted earnings per share dropped to 58 cents from $1.08 a year ago.
The airline warned that its revenue per average seat mile may fall and nonfuel costs may jump by as much as 13% in the current quarter from a year ago.
American Airlines Group rose 1.4% to $10.32 after the international carrier issued a cautious outlook for the current quarter, citing lower fares because of overcapacity.
Total operating revenue in the second quarter increased 2% to $14.3 billion from $14.1 billion, net income plunged 46% to $717 million from $1.3 billion, and diluted earnings per share fell to $1.01 from $1.88 a year ago.
The company guided diluted earnings per share in the third quarter to be breakeven and in the full year to range between 70 cents and $1.30.
Chipotle Mexican Grill decreased 2% to $50.77 after the restaurant chain operator reported
Revenue in the quarter increased 18% to $3.0 billion from $2.5 billion, net income advanced to $455.6 million from $341.7 million, and diluted earnings per share rose 32% to 33 cents from 25 cents a year ago.
Comparable same-store sales increased 11.1%, and the company opened 52 new stores in 46 locations and one international licensed restaurant.
The company reiterated full-year comparable restaurant same-store sales to increase in the mid- to high-single-digit range and open between 285 and 315 stores.
During the second quarter, the company repurchased $151.4 million of stock at an average price per share of $63.52.
As of June 30, $647.7 million was available under share repurchase authorizations, including an additional $400 million in authorized repurchases approved by the Board on June 5.
- Inga Muller
- 25 Jul, 2024
- Frankfurt
Weak corporate earnings and ongoing economic stagnation dampened market sentiment on bourses across Europe.
The DAX index decreased by 1.2% to 18,162.03; the CAC-40 index declined by 2% to 7,365.63; and the FTSE 100 index fell by 0.6% to 8,100.89.
The yield on 10-year German bonds edged lower to 2.39%, French bonds inched lower to 3.10%, the UK gilts inched lower to 4.11%, and Italian bonds decreased to 3.77%.
Nestle SA decreased 4.9% to CHF 88.96 after the Swiss food products and beverage company lowered its full-year outlook following the 3% decline in sales in the first half.
STMicroelectronics SA declined 14.7% to €31.62 after the advanced chipmaker reported lowering its outlook for the second time this year.
Centamin declined 6.1% to 121.50 pence after the gold mining company reported weaker-than-expected net income in the first half.
Centrica PLC dropped 7.2% to 132.0 pence after the company said Scott Wheway has resigned from the Chairman of the Board office and would not seek re-election as a director.
British American Tobacco rose 4.4% to 2,690.0 pence after the company's first-half results met investors' expectations.
BT Group declined 1.5% to 137.45 pence after the British telecom company said revenue in the fiscal first quarter declined.
Unilever plc increased 6.4% to 4,678.0 pence after the food products maker reported better-than-expected first-half results.
Kering SA dropped 6.4% to €279.25 after the Gucci parent issued another profit warning citing weakness in China sales.
Kering stock dropped to a seven-year low, near the level last seen in August 2017, after the luxury goods company said first-half operating income plunged 42% to €1.6 billion.
The company also issued a dire warning for the second half and added that operating earnings are likely to fall 30% from a year ago.
Gucci sales are struggling in China because of high youth unemployment and a lingering property market crisis. The luxury label accounts for about half of Kering sales and two-thirds of its profits.
Air France-KLM increased 3.3% to €8.17 despite the Franco-Dutch airline reporting second quarter earnings below market expectations.
The airline group's operational revenue increased 4.3% to €7.9 billion from €7.6 billion, and net income plunged sharply to €165 million from €612 million a year ago.
The airline said it expects revenue to take a hit between €150 million and €170 million in the third quarter as passengers avoid its Paris hub because of high prices and possible air travel disruptions during Olympic games.
- Bridgette Randall
- 25 Jul, 2024
- London
European markets extended this week's losses after a mix of weak earnings and global tech stocks rout.
Benchmark indexes in London, Paris, and Frankfurt dropped between 1% and 2%, after U.S. market indexes dropped the most in nearly two years following disappointing earnings from Tesla and Google-parent Alphabet.
Moreover, Nestle, BT Group, Centamin, Gucci-parent Kering, STMicroelectronics, Centrica, Air France-KLM, and Carrefour reported weaker-than-expected quarterly results.
Market sentiment was downbeat on the worry that demand from China for European luxury goods is not likely to improve in the near future amid persistent economic challenges and a protracted property market slump.
