- Barry Adams
- 08 Aug, 2023
- New York City
Market averages rebounded from the lows of the session and bank stocks closed down after Moody's lowered its outlook for regional banks.
Stocks were under pressure for the second day in a row on the worries that rising rates and looming economic slowdown could be a double whammy for regional and smaller banks.
Regional banks have a larger exposure to commercial real estate and with rising rates banks have higher cost of retaining bank deposits.
Commodities and resource sector stocks were also in focus after China reported a third monthly decline in exports and imports also fell in double digits in July.
Crude oil and base metal prices traded volatile with a downward bias.
Treasury yields edged down and bond yields declined worldwide following the weak international trade data from China.
Moody's Downgraded Several Banks on Capital Worries
Moody's Services lowered its ratings on 10 small and regional banks and placed large banks on its negative watch lists.
In wide ranging alert about the banking industry, the rating agency belatedly highlighted fast developing stress for small to large banks as rates continue to rise.
Banks are heading into perfect storms as depositors flee for higher rates to other forms of investments, undeclared losses mounted in the securities held by banks and impending recession in early 2024 is likely to create additional headwinds to credit quality.
Moreover, commercial real estate loans are facing investor discontent on growing worries linked to elevated office vacancy rates and default worries.
“U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets,” Jill Cetina and Ana Arsov said in the Moody's research report.
Moody's placed Bank of New York Mellon, Cullen/Frost Bankers, Northern Trust, Truist Financial, U.S. Bancorp and State Street under review for a possible downgrade.
Most banks reported flat or modest decline in deposits but deposit mix worsened and banks paid higher rates to retain deposits.
Moody's also lowered outlook for 11 banks including Capital One, Regions Financial Corp, Fifth Third Bancorp and Citizens Financial.
"In the current high-rate environment, banks with sizable unrealized losses that are not reflected in their regulatory capital ratios are vulnerable to a loss of confidence. Additionally, a higher share of fixed-rate assets on the balance constrains a bank's profitability and, thus, its ability to grow capital and continue lending.
Risks may be more pronounced if the US enters a recession – which we expect will happen in early 2024 – because asset quality will worsen and increase the potential for capital erosion," Moody's analysts noted in the research report.
China Exports Declined 3rd Month In a Row
China reported exports declined for the third month in a row and trade surplus also fell after imports also fell in July.
Exports declined 14.5% to $281.7 billion and imports fell 12.4% to $201.1 billion resulting in a trade surplus of $80.6 billion from $102.7 billion a year ago.
Politically sensitive exports to the U.S. fell 23.1%, ASEAN countries 21.4% and to the EU declined 20.6%.
Exports of rare earth materials, critical for electric batteries. in July soared 49% from a year earlier to 5,426 metric tons, supported by strong international demand for battery powered vehicles and wind power systems.
The sharp fall in imports was noticed by commodities market and copper and other base metal prices came under pressure and weak exports also highlighted the slowing global demand for Chinese products and reorienting of global supply chains away from China.
U.S. Indexes & Yields
The S&P 500 index traded down 0.5% to 4,495.73 and the Nasdaq Composite futures fell 0.9% to 13,865.60.
The yield on 2-year Treasury notes decreased to 4.74%, 10-year Treasury notes inched lower to 3.99% and 30-year Treasury bonds edged down to 4.17%.
Crude oil decreased $0.97 to $82.87 a barrel and natural gas prices increased 7 cents to $2.74 a thermal unit.
U.S. Stock Movers
Banks led decliners in trading after the Moody's placed several banks on negative watch list.
M&T Bancorp declined 3.2% to $137.19, Regions Financial fell 2.2% to $20.69, Citizens Financial Group decreased 3.2% to $30.39 and PNC Financial Services dropped 3.5% to $127.79.
United Parcel Services, Inc declined 0.8% to $180.59 after the parcel delivery company reported weaker-than-expected revenue in the second quarter.
The company also lowered its full-year outlook citing macroeconomic headwinds.
Chegg Inc increased 6.3% to $10.66 after the online education and text book provider reported better-than-expected revenue in the second quarter.
