Germany's Trade Surplus Widened, Service Sector Growth Slowed In Spain and Italy

European markets lacked direction in Monday's trading and investors digested mixed economic data. 

Averages in Frankfurt, Paris and London hugged the flat line and investors reacted positively to a surprise rise in Germany's trade surplus. 

Business growth in the Euro Area slowed in May, according to the latest survey released by the S&P Global. 

HCOB's final Composite Purchasing Managers' Index dropped to a three-month low 52.8 in May from 54.1 in April. 

Any reading above 50 indicates expansion. 

The HCOB Italy Services PMI fell to 54 in May from 57.6 in April, which was the highest level in 20 months.

The growth in the service level eased but was supported by a rise in demand and the company's expanded payrolls.

Service sector growth in Spain also eased from the 17-month high reading in April but remained elevated and the sector expanded for the fifth month in a row. 

The HCOB Spain Services PMI eased to 56.7 in May 2023 from 57.9 the month before, slightly below market expectations of 56.9.

The Turkish inflation rate dropped for the seventh month in a row to 39.6% in May, the Turkish Statistical Institute reported Monday. 

Inflation eased from 43.7% in April because of the pre-election promise of free natural gas for all households for one year by President Erdogan. 

In overseas news, U.S. President Joe Biden signed the debt ceiling bill suspending the debt limit for the next two years, just in time to avoid debt default on June 5. 

After weeks of political wrangling and tense negotiations, U.S. lawmakers approved bipartisan agreement, which kept global financial markets on edge.

Germany's Trade Surplus Widened In April

Germany's trade surplus widened to Є18.4 billion in April from Є14.9 billion in March, the Federal Statistics Office of DeStatis reported Monday.  

The trade surplus was the largest since January 2021. 

On a calendar and seasonally adjusted basis, exports increased 1.2% to Є130.4 billion from the previous month and imports fell 1.7% to Є112.0 billion, driving the trade surplus higher.  

From a year ago, exports increased 1.5% while imports fell 10.3%. 

Exports to the EU member states increased 4.5% from March but declined to countries outside the EU, falling 5.2% to the UK and 17.8% to Russia. Exports to the U.S. increased 4.7% and to China surged 10.1% respectively. 

Imports from the EU nations declined 0.4% and from other countries declined 3.0%. 

Imports from Russia declined 7.6%, the UK fell 6.4% but increased from the U.S. by 2.9% and China by 1.9%. 

Most imports came from China valued at Є12.9 billion, followed by Є8.0 billion from the U.S. and Є2.8 billion from the U.K. 

Crude Oil Rebounded 

Crude oil rebounded as much as 4% before receding from the day's high in Asian markets after Saudi Arabia pledged to cut additional output from July. 

After a tense meeting of OPEC+ nations over the weekend, Saudi Arabia announced voluntary oil production cuts by 1 million barrels a day to 9 million barrels a day. 

OPEC+ nations produce 40% of the world's crude oil and any change in policy could impact oil prices worldwide. 

Under the agreement, the United Arab Emirates was permitted to increase its output next year and Russia will hold its monthly production target.  

Brent crude jumped 0.7% to $76.84 a barrel and WTI crude  increased 1% to $72.87 a barrel. 

Europe Indexes & Yields 

The DAX index increased 0.07% to 16,061.40, the CAC-40 index decreased 0.2% to 7,259.32, and the FTSE 100 index advanced 0.5% to 7,645.84. 

The yield on 10-year German Bunds inched higher to 2.38%, French bonds traded higher to 2.93%, the UK gilts edged up 4.22% and Italian bonds increased to 4.02%.

The euro edged lower to $1.068, the British pound to $1.239 and the Swiss franc to 91.07 cents.

Brent crude increased $1.11 to $77.24 a barrel and the Dutch TTF natural gas increased €1.76 to €25.45 per MWh.

Europe Stock Movers 

Resource companies traded higher in London trading following a rise in energy prices. 

Anglo American and Antofagasta and Glencore increased between 0.5% and 1.5%. BP Plc  and Shell Plc advanced 1.5%.  

Polymetal International PLC declined 2% to 186.22 pence after the company said it plans to divest its Russian business. 

In addition, the Russian subsidiary's chief executive and chief financial officer have resigned. 

UBS AG increased 1.4% after the Swiss bank said that the Credit Suisse takeover is likely to be completed as early as June 12. 

SBB jumped 6% after the troubled Swedish property group's chief executive said that the company is not going to sell off its properties at a discount. 

Sirius Real Estate Ltd increased 4.2% to  88.43 pence after the company reported a decline in its annual profit and increased its dividend. 

Hunting Plc advanced 1.6% to 225.60 pence after the company signed a 10-year strategic partnership with China-based Zhejiang Jiuli Hi-Tech Metals Co.

