DAX:
- Zalando (ZAL TH) +1.4%
- VW (VOW3 TH) +1%
- Watch China-Exposed European Stocks After Positive Economic Data
- Siemens Energy (ENR TH) +0.9%
- Commerzbank (CBK TH) +0.9%
- Bayer (BAYN TH) +0.8%
- Bayer’s New CEO Anderson Plans to Cut Management Jobs: Reuters
MDAX:
- Delivery Hero (DHER TH) +0.9%
- Lufthansa (LHA TH) +0.6%
- Nordex (NDX1 TH) +0.6%
- Thyssenkrupp (TKA TH) +0.6%
- Carl Zeiss Meditec (AFX TH) +0.6%
SDAX:
- MorphoSys (MOR TH) +2.9%
- MorphoSys Raised to Neutral at Goldman; PT 33.50 euros
- BayWa (BYW6 TH) +2.7%
- BayWa Reinstated Buy at Baader Helvea; PT 52 euros
- Adtran Holdings (QH9 TH) +1.5%
- Schaeffler (SHA TH) +1.4%
- PNE AG (PNE3 TH) +1.2%
- Borussia Dortmund (BVB TH) -0.7%
- Japan Soccer League Is Ready to Support Clubs Seeking IPOs
Stocks in Asia advanced following better-than-expected Chinese economic data and after the central bank took further measures to support the struggling economy. Shares in mainland China edged higher after industrial production and retail sales data beat estimates, adding to evidence earlier stimulus measures are starting to have an effect. The Australian dollar and Chinese yuan both strengthened. Equities in Australia, Japan, South Korea and Hong Kong also gained following a rally in US stocks Thursday. The People’s Bank of China kept the interest rate on its one-year medium-term lending facility unchanged and added further cash into markets via a key policy loan for the 10th month to help loosen conditions, a day after it announced another cut to lenders’ reserve requirements. China’s policy strategy appears to be one that puts forward an orchestra of measures within a short period of time in order to achieve some amplified impact, she said. Arm Holdings Plc jumped 25% in its trading debut in New York, while Ford Motor Co. and General Motors Co. underperformed, with Detroit carmakers facing the threat of a strike. Traders also braced for Friday’s triple witching options event — which has the potential to trigger volume spikes and volatility. The dollar edged lower versus most major peers and the Bloomberg dollar index is set to snap eight weeks of gains. The euro remains near a five-month low after the European Central Bank likely hiked for a final time and downgraded growth forecasts on Thursday. US Treasury yields edged lower in Asia. In commodities, oil’s rally above $90 a barrel is the latest milestone in a surge driven by output cuts from Saudi Arabia and Russia amid record global consumption and follows reports this week warning of tightness in the coming months. Futures advanced Friday, but with prices soaring more than 30% since late June, traders are bracing for a potential pullback. US After Hours NUE -3.3% falls on guidance; LEN -0.9%, ADBE -0.8% slightly lower on earnings.
Nikkei +1,01% Hang Seng +1,08% CSI -0,70% Shanghai -0,37% Shenzen -0,34%
Eur$ 1.0651 CNH 7.2690 CNY 7.2609 JPY 147.43 GBP 1.2425 CHF 0.8955 RUB 96.7953 TRY 26.9420 WTI$ 90.92 +0.84% Gold 1,916 +0.80% BTC 26,628 +0.20% ETH 1,633 +0.30%
S&P +0,20% Nasdaq +0,23% EuroStoxx +0,68% FTSE +0,45% Dax +0,60% SMI +0.32%
Macro :
- Vestager Makes Spain Trip in Bid for EIB Top Job
- SocGen Strategists Prefer US Assets on Delayed Recession
- Biden Spoke With UAW, Automakers’ Leaders on Ongoing Labor Talks
Keep an eye on :
Keep an eye on :
- AF FP : Air France-KLM Begins Formal Process for New Widebody Jets
- ARM US : *ARM HOLDINGS JUMPS 25% FROM IPO PRICE IN TRADING DEBUT
