Most Asian stocks rose along with U.S. and European futures Wednesday, extending a global rally as earnings roll in, optimism builds over U.S. stimulus and concern about volatile retail trading eases. The dollar dipped.
Shares outperformed in South Korea and Japan. S&P 500 and Nasdaq 100 futures climbed after Alphabet Inc. and Amazon.com Inc. reported better-than-estimated revenue. U.S. stocks earlier closed higher for a second session. Treasury yields edged up amid a move to fast track a U.S. stimulus plan.
Elsewhere, oil traded at its highest in over a year on tightening global supplies. Chinese equities fluctuated after the People’s Bank of China drained some funds from the financial system.
US After Hours Biggest news is that AMZN reports large beat and Jeff Bezos will transition to Exec Chair in Q3, Andy Jassy will then become CEO; GOOG +7% and DOX +2.6% up sharply on earnings; TENB -10.2%, MTCH -5.7%, EA -4.7% lower on earnings
Nikkei +1% Hang Seng -0.17% CSI -0.26% Shanghai -0.38% Shenzen -0.68%
Eur$ 1.2037 CNH 6.4635 CNY 6.4594 JPY 105.05 GBP 1.3653 CHF 0.8982 RUB 76.0175 TRY 7.1848 WTI$ 55 +0.44%
S&P +0.43% Nasdaq +0.71% EuroStoxx +0.61% FTSE +0.33% Dax +0.52% SMI +0.06%
Macro :
Macro :
- France Considers Extending Payment Period for Covid Loans: Echos
- Roller-Coaster Markets Are Good News for Convertibles
- Roller-Coaster Markets Are Good News for Convertibles
- VIX, Skew, ETF Shorts Show Stock Market Still Pretty Far From OK
- Manchin Doesn’t Back Minimum Wage Proposal in Biden Aid plan
SPACs :
- SPAC Agile Growth Files for $300M IPO; Seeks Nasdaq Listing
- Israeli Startup REE Said to Plan Merger With 10X Capital SPAC
Keep an eye on :
Keep an eye on :
- AIR FP : Airbus $781 Million Space Contract Extension Protects 200 Jobs
- AKSO NO : Aker Solutions Prelim 4Q Adjusted Ebitda About NOK120M
- ALFA SS : Alfa Laval 4Q Adjusted Ebita Beats Estimates
- SAN SM : Banco Santander Books EU1.15b 4Q Restructuring Costs in 4Q
- BCN LN : Bacanora Lithium to Offer 100m Shrs GBP0.45/Shr
- BRG NO : Borregaard 4Q Operating Revenue Beats Estimates
- BP/ LN : BP Says Its Electric Car Chargers Aren’t Profitable Yet
- CINE LN : Cineworld Backs Down in Dispute Over Interest Bill, FT Says
- CINE LN : Cineworld Backs Down in Dispute Over Interest Bill, FT Says
- CON SW : Conzzeta FY Net Revenue Beats Estimates
- ERICB SS : Ericsson Patent Case Against Samsung to Be Probed at ITC
- FNTN GY : Freenet to Buy Back Up to EU135 Million Shares This Year
- HUSQB SS : Husqvarna 4Q Net Sales Beat Estimates
- KAZ LN : KAZ Minerals Holder RWC Sees 1,000p/Share as ‘More Acceptable’
- MBWS FP : Marie Brizard Wine & Spirits Raises EU100.9 Mln in Rights Offer
- MELE BB : Melexis 1Q Revenue Forecast Beats Estimates
- MELE BB : Melexis Names Marc Biron to Be New CEO; Chombar to Be Chairwoman
- NOVOB DC : Novo Nordisk FY Ebit Meets Estimates
- PHIA NA : Philips Is Said to Pick Lazard for Potential Home Appliance IPO
- PUB FP : Publicis FY Revenue Meets Estimates
- REP SM : Repsol Taps JPMorgan for Renewables Unit : El Confidencial
- SIE GY : Siemens Raises Guidance as China Recovery Seen Boosting Profits
- VAC FP : Pierre & Vacances: Paris Court Opens Conciliation Procedure
- SAN FP : Sanofi, Kiadis Say 36.6% of Kiadis Shares Committed Under Offer
- VOD LN : Vodafone Prepares Telecom Towers Business for March IPO: Reuters
- VOLVB SS : Volvo 4Q Profit Beats Estimates, Warns of 1Q Disturbances (1)
- VOW3 GY : Porsche Budgets $1.1 Billion on Digitization China Buyers Demand
- WCH GY : Wacker Chemie to Buy Genopis for at Least $39m Cash
Publicis slows revenue fall in final quarter of 2020
French group says sales guidance impossible during Covid crisis but pledges to improve margins
French advertising group Publicis slowed the decline in its revenues in the fourth quarter, helped by a return to growth in the US, its biggest market, where demand for its digital marketing has been strong.
