- Alstom (AOMD TH) +2.3%
- Rio Tinto (RIO1 TH) +1.5%
- Nel (D7G TH) +1.4%
- Heidelberg Materials (HEI TH) +1%
- Imperial Brands (ITB TH) +0.9%
- GSK (GS71 TH) -0.8%
- Nokia (NOA3 TH) -1%
- Hannover Re (HNR1 TH) -1.2%
- Equinor (DNQ TH) -1.5%
- Talanx (TLX TH) -1.5%
- AB InBev (1NBA TH) -1.6%
- Philips (PHI1 TH) -4.3%
DAX:
- Zalando (ZAL TH) +1.1%
- Hannover Re (HNR1 TH) -1.2%
- Hannover Re Cut to Underperform at Oddo BHF; PT 197 euros
MDAX:
- Talanx (TLX TH) -1.3%
- Talanx Cut to Underperform at Oddo BHF; PT 60 euros
SDAX:
- SUSE (SUSE TH) +5.9%
Asian shares rose before a monthly US payrolls report forecast to show employers slowed hiring month, potentially easing pressure on the Federal Reserve to raise interest rates again. Equity benchmarks in Australia, Japan, South Korea and Hong Kong all climbed. A region-wide share gauge headed for its second daily advance, which would mark the first back-to-back gain in three weeks. The Hang Seng Index jumped as much as 2.3%, but it still set for a fifth week of losses. The nonfarm payrolls report will show employers hired 170,000 workers last month, down from 187,000 in August, a Bloomberg survey showed. Job data earlier this week provided a discordant narrative: job-openings overshot estimates, while a measure of private employment from ADP was weaker than forecast. US equity futures were little changed after the S&P 500 fell 0.1% Thursday, while the tech-heavy Nasdaq 100 slipped 0.4%, though both were well off their lows. Mainland China markets remain shut for a week-long holiday. News that a Chinese iron-ore buying agency was in talks with global miners boosted shares in BHP Group Limited and Fortescue Metals Group Ltd.
Major currencies traded in narrow ranges. The yen edged lower even as former Bank of Japan official Kazuo Momma, currently executive economist at Mizuho Research & Technologies, said the central bank would likely discuss whether to tweak forward guidance and yield curve control when they meet this month. Traders have record sums riding on the outcome of November’s Fed meeting as investors and policymakers debate the likelihood of a further rate increase this year. San Francisco Fed President Mary Daly, who doesn’t vote on the Fed’s rate-setting committee this year, said the central bank may keep rates on hold if inflation and the jobs market cool. In Asia, the Reserve Bank of India is forecast to keep interest rates unchanged in a monetary policy decision due Friday. In commodities, oil edged higher after a Thursday decline on concern slowing global growth will hit demand. Goldman Sachs Group Inc. predicts the decline will be fleeting. Gold s teadied after a run of declines, while Bitcoin traded around $27,500. US After Hours LEVI -2.7% lower on earnings; JNPR +4.5% approves restructuring plan; MGM +2.2% provides update on cyberattack.
Nikkei -0,14% Hang Seng +1,37% CSI Closed Shanghai Closed Shenzen Closed
Eur$ 1,0541 CNH 7,3124 CNY 7,2980 JPY 148,79 GBP 1,2177 CHF 0,9134 RUB 100,0562 TRY 27,7507 WTI$ 82,49 Gold 1,822 BTC 27,500 ETH 1,621
S&P -0,19% Nasdaq -0,13% EuroStoxx +0,17% FTSE +0,25% Dax +0,19% SMI +0,19%
Macro :
- Natural Gas Stocks Rise on Smaller-Than-Expected Inventory Gain
- Brevan Howard Plans $750 Million Push Into Commodities Trading
- China’s Giant Iron Ore Buyer Starts Supply Talks With Top Miners
- Citi Strategists Prefer Cyclical Tilt, Buying the Dip in Stocks
Keep an eye on :
Keep an eye on :
- CLASB SS : Clas Ohlson Sept. Sales +6%
- ACA FP : Credit Agricole to Start Share Repurchase of Up to 26.8M Shrs
- ELI BB : Belgium, Flanders Set to Invest in Grid Operator Elia: Tijd
- ENEL IM : Enel to Buy Back 4.2M Treasury Shares
- XOM US : Exxon Nears $60 Billion Deal for Shale Driller Pioneer: WSJ
- FIA1S FH : Finnair Plans EU600m Rights Issue; Announces New Targets
- HMB SS : Levi Strauss Cuts FY Net Revenue Forecast
- HLN LN : GSK Offloads Stake Worth About £900 Million in Haleon