- BAYN GY : Bayer’s New CEO Anderson Plans to Cut Management Jobs: Reuters
- BAYN GY : Bayer’s New CEO Anderson Plans to Cut Management Jobs: Reuters
- BP/ LN : BP chair rules himself out as next chief executive
- 2007 HK : Country Garden Delays Yuan Bond Extension Vote to Monday
- O5G GY : S Immo May Buy Czech Commercial Properties From Parent CPI
- DTE GY : T-Mobile in Talks to Make Big Broadband Bet With Move Into Fiber
- DIS US : Disney Says No Decision on Selling ABC, Open to Options
- DIS US : Byron Allen Makes $10 Billion Bid for ABC, Other Disney Networks
- HEIA NA : Heineken Mexico to Invest EU430M for Brewery in Yucatán
- LNZ AV : Lenzing Cuts FY Ebitda Outlook to EU270m-EU330m, Est. EU323.2m
- MC FP : Luxury Site Mytheresa Jumps as a Bet on the Ultra-Rich Pays Off
- NOVN SW : Novartis: Patients on Kisqali Maintain Quality of Life
- SIKA SW : Sika Proposes Thierry Vanlancker as New Chair of Board
- SPI AV : S Immo May Buy Czech Commercial Properties From Parent CPI
- GLE FP : SocGen Open to Sale of Equipment Finance Unit: Reuters
- SONG LN : Hipgnosis Shares Drop After Deal to Sell Songs for $465 Million
- STLA IM : GM, Ford, Stellantis, Suppliers Lower as Auto Strike Looms Large
- THG LN : THG Holder Kelso Says Lack of Strategy Update Is ‘Disappointing’
- TTE FP : *TOTAL IS SAID IN TALKS TO INVEST IN ADANI GREEN’S PROJECTS
- TCEL TI : Turkcell Confirms Bulent Aksu Named as CEO
- UBSG SW : UBS Cuts About a Dozen US Bankers Amid Credit Suisse Integration
- VLN CN : France Weighs Stakes in Nuclear Suppliers to Avert US Takeovers
- DG FP : Vinci May Help Hungary to Buy Budapest Airport: VSquare
>>> Up
* Andritz Raised to Buy at Erste Group; PT 73.70 euros
* Derwent London Raised to Buy at Goldman; PT 2,090 pence
* Great Portland Raised to Neutral at Goldman; PT 400 pence
* Intesa Sanpaolo Raised to Buy at Jefferies; PT 3.70 euros
* MorphoSys Raised to Neutral at Goldman; PT 33.50 euros
* MorphoSys ADRs Raised to Neutral at Goldman; PT $9.25
* S Immo Raised to Buy at Erste Group; PT 17 euros
* Tele2 Raised to Buy at SEB Equities; PT 92 kronor
* Tele2 Raised to Buy at SEB Equities; PT 92 kronor
* Telenor Raised to Overweight at Barclays; PT 160 kroner
>>> Down
* Mediobanca Cut to Hold at Jefferies; PT 13.60 euros
>>> Down
* Mediobanca Cut to Hold at Jefferies; PT 13.60 euros
* Nichols Rated New Hold at Peel Hunt; PT 1,150 pence
* Telia Cut to Equal-Weight at Barclays; PT 30 kronor
>>> Initiation
>>> Initiation
* AB InBev Rated New Outperform at Cowen; PT 63 euros
* ARM Holdings ADRs Rated New Hold at Needham
* ASML Rated New Outperform at Wolfe; PT 730 euros
* Atlas Copco Reinstated Outperform at Oddo BHF; PT 172 kronor
* Atlas Copco Reinstated Outperform at Oddo BHF; PT 172 kronor
* BayWa Reinstated Buy at Baader Helvea; PT 52 euros
* Diageo Rated New Market Perform at Cowen; PT 3,100 pence
* Nostrum Oil & Gas Rated New Hold at Canaccord; PT 13 pence
>>> Call
* Arm Gets Hold Rating as Needham Sees ‘Full’ Valuation
>>> Call
* Arm Gets Hold Rating as Needham Sees ‘Full’ Valuation
Yuri Shefler, the Russian billionaire starring in latest ‘Brangelina’ drama
Vodka magnate’s stake in French vineyard has dragged him into the bitter dispute between Brad Pitt and Angelina Jolie
Yuri Shefler has been locked in a battle with the Kremlin over the trademark rights to the Stolichnaya vodka brand for two decades. Now the exiled Russian billionaire is embroiled in another lengthy legal tussle — putting him at the heart of a Hollywood drama — this time over French rosé.