Datadog Inc plunged 18.3% to $86.65 after the cloud computing monitoring services provider forecasted weaker-than-expected sales in the third quarter and lowered its full-year outlook.
European Markets Dropped After Italy Imposed Windfall Tax On Banks
European markets turned lower following worries of global economic growth and windfall tax on banks in Italy.
Market indexes in Frankfurt, Paris, London and Milan declined after Italy imposed windfall tax on excess earnings this year and finance tax cuts and financial support for first time home buyers.
The decision surprised markets and banks in the region dropped as much as 3% in Germany, France and Spain.
Europe Indexes & Yields
The DAX index decreased 1.1% to 15,774.93, the CAC-40 index fell 0.7% to 7,269.47 and the FTSE 100 index dropped 0.4% to 7,527.42.
The yield on 10-year German bonds decreased to 2.43%, 8rench bonds traded lower to 3.00%, the UK gilts edged up to 4.35% and Italian bonds decreased to 4.14%.
The euro edged lower to $1.095, the British pound to $1.271 and the U.S. dollar fetched 87.67 Swiss cents.
Brent crude decreased $0.93 to $85.87 a barrel and the Dutch TTF natural gas increased €0.56 to €31.05 per MWh.
Europe Stock Movers
Italian banks dropped after Italy placed 40% windfall tax on banks to finance tax cuts and financial support to first time mortgage holders.
UniCredit SpA declined 6.9% to €21.06 and Intesa Sanpaolo SpA dropped 8.5% to €2.34.
Banks in the region declined following the windfall tax announcement.
Commerzbank, Dresdner Bank, Banco Santander and BNP Paribas dropped between 2% and 3%.
Bayer AG declined 1.9% to €51.40 after the German chemical company reported a net loss of €1.9 billion in the second quarter.
Mining companies traded down after Glencore reported profit nearly halved from a year ago and China's exports and imports declined in July.
Glencore dropped 4.2% to 437.80 pence after the company reported half-year profit plunged 50% from a year ago.
Anglo American and Antofagasta declined between 1.5% and 2.0%.
Abrdn Plc dropped 8.4% to 200.20 pence after the asset management company reported a decline in its assets under management.
- Scott Peters
- 08 Aug, 2023
- New York City
The S&P 500 index traded down 1.0% to 4,475.14 and the Nasdaq Composite futures fell 1.3% to 13,811.55.
The yield on 2-year Treasury notes decreased to 4.74%, 10-year Treasury notes inched lower to 3.99% and 30-year Treasury bonds edged down to 4.17%.
Banks led decliners in trading after the Moody's placed several banks on negative watch list.
M&T Bancorp declined 3.2% to $137.19, Regions Financial fell 2.2% to $20.69, Citizens Financial Group decreased 3.2% to $30.39 and PNC Financial Services dropped 3.5% to $127.79.
United Parcel Services, Inc declined 0.8% to $180.59 after the parcel delivery company reported weaker-than-expected revenue in the second quarter.
The company also lowered its full-year outlook citing macroeconomic headwinds.
Chegg Inc increased 6.3% to $10.66 after the online education and textbook provider reported better-than-expected revenue in the second quarter.
Datadog Inc plunged 18.3% to $86.65 after the cloud computing monitoring services provider forecasted weaker-than-expected sales in the third quarter and lowered its full-year outlook.
DISH Network Corp jumped 8.6% to $8.30 after Charlie Ergan said he would consolidate his telecom companies.
EchoStar Corp edged up 0.5% to $23.62.
Two companies were separated in 2008 and Ergan plans to combine two satellite communication and technology companies as market for providing data is expected to heat in the next three years.
International Flavors & Fragrances Inc plunged 19% to $65 after the company reported weaker-than-expected quarterly results.
Revenue in the second quarter declined 11% to $2.9 billion from $3.3 billion and net income plunged 75% to $27 million from $109 million and diluted earnings per share dropped to 11 cents from 43 cents a year ago.
The company revised lower its full-year revenue outlook to between $11.3 billion and $11.6 billion from the previous estimate of $12.3 billion.
the fragrance company also lowered its adjusted earnings outlook to between $1.85 billion and $2.0 billion from the previous estimate of $2.34 billion.