- IMPN SW : Implenia Wins Two Contracts Totaling Over €100 Million
- MC FP : Birkenstock Follows Arm to Seek US Premium: ECM Watch
- MANU US : Qatari Group Won’t Raise £5b Manchester United Bid: Times
- MTRO LN : Metro Bank chair meets UK financial watchdogs as shares plummet
- ORA FP : Orange Seeks to Buy Risk&Co’s Cybersecurity Business: Les Echos
- REP SM : Repsol Says 3Q Refining Margin Indicator in Spain 13.5 $/Bbl
- SAN SM : Santander Mexico Hires Former Central Bank Executive Garcia
- SAN SM : Santander Mexico Hires Former Central Bank Executive Garcia
- SAN FP : Mirati Climbs on Report of Sanofi Exploring Acquisition
- SBBB SS : SBB Says It May Have to Buy Valerum Bonds After Coupon Skipped
- SKAB SS : Skanska Cancels SEK1.2b Order for Preparatory Works for Hospital
- HO FP : Thales to hire 1,000 people in Singapore over 3 years, a 50%
- TRB LN : Ellucian to Buy Tribal Group
- TNGX US : TNGX: Tango Therapeutics rises after report of Mirati takeover interest
- TSLA US : Tesla Cuts Prices of Model 3, Y in US After Quarterly Sales Miss
- TTE FP : Total Said to Weigh Selling Stake in Giant Scottish Wind Farm
>>> Up
* Aryzta Raised to Buy at Baader Helvea; PT 2.30 Swiss francs
* Bunzl Raised to Equal-Weight at Barclays; PT 3,100 pence
* Buzzi SpA Raised to Buy at HSBC; PT 31 euros
* Heidelberg Materials Raised to Buy at HSBC; PT 86 euros
* Heidelberg Materials Raised to Buy at HSBC; PT 86 euros
* Imperial Brands Raised to Buy at Citi; PT 1,980 pence
* Liberty Formula One Raised to Buy at Citi; PT $71
* Maire Tecnimont Raised to Outperform at Mediobanca SpA
* Man Group Raised to Outperform at BNPP Exane; PT 275 pence
* Prysmian Raised to Outperform at Mediobanca SpA; PT 46.20 euros
* Renault Raised to Equal-Weight at Barclays; PT 37.50 euros
* UBS Raised to Outperform at BNPP Exane; PT 28 Swiss francs
* Viafin Service Raised to Buy at Inderes; PT 14 euros
>>> Down
>>> Down
* Equinor Cut to Sell at Goldman; PT 340 kroner
* Galp Cut to Neutral at Goldman; PT 16 euros
* Galp Cut to Neutral at Goldman; PT 16 euros
* Hannover Re Cut to Underperform at Oddo BHF; PT 197 euros
* Phoenix Group Cut to Neutral at Oddo BHF; PT 540 pence
* Rentokil Rated New Sell at SocGen
* Talanx Cut to Underperform at Oddo BHF; PT 60 euros
* Wizz Air Cut to Neutral at JPMorgan; PT 3,000 pence
* Wizz Air Raised to Hold at HSBC; PT 1,925 pence
>>> Initiation
>>> Initiation
* Adyen Rated New Market Perform at Cowen; PT 736 euros
* Arjo Reinstated Hold at Nordea
* Banco BPM Reinstated Overweight at Morgan Stanley; PT 6.20 euros
* Blackstone Rated New Hold at HSBC; PT $113
* Brookfield Asset Management Rated New Buy at HSBC; PT C$53.53
* Charter Communications Rated New Market Perform at Bernstein
* Comcast Rated New Market Perform at Bernstein; PT $46
* Disney Rated New Outperform at Bernstein; PT $103
* Fortnox Rated New Underweight at Morgan Stanley; PT 49 kronor
* Fox Corp Rated New Market Perform at Bernstein; PT $32
* Paramount Global Rated New Underperform at Bernstein; PT $11
* VAT Rated New Underweight at Barclays; PT 284 Swiss francs
* VAT Rated New Underweight at Barclays; PT 284 Swiss francs
* YGT CN Rated New Speculative Buy at Paradigm Capital
* Warner Bros Discovery Rated New Outperform at Bernstein; PT $13
>>> Call
>>> Call
* Citi Strategists Prefer Cyclical Tilt, Buying the Dip in Stocks
* Disney Rated Outperform at Bernstein on Stable Growth Outlook
* Disney Rated Outperform at Bernstein on Stable Growth Outlook
Exxon Mobil Closing In on Megadeal With Shale Driller Pioneer
Deal could be sealed in coming days, though it is still possible there won’t be one
Exxon Mobil XOM -2.25%decrease; red down pointing triangle is closing in on a deal to buy Pioneer Natural Resources PXD -0.17%decrease; red down pointing triangle, a blockbuster takeover that could be worth roughly $60 billion and reshape the U.S. oil industry.