Shefler is fighting with Brad Pitt over control of Château Miraval, a Provence vineyard Pitt purchased with his former wife Angelina Jolie in 2008.
The billionaire, who made his fortune from his liquor empire, provoked Pitt’s ire after buying Jolie’s stake for $64mn in 2021, and thereby finding himself drawn into the pair’s acrimonious divorce. The dispute has been laid bare in a series of dramatic court filings putting Shefler’s name in headlines in recent months.
The couple discovered the picturesque 17th century Provencal château when they were “helicopter hopping” around the South of France, looking for a European property to buy.
The château and its accompanying 30 hectares of vineyard turned out to be a savvy investment. Miraval, which comes in a distinctive wide bottle, has ridden a rosé wave that saw global consumption rise 40 per cent between 2002 and 2018.
LVMH has snapped up not one but two “prestige” rosé Provencal wineries: Château d’Esclans, producer of Whispering Angel, and Château Minuty. Celebrities including Post Malone, Kylie Minogue and Jon Bon Jovi have all jumped on the band wagon.
With the help of the famous Rhône winemaker Marc Perrin, the star couple built up the brand, which generated more than €15mn in profits in 2022, according to court filings.
The actor has questioned whether Jolie had the right to sell her share in the first place, claiming in a lawsuit against Jolie last year he had a right to refusal of the sale. Jolie countered that she had offered to sell her stake to the actor, but that talks fell through after Pitt introduced a provision stopping her from talking publicly about events leading to the split, forcing her to look elsewhere for a buyer.
Meanwhile, Shefler’s company, Stoli Group, alleges it has been frozen out of the running of Miraval by the Oscar-winner.
Jolie and Shefler, who left Russia in 2002 and lives in Switzerland, accused Pitt’s team of launching a “xenophobic, untrue smear campaign worthy of Putin himself”, according to court filings.
Pitt’s lawyers accused the group and Jolie of forcing Pitt into a partnership with “a stranger with poisonous associations and intentions” and argued that Shefler’s ownership “threatens harm to Miraval’s carefully honed reputation and brand” due to his alleged association with Vladimir Putin’s inner circle.
Stoli Group denied the allegation. “Stoli and Mr Shefler have been fighting a well-publicised and well-documented battle against Putin for over 20 years,” it said, adding, “Mr Shefler’s business practices or professional associations are nothing other than reputable.”
People familiar with Shefler say he is unlikely to be cowed by the drama.
The vodka magnate has, according to Stoli Group, endured raids, smear campaigns designed to damage his reputation, and attempted poisonings and kidnappings at the hands of Russian authorities over a vodka trademark dispute.
Shefler took over a Russian company in 1997 and formed a related company that acquired the trademarks to 43 brands, including Stolichnaya, for $300,000. Russia’s Audit Chamber later said the brands were really worth $400mn, prompting Moscow to declare the sale illegal in 2001.
In 2002, Russia’s General Prosecutor’s Office charged Shefler with threatening a government official and placed him on a wanted list. The billionaire left the country to avoid arrest, moving to Switzerland and later to Luxembourg, where the Stoli Group is headquartered.
“He keeps a low profile because he doesn’t want to be seen by the Russian government too visibly,” said a person who has worked closely with Shefler. “He is cautious about his public image.”
In the drinks sector, however, he has a “reputation for churn”, added the former colleague. “He likes to keep people feeling uncomfortable, to feel like they have to prove themselves all the time.” Stoli Group has had multiple chief executives over the past decade, according to LinkedIn.
Shefler declined to be interviewed. Stoli Group said it was normal for businesses to have managers with varying tenures. “Every story, whether short or long, adds to the company’s accomplishments,” it said.
Shefler’s management style has made headlines before. In 2022 a UK employment tribunal ordered Stoli to pay £1.62mn for the unfair dismissal of UK executive Vlad Zabelin, who was fired after he objected to staff pay cuts during the coronavirus pandemic. The court heard that Shefler and SPI Spirits UK, the UK-based subsidiary of Stoli Group, cut the wages of most of its 2,000 employees by 30 per cent during the pandemic.