The company declared a regular dividend of 81 cents a share payable to shareholders on October 5 to shareholders on record September 22.
- Barry Adams
- 08 Aug, 2023
- New York City
Banks led decliners after Moody's Services lowered its ratings on 10 small and regional banks and placed large banks on its negative watch lists.
In a wide ranging alert about the banking industry, the rating agency belatedly highlighted fast developing stress for small to large banks as rates continue to rise.
Banks are heading into perfect storms as depositors flee for higher rates to other forms of investments, undeclared losses mounted in the securities held by banks and impending recession in early 2024 is likely to create additional headwinds to credit quality.
Moreover, commercial real estate loans are facing investor discontent on growing worries linked to elevated office vacancy rates and default worries.
“U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets,” Jill Cetina and Ana Arsov said in the Moody's research report.
Moody's placed Bank of New York Mellon, Cullen/Frost Bankers, Northern Trust, Truist Financial, U.S. Bancorp and State Street under review for a possible downgrade.
Most banks reported flat or modest decline in deposits but deposit mix worsened and banks paid higher rates to retain deposits.
Moody's also lowered outlook for 11 banks including Capital One, Regions Financial Corp, Fifth Third Bancorp and Citizens Financial.
"In the current high-rate environment, banks with sizable unrealized losses that are not reflected in their regulatory capital ratios are vulnerable to a loss of confidence. Additionally, a higher share of fixed-rate assets on the balance constrains a bank's profitability and, thus, its ability to grow capital and continue lending.
Risks may be more pronounced if the US enters a recession – which we expect will happen in early 2024 – because asset quality will worsen and increase the potential for capital erosion," Moody's analysts noted in the research report.
China Exports Declined 3rd Month In a Row
China reported exports declined for the third month in a row and trade surplus also fell after imports also fell in July.
Exports declined 14.5% to $281.7 billion and imports fell 12.4% to $201.1 billion resulting in a trade surplus of $80.6 billion from $102.7 billion a year ago.
Politically sensitive exports to the U.S. fell 23.1%, ASEAN countries 21.4% and to the EU declined 20.6%.
Exports of rare earth materials, critical for electric batteries. in July soared 49% from a year earlier to 5,426 metric tons, supported by strong international demand for battery powered vehicles and wind power systems.
The sharp fall in imports was noticed by commodities market and copper and other base metal prices came under pressure and weak exports also highlighted the slowing global demand for Chinese products and reorienting of global supply chains away from China.
U.S. Indexes & Yields
The S&P 500 index traded down 1.0% to 4,475.14 and the Nasdaq Composite futures fell 1.3% to 13,811.55.
The yield on 2-year Treasury notes decreased to 4.74%, 10-year Treasury notes inched lower to 3.99% and 30-year Treasury bonds edged down to 4.17%.
Crude oil decreased $0.97 to $80.96 a barrel and natural gas prices increased 1 cents to $2.74 a thermal unit.
U.S. Stock Movers
Banks led decliners in trading after the Moody's placed several banks on negative watch list.
M&T Bancorp declined 3.2% to $137.19, Regions Financial fell 2.2% to $20.69, Citizens Financial Group decreased 3.2% to $30.39 and PNC Financial Services dropped 3.5% to $127.79.
United Parcel Services, Inc declined 0.8% to $180.59 after the parcel delivery company reported weaker-than-expected revenue in the second quarter.
The company also lowered its full-year outlook citing macroeconomic headwinds.
Chegg Inc increased 6.3% to $10.66 after the online education and text book provider reported better-than-expected revenue in the second quarter.
Datadog Inc plunged 18.3% to $86.65 after the cloud computing monitoring services provider forecasted weaker-than-expected sales in the third quarter and lowered its full-year outlook.
- Inga Muller
- 08 Aug, 2023
- Frankfurt
European markets traded down after banks dropped between 2% and 8% in the region after Italy imposed windfall tax on banks for excess profits in 2023.
The DAX index decreased 0.9% to 15,813.56, the CAC-40 index fell 0.8% to 7,263.27 and the FTSE 100 index dropped 0.6% to 7,507.44.