The world’s third-biggest advertising holding company by revenue managed to limit the damage wrought by the pandemic last year by significantly cutting costs on everything from salaries to travel to help it cope as big clients slashed their marketing budgets.
Although uncertainty hangs over the global economy, Publicis signalled a measure of confidence by proposing a €2-per-share dividend for 2020, up from the €1.50 paid the previous year and just below its pre-pandemic levels.
Arthur Sadoun, chief executive, acknowledged that Covid-19 was still exacting a toll and making it impossible to give sales guidance for this year. “The first quarter of 2021 is basically the fifth quarter of 2020, so it will be negative,” he said, adding that the second quarter would be likely to show growth given the easier year-on-year comparisons.
“We hope to have more visibility by summer but everything will depend on the health situation.”
Publicis pledged to improve its profit margins this year by up to 50 basis points, after having achieved a 16 per cent margin last year, down 90bp from 2019. Mr Sadoun said that Publicis wanted to start reinvesting in “talent” again this year, in a nod to what is often perceived to be the main asset for an advertising agency — its people.
Revenue in the fourth quarter fell 3.9 per cent on an organic basis, a metric closely followed by investors that strips out the impact of currency movements and M&A, to reach €2.59bn. This was an improvement on the third-quarter organic sales contraction of 5.6 per cent and was also ahead of analysts’ expectations of a fall in fourth-quarter organic sales of 6 per cent on revenue of €2.56bn, according to consensus forecasts from Kepler Cheuvreux analysts.
Annual revenue fell by only 0.9 per cent to €9.71bn on a reported basis but that was helped by the $4.4bn acquisition of digital marketing agency Epsilon in 2019. Net income for 2020 stood at €1.03bn, down 13 per cent from a year earlier.
Under Mr Sadoun’s tenure, Publicis has been investing heavily in expanding its use of technology to help its clients, which include big multinationals like Disney, L’Oréal and Kraft-Heinz, to navigate the shift to online commerce and marketing.
Digital advertising now accounts for roughly half of global advertising spending, according to Publicis-owned market researcher Zenith, and companies cut back less on this type of marketing during the Covid-19 crisis than on television, radio and print ads.
Investors have had doubts for several years about the abilities of the big ad holding groups, such as Publicis and rivals WPP, Omnicom and Interpublic, to prosper in this new environment where they have to jostle for clients and data with tech giants like Facebook and Google.
Publicis shares have lost about one-third of their value since Mr Sadoun took over as chief in July 2017. But they have risen 9.4 per cent in the past year, outperforming both WPP and Omnicom shares that are both down about 17 per cent. Publicis shares still trade at a discount of roughly 15 per cent to those peers on a price-to-earnings ratio.
>>> Up
* Adevinta Raised to Overweight at Morgan Stanley; PT 160 kroner
* Alphabet PT Raised to $2,200 from $2,050 at Morgan Stanley
* Amazon PT Raised to $4,200 from $3,900 at Morgan Stanley
* Avanza Raised to Buy at DNB Markets; PT 300 kronor
* Aviva Raised to Overweight at Morgan Stanley; PT 425 pence
* Bucher PT Raised to 530 Swiss francs at Berenberg
* Electrolux Raised to Buy at Pareto Securities; PT 230 kronor
* Ferrari Cut to Sell at Citi; PT 160 euros
* Fresenius Medical Cut to Hold at LBBW; PT 60 euros
* Lenzing PT Raised to 145 euros from 94 euros at Deutsche Bank
* Novozymes Raised to Hold at Berenberg; PT 370 kroner
* Persimmon Raised to Overweight at Barclays; PT 3,000 pence
* Polypipe PT Raised to 667 pence from 639 pence at Jefferies
* Prudential Raised to Hold at SocGen; PT 1,250 pence
* Rieter Raised to Buy at Stifel; PT 145 Swiss francs
* Schibsted Raised to Buy at SEB Equities; PT 365 kroner
* SSP Raised to Buy at Berenberg; PT 335 pence
* Taylor Wimpey Raised to Overweight at Barclays; PT 170 pence
>>> Down
* Air France-KLM Cut to Underperform at Oddo BHF; PT 4.50 euros
* Barratt Cut to Equal-Weight at Barclays; PT 725 pence
* CCC Raised to Buy at HSBC; PT 100 zloty
* Crest Nicholson Cut to Equal-Weight at Barclays; PT 335 pence
* Holmen Cut to Sell at SEB Equities; PT 340 kronor
* Lundin Energy Raised to Outperform at RBC; PT 260 kronor
* Mycronic Cut to Sell at Handelsbanken; PT 200 kronor
* Orange Belgium Cut to Neutral at Oddo BHF; PT 22 euros
* Sainsbury Cut to Hold at SocGen; PT 247 pence
* Sainsbury Cut to Hold at SocGen; PT 247 pence
* Scatec ASA Cut to Neutral at Clarksons Platou; PT 300 kroner
* Unite Group Cut to Underweight at Barclays; PT 850 pence
>>> Initiation
* Diageo ADRs Rated New Overweight at Morgan Stanley; PT $192
>>> Initiation
* Diageo ADRs Rated New Overweight at Morgan Stanley; PT $192
* Solaria Energia Rated New Buy at Berenberg; PT 26 euros
* Wincanton Rated New Buy at Peel Hunt; PT 385 pence
>>> Call
>>> Call
* Adevinta Share Drop Provides Attractive Entry Point, MS Says
* Aviva Upgraded at Morgan Stanley, Disposals Bring Optionality
* Solaria a Buy at Berenberg But Needs to Deliver on Targets
* SSP Group Share Weakness Brings Buying Opportunity: Berenberg
* SSP Group Share Weakness Brings Buying Opportunity: Berenberg
High-speed traders get windfall from retail investor boom
Value of the extra trading is expected to be widely shared by market makers
The deluge of trading activity in US equities and derivatives markets is expected to produce a windfall for the high-speed market makers that execute orders for brokers such as Robinhood and Charles Schwab.