Closer to home, the Ifo Institute's business climate index dropped to 87.0 in July from 88.6 in June amid growing pessimism about the economic outlook in Germany, the largest economy in the eurozone.
Europe Indexes and Yields
The DAX index decreased by 1.2% to 18,162.03; the CAC-40 index declined by 2% to 7,365.63; and the FTSE 100 index fell by 0.6% to 8,100.89.
The yield on 10-year German bonds edged lower to 2.39%, French bonds inched lower to 3.10%, the UK gilts inched lower to 4.11%, and Italian bonds decreased to 3.77%.
The euro edged lower to $1.08; the British pound inched higher to $1.294; and the U.S. dollar weakened to 87.81 Swiss cents.
Brent crude decreased $1.40 to $80.30 a barrel, and the Dutch TTF natural gas fell by €0.81 to €31.89 per MWh.
Europe Stock Movers
Nestle SA decreased 4.9% to CHF 88.96 after the Swiss food products and beverage company lowered its full-year outlook following the 3% decline in sales in the first half.
STMicroelectronics SA declined 14.7% to €31.62 after the advanced chipmaker reported lowering its outlook for the second time this year.
Centamin declined 6.1% to 121.50 pence after the gold mining company reported weaker-than-expected net income in the first half.
Centrica PLC dropped 7.2% to 132.0 pence after the company said Scott Wheway has resigned from the Chairman of the Board office and would not seek re-election as a director.
British American Tobacco rose 4.4% to 2,690.0 pence after the company's first-half results met investors' expectations.
BT Group declined 1.5% to 137.45 pence after the British telecom company said revenue in the fiscal first quarter declined.
Unilever plc increased 6.4% to 4,678.0 pence after the food products maker reported better-than-expected first-half results.
Kering SA dropped 6.4% to €279.25 after the Gucci parent issued another profit warning citing weakness in China sales.
Kering stock dropped to a seven-year low, near the level last seen in August 2017, after the luxury goods company said first-half operating income plunged 42% to €1.6 billion.
The company also issued a dire warning for the second half and added that operating earnings are likely to fall 30% from a year ago.
Gucci sales are struggling in China because of high youth unemployment and a lingering property market crisis. The luxury label accounts for about half of Kering sales and two-thirds of its profits.
Air France-KLM increased 3.3% to €8.17 despite the Franco-Dutch airline reporting second quarter earnings below market expectations.
- Akira Ito
- 25 Jul, 2024
- Tokyo
Market indexes in Japan extended this week's losses after a steep decline in technology stocks following the sharp sell-off in overnight trading in New York.
The Nikkei 225 and the Topix index dropped more than 3% after tech stocks fell more than 5%.
Global tech stock rout engulfed markets in Asia and Japan after Tesla and Google-parent Alphabet reported weaker-than-expected quarterly results.
Tesla said automotive unit revenue declined for the second quarter in a row, and higher discounts and financial incentives in the U.S. and China crimped operating margins.
Investors sold mega-cap stocks on the worry that the artificial intelligence-related tech stock rally may come to an end sooner-than-expected if large tech companies slowdown spending amid earnings shortfalls.
Stocks in Tokyo were under pressure after the yen continued to rally for the second consecutive week ahead of the Bank of Japan's policy meeting next week.
The yen rose to 152.06 against the U.S. dollar in the hopes that the central bank is finally ready to increase the interest rate next week and narrow the wide yield gap between the U.S. and Japan bonds.
Japan Stock Movers
The Nikkei 225 stock average closed down 3.3% to 37,869.51, and the Topix index dropped 3% to 37,869.51.
Tokyo Electron decreased 4.2% to ¥29,010.0, Advantest rose 6% to ¥5,708.0, Screen Holdings fell 2.6% to ¥13,000.0.
Softbank fell 9.4% to ¥9,365.0, Renesas Electronics plunged 13.6% to ¥2,583.50, and Hitachi dropped 9.5% to ¥3,078.0.
Kawasaki Heavy Industries declined 9.1% to ¥5,358.0, Mitsubishi Heavy Industries decreased 6.2% to ¥1,735.50, and Japan Steel Works dropped 5.2% to ¥4,156.0.
Financial stocks were among the leading decliners amid growing expectations that the Bank of Japan is likely to raise interest at the end of the next policy meeting on July 31.