The yield on 10-year German bonds decreased to 2.43%, 8rench bonds traded lower to 3.00%, the UK gilts edged up to 4.35% and Italian bonds decreased to 4.14%.
Italian banks dropped after Italy placed 40% windfall tax on banks to finance tax cuts and financial support to first time mortgage holders.
UniCredit SpA declined 6.9% to €21.06 and Intesa Sanpaolo SpA dropped 8.5% to €2.34.
Banks in the region declined following the windfall tax announcement.
Commerzbank, Dresdner Bank, Banco Santander and BNP Paribas dropped between 2% and 3%.
Bayer AG declined 1.9% to €51.40 after the German chemical company reported a net loss of €1.9 billion in the second quarter.
Mining companies traded down after Glencore reported profit nearly halved from a year ago and China's exports and imports declined in July.
Glencore Plc dropped 4.2% to 437.80 pence after the company reported half-year profit plunged 50% from a year ago.
Anglo American and Antofagasta declined between 1.5% and 2.0%.
Abrdn Plc dropped 8.4% to 200.20 pence after the asset management company reported a decline in its assets under management.
- Bridgette Randall
- 08 Aug, 2023
- Frankfurt
European markets turned lower following worries of global economic growth and windfall tax on banks in Italy.
Market indexes in Frankfurt, Paris, London and Milan declined after Italy imposed windfall tax on excess earnings this year and finance tax cuts and financial support for first time home buyers.
The decision surprised markets and banks in the region dropped as much as 3% in Germany, France and Spain.
In other economic news, China reported exports declined for the third month in a row and trade surplus also fell after imports also fell in July.
Exports declined 14.5% to $281.7 billion and imports fell 12.4% to $201.1 billion resulting in a trade surplus of $80.6 billion from $102.7 billion a year ago.
Politically sensitive exports to the U.S. fell 23.1%, ASEAN countries 21.4% and to the EU declined 20.6%.
Exports of rare earth materials, critical for electric batteries. in July soared 49% from a year earlier to 5,426 metric tons, supported by strong international demand for battery powered vehicles and wind power systems.
The sharp fall in imports was noticed by commodities market and copper and other base metal prices came under pressure and weak exports also highlighted the slowing global demand for Chinese products and reorienting of global supply chains away from China.
Europe Indexes & Yields
The DAX index decreased 0.9% to 15,813.56, the CAC-40 index fell 0.8% to 7,263.27 and the FTSE 100 index dropped 0.6% to 7,507.44.
The yield on 10-year German bonds decreased to 2.43%, 8rench bonds traded lower to 3.00%, the UK gilts edged up to 4.35% and Italian bonds decreased to 4.14%.
The euro edged lower to $1.095, the British pound to $1.271 and the U.S. dollar fetched 87.67 Swiss cents.
Brent crude decreased $1.20 to $84.20 a barrel and the Dutch TTF natural gas increased €0.44 to €30.05 per MWh.
Europe Stock Movers
Italian banks dropped after Italy placed 40% windfall tax on banks to finance tax cuts and financial support to first time mortgage holders.
UniCredit SpA declined 6.9% to €21.06 and Intesa Sanpaolo SpA dropped 8.5% to €2.34.
Banks in the region declined following the windfall tax announcement.
Commerzbank, Dresdner Bank, Banco Santander and BNP Paribas dropped between 2% and 3%.
Bayer AG declined 1.9% to €51.40 after the German chemical company reported a net loss of €1.9 billion in the second quarter.
Mining companies traded down after Glencore reported profit nearly halved from a year ago and China's exports and imports declined in July.
Glencore dropped 4.2% to 437.80 pence after the company reported half-year profit plunged 50% from a year ago.
Anglo American and Antofagasta declined between 1.5% and 2.0%.
Abrdn Plc dropped 8.4% to 200.20 pence after the asset management company reported a decline in its assets under management.
- Barry Adams
- 07 Aug, 2023
- New York City
Market averages attempted a rebound after global markets dropped 2% in the previous week and energy stocks led gainers but tech stocks lagged market gains.