The U.S. economy added 339,000 jobs in May, and March and April data were revised higher, the U.S. Bureau of Labor Statistics reported Friday. 

Despite the talks of job market slowdown and ongoing macroeconomic headwinds, payrolls in several sectors of the economy expanded at the elevated pace seen in the last twelve months.  

Employers expanded payrolls in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.

Job gains in May were in line with the monthly average of 341,000 over the last twelve months. 

Professional and business services added 64,000, government at all levels increased 56,000, health care 52,000, leisure and hospitality 48,000, construction 25,000, warehousing 24,000 and social assistance 22,000. 

HP Inc declined 4.6% to $29.50 after the computer and advanced systems maker reported weaker than expected results. 

Revenue in the fiscal second quarter ending in April dropped 21.7% to $12.9 billion from $16.5 billion and net income increased 7% to $1.07 billion from $1.0 billion and diluted earnings per share rose to $1.07 from 94 cents a year ago. 

For the fiscal third quarter, the company estimated diluted earnings per share between 61 cents and 71 cents and for the fiscal year 2023 between $2.91 and $3.11. 

Yatra Online Inc increased 3.8% to $2.06 after the company reported a rebound in travel sales in India. 

Revenue in the March quarter increased 97.4% to  ₹1.2 billion and the company swung to a profit of ₹7.5 million from a loss of ₹117.2 million a year ago. 

For the fiscal year ending in March 2023, revenue increased 92.4% to ₹3.8 billion and loss shrank to ₹288.2 million from ₹482.5 million a year ago. 

In the year, air passengers booked jumped 51% to 5.6 million from 3.7 million and hotel room nights books soared 72% to 1.7 million from 1.0 million a year ago. 

Hewlett Packard Enterprise dropped 6.3% to $14.56 after the company announced mixed quarterly results. 

Sales in the fiscal second quarter ending in April increased 4% to $6.97 billion and net income increased to $418 million from $250 million and diluted earnings per share rose to 32 cents from 19 cents a year ago. 

The company declared a regular cash dividend of 12 cents a share to shareholders on record on June 15 payable on July 14. 

The company guided fiscal third quarter revenue between $6.7 billion and $7.2 billion and diluted earnings per share between 34 cents and 38 cents. 

The company estimated full-year revenue growth in constant currency between 4% and 6% and revised higher diluted earnings per share between $1.42 and $1.50.  

American Airlines Group Inc increased 1.8% to $14.88 after the international airline lifted its earnings outlook and revised higher operating margin. 

The airline revised higher second quarter earnings per share between $1.45 and $1.65 from the previously estimated range between $1.20 and $1.40. 

The company revised higher its margin estimate from between 11% and 13% to between 12.5% and 14.5%. 

Advance Auto Parts, Inc plunged 30.50% to $78.30 after the auto parts retailer reported a sharp decline in earnings, cut its dividend and lowered its full-year estimate. 

Net sales in the first quarter increased 1.3% to $3.4 billion, driven by new store openings and partially offset by a 0.4% decline in comparable store sales. 

Net income plunged to $42.6 million from $129.8 million and diluted earnings per share fell to 72 cents from $2.26 a year ago. 

The specialty retailer announced a quarterly dividend of 25 cents per share compared to $1.50 in the previous quarter. 

The retailer lowered its estimate of new store openings from between 60 and 80 to between 40 and 60 in the current fiscal year. 

The company also slashed its annual earnings per share estimate between $6.0 and $6.50 from the previous outlook between $10.20 and $11.20.  

Chewy Inc soared 23.5% to $36.43 after the online retailer of pet foods reported better-than-expected quarterly results. 

Net sales in the fiscal first quarter increased 14.7% to $2.78 billion and net income increased to $22.2 million from $18.5 million and diluted earnings per share rose to 5 cents from 4 cents a year ago. 

Dollar General Corp plunged 18.4% to $164.40 after the deep discount retailer lowered its same store sales in the current year to between 1% and 2% from the previous estimate between 3.0% and 3.5%. 

The retailer also lowered its net sales growth estimate in the current year to between 3.5% and 5.0% from the previous estimate between 5.5% and 6.0%. 

Net sales in the quarter increased 6.8% to $9.3 billion and net income declined to $514.8 million from $552.6 million and diluted earnings per share fell to $2.34 from $2.41 a year ago. 

As of May 5, 2023, total merchandise inventories, at cost, were $7.3 billion compared to $6.1 billion as of April 29, 2022, an increase of 14.7% on a per-store basis. 

This increase primarily reflects the impact of product cost inflation.

The company declared quarterly dividend of 59 cents a share, payable on or before July 25 to shareholders on record July 11. 