Stoli Group said Zabelin left of his own accord, and that the company had taken “unprecedented steps to minimise damage from a global pandemic”. It added that compensation was restored to pre-pandemic levels after three months, and that employees were retroactively paid for the “mitigation” measures.
Stoli Group, whose other brands include Kentucky Owl bourbon and Bayou rum, announced a rebrand of its flagship vodka last year, changing the name from Stolichnaya to Stoli vodka in an attempt to distance itself from Russia following Moscow’s invasion of Ukraine.
The group, whose wine division Tenute del Mondo has estates in Italy, Spain and Argentina, had its eye on Miraval for some time, according to Pitt’s allegations. The actor claimed in court filings that Shefler approached him in 2016, following the news of his and Jolie’s divorce, with an offer of €60mn for the estate, alongside a sweetener of a discount on a €50mn private jet.
For the case to reach a resolution, Shefler or Pitt could buy the other out, or the two sides find a way to work together to run the wine business. But the pair appear to be at an impasse. Representatives for both sides confirmed that discussions to find a resolution had so far failed.
Stoli said that “Shefler has been very consistent in his efforts to have a productive and mutually beneficial partnership with Mr Pitt”. A person familiar with the situation said: “Brad is not going to back down to bullies.
EU tries to buy time in electric car race with China
Europe’s carmakers fear being eclipsed by Chinese rivals with superior battery technology
Faced with a coming wave of Chinese electric vehicles, Europe’s carmakers need more time.
An anti-subsidy probe into imported models, announced by the European Commission on Wednesday, may have bought the industry the breathing room it needs to adapt.
But even as president Ursula von der Leyen announced a months-long probe that could lead to higher tariffs, fears were circling that the Commission president’s action plan is already too late.
“We have been denouncing this risk for years,” said Matteo Salvini, Italy’s transport minister and leader of the hard-right League. “Europe is waking up only now: were they distracted, incompetent or complicit?”
While the probe deals with imported Chinese-built cars, it will not address the larger issue of European carmakers’ reliance on Chinese battery technology, which is the reason why China dominates the region’s nascent battery scene.
On the fringes of last week’s Munich auto show, a regular meeting of the region’s top auto executives focused almost exclusively on the threat from the Chinese brands whose glitzy stands dominated the trade show.
“The rules of the international chess board have been changed,” Sigrid de Vries, head of ACEA, which represents Europe’s carmakers, told the FT hours after the meeting broke up. “Europe needs to up its game.”
China’s car building capacity and battery technology has advanced considerably. Yet even under the most aggressive plans, it will still take years for Chinese groups to increase sales and grow name recognition in a region that plays home to many of the world’s most storied auto brands.
“It’s a two-year process before they really have a presence,” said Philippe Houchois, the auto analyst at Jefferies. “That’s a two-year window for the European industry to get its act together.”
Having only recently released their first competitive range of EVs, which coincided with new emissions rules in the region, Europe’s carmakers are expecting the next wave to be much more cost-efficient.
Renault’s next models would cost significantly less than its current offerings, chief executive Luca de Meo told the FT at the Munich show. “We have the visibility to reduce costs by 30-40 per cent,” he said.
Yet while carmakers often complain that Chinese brands will use lower labour and energy costs — along with hefty subsidies — to undercut Europeans, it is not borne out yet in the market.
The average price of a Chinese EV sold in the EU was €48,581 in the first half of 2023, compared with a cost of €67,607 for non-Chinese brands, according to data group Jato Dynamics.
The figures, however, are skewed by MG, a European brand now owned by China’s SAIC, which has dominated the lower end of the market with its €35,000 MG4.
The company accounts for two-thirds of the imports from Chinese-owned carmakers, according to Matthias Schmidt, an analyst who tracks Chinese imports into the region.
While cheaper cars come from China — Renault will manufacture the cut-price Dacia Spring in the country — most European plants focus on more expensive models.
“Until last year, most of the offer from the European, American, Korean, and Japanese brands was concentrated on the upper segments,” says Juan Felipe Munoz, an analyst at data group Jato Dynamics. “This started to change recently, but still today half of the offer corresponds to midsize or large SUVs and sedans. The West has positioned the EVs as “premium” cars (until now), while China has always looked to all segments.”