Investors reviewed more earnings and awaited consumer and wholesale inflation later in the week.
Investors look for clues to future rate path direction amid growing consensus that the Federal Reserve is more likely to engineer a soft landing, meaning keep interest rates elevated and avoid sinking the economy into a recession.
Market averages rebounded on the first day of a new week and Treasury yields edged slightly higher ahead of inflation reports.
Tech stocks traded mixed and Microsoft, Amazon and Meta Platforms advanced 0.5% but Apple Inc declined 1.7%.
Chevron, Exxon, Valero, Hess, EQT, Sunoco, Occidental Petroleum and Marathon Oil were in focus after crude oil traded at a new 4-month high on tighter supply conditions.
On the merger front Campbell Soup Company declined 1.8% after the food products maker agreed to acquire pasta sauce maker Sovos Brands Inc for $2.33 billion.
U.S. Indexes & Yields
The S&P 500 index traded up 0.7% to 4,508.69 and the Nasdaq Composite rose 0.4% to 13,956.76.
The yield on 2-year Treasury notes decreased to 4.77%, 10-year Treasury notes inched lower to 4.08% and 30-year Treasury bonds edged down to 4.25%.
Crude oil decreased $0.66 to $82.13 a barrel and natural gas prices increased 15 cents to $2.76 a thermal unit.
U.S. Stock Movers
Berkshire Hathaway Inc Class A jumped 3% to a record high of $550,000 after the diversified conglomerate said its operating earnings jumped 6.6% to $10.04 billion or $6,928.40 per Class A share.
Revenue in the second quarter jumped to $92.5 billion from $76.2 billion, largely driven by the recent acquisition of Pilot Travel Centers which generated $14.75 billion in revenue in the period.
The company's cash hoard soared to $147.4 billion, from $130.6 billion in the first quarter and higher interest rates also helped the company to generate more cash.
Berkshire repurchased $1.4 billion of its own stock, significantly lower than the $4.4 billion repurchase in the first quarter.
Tesla Inc declined 3.2% to $245.70 after the company announced the departure of Zachary Kirkhorn as chief financial officer after 13 years at the company and spending last four years and six months in the position.
In the second quarter, Tesla announced earnings per share of 91 cents and better-than-expected operating margins despite company incentives that lowered net sale price of vehicles.
Sovos Brands soared 25% to $22.52 after the pasta sauce maker agreed to be acquired by Campbell Soup for $2.33 billion or $23 a share.
Including the debt, the purchase price is $2.7 billion and Campbell said it plans to finance part of the deal with the help of new debt.
Separately, Sovos reported organic sales in its latest quarter jumped 16.3% from a year ago.
Three months ago, Campbell Soup agreed to sell Emerald Nuts for an undisclosed amount to Flagstone Foods.
European Markets Hovered Near Flatline
European markets struggled and market indexes retained downward bias after the release of German industrial production and UK home sales data.
Market averages declined on the first day of a new following losses in the previous week after bond yields rose and the euro dropped to a one-year low.
German industrial production declined more than expected in June on weak auto production.
Industrial output declined 1.5% from the previous month and fell 1.7% from a year ago in June, the Federal Statistics Office or Destatis reported Monday.
In other news, the UK home prices fell for the third month in a row in July on rising borrowing costs and elevated home prices.
The Halifax home price index declined 2.4% in July after falling 2.6% in June and average home price eased to £285,044, lower than the peak of £293,992 reached last August.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline.
And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels,” said Kim Kinnaird, Director, Halifax Mortgages.
Europe Indexes & Yields
The DAX index decreased 0.01% to 15,950.76, the CAC-40 index rose 0.06% to 7,319.76 and the FTSE 100 index dropped 0.1% to 7,554.49.
In the previous week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds decreased to 2.58%, 8rench bonds traded lower to 3.15%, the UK gilts edged up to 4.45% and Italian bonds decreased to 4.28%.
The euro edged lower to $1.097, the British pound to $1.271 and the U.S. dollar fetched 87.69 Swiss cents.
Brent crude decreased $0.48 to $85.75 a barrel and the Dutch TTF natural gas increased €1.73 to €30.49 per MWh.