Macy's Inc declined 4.8% to $12.94 after the company reported weak quarterly results and lowered its annual outlook citing macroeconomic headwinds. 

Net sales in the quarter declined 7% to $4.98 billion from $5.4 billion and net income plunged to $155 million from $286 million and diluted earnings per share fell to 56 cents from 98 cents a a year ago. 

Digital sales declined 8% and retail store sales fell 6% from a year  ago. 

Comparable store sales at locations owned by the company declined 7.9% and fell 7.2% including licensed sales.   

The company lowered its full-year revenue estimate to between $22.8 billion from $23.2 billion from between $23.7 billion and $24.2 billion in the previous estimate. 

Salesforce Inc declined 5% to $212.38 after the company highlighted softness  in large account sales activities. 

Revenue in the first quarter ending in April increased 11% to $8.25 billion from $7.4 billion and net income jumped to $199 million from $28 million and diluted earnings per share advanced to 20 cents from 3 cents a year ago. 

The company reiterated its full-year fiscal 2024 revenue to fall 10% to between $34.5 billion and $334.7 billion and GAAP earnings between $2.67 and $2.69. 

The company estimated fiscal second quarter revenue range between $8.51 billion and $8.53 billion and GAAP earnings per share between 79 cents and 80 cents.  

Nordstrom Inc increased 3% to $15.76 after the company reported better-than-expected quarterly results. 

The company reaffirmed its revenue and adjusted financial outlook for fiscal 2023 and revenue is estimated to fall between 4% and 6%, including an approximately 250 basis point negative impact from the wind-down of Canadian operations and an approximately 130 basis point positive impact from the 53rd week in the current year. 

Net sales declined 11.6% to $3.0 billion from $3.5 billion and the company swung to a loss of $205 million from a profit of $20 million and diluted earnings per share was ($1.27) compared to 13 cents a year ago.

Lululemon Athletica Lifted Annual Outlook After Comparable Sales Surged 14%

Lululemon Athletica Inc soared 14% to 374.35 after the Athletic apparel retailer reported sharply higher revenue and earnings and the company lifted its full-year outlook.  

Revenue in the latest quarter jumped 24% to $2.0 billion or increased 27% on a constant dollar basis.  

Total comparable sales increased 14%, and comparable store sales increased 13% and direct to consumer sales jumped 16%. 

Net revenue increased 17% in North America, and increased 60% internationally.

Net income increased to $290.4 million from $190 million and diluted earnings per share rose to $2.28 from $1.48 a year ago. 

For the second quarter, the company estimated net revenue to be in the range of $2.14 billion to $2.17 billion, representing growth of approximately 15%. 

Diluted earnings per share are expected to be in the range of $2.47 to $2.52 for the quarter.

For 2023, the retailer expects net revenue to be in the range of $9.44 billion to $9.51 billion, representing growth of approximately 17%.

 Diluted earnings per share are expected to be in the range of $11.74 to $11.94 for the year.

The company revised its full-year revenue from between $9.31 billion and $9.41 billion to between $9.44 billion and $9.51 billion. 

Broadcom Inc increased 2.4% to $808.81 after the advanced chipmaker exceeded revenue and earnings expectations. 

Revenue in the fiscal second quarter ending in April increased 8% to $8.7 billion from $8.1 billion and net income increased to $3.5 billion from %2.6 billion and diluted earnings per share rose to $8.15 from $5.93 a year ago. 

The company announced a dividend of $4.60 per share payable on June 30 to stockholders of record on June 22. 

The company guided fiscal third quarter revenue of $8.85 billion and adjusted operating income of 65% of projected revenue. 

Lululemon Athletica Inc soared 14% to 374.35 after the Athletic apparel retailer reported sharply higher revenue and earnings and the company lifted its full-year outlook.  

Revenue in the latest quarter jumped 24% to $2.0 billion or increased 27% on a constant dollar basis.  

Total comparable sales increased 14%, and comparable store sales increased 13% and direct to consumer sales jumped 16%. 

Net revenue increased 17% in North America, and increased 60% internationally.

Net income increased to $290.4 million from $190 million and diluted earnings per share rose to $2.28 from $1.48 a year ago. 

For the second quarter, the company estimated net revenue to be in the range of $2.14 billion to $2.17 billion, representing growth of approximately 15%. 

Diluted earnings per share are expected to be in the range of $2.47 to $2.52 for the quarter.

For 2023, the retailer expects net revenue to be in the range of $9.44 billion to $9.51 billion, representing growth of approximately 17%.

 Diluted earnings per share are expected to be in the range of $11.74 to $11.94 for the year.

The company revised its full-year revenue from between $9.31 billion and $9.41 billion to between $9.44 billion and $9.51 billion.