Market makers including Virtu Financial, Citadel Securities, Susquehanna and Two Sigma look set to be among the enduring winners from the burst of activity driven by retail investors, even as the run-up in shares such as GameStop appears to be reversing.
Shares in Virtu, the only publicly traded US market maker, are up 11 per cent this year, compared with less than 2 per cent for the US equity market as a whole.
The emergence of a new generation of day trader last year swapping investment ideas on social media sites including Reddit culminated last week in a surge of trading activity never before seen in US financial markets. More than 93bn shares changed hands in the US over five sessions, including a record 24.4bn on Wednesday last week alone.
Those orders often make their way to high-speed trading firms, which have grown to account for a significant percentage of trading in US equities — cheered by some in the market for providing extra liquidity and cutting the costs of trading for ordinary investors.
The firms often pay brokers to route orders into their systems, and profit on the difference between bid and ask prices quoted on securities.
“This pace is pretty intense,” said Richard Repetto, an analyst at Piper Sandler. “The group of ‘Reddit tickers’ have displayed enormous volume with a far greater amount of volatility,” he said, in reference to stocks including GameStop, AMC and the former mobile phone behemoth BlackBerry.
The explosion in volumes in the country’s $43tn equity market has been accompanied by an increase in options trading. January had the highest volume in options trading on record, up 62 per cent compared to a year ago, according to data from the Options Clearing Corporation. More than 843m options contracts were cleared that month alone, the equity derivatives clearing house said.
Much of that activity has been fuelled by retail investors and day traders stuck at home during the pandemic who are sitting on high levels of savings. Roughly a fifth of the call options bought last week were small trades made up of 10 contracts or less, according to Susquehanna.
“The question is, how long does the retail buying stay in place once we are past this topping off of the stimulus cheques and the world reopens and people are not just sitting at home on their computers?” asked Saira Malik, head of global equities at Nuveen.
The trading bonanza has intensified interest in Virtu’s quarterly results next week. Analysts expect the company to report an adjusted profit of $1.06bn for last year, more than five-times higher than its full-year adjusted earnings in 2019.
“They are big beneficiaries of elevated retail volumes,” Alex Kramm, a research analyst at UBS, said of Virtu.
“Retail may be the tip of the spear that’s prodding the excitement in the market but it brings more investors to the table and as a market maker what else can we ask for?” a trader at one market maker said. “That’s what we thrive on.”
The value of the extra trading is widely shared. High-speed market makers typically pay online brokers to route orders to them, allowing brokers to offer free trading to clients. Robinhood released figures last month showing market makers paid $221.4m in the fourth quarter in return for it routing its clients’ transactions to them, including $91m in December. That put Robinhood on pace for annualised sales above $1bn.
Sean Horgan, an analyst with Rosenblatt Securities, noted that the uptick in trading activity would also lift other companies who manage the plumbing of US financial markets, including stock exchanges.