A deal could be sealed as soon as in the coming days, though it is still possible there won’t be one, people familiar with the matter said.
After posting a record profit in 2022, Exxon has been flush with cash and exploring options that would push it deeper into West Texas shale.
An acquisition of Pioneer, with a market cap of around $50 billion, would likely be Exxon’s largest deal since its megamerger with Mobil in 1999. It would give Exxon a dominant position in the oil-rich Permian Basin of West Texas and New Mexico, a region the oil giant has said is integral to its growth plans.
The Wall Street Journal reported in April that the two companies were holding preliminary talks.
Exxon has a market value of $436 billion, so the deal, which would be the biggest takeover of the year, should be easily doable.
A deal would eclipse the U.S. oil industry’s most recent blockbuster, Occidental Petroleum’s 2019 acquisition of Anadarko Petroleum for about $38 billion, and top Exxon’s 2010 purchase of XTO Energy for more than $30 billion.
It would also be a legacy-shaping move for Exxon CEO Darren Woods, whose tenure at the company has seen its peaks and valleys.
Woods, an Exxon-lifer who became CEO in 2017, initially promised to dramatically grow Exxon’s oil production only to see his plans felled by the pandemic. An oil-market collapse in 2020 led to Exxon’s first annual loss in decades—more than $22 billion. It lost a historic proxy fight in 2021 to investment firm Engine No. 1, which excoriated Exxon’s finances and argued it had no long-term strategy.
But Exxon rebounded to a record profit of $55.7 billion last year, buoyed by soaring global demand for oil and gas as economies reopened. Exxon has used its prolific cash flows to reward investors with buybacks and dividends and pledged disciplined spending, though many wondered whether the company would dip into its coffers for a megadeal in the oil patch.
The acquisition marks Woods’s second significant acquisition, coming only a few months after Exxon scooped up CO2 pipeline operator Denbury for $4.9 billion. It would add vast swaths of West Texas acreage considered the core of the U.S. shale boom.
Pioneer’s acreage in the Midland Basin—the eastern portion of the Permian Basin, which straddles West Texas and New Mexico—is seen as one of the largest collections of fertile oil land in the U.S., and the company holds one of the largest numbers of untapped drilling locations of any Permian player, analysts have said.
In the wake of the pandemic, Pioneer snapped up two other large Permian operators, Parsley Energy and DoublePoint Energy, for a combined $11 billion in 2021.
Pioneer’s CEO, Scott Sheffield, started work for predecessor company, Parker & Parsley Petroleum, in 1979. That company merged with another in 1997 to form Pioneer. He had retired in 2016 but returned to the job in 2019.
In April, Sheffield had announced he would retire at the end of this year, and that he would be succeeded by his longtime top lieutenant Richard Dealy, the company’s chief operating officer.
“I’m almost 71, we celebrated Pioneer’s 25th anniversary last year,” Sheffield told The Wall Street Journal in an interview in April. “And so [the] timing was right.”
Pioneer’s balance sheet has been in increasingly good shape since oil prices surged, with its debt declining by more than 20% since the end of 2021, according to FactSet.
The tie-up could presage a wave of consolidation among shale companies. The industry has shifted from the rapid growth it pursued for more than a decade to a mature business underpinned by fiscal restraint and hefty investor payouts. But producers are contending with dwindling drilling locations. Drilling for new oil discoveries has fallen out of favor with investors, leaving many companies with few options other than to acquire rivals to extend their runway.
