Saudi Oil Min Al-Falih: Reiterates Saudi Arabia is interested in continuing talks to stabilize oil prices between OPEC and non-OPEC members
Kering Powers Ahead in Q1 as Gucci Defies Predictions
Organic sales at Gucci rose 48.3 percent, their strongest increase in two decades, as luxury clients clamored for Alessandro Michele's distinctive designs.
PARIS — Kering is proving that even a $5 billion brand can deliver record results.
Defying conventional wisdom that mature brands reach a plateau at a certain point in their cycle, Gucci posted its strongest revenue increase in 20 years, with organic sales in the first quarter vaulting up 48.3 percent to 1.35 billion euros, or $1.44 billion.
That, and another strong performance from Saint Laurent, helped parent company Kering register a 31.2 percent jump in revenues during the period, providing further evidence of a rebound in luxury sales amid signs of a recovery in Chinese demand.
Group sales totaled 3.57 billion euros, or $3.81 million, in the three months to March 31, with the French conglomerate reporting double-digit growth across all activities and all geographic regions, excluding Japan. In organic terms, revenues were up 28.6 percent.
“Kering achieved a record performance in the first three months of the year, posting a sharp acceleration in sales growth,” said François-Henri Pinault, chairman and chief executive officer.
“In a climate of persistent geopolitical and macroeconomic uncertainties, our first quarter puts us in a particularly good position for the balance of the year,” he added.
The figures come on the heels of a 15 percent rise in revenues at LVMH Moët Hennessy Louis Vuitton in the first quarter. Burberry, meanwhile, reported total revenue rose 14 percent in the six months ended March 31.
“We were expecting Kering to likely produce a beat versus sell-side expectations in the same vein as LVMH, but plus-28.6 percent versus plus-13.3 percent is a first as far as experience of beats goes,” said Luca Solca, head of luxury goods at Exane BNP Paribas.
“We expect this is beyond the rosiest buy-side expectations, and should push the share price to new heights as a consequence,” he added.
Jean-Marc Duplaix, Kering’s chief financial officer, said Gucci was on track to deliver its medium-term objectives sooner than expected, but said the brand still had plenty of room to grow.
He predicted its earnings before interests and taxes margin would hit 30 percent this year, but added that Kering wanted to increase the margin progressively. Planned investments this year include the launch of e-commerce in China, digital communications and additional store refurbishments.
“We are ahead of schedule in terms of achievement of the objectives we had set together with Gucci,” he told analysts and reporters on a conference call.
“But there are still many KPIs where we need to make some progress and the teams are working on that at Gucci. That’s the reason why we consider that, because also of the creative momentum, there is still room for expansion at Gucci and we have not yet reached the peak,” he added.
Gucci, which accounts for more than a third of Kering’s revenues, has undergone a reinvention at the hands of creative director Alessandro Michele and ceo Marco Bizzarri.
In the first quarter, it registered double-digit growth for all product categories, with a sharp acceleration in full-price sales. Sales in directly operated stores were up 51.4 percent on a comparable basis, with Western Europe posting a 66.4 percent increase, and the Asia-Pacific region registering a 63.1 percent uptick.
The brand did well across the board, appealing to local customers and tourists, Millennials and other age groups. Duplaix said comparisons would get tougher in the coming quarters, noting that Gucci has completed its transition to the geek-chic aesthetic introduced by Michele following his appointment in 2015.
“We won’t benefit anymore from the boost we had with the introduction of the new styles in all categories, so now we have to rely on the creativity of Alessandro,” said Duplaix.
“Looking at the evolution of the sell-through and also considering the wholesale orders we have, I think we can be confident for the remainder of the year, but…we should see a normalization of the growth going forward,” he added.
However, he said there was room for improved performances from divisions including eyewear, after Kering took the license in-house on Jan. 1, as well as fragrance royalties, with the planned launch this year of the first perfume created with Coty under Michele’s creative direction.
The luxury division as a whole — which includes brands such as Yves Saint Laurent, Bottega Veneta, Stella McCartney, Boucheron and Brioni — saw revenues increase 31.6 percent in organic terms. The sports and lifestyle division, which revolves around Puma, posted a 14 percent rise.
Saint Laurent delivered another strong quarter, with sales up 33.4 percent on a comparable basis. The first collection designed by Anthony Vaccarello hit stores in January and has been “extremely well received,” the group said, reporting that some women’s ready-to-wear and shoe designs achieved bestseller status.
Bottega Veneta posted a 2.3 percent rise in organic sales, after a drop of 9.4 percent in the fourth quarter of 2016, helped by the general improvement in the luxury environment. Sales in directly operated stores rose 3.6 percent on a comparable basis, with women’s shoes, in particular, driving demand.
Revenues from the group’s other luxury brands rose 11.1 percent. Couture and leather goods houses posted an aggregate revenue rise of 11.1 percent, fueled by the “excellent” performance of Balenciaga’s directly operated stores, reflecting strong demand for Demna Gvasalia’s collections.
Stella McCartney and Alexander McQueen achieved growth, while Brioni’s sales in directly operated stores improved, helped by a return of Russian customers to Europe. Solid performances from Boucheron and Pomellato helped drive a 13.1 percent rise in revenue from watches and jewelry houses.
“There is clearly an improvement in the soft luxury market, even if we can see that it’s not necessarily the case for all the brands and all the players, so for the big brands there is clearly an opportunity to capture the growth with the Chinese cluster, but also with the local customers in the mature markets,” said Duplaix.
“But the fact is that Gucci is overperforming the market because of all the initiatives and all the work done by the Gucci teams,” he added.
Kering Eyewear, whose revenues were consolidated for the first time, registered sales of 112.9 million euros, or $120.3 million, before elimination of intra-group sales and royalties received by brands. Net revenue for the period totaled 85.5 million, or $91.1 million.
Organic sales at Puma rose 15.3 percent in the first quarter, with quarterly sales surpassing one billion euros, or $1.1 billion, for the first time in the company’s history. Celebrity ambassador-backed styles drove the German sporting goods firm’s core footwear sales.
Puma ceo Bjørn Gulden cited the Fierce, Basket Heart and Limitless lines — backed respectively by campaigns starring Kylie Jenner, Cara Delevingne and The Weeknd — among top sells in the first quarter.
“It’s the strongest quarter in retail that we’ve had since I started. The sell-through of new [styles] has been so strong that we have been out of stock on certain units,” he said on an earlier conference call on Tuesday.
In order to keep up with demand, the firm has had to pull forward some of its deliveries meant for the second quarter. “The retailers ordered more because they needed more, which has probably not been the case for Puma for a long time,” Gulden said.
The “brand heat,” he said, continues to come from the non-performance category, with ath-leisure still the most popular direction for women’s, and retro styles like the Clyde and Suede for men’s.
Gulden declined to comment on speculation that Kering is looking to off-load Puma, a rumor that fizzed earlier this month following the announcement that Pinault was stepping down from Puma’s board.
The company plans to continue investing heavily in marketing, he said, with “almost all marketing that we do from a media point of view now digital.” Digital platforms have been implemented in almost all of the brand’s markets, with a rollout under way in Asia, he said.
Puma SE reported net profit advanced 92.2 percent in the first quarter of 2016 versus the same prior-year period. The German sporting goods maker’s net earnings reached 49.6 million euros, or $52.8 million, in the three months ended March 31.
Meanwhile, its gross margin — a key indicator of profitability — gained 30 basis points to 47.1 percent from 46.8 percent. EBIT rose 70.1 percent to 70.2 million euros, or $75 million. Revenues rose 18 percent, driven by all regions, which posted double-digit gains.
Puma saw a 17 percent increase in sales in the Americas region. In Europe, all markets were up except for Italy, with strong sales in France, the U.K. and Germany. In Asia, the brand saw “very strong gains” in China and “for the first time in a long time” strong gains in Korea.
The only soft spot was Japan, “where we changed management in the beginning the year and are going through a repositioning.”
As reported, Puma’s full-year EBIT are now anticipated to fall between 185 million euros and 200 million euros, or $196.1 million and $212 million, up from the previous guidance of 170 million euros to 190 million euros, or $180.2 million to $201.4 million.
Dollar figures are converted at average exchange for the period to which they refer.
Gett in advanced talks to buy Juno for $250M as Uber rivals consolidate
Neither company responded to multiple requests for comment, but one of our sources says that the deal is at an advanced stage at this point.
This means that there is still a chance it could be delayed or fall apart, although this is not the intention from either side at this point.
There are a few likely reasons behind this M&A move.
Putting together the two companies, from what we understand, would not be to go head-to-head with Uber — which is currently in 579 cities and valued at over $60 billion (although some dispute that number). Rather, it would be to put the combined company into a more solid number-two position above other rivals like Lyft.
Specifically, it would give the two a strong foothold in New York, where both Gett and Juno are already very active. From what we understand the combined company would like to use that stronger base to gradually expand to other markets nationally.
The companies are also fighting to swim in a crowded funding pool, where a lot of capital is needed to acquire customers with promotions; to build up a base of drivers; and to compete against other existing companies, including both older taxi firms as well as newer entities like Uber.
Juno was co-founded in New York by the founders of Viber, who sold the messaging app to Rakuten in 2014 for $900 million. It first emerged in 2016 with a specific mission to take on Uber — which was already facing a lot of criticism over how it treated its drivers — as well as other services with a model that put the driver first.
The company would give drivers a shareholding in the company, with the understanding that even if one day their roles as drivers might potentially get supplanted by more autonomous systems, they would nevertheless retain a stake in the fortunes of the company that was doing the supplanting, and thus be less financially at risk. The employee-owned model is also often used as a way to help motivate workers to give better customer service.
The company has never disclosed its total funding although Talmon Marco, the co-founder and CEO, has said that it is “sufficiently funded“. We reported it was raising $30 million at one point last year, although from what I understand it has been backed by more.
Gett, long a trailing player in the on-demand ride space, had early roots in Israel, but more recently has been trying to carve out a position for itself in the market in both the U.S. and Europe, not so much as a direct Uber competitor, but as a service and app for established taxi drivers to use to complement whatever services they might already offer for on-street hailing.
In its own way, it was also built as a service that served drivers’ needs, in this case to fill spare time in their driving day.
Of course, this is not necessarily uncrowded territory — there are a number of other firms (MyTaxi/Hailo being one) that are building virtual fleets of established taxi drivers (rather than private individuals using their own cars) to find passengers and take their payments.
Gett specifically has had a very interesting boost in the form of Volkswagen, the world’s largest car maker, taking a stake in the company and using it to further its own interests in the area of transportation services in partnership with the startup. The company, led by founder Dave Waiser, has raised $513 million to date.
The deal comes at an interesting time in the market for transportation services. While Uber has been knocked hard by a series of bad stories concerning its internal work culture, alleged IP theft, and questionable uses of technology in the name of making its service more effective and efficient; rivals are looking for opportunities to move ahead.
Just earlier this month, Lyft announced that it had closed a $600 million round of funding at a $7.5 billion valuation. Yes, that financing may have been in play for months before Uber’s egg began to crack, but closing and announcing the round right now certainly points to an interesting show of strength at a key moment. It may be that Gett and Juno sense the moment, too.
Dow +1.12% S&P +0.61% Nasdaq +0.70% Russell +0.94%
US Market ckosed higher, help by +ve european sentiment and +ve earnings announcement in the US. nine of eleven sectors finished in positive territory. The materials group closed at the top of the standings by a wide margin while the utilities (-0.1%) and telecom services (-0.3%) spaces finished in negative territory at the bottom. The real estate (+0.2%) and consumer staples (+0.3%) sectors underperformed, and the remaining sectors--financials, consumer discretionary, industrials, energy, technology, and health care--settled with gains between 0.5% and 0.8%. investors cheered the renewed push for tax reform (with, or without, health care reform), a sense that Congress will avoid a government shutdown this week, and China's diplomatic emphasis on quieting tensions over North Korea. US After Hours IRBT +10%, EW +8%, ARNC +5%, WYNN / TSS +4%, CMG / JNPR +3.3% all higher following earnings, DECK +5.6% exploring strategic alternatives... X -17% following earnings and dragging down steel names. Asian equity indices remain bid, tracking 2nd straight day of strong gains on Wall St. Optimism from weekend French election has been displaced by expectation of pro-business tax reform announcement from the White House on Wednesday. One press report anticipates the plan to feature tax cuts for small pass-through businesses to 15% from 39.6%, along with a 10% levy on US companies offshore profits. Treasury Sec Mnuchin and EA Cohn have met with Congressional leaders Tues evening, and White House suggests "everyone is on the same page". The tax plan will also reportedly not contain House Speaker Ryan's border-adjustment proposal.
Nikkei +1.05% HangSeng +0.65% CSI +0.35% Shanghai +0.33%
Eur$ 1.0946 CNH 6.8896 CNY 6.8852 JPY 111.38 GBP 1.2835 CHF 0.9925 RUB 56.0655
S&P +0.02% EuroStoxx +0.11% Dax +0.05% SMI +0.02 FTSE +0.05
Macro :
- French 2nd-Round Vote Shifts 1-Point to Macron: Ifop Daily Poll
- Oil Bull Andurand Says Rebound in Sight Despite ’Choppy’ Market
Keep an eye on :
- ABE SM : Abertis Board Open to Receiving Atlantia Offer: Confidencial
- ADP FP : ADP 1Q Rev. EU700M, Up 1.8%; Raises 2017 Traffic-Growth Forecast
- AI FP : Air Liquide Says Synergies From Airgas Materializing Rapidly
- AKZA NA : Elliott Advisors Says Condemns Akzo Nobel Rejection of EGM
- AZA IM : Alitalia Partial or Total Sale Likely in Next 6 Months: Calenda
- AZA IM : Italy Won’t Oppose Any Bid From Lufthansa for Alitalia: Delrio
- ALO FP : Spain Seeks to Unblock High-Speed Train Projects: Economista
- BLT LN : BHP Cuts Copper, Coal Output Targets, Narrows Iron Ore Forecast
- BB FP : Bic 1Q Net Sales Declines; Sees FY Organic Growth
- CABK SM : CaixaBank Boosts Insurance Business, Expansion Reports
- CAP FP : Capgemini 1Q Rev. EU3.17b
- CSGN VX : Credit Suisse 1Q Net Income Beats Highest Est.
- CSGN VX : Credit Suisse to Raise CHF4b in Rights Offer; Keeps Swiss Bank --> Credit Suisse CHF4b Rights Issue May Not Be Enough: Bernstein
- DAI GY : Daimler 1Q Rev. EU38.8b, Daimler Sees ‘Significant’ 2017 EBIT Growth, Up From ‘Slightly’
- DSY FP : Dassault Systemes 1Q Non-IFRS Rev. Rises 10% to EU766m
- FLO FP : Groupe Bertrand to Buy French Steakhouse Operator Groupe Flo
- G IM : Generali Ready to Weigh Acquisitions: Chairman to Corriere
- SHBA SS : Handelsbanken 1Q Net Income Beats Highest Est. , May Consider Share Repurchases, Extra Dividend
- ISAT LN : Qatar Airways to Use Inmarsat Satellites to Track Flights
- KEMIRA FH : Kemira 1Q Rev. Beats Highest Est.
- KER FP : Kering 1Q Beats Ests.; Co. in ‘Particularly Good Position’
- KPN NA : KPN 1Q Rev. Cont. Ops. Matches Est.
- LIGHT NA : Philips Offering ~22.25m Philips Lighting Shares Via Placing
- LOGN VX : Logitech 4Q Sales Beat Highest Est.
- LONN VX : Lonza to Raise CHF2.25b in Share Sale for Capsugel Purchase
- LHA GY : Italy Won’t Oppose Any Bid From Lufthansa for Alitalia: Delrio
- MMT FP : M6 1Q Net Sales EU323.7m
- NXI FP : Nexity 1Q Rev. Rises 5.5%; Co. Repeats Outlook for 2017 Growth
- UG FP : PSA 1Q Rev. EU13.63B, Up 4.9%; Est. EU13.47B
- PHIA NA : Philips Cuts Stake in Philips Lighting to 39%; Raises EU641m
- REE SM : Red Electrica 1Q Net Income Beats Est.
- REP SM : Repsol, Statoil Said to Pull Expats From Venezuela: Reuters
- SAF FP : Safran First-Quarter Sales Gain 5%; Outlook Confirmed --> Safran 1Q Rev Beat W/ Positive Mix, Guidance Confirmed: Barclays
- SAN SM : Santander 1Q Net Income Beats Highest Est.
- SAN SM : Santander CET1 Fully-Loaded Rises to 10.66% From 10.55% in Dec.
- STL NO : Repsol, Statoil Said to Pull Expats From Venezuela: Reuters
- TELIA SS : Telia 1Q Rev. Beats Highest Est.
- UCB BB : UCB Receives Positive CHMP Opinion for Cimzia Injection Device
- UL FP : Unibail-Rodamco 1Q Gross Rental Revenue Climbs 1.1%
- RIN FP : Vilmorin 9-