While Europeans grapple with integrating expensive batteries into cheaper models, China’s long-term strategy to bet on batteries has allowed its players a lead in the technology that feeds into its lower-end models.
That said, aside from MG, most Chinese electric cars sold in Europe remained expensive. “Look at the NIOs, BYDs, Xpengs that are on sale in Europe, they are not cheap,” says Lei Xing, an independent Chinese auto expert.
He adds: “China EVs have been subsidised domestically for years but that shouldn’t discount the fact that Chinese cars are becoming competitive and quality products.”
When faced with two evenly-priced cars, the Chinese brands such as BYD hope that consumers will judge them as equals, looking at technology and interior quality when making their decision.
“If you enter a [cheaper] European electric car, you can see where they’re cutting corners, it’s full of hard plastic,” said Schmidt, the independent analyst. “The tables have definitely turned, you would expect the Chinese to be plastic, and the Europeans the other way around.”
Yet concerns that Europe has been caught flat-footed are well founded.
Much of this stems from the bloc’s painstaking efforts to appear “technology neutral”, rather than prescribing one system, such as battery cars, as the preferred solution.
“By arguing for neutrality, they [the EU] didn’t have to make decisions on the total value chain,” said Houchois. “But it became clear a number of years ago that the only way we were getting there was batteries, but because the European position was neutrality, they didn’t have anything on batteries or charging.”
Many draw parallels with fears over the Japanese importers Toyota, Honda and Nissan, which came to Europe in the 1990s and were viewed by comfortable incumbents with similar alarm.
“Europe never wanted to keep the Japanese out,” said Houchois. “They just wanted them to give time for the industry to raise its game.”
Arm listing stirs Wall Street bankers’ hopes of IPO fee revival
Underwriters in line for $104.6mn payday after chip designer’s flotation on Nasdaq
Arm’s successful initial public offering this week and plans for other substantial listings are stirring Wall Street bankers’ hopes for a return of billions in fees after a year and a half in which new issues were all but stalled.
SoftBank-backed chip designer Arm expects to pay its underwriters as much as nearly $104.6mn in fees, according to an updated prospectus Arm filed after its first day of trading on Thursday, providing the IPO bankers with their first big payday in a while.
The fees will be split among the 28 banks involved in the deal, with the banks leading it — so-called bookrunners Barclays, Goldman Sachs, JPMorgan and Mizuho — splitting equally about 70 per cent of the total commission.
Dealmakers hope the Arm offering will be a harbinger for a broader recovery for an investment banking sector in the doldrums ever since the Federal Reserve started aggressively raising US interest rates to combat inflation last year.
“The headline is the IPO market is in the final phase of the recovery,” said Jim Cooney, head of Americas equity capital markets at Bank of America. “There are five to seven important deals scheduled for 2023, but if the majority price and trade well, then you could see an acceleration of transactions waiting for next year to move into the fourth quarter.”
Two other high-profile but smaller IPOs — grocery delivery company Instacart and email marketing company Klaviyo — are expected to start trading next week. Neither company has disclosed how much it will pay their underwriters, but based on average fees the two deals could generate another $70mn for Wall Street’s until recently payday-starved IPO specialists.
Senior bankers warned that the IPO market is still fragile and it was unrealistic to expect a flood of new deals. Only a handful of IPOs are likely to get done this year, they say, and that the bulk of those anticipated fees might not come until next year.
Although stock markets have rebounded and volatility has declined this year, few companies are rushing to bring forward their plans.
“We’re still in an environment where the economic outlook is questionable,” said Eddie Molloy, co-head of Americas equity capital markets at Morgan Stanley. “Being able to show an operational track record for another few quarters is probably helpful” for companies to win over investors.
In a good year, the business of shepherding start-ups and other companies into the public markets is one of Wall Street’s best. In 2021 the number of new listings hit a record high and IPO bankers collected more than $14bn in fees on US deals alone, according to data from Bloomberg.
But it has always been a feast-or-famine business tied to the strength of the overall stock market. Fees from US IPOs plunged along with the stock market to less than $1bn last year. Until Arm, the IPO market had continued to be humdrum, generating just $500mn in fees during the first eight months of the year for the dozens of banks vying for business.
But bankers said enthusiasm around the Arm deal has resulted in more incoming calls.