After Hours Summary: Biggest news is that AMZN reports large beat and Jeff Bezos will transition to Exec Chair in Q3, Andy Jassy will then become CEO; GOOG +7% and DOX +2.6% up sharply on earnings; TENB -10.2%, MTCH -5.7%, EA -4.7% lower on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ATGE +7.6%, GOOG +7%, AMCR +6%, VIAV +5.4%, LU +3.6%, SCSC +3.5%, DOX +2.6% (also announces service agreements with various partners), ICHR +2%, APAM +1.6% (also announces $0.31/sh special dividend), BDN +1.3%, POWI +1.2%, CB +1.1%, PKI +0.9%, AMZN +0.6% (also Jeff Bezos will transition to Exec Chair in Q3; Andy Jassy will then become CEO), MANH +0.3%, SMCI +0.1% (also names new CFO; announces new $200 mln stock repurchase program), ARGO +0.1%
Companies trading higher in after hours in reaction to news: CLIR +13.9% (receives purchase order from global refining co), ISBC +12.3% (to be added to S&P SmallCap 600), SNE +1.4% (promotes Neal Manowitz to COO of Sony Electronics Inc North America), PCG +0.7% (enters into Master Transaction Agreement with subsidiary of SBAC), TCON +0.3% (new CFO), CX +0.3% (announces efforts to optimize supply chain), WMT +0.3% (confirms readiness to administer COVID-19 vaccines at select pharmacies), GEF +0.2% (implements price increases), NDAQ +0.1% (reports Jan volume statistics)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: TENB -10.2%, MTCH -5.7%, EA -4.7%, ALGM -3.9% (also announces stock offering), BRKS -3%, ALB -2.7% (sees Q4 EPS and revs above consensus; also announces stock offering), SANM -2.5%, TCS -2.5%, CMG -2.3%, OCFT -1.8%, AMGN -1.2%, FEYE -0.5%, FBHS -0.1%, STE -0.1%
Companies trading lower in after hours in reaction to news: VYGR -12.5% (VYGR and NBIX terminate Parkinson's disease portion of collaboration agreement), TMDI -6% (announces $15 mln bought deal offering), X -5.4% (commences public offering of 40 mln shares), OPEN -5.4% (commences public offering of 24 mln shares), KRYS -4.6% (stock offering), GNUS -2.2% (stock offering), VUZI -2.2% (files for $300 mln mixed securities shelf offering), MKTX -0.9% (reports Jan volume statistics), NBIX -0.2% (VYGR and NBIX terminate Parkinson's disease portion of collaboration agreement)
Closing Stock Market SummaryThe S&P 500 gained 1.4% on Tuesday in a broad-based advance, bringing its two-day gain to 3.0%. The Dow Jones Industrial Average (+1.6%) and Nasdaq Composite (+1.6%) edged out the benchmark index in terms of performance, while the Russell 2000 gained 1.2%.
All 11 S&P 500 sectors contributed to the advance, including the financials (+2.5%), industrials (+2.2%), and consumer discretionary (+2.0%) sectors with at least 2.0% gains. The health care (+0.3%) and real estate (+0.4%) sectors lagged with more modest gains.
The cyclical leadership suggested investors continued to bet on an economic recovery, supported by increasing vaccination rates and expectations for additional fiscal stimulus. The cratering in shares of GameStop (GME 90.00, -135.00, -60.0%) and AMC Entertainment (AMC 7.82, -5.48, -41.2%) was cited as a positive factor that helped guide investors back to the bigger economic picture.
In addition, UPS (UPS 160.26, +4.00, +2.6%) and Exxon Mobil (XOM 45.63, +0.71, +1.6%) highlighted the batch of better-than-expected earnings reports, and Amazon (AMZN 3380.00, +37.12, +1.1%) and Alphabet (GOOG 1927.51, +26.16, +1.4%) finished higher ahead their earnings reports after the close.
Shares of Pfizer (PFE 34.99, -0.81, -2.3%), on the other hand, declined 2.3% after the Dow component came up short of EPS expectations. Note, Pfizer did beat revenue estimates, issued upbeat FY21 guidance, and provided positive-sounding vaccine delivery commentary.
In other corporate news, AstraZeneca's (AZN 50.06, -0.34, -0.7%) COVID-19 vaccine was 82.4% effective with 3-month intervals used in UK trials, Uber (UBER 56.46, +3.70, +7.0%) agreed to acquire Drizly for approximately $1.1 billion in cash and stock, and Dell (DELL 77.17, +3.22, +4.4%) was upgraded to Buy from Neutral at Goldman.
Longer-dated U.S. Treasuries succumbed to selling pressure amid the positive outing in stocks and renewed growth optimism. The 10-yr yield increased three basis points to 1.11%, and the 2-yr yield remained unchanged at 0.11%. The U.S. Dollar Index increased 0.1% to 91.07. WTI crude futures rose 2.3%, or $1.21, to $54.77/bbl.
Investors did not receive any economic data on Tuesday. Looking ahead to Wednesday, investors will receive the ADP Employment Change Report for January, the ISM Non-Manufacturing Index for January, the final IHS Markit Services PMI for January, and the weekly MBA Mortgage Applications Index.
- Russell 2000 +8.9% YTD
- Nasdaq Composite +5.6% YTD
- S&P 500 +1.9% YTD
- Dow Jones Industrial Average +0.3% YTD