Europe Stock Movers
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
- Barry Adams
- 07 Aug, 2023
- New York City
Market averages attempted a rebound after global markets dropped 2% in the previous week.
Investors reviewed more earnings and awaited consumer and wholesale inflation later in the week.
Market averages rebounded on the first day of a new week and Treasury yields eased ahead of inflation reports.
Tech stocks traded mixed and Microsoft, Amazon and Meta Platforms advanced 0.5% but Apple Inc declined 2%.
On the merger front Campbell Soup Company declined 1.8% after the food products maker agreed to acquire pasta sauce maker Sovos Brands Inc for $2.33 billion.
U.S. Indexes & Yields
The S&P 500 index traded up 0.4% to 4,495.84 and the Nasdaq Composite fell 0.3% to 13,877.90.
The yield on 2-year Treasury notes decreased to 4.77%, 10-year Treasury notes inched lower to 4.08% and 30-year Treasury bonds edged down to 4.25%.
Crude oil decreased $1.09 to $81.73 a barrel and natural gas prices increased 13 cents to $2.71 a thermal unit.
U.S. Stock Movers
Berkshire Hathaway Inc Class A jumped 3% to a record high of $550,000 after the diversified conglomerate said its operating earnings jumped 6.6% to $10.04 billion or $6,928.40 per Class A share.
Revenue in the second quarter jumped to $92.5 billion from $76.2 billion, largely driven by the recent acquisition of Pilot Travel Centers which generated $14.75 billion in revenue in the period.
The company's cash hoard soared to $147.4 billion, from $130.6 billion in the first quarter and higher interest rates also helped the company to generate more cash.
Berkshire repurchased $1.4 billion of its own stock, significantly lower than the $4.4 billion repurchase in the first quarter.
Tesla Inc declined 3.2% to $245.70 after the company announced the departure of Zachary Kirkhorn as chief financial officer after 13 years at the company and spending last four years and six months in the position.
In the second quarter, Tesla announced earnings per share of 91 cents and better-than-expected operating margins despite company incentives that lowered net sale price of vehicles.
Sovos Brands soared 25% to $22.52 after the pasta sauce maker agreed to be acquired by Campbell Soup for $2.33 billion or $23 a share.
Including the debt, the purchase price is $2.7 billion and Campbell said it plans to finance part of the deal with the help of new debt.
Separately, Sovos reported organic sales in its latest quarter jumped 16.3% from a year ago.
Three months ago, Campbell Soup agreed to sell Emerald Nuts for an undisclosed amount to Flagstone Foods.
- Inga Muller
- 07 Aug, 2023
- Frankfurt
European markets attempted a rebound after a sell-off in the previous week and investors reacted to the latest corporate earnings.
The DAX index decreased 0.4% to 15,891.68, the CAC-40 index fell 0.2% to 7,303.29 and the FTSE 100 index dropped 0.5% to 7,524.96.
In the last week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
- Bridgette Randall
- 07 Aug, 2023
- Frankfurt
European markets struggled and market indexes retained downward bias after the release of German industrial production and UK home sales data.
Market averages declined on the first day of a new following losses in the previous week after bond yields rose and the euro dropped to a one-year low.
German industrial production declined more than expected in June on weak auto production.
Industrial output declined 1.5% from the previous month and fell 1.7% from a year ago in June, the Federal Statistics Office or Destatis reported Monday.
In other news, the UK home prices fell for the third month in a row in July on rising borrowing costs and elevated home prices.
The Halifax home price index declined 2.4% in July after falling 2.6% in June and average home price eased to £285,044, lower than the peak of £293,992 reached last August.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline.
And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels,” said Kim Kinnaird, Director, Halifax Mortgages.
Europe Indexes & Yields
The DAX index decreased 0.4% to 15,891.68, the CAC-40 index fell 0.2% to 7,303.29 and the FTSE 100 index dropped 0.5% to 7,524.96.
In the last week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds decreased to 2.58%, 8rench bonds traded lower to 3.15%, the UK gilts edged up to 4.45% and Italian bonds decreased to 4.28%.
The euro edged lower to $1.097, the British pound to $1.271 and the U.S. dollar fetched 87.69 Swiss cents.
Brent crude decreased $0.74 to $85.49 a barrel and the Dutch TTF natural gas increased €0.81 to €29.72 per MWh.
Europe Stock Movers
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
- Scott Peters
- 04 Aug, 2023
- New York City
Airbnb Inc was nearly unchanged at $141.0 after the online short-term stay booking platform reported revenues and booking rose at a slower-than-expected pace in the quarter.
Second quarter revenue increased 18% to $2.5 billion from $2.1 billion and net income soared 72% to $650 million from $379 million and diluted earnings per share advanced to 98 cents from 56 cents a year ago.
The company reported the most profitable second quarter on GAAP basis.
The company generated $909 million of operating cash flow and free cash flow jumped 13% from a year ago and 644% from four years ago to $900 million.
Gross booking value rose 13% from a year ago to $19.1 billion and nights and experiences booked increased 11% driven by growth in all regions to 115.1 million.
Active listings increased 19% to 7 million, and the booking platform added record net active listings in any quarter, and active listings have accelerated in every quarter in the last ten quarters.
Average daily rate declined 1% from a year ago in North America but rose 8% in the Europe, Middle East and Africa but overall daily rate increased 1% to $166.
In the second quarter, guests traveling more than 3,000 miles increased 20% compared to a year ago and cross-border represented 45% of total gross nights booked, up from 43% in the second quarter of 2022, but still below 50% in the corresponding period in 2019.
The company forecasted third quarter revenue between $3.3 billion and $3.4 billion and estimated upward pressure in average daily room rate and "a modest sequential increase in the annual growth rate" of nights and experiences booked from the second quarter.
- Scott Peters
- 06 Aug, 2023
- New York City
Starbucks Corp increased 0.8% to $102.03 after the coffee chain operator reported higher-than-expected sales in the fiscal third quarter on a sales rebound in China.
Sales at stores open at least 13 months in China soared 46% from a year ago, after Covid-restrictions ended.
Global comparable store sales increased 10% and the U.S. and North American comparable store sales increased 7% from a year ago.
Revenue in the quarter ending on July 2 rose 12% to $9.2 billion and the company opened 588 net new stores in the quarter, increasing the worldwide total to 37,000.
Net earnings attributable to shareholders increased to $1.1 billion from $913 million and diluted earnings per share rose to 99 cents from 79 cents a year ago.
China is expected to drive future sales growth as the company pushes to open more stores in smaller cities of the nation with 1.4 billion people with a preferred hot beverage tea over coffee.
At the end of the third quarter, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively.
- Scott Peters
- 04 Aug, 2023
- New York City
Market averages rebounded after the U.S. economy added below average 187,000 net new jobs in July and big tech earnings drove market sentiment.
The S&P 500 index futures traded up 0.2% to 4,511.4.34 and the Nasdaq Composite futures rose 0.3% to 13,971.63.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.20% and 30-year Treasury bonds edged down to 4.29%.
Apple Inc declined 2.5% to $186.50 after the company reported sales declined 1% from a year ago and earnings per share of $1.29 on the weakness in computing devices and smart phones.
Amazon.com, Inc soared 8.8% to $140.27 after the e-commerce company reported better-than-expected sales in its latest quarter of $134.4 billion and earnings of 65 cents per share.
Airbnb Inc was nearly unchanged at $141.0 after the online short-term stay booking platform reported revenues and booking rose at a slower-than-expected pace in the quarter.
Block Inc declined 6.6% to $68.80 after the company reported second quarter earnings per share of 39 cents and revenue of $5.53 billion.
The company reported earnings and sales ahead of market expectations.
Paramount Global declined 1.6% to $18.08 on multiple reports that the company is in talks with private equity firm KKR to sell its publishing division Simon & Schuster.
Booking Holdings Inc rose 12.1% to $3,185.0 after the online travel booking company reported second quarter revenue of $5.46 billion and adjusted earnings per share of $37.62.
Tupperware Brands Corp soared 60.1% to $5.64 after the company said it finalized its debt restructuring deal that could reclassify as much as $121 million in interest expenses and fees.