Arm priced its offering at $51 a share, the top of its price range, and the stock jumped 25 per cent on the Nasdaq exchange to close at $63.59 on Thursday.
“In the wake of it you should now see more [companies] feeling confident and comfortable with the idea of going public,” said a banker who worked on the Arm listing. But the person added that the chip designer was larger and more established than most IPO candidates: “Revenue scale and profitability has been helpful here.”
Turo, an Airbnb-like platform for rental cars, filed for its IPO more than a year ago. The company is now aiming to list by late October, according to a person familiar with the matter.
The German sandal company Birkenstock this week became the latest company to announce plans for an IPO, targeting a $8bn valuation in a deal later this year.
“Our IPO backlog is as strong as it’s ever been,” said Keith Canton, who is head of Americas equity capital markets at JPMorgan Chase. “How that will translate into deal volumes is still going to be somewhat measured.”
The IPO recovery has been especially good news for Goldman Sachs, which the Financial Times recently reported is embarking on a new round of lay-offs as it grapples with a drop in deals and an ill-fated foray into consumer banking.
The bank has also lost a number of high-profile technology bankers this year. Tammy Kiely, co-head of technology investment banking, left the bank in June.
Nonetheless, Goldman nabbed a top spot on the Arm, Instacart and Klaviyo IPOs. It generated more than $2bn in fees from IPO deals in 2021, but just $110mn this year prior to the Arm listing, according to Dealogic. It is also co-leading the Birkenstock offering along with JPMorgan and Morgan Stanley.
BofA, which did not rank among the top 10 underwriters of IPOs last year, also looks surprisingly well-positioned if the IPO market continues to perk up.
Internationally, 82 companies have filed to go public in the past year, according to data from Bloomberg. While many more companies file for IPOs than actually complete them, BofA is listed as a lead underwriter on six of those deals, tied with JPMorgan for the most out of any big bank.
After Hours Summary: Oracle and Microsoft announce partnership; NUE -3.3% falls on guidance; LEN -0.9%, ADBE -0.8% slightly lower on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: MITK +3.9%
Companies trading higher in after hours in reaction to news: TKC +1.7% (names new CEO and Chairman), JBHT +1.6% (to purchase the brokerage operations of BNSF Logistics), DIS +0.5% (expects to fall "tens of millions" of subs below FY24 Disney+ goal according to Bloomberg), ORCL +0.4% (Oracle and Microsoft announce Oracle Database@Azure), COP +0.4% (to secure additional regasification capacity in Europe), MSFT +0.2% (Oracle and Microsoft announce Oracle Database@Azure), RBLX +0.2% (appoints Jason Kilar to its board; recently served as CEO of Warner Media), LE +0.1% (names new CFO), GOOG +0.1% (California AG announces $93 mln settlement), OIS +0.1% (contract award for Merlin Deepsea Mineral Riser System), OGN +0.1% (announces publication of RUBY study results)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: NUE -3.3% (guides Q3 EPS below consensus), LEN -0.9%, ADBE -0.8%, CPRT -0.1%
Companies trading lower in after hours in reaction to news: HGBL -2.9% (files $150 mln mixed shelf securities offering), ALRS -1.9% (files for $125 mln mixed securities shelf offering), CNM -1.5% (launches 18 mln share offering; also expects to repurchase and redeem 3.12 mln shares), STLD -1.5% (in sympathy with weak NUE guidance), TMUS -1.2% (in discussions with Tillman Global to build fiber-optic network, moving into the landline broadband industry, according to Bloomberg), LECO -0.7% (receives initial order to supply four Velion 150kW DC fast chargers to DC-America), X -0.7% (in sympathy with weak NUE guidance), CPA -0.6% (reports August traffic), F -0.4% (CEO appears on CNBC to discuss strike; CEO says strike would cause significant adverse impacts across Ford's manufacturing), DDD -0.4% (insourcing manufacturing of two more strategic printer platforms), PDS -0.2% (to acquire up to approximately 10% of its shares), AMZN -0.1% (Oracle and Microsoft announce Oracle Database@Azure)
Closing Stock Market Summary
Stocks had a strong showing today after a quiet start to the week in terms of market-moving events. The major indices all closed near their best levels of the session with decent gains. The S&P 500, which closed above 4,500, and the Nasdaq Composite climbed past their 50-day moving averages.
