(Boursier.com) – The S&P 500 now takes 0.4% before market trading on Tuesday, the Dow Jones 0.3% and the Nasdaq 0.6%. The trend therefore remains positive, after a good behavior yesterday evening (+1.31% on the Dow and +0.85% on the Nasdaq) despite persistent concerns about the impact of the Fed’s accelerated monetary tightening and persistent pressure on the file Apple, the world’s largest capitalisation, weakened by a potential slowdown in demand… A barrel of WTI crude oil lost 0.8% on the Nymex at $91.1. An ounce of gold dropped 0.3% to $1,676. The dollar index gained 0.3% against a basket of benchmark currencies.
According to the CME Group’s FedWatch tool, the Fed is expected to raise its rates by another 50 basis points (57% probability) or 75 basis points (43% probability) at the end of its next monetary meeting in mid-December. The fed funds rate range is currently nestled between 3.75 and 4%, after four consecutive oversized rate hikes of 75 bps.
In the absence of any other major lead, operators are focusing mainly on the US midterm elections. Polls suggest that Republicans would be the favorites to take control of the House of Representatives or even the Senate. Markets believe a Republican victory could bring inflation down by stalling the Biden administration’s spending plans. In addition, Republicans are opposed to regulations on new technologies, energy and health…
Speculation also continues that China may reconsider its zero-Covid policy. Health officials have maintained, however, that China will stick to its strategy, although markets seem to be more open to the possibility of a reopening. China’s current Covid outbreak is the worst since April, with several cities tightening restrictions and Guangdong province now the epicenter of the outbreak.
Some attention could also be drawn to banking stocks in Europe, after European Central Bank Supervisory Board Chairman Andrea Enria said he was carefully reviewing shareholder compensation plans amid weakening economic outlook. COP27 could also generate more headlines. British press said Prime Minister Rishi Sunak was set to announce a natural gas deal with the United States after the summit. Eurozone finance ministers said on Monday that measures to support economies against soaring energy prices could accompany 2023 budget plans.
On the macroeconomic data front, the French trade deficit widened (17.5 billion euros in September against 14.4 billion euros in the FactSet consensus), while retail sales in the euro zone beat the consensus (+0.4% in prior month comparison or -0.6% YoY). Japanese household spending remained below expectations while wages accelerated. Rising rates and inflation drove Australian consumer confidence to the lowest since April 2020, while household inflation expectations surged. Australian business confidence also fell amid a deteriorating economic outlook, although conditions remained positive.
The week will also be marked, on Wall Street, by the publication Thursday of the October consumer price index, expected to rise by 0.6% compared to the previous month and 8% over one year (+0 .5% excluding food and energy compared to September or +6.5% over one year according to FactSet).
There will be no significant statistics on Tuesday on Wall Street. On the other hand, operators will be able to follow a new series of quarterly results. Constellation Brands, DuPont de Nemours, GlobalFoundries, Coty Where The Carlyle Groupannounce before market day. waltz disney, Western Petroleum, Lucid Group, Akamai, NewsCorp, Plug Power Where NortonLifeLockpublish this evening, after the close.
Values
TripAdvisor risk exploring the depths on Wall Street on Tuesday. The stock fell last night following a disappointing financial publication. TripAdvisor in particular provided Q4 EBITDA adjusted margin guidance of around 10%, versus a FactSet consensus of 19.5%. Consolidated Adjusted EBITDA margin will decrease sequentially to nearly 10% of revenue, due to seasonal decline, mix shift in favor of lower margin growth revenue lines and investment increased in Viator. Consolidated revenue growth is expected at 1-5% compared to 2019 levels, implying a slight slowdown compared to the third quarter of 2022. For the quarter ended, adjusted EPS was 28 cents, against 39 cents consensus and 16 cents a year earlier. Revenue reached $459 million, compared to $303 million for the comparable period last year.