Mitsubishi UFJ Financial Group dropped 3.9% to ¥1,675.0, Sumitomo Mitsui Financial decreased 4.3% to ¥10,440.0, and Mizuho Financial Group fell 4.6% to ¥3,249.0.
- Li Chen
- 25 Jul, 2024
- Hong Kong
China stock indexes joined the world market sell-off after benchmark indexes on Wall Street dropped sharply in overnight trading.
The Hang Seng index dropped nearly 2%, and the CSI index decreased 1% after tech stocks fell more than 3% following losses in New York.
The S&P 500 index and the Nasdaq Composite dropped 2.3% and 3.7% at close on Wednesday after Tesla and Google-parent Alphabet reported weaker-than-expected quarterly results.
Benchmark indexes in Japan declined by 3.3%, and they in South Korea fell by 1.8%.
Market sentiment was negative amid a protracted property market crisis, a lack of coherent policy measures from Chinese leadership, and weakening consumer confidence.
Investors' expectations are low ahead of the Politburo meeting, a meeting of Chinese top leaders to discuss policy alternatives and finalize new measures to revive long-term economic growth.
China is undergoing a secular decline in economic growth from above 9% to less than 3% as the economy faces demographic challenges, globalization of Chinese businesses, steady capital outflow, and a lack of financial headroom amid huge government debt.
The People's Bank of China unexpectedly cut its one-year loan prime rate by 20 basis points to 2.3% from 2.5%, the first rate cut for this loan facility in a year and the largest since April 2020.
On Monday, the central bank trimmed its short-term lending rates by 10 basis points as policymakers offered supportive measures to increase lending to the industrial economy.
China Stock Movers
The Hang Seng index declined 1.9% to 16,984.85, and the CSI 300 index dropped 0.7% to 3,393.96.
Tech stocks led the decline in Hong Kong and Shanghai following the market selloff in New York.
Alibaba Group fell 0.7% to HK $73.65, Baidu dropped 2.8% to HK $85.30, and Tencent Holdings decreased 3% to HK $352.0.
Electric vehicle makers were under pressure for the second day in a row after Tesla reported a decline in revenue in its automotive unit for the second quarter in a row.
BYD decreased 1% to HK $231.0, Li Auto fell 1.7% to HK $73.20, and Xpeng declined 1.9% to HK $31.65.
Chow Tai Fook Jewellery declined 1.4% to HK $7.28, and the specialty retailer extended losses for the second day in a row after the company reported a 20% decline in sales in the second quarter on Wednesday.
- Arun Goswami
- 25 Jul, 2024
- Mumbai
India indexes declined for the second day in a row after the central government proposed to increase the capital gain tax and securities transaction rates in the Union Budget on Wednesday.
The Sensex index decreased by 0.5% to 79,758.24, and the Nifty index fell by 0.4% to 24,320.30.
On the Mumbai stock exchange, 127 stocks traded at their 52-week highs, and 11 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched higher to 7.08%, and the Indian rupee edged higher to ₹83.71 against the U.S. dollar.
Axis Bank decreased 6.2% to ₹1,162.80 after financial services reported weaker-than-expected June quarter results.
Net interest income increased to ₹13,448 crore from ₹11,959 crore, while interest margin eased to 4.05% from 4.11%.
Net profit increased to ₹6,035 from ₹3,452 a year ago, but declined 15% from ₹7,130 crore in the previous quarter.
Larsen & Toubro advanced 1.5% to ₹3,572.05 after the engineering company reported better-than-expected June quarter results.
Consolidated revenue increased 15% to ₹55,120 crore from ₹47,882 crore, and net income advanced 12% to ₹2,786 crore from ₹2,493 crore a year ago, respectively.
Indraprastha Gas fell 2.3% to ₹536.50 after the natural gas distributor reported a decline in profit in the June quarter.
Revenue increased 3.4% to ₹3,891 crore from ₹3,761 crore, and net income dropped 8.6% to ₹400.65 crore from ₹438.5 crore a year ago, respectively.
The company said profit declined because of higher feed stock prices.
Total sales volumes rose 5.3% to 786 million standard cubic meters from 746.2 million scm in the quarter a year ago.
IDBI Bank rose 3.9% to ₹101.25 after the financial services company reported better-than-expected June quarter results.
Net interest income declined 19% to ₹3,233 crore from ₹3,998 crore, and net income soared 40% to ₹1,719 crore from ₹1,224 crore a year ago, respectively.