Gains were fairly broad in nature. 28 of the 30 Dow components logged a gain and all 11 S&P 500 sectors were positive. The real estate sector (+1.7%) saw the biggest gain. Energy (+1.3%) was another top performer, climbing alongside oil prices ($90.26/bbl, +1.69, +1.9%). The health care (+0.3%) and information technology (+0.7%) sectors closed at the bottom of the lineup.
Today's positive bias was driven by a couple of factors. There was a speculative buzz in the air surrounding the Arm Holdings (ARM 63.59, +12.59, +24.7%) IPO, which opened for trading at $56.10. There was also some central bank news and economic data that comported with a more hopeful economic outlook.
Specifically:
- The ECB raised its three, key interest rates by another 25 basis points, but hinted that it might be done raising rates, thereby opening the door to claims that today's move was a "dovish hike."
- The PBOC said the required reserve ratio will be cut by 25 basis points, effective September 15, for all banks that don't currently have a 5% reserve ratio.
- August retail sales (+0.6%) were stronger than expected.
- The August PPI report produced an in-line core reading and some palatable year-over-year increases of 1.6% for total PPI and 2.2% for core-PPI, respectively.
- Initial jobless claims for the week ending September 9 were just 220,000, which is a level associated with a tight labor market that is supportive of continued consumer spending.
The relatively calm response to the data from Treasuries was another factor supporting stocks. The 2-yr note yield rose two basis points to 5.01% and the 10-yr note yield rose four basis points to 4.29%.
Separately, Delta Air Lines (DAL 39.33, -0.22, -0.6%) was the latest airline to warn for Q3 due in part to rising fuel costs and was a notable laggard on a day that saw most stocks trade higher. Advancers led decliners by a better than 3-to-1 margin at the NYSE and by a 2-to-1 margin at the Nasdaq.
- Nasdaq Composite: +33.1% YTD
- S&P 500: +17.3% YTD
- S&P Midcap 400: +6.8% YTD
- Russell 2000: +6.0% YTD
- Dow Jones Industrial Average: +5.3% YTD
Reviewing today's economic data:
- Weekly Initial Claims 220K (consensus 226K); Prior was revised to 217K from 216K; Weekly Continuing Claims 1.688 mln; Prior was revised to 1.684 mln from 1.679 mln
- The key takeaway from the report is the same: the low level of initial claims -- a leading indicator -- is reflective of a fairly tight labor market, which is the basis for why consumer spending continues to hold up in the face of inflation pressures and rising rates.
- August PPI 0.7% (consensus 0.4%); Prior 0.3%; August Core PPI 0.2% (consensus 0.2%); Prior was revised to 0.4% from 0.3%
- The key takeaway from the report is that 80% of the rise in final demand prices was attributed to a 2.0% jump in the index for final demand goods, which was driven by a 10.5% increase in prices fir final demand energy. That understanding softens the blow of the headline surprise for the index for final demand; however, until energy prices back down, concerns about rising inflation expectations and the Fed holding higher for longer will persist.
- August Retail Sales 0.6% (consensus 0.2%); Prior was revised to 0.5% from 0.7%; August Retail Sales ex-auto 0.6% (consensus 0.4%); Prior was revised to 0.7% from 1.0%
- The key takeaway from the report is that gasoline station sales (+5.2%) had a big impact on the overall increase in retail sales. Excluding gasoline stations, retail sales were up a more modest 0.2%, which is suggestive of a consumer that is softening but not breaking.
- July Business Inventories 0.0% (consensus 0.1%); Prior was revised to -0.1% from 0.0%
Friday's calendar features the following data:
- 8:30 ET: August Import Prices (prior 0.4%), Import Prices ex-oil (prior 0.0%), Export Prices (prior 0.7%), Export Prices ex-agriculture (prior 0.6%), and September Empire State Manufacturing survey (consensus -10.0; prior -19.0)
- 9:15 ET: August Industrial Production (consensus 0.2%; prior 1.0%) and Capacity Utilization (consensus 79.3%; prior 79.3%)
- 10:00 ET: Preliminary September University of Michigan Consumer Sentiment ( consensus 69.4; prior 69.5)