Activision Blizzard, the American video game publisher, announced for its third fiscal quarter adjusted earnings per share of 68 cents, compared to a consensus of 51 cents and a level of 72 cents a year earlier. Revenue totaled $1.83 billion, compared to $1.88 billion in the comparable period last year. They also largely beat the consensus, but for investors, the worries come more from the ability to Microsoft to complete the acquisition of the group in the face of antitrust obstacles. Activision Blizzard made a point of reassuring last night, saying the $69 billion deal was still on track. “We continue to expect the transaction to close during Microsoft’s current fiscal year ending June 2023,” said CEO Bobby Kotick.
Take-Two Interactive stalled yesterday evening after the stock market on Wall Street, following the announcement of results below expectations for the second quarter and flat forecasts. The level of bookings for the second fiscal quarter, ending in September, was 1.5 billion dollars against 1.55 billion consensus. Adjusted earnings per share were $1.25, versus $1.37 consensus and $1.58 a year earlier. The group expects a ‘net bookings’ (net amount of products and services sold globally) of up to 5.5 billion dollars. Previously, Take-Two forecast up to $5.9 billion. CEO Strauss Zelnick said the company’s outlook was affected by changes in production, the strength of the dollar and “a more cautious view of the current macroeconomic environment, particularly in mobile.”
Lyft, the Californian rival of Uber, unscrewed after the stock market last night on Wall Street. For its third fiscal quarter, the group nevertheless exceeded market expectations, with adjusted earnings per share of 11 cents compared to the consensus of 8 cents, and the level of 5 cents last year. Quarterly revenue was $1.05 billion, down from $864 million a year earlier. Markets are nonetheless sanctioning the group’s slowing growth, while the number of people using Lyft’s services otherwise remains below pre-pandemic levels.
DuPont, the American group active in industrial materials, exceeded profit expectations for the quarter ended and announced the launch of a $5 billion share buyback program. Net income was $376 million, or 73 cents per share, from $404 million a year earlier. Adjusted earnings per share were 82 cents for the quarter ended September, against 79 cents consensus. The electronics and industry unit posted revenue up 3% to 1.51 billion. The water and protection segment saw its revenues increase by 10% to 1.53 billion. The group expects continued strong demand in the fourth quarter in most end markets, with the exception of consumer electronics. The annual sales forecasts are unchanged.
The Mosaic Company, the American phosphate and potash giant, disappointed in the third quarter, but its growth remains substantial. Over the period, adjusted earnings per share represented $3.22, against consensus $3.44 and $1.35 a year earlier. Revenue came in at $5.35 billion, 10% below consensus, versus a performance of $3.42 billion a year earlier. The fertilizer designer suffered from the impact of Hurricane Ian and the slowdown in price increases on certain products. Mosaic has however recorded record sales in the first nine months of this year and speaks of “favorable fundamentals” by the end of the year and in 2023. The gross margin rate in the third quarter was 28% against 25% in the same quarter last year.
GlobalFoundries, the Californian ‘founder’ of semiconductors, climbed before the stock market on Wall Street, after a solid financial publication. The group beat the profit consensus for the quarter ended at the end of September. Revenues reached a record $2.1 billion, up 22% year-on-year, for a gross margin of 29.4% down slightly and an operating margin of 17.2%. Adjusted EBITDA also hit a record $793 million. Net income was $336 million or 61 cents per share, compared with just $5 million a year earlier. On an adjusted basis, EPS was 67 cents, versus 7 cents a year ago and 62 cents FactSet consensus.
Coty, the leading player in beauty products, exceeded revenue expectations for the quarter ended. Demand remained solid for the group’s perfumes and cosmetics, offsetting the impact of the strong dollar and the exit from Russia. For the first fiscal quarter, the group posted net profit of $125 million, or 15 cents per share, against $103 million a year earlier. Adjusted EPS was 11 cents, versus 8 cents a year earlier and market consensus of 12 cents.