Producers have deep coffers at their disposal to pursue deals after Russia’s invasion of Ukraine last year sent global prices soaring to more than $127 a barrel. Prices have retreated and been volatile since then. Exxon’s acquisition of Pioneer could be the first of a series of deals in the Permian, which contains shale wells that produce rapidly and don’t bind companies to decadeslong megaprojects that have fallen out of favor with some investors who fear a future decline in oil demand.
Environmentalists, lawmakers and others have hoped oil and gas companies would invest their record profits into green energy. Woods has pledged Exxon will invest $17 billion through 2027 in cutting the company’s carbon emissions and building a business that would help other companies reduce theirs too, investing in areas including carbon capture, biofuels and lithium mining.
Exxon’s move to purchase Pioneer, even after its acquisition of Denbury, the CO2 pipeline operator, signals the company is still primarily planning to lean on its traditional oil-and-gas business for decades.
Are Chinese Buyers Bowing Out of the Art Market?
A disappointing sale at Sotheby’s Hong Kong suggests that China’s art-buying spree may be over
After Hours Summary: LEVI -2.7% lower on earnings; JNPR +4.5% approves restructuring plan; MGM +2.2% provides update on cyberattack
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SAND +0.5%
Companies trading higher in after hours in reaction to news: JNPR +4.5% (approves restructuring plan, including headcount reduction of 440 employees), MGM +2.2% (provides update on cyberattack, expects Q3 impact), AMC +1.4% (Taylor Swift concert film has sold over $100 mln in advance tickets), BG +1.3% (shareholders approve acquisition of Viterra), AMLX +1.3% (provides update on AMX0035 in France), PFE +0.1% (presents new data re respiratory illnesses)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AEHR -11.5%, PKE -5%, LEVI -2.7% (also commences initiative to review operating model and cost structure)
Companies trading lower in after hours in reaction to news: KTB -2.3% (in sympathy with weak LEVI earnings), FLR -1.9% (awarded a contract by Cormorant Clean Energy), REGN -0.9% (expects $0.78 impact to Q3 EPS due charge relating to development milestone payment), CSCO -0.5% (simplifies product category and customer market reporting), AORT -0.1% (announces presentation of late-breaking interim data from AMDS PERSEVERE Trial; also announces presentation of real world data from X Aortic heart valve study), HCI -0.1% (TypTap approved to assume up to 25,000 policies from Citizens Property), NOC -0.1% (awarded $235 mln U.S. Air Force contract modification)
Thames Water says pollution fine limits needed to win over investors
England’s biggest water and sewage provider says shareholder support is conditional on regulatory changes
Thames Water has said it will need regulatory changes including a limit to pollution fines and an increase in permitted returns to persuade shareholders to inject much-needed equity into the debt-laden business.
The utility, which provides water and sewage services to about 25 per cent of the population in England, has asked shareholders, which include sovereign wealth, private equity and pension funds, to inject more than £2.5bn of equity into the business to stabilise its finances. It is also seeking approval from the regulator Ofwat for a 40 per cent increase in customer bills by 2030.
However, in a business plan submitted to Ofwat on Thursday, Thames Water said the equity injections were conditional on the regulator agreeing a “material move up in the allowed rate of return”.
It also said it required an agreement on the “maximum level of penalties we can incur”. Last week it received a £100mn fine for performance failures but it faces other court cases and penalties, which could weigh heavily on profitability. In a statement on Thursday, it said it was “actively discussing the changes with the regulator”.
Thames Water said it would not be able to deliver its £18bn business plan, which covers spending between 2025 and 2030, if it does not receive the equity injection.
The demands highlight the fragile state of Britain’s largest privatised water utility. The company is struggling with higher financing costs on its £16bn debt, as well as a public outcry over sewage overflows and leakage. In June its chief executive Sarah Bentley stepped down amid concerns over the company’s financial stability. The government has drawn up contingency plans for a temporary renationalisation.
Worries have also risen about other UK water companies. More than half of the sector’s estimated £60bn in debt is inflation linked. Although interest rate pressures have reduced slightly in recent months, rating agency S&P has a negative outlook or credit watch on three-quarters of water company ratings.
Thames Water also warned in its business plan that ageing infrastructure such as water pipes and sewage treatment plants were increasingly vulnerable and it was having to spend more on repairs. “This results in less money to invest in improvements,” it added.