The net interest margin eased to 4.18% from 5.8% when one-time loan recovery pushed the margin higher, and the company estimated the margin to range between 3.75% and 4.0%.
- Brian Turner
- 24 Jul, 2024
- Washington, D.C.
Sales of new single-family houses in June declined 0.6% from the previous month to a seasonally adjusted annual rate of 617,000, according to the U.S. Census Bureau and Department of Housing and Urban Development.
The high home prices, elevated mortgage rates, and higher base for property tax continue to weigh on buyers' affordability.
The annual rate declined to the lowest in the last seven months, and May house sales data were revised higher to an annual pace of 621,000.
The median sales price of new houses sold in June was $417,300, the highest since March, while the average sales price was $487,200, the lowest since January 2023.
Sales in the Northeast declined 7.7% to 12,000 and in the Midwest fell 6.9% to 81,000; however, sales rose 1.4% to 149,000 and edged up 0.3% to 375,000.
Homes are taking longer to sell, and the available home supply at the end of June increased to 9.3 months at the current sales rate.
- Alexander Garcia
- 24 Jul, 2024
- Miami
Stock market indexes on Wall Street extended morning losses after mega-cap companies reported lower than expected earnings.
The S&P 500 index and the Nasdaq Composite declined, more than 1.8% and nearly 3% respectively, after traders reviewed the latest quarterly results from Google-parent Alphabet and Tesla.
Alphabet reported better-than-expected quarterly revenue and earnings, but YouTube revenue disappointed some analysts.
Tesla plunged more than 10% after the electric vehicle maker reported a 2% increase in overall revenue, but automotive revenue fell 7% in the second quarter.
Tesla is losing market share to a growing list of competitors, and Tesla's discounts and financial incentives in the U.S. and China also hit the company's profitability.
Meta, Microsoft, Nvidia, and Amazon dropped more than 1% after Tesla and Alphabet reported weaker-than-expected quarterly results.
New Home Sales In June Confirm Declining Trend
Sales of new single-family houses in June declined 0.6% from the previous month to a seasonally adjusted annual rate of 617,000, according to the U.S. Census Bureau and Department of Housing and Urban Development.
The high home prices, elevated mortgage rates, and higher base for property tax continue to weigh on buyers' affordability.
The annual rate declined to the lowest in the last seven months, and May house sales data were revised higher to an annual pace of 621,000.
The median sales price of new houses sold in June was $417,300, the highest since March, while the average sales price was $487,200, the lowest since January 2023.
Sales in the Northeast declined 7.7% to 12,000 and in the Midwest fell 6.9% to 81,000; however, sales rose 1.4% to 149,000 and edged up 0.3% to 375,000.
Homes are taking longer to sell, and the available home supply at the end of June increased to 9.3 months at the current sales rate.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 1.7% to 5,462.17, the Nasdaq Composite fell 2.8% to 17,497.73, and the Russell 2000 index fell 0.5% to 2,232.55.
The yield on 2-year Treasury notes edged lower to 4.41%, 10-year Treasury notes increased to 4.24%, and 30-year Treasury bonds edged higher to 4.48%.
WTI crude oil increased $0.06 to $78.02 a barrel, and natural gas prices edged down 5 cents to $2.14 a thermal unit.
Gold increased by $6.62 to $2,414.88 an ounce, and silver decreased 7 cents to $29.12.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.17.
U.S. Stock Movers
Tesla plunged 12.2% to $216.18, and the company reported a drop in its automotive unit sales declined for the second quarter in a row.
Moreover, the company's discounts and financial incentives lowered its profitability.
Revenue in the second quarter increased 2% to $25.5 billion from $24.9 billion, net income attributable to shareholders plunged 45% to $1.5 billion from $2.7 billion, and diluted earnings per share plunged to 52 cents from 91 cents a year ago.
Alphabet dropped 3.9% to $176.49 after the parent company of Google reported better-than-expected quarterly results, but YouTube's revenue disappointed investors.
Revenue in the second quarter increased 14% to $84.7 billion from $74.6 billion, net income rose to $24.6 billion from $18.4 billion, and diluted earnings per share increased to $1.89 from $1.44 a year ago.
YouTube revenue increased to $8.6 billion from $7.6 billion, Google cloud revenue rose to $10.3 billion from $8.0 billion, and Google search revenue jumped to $48.5 billion from $42.6 billion a year ago, respectively.
European Indexes Declined, Private Sector Growth Stalled
European market indexes declined after business activities stagnated in the eurozone, and earnings season picked up pace.
Benchmark indexes in Paris, London, and Frankfurt struggled to advance and lost as much as 1% amid worries of economic growth.
The HCOB Eurozone Composite PMI eased to 50.1 in July from 50.9 in June, according to a preliminary estimate released by S&P Global.
The index dropped to a five-month low, and the latest reading signaled near stagnation in the currency union as the fragile economic recovery continues to lose steam.
Manufacturing sector activities contracted to 45.6 from 45.8, and the service sector slowed to 51.9 from 52.8.
The economic backdrop was weaker in two of the largest economies in the region; business activities declined in Germany for the first time in four months, and in France, growth eased for the third consecutive month.
Europe Indexes and Yields
The DAX index decreased by 0.9% to 18,387.46; the CAC-40 index declined by 1.1% to 7,513.73; and the FTSE 100 index fell by 0.2% to 8,153.69.
The yield on 10-year German bonds edged lower to 2.43%, French bonds inched higher to 3.12%, the UK gilts inched higher to 4.13%, and Italian bonds increased to 3.77%.
The euro edged lower to $1.08; the British pound inched higher to $1.29; and the U.S. dollar weakened to 88.53 Swiss cents.
Brent crude increased $1.04 to $82.05 a barrel, and the Dutch TTF natural gas fell by €1.38 to €32.73 per MWh.
Europe Stock Movers
Informa PLC jumped 3.9% to 880.40 pence after the company agreed to acquire Ascential plc for £1.2 billion or $1.5 billion.
Marston's PLC rose 2.9% to 39.25 pence, and the pub operator reported positive momentum for the 16-week period.
LVMH dropped 4.4% to €663.20 after the luxury goods maker reported weaker-than-expected second quarter results, raising the prospect of a wider slowdown in the industry.
Revenue in the first half declined 1% to €41.7 billion from €44.3 billion, and net profit declined 14% to €7.3 billion from €8.5 billion.
Hermes declined 1.8% to €2,045.0, Kering dropped 4.4% to €301.45, and Richemont fell 1.1% to CHF 134.0.
Remy Cointreau decreased 0.4% to €70.55 after the spirit maker reported a wider-than-expected decline in first-quarter sales of 15.6%.
Deutsche Bank dropped 6.1% to €14.72, and the German bank reported its first quarterly loss in four years.
BNP Paribas fell 1% to €64.08, despite the French financial service company reporting second-quarter earnings that surpassed market expectations.
Nikkei and Topix Extended Weekly Losses After Factory Activity Unexpectedly Shrank
Benchmark indexes in Tokyo dropped more than 1% after business activity indexes declined in July.
Market sentiment was weak after the Au Jibun Bank Japan Manufacturing Purchasing Managers' Index eased to 49.2 in July from 50.0 in June, indicating the first decline in factory activities since April.
The manufacturing sector growth has been volatile this year, and growth eased for the fifth time, data from S&P Global showed.
On the other hand, service sector PMI rebounded to 53.9 in July from 49.4 in June, increasing to a 3-month high.
Any reading above 50 shows growth, and below 50 shows a decline in activities.
The yen rebounded to 154.56 against the U.S. dollar in the hopes that the Bank of Japan may signal rate increases as early as next week at the policy meeting on July 31.
Japan Stock Movers
The Nikkei 225 stock average decreased 1.1% to 39,154.85, and the Topix index fell 1.4% to 2,793.12.
Tech stocks advanced ahead of the start of the earnings season later in the week.
Advantest, Tokyo Electron, and Lasertec declined around 1%, and Screen Holdings gained 1.9%.
Asics Corp. declined 2% to ¥2,468.0, and the sportswear company priced its secondary offering of 75 million shares at 2,442.50 per share, raising about 180.5 billion yen.
Honda Motor declined 2.6% to ¥1,630.0 after the vehicle maker recalled prologue SUVs for defective control links.
A week ago, Honda Motor priced its secondary stock offering at 1,664 yen per share and raised 497 billion yen, or $3.2 billion.
China Indexes Erase 2024 Gains, Chow Tai Fook Sales Drop 20%
Investors focused on corporate results as the earnings season kicked off, and market sentiment was cautious as property market malaise showed no signs of easing.
Stocks in Hong Kong and Shanghai declined on the worry that the recent flurry of salary cuts announced in the financial sector are going to create another headwind for property prices in tier-1 cities.
Property prices have been still rising in the tier-1 cities, unlike smaller cities where prices have declined for the third year in a row.
However, prices have started to soften in Shanghai, Beijing, and Shenzhen after the latest cuts in staff and salaries in the financial services industry.
Investors were cautious after the jewelry retailer Chow Tai Fook said sales in the latest quarter declined 20% from a year ago.
Li Auto and other electric vehicle makers declined after Tesla reported weaker-than-expected earnings in the second quarter.
The two widely followed indexes, the Hang Seng index and the CSI index, have nearly erased this year's gains amid a weak economic growth outlook, a protracted property market slump, and weakening consumer confidence.
China Stock Movers
The Hang Seng index declined 0.8% to 17,338.51 and the CSI 300 index dropped 0.5% to 3,423.40.
Chow Tai Fook Jewelry Group Ltd. dropped 5.5% to HK$7.49 after the retailer reported weak quarterly results.
Same store sales in Mainland China plunged 26.4% and in Hong Kong declined 30.8% from a year ago, respectively.
Same store average selling price of gold jewelry was resilient, and in Mainland China it rose to HK $6,200 from HK $5,400, and in Hong Kong and Macau it increased to HK $8,900 from HK $8,400.
Electric vehicle makers declined after Tesla reported weaker-than-expected quarterly earnings.
Li Auto declined 4.4% to HK $74.25, BYD dropped 2.7% to HK $232.0, and Xpeng decreased 5.5% to $32.10.
Tech stocks also traded volatile amid market anxieties ahead of the start of the earnings season.
Tencent Holdings declined 0.7% to HK $363.40, Alibaba Group increased 0.7% to HK $74.45, Baidu fell 0.5% to HK $87.85, and Meituan dropped 4.7% to HK 105.10.
- Scott Peters
- 24 Jul, 2024
- New York City
Tesla plunged 12.2% to $216.18, and the company reported automotive unit sales declined for the second quarter in a row.
Moreover, the company's discounts and financial incentives lowered its profitability.
Revenue in the second quarter increased 2% to $25.5 billion from $24.9 billion, net income attributable to shareholders plunged 45% to $1.5 billion from $2.7 billion, and diluted earnings per share plunged to 52 cents from 91 cents a year ago.
Alphabet dropped 3.9% to $176.49 after the parent company of Google reported better-than-expected quarterly results, but YouTube's revenue disappointed investors.
Revenue in the second quarter increased 14% to $84.7 billion from $74.6 billion, net income rose to $24.6 billion from $18.4 billion, and diluted earnings per share increased to $1.89 from $1.44 a year ago.
YouTube revenue increased to $8.6 billion from $7.6 billion, Google cloud revenue rose to $10.3 billion from $8.0 billion, and Google search revenue jumped to $48.5 billion from $42.6 billion a year ago, respectively.
Visa dropped 4.3% to $253.55 after the electronic payment network operator reported lower-than-expected revenue in the June quarter.
Revenue in fiscal third quarter ending in June increased 10% to $8.9 billion from $8.1 billion, net income soared 17% to $4.9 billion from $4.2 billion, and diluted earnings per Class A share advanced to $2.40 from $2.0 a year ago.
Payment volume jumped 7% and cross border volume rose 14% from a year ago, respectively.
During the quarter, Visa repurchased 17.2 million shares of class A common stock at an average cost of $276.75 per share for $4.8 billion, and about $18.9 billion are available for share repurchases as of June 30, 2024.
The board of directors declared a quarterly cash dividend of $0.520 per share of class A common stock payable on September 3, to all holders of record as of August 9.
Lamb Weston plunged 27% to $57.44 after the french fry maker reported a decline in revenue and earnings in its latest quarter.
Revenue in the fiscal fourth quarter ending in May declined 5% to $1.61 billion from $1.69 billion, net income plunged 74% to $129.6 million from $498.8 million, and diluted earnings per share dropped to 89 cents from $3.40 a year ago.
The food processing company estimated fiscal 2025 revenue between $6.6 billion and $6.8 billion, net income between $630 million and $685 million, and diluted earnings per share between $4.35 and $4.85.
"The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic.
This has resulted in an increase in available capacity in North America and Europe. We believe this supply-demand imbalance will persist through much, if not all, of fiscal 2025," said chief executive Tom Werner in a statement released to investors.