The company announced last year that shareholders had pledged £1.5bn, but by March this year it had received only £500mn. In July, it said investors had agreed to stump up £750mn next year, subject to conditions, and that it needed a further £2.5bn from shareholders by 2030.
However, its largest investor, the pension fund Omers, took a 30 per cent write down on its Thames Water stake last year, raising concerns over investors’ willingness to put more cash into the business.
Ofwat said: “Companies have now set out their plans, how they intend to deliver them and the returns they feel their investors should receive. This is the first step of the process and we will now scrutinise and test those plans.”
“We will go through all plans and challenge them individually and comparatively. Our initial view will be published in May/June with a final determination made in December 2024.”
Thames Water said: “Our plans are ambitious and aim to deliver on what our customers have told us are their priorities.”
Closing Stock Market Summary
The stock market experienced some turbulence on the back of yesterday's gains. Unlike yesterday, there was a disconnect between the stock market and Treasury yields, which is to say that stocks languished despite a modest drop in yields.
The major indices were able to close well off their lows of the day, albeit with modest declines, thanks to some mega cap stocks recovering from early losses. The Vanguard Mega Cap Growth ETF (MGK) rose 0.1% while the market-cap weighted S&P 500 fell 0.1%. Meanwhile, the Invesco S&P 500 Equal Weight ETF (RSP) saw a 0.3% decline.
The Russell 2000 for its part closed with a 0.1% gain, drawing some support from its regional bank components. On a related note, the SPDR S&P Regional Banking ETF (KRE) rose 1.7% today.
Buyers were seemingly hesitant in front of the September jobs report on Friday at 8:30 a.m. ET. The labor report follows this morning's release of the weekly initial jobless claims report, which showed a low level of initial claims (207,000) that is typically associated with a tight labor market and an economy running at a healthy clip.
Treasuries had a volatile response to the data, but calmed down fairly quickly. The 10-yr note yield was at 4.71% just before the release and jumped to 4.77% in the immediate aftermath. It settled the day at 4.71%, which is down three basis points from yesterday. The 2-yr note yield was at 5.02% just before 8:30 a.m. ET and jumped to 5.07% in response to the data, ultimately settling the session six basis points lower at 5.03%.
Seven of the 11 S&P 500 sectors registered a decline, but the consumer staples sector (-2.1%) was the worst performer by a wide margin due in part to a big loss in Clorox (CLX 124.93, -6.90, -5.2%) following its disappointing guidance. The materials sector (-1.3%) was the next worst performer.
The real estate (+0.7%), health care (+0.5%), financials (+0.4%), and information technology (+0.3%) sectors were alone in the green at the close.
Separately, WTI crude oil futures extended their losses today, dropping another 2.9% to $82.29/bbl. That weakness, along with the decline in Exxon Mobil (XOM 108.99, -2.51, -2.3%), drove the underperformance of the energy sector (-0.6%).
- Nasdaq Composite: +26.3% YTD
- S&P 500: +10.9% YTD
- S&P Midcap 400: +0.2% YTD
- Dow Jones Industrial Average: -0.1% YTD
- Russell 2000: -1.7% YTD
Reviewing today's economic data:
- Weekly Initial Claims 207K (consensus 225K); Prior was revised to 205K from 204K; Weekly Continuing Claims 1.664 mln; Prior was revised to 1.665 mln from 1.670 mln
- The key takeaway from the report is the understanding that the low level of initial claims is associated not only with a tight labor market, but also an economy running at a good pace.
- August Trade Balance -$58.3 bln (consensus -$65.1 bln); Prior was revised to -$64.7 bln from -$65.0 bln
- The key takeaway from the report is that the drop in imports in August, versus the increase in exports, will factor favorably as an input to Q3 GDP computations.
Friday's economic calendar features:
- 08:30 ET: September Nonfarm Payrolls ( consensus 158K; prior 187K)
- 08:30 ET: September Nonfarm Private Payrolls ( consensus 150K; prior 179K)
- 08:30 ET: September Unemployment rate (consensus 3.7%; prior 3.8%)
- 08:30 ET: September Average Hourly Earnings ( consensus 0.3%; prior 0.2%)
- 08:30 ET: September Average Workweek ( consensus 34.4; prior 34.4)
- 15:00 ET: August Consumer Credit ( consensus $12.0B; prior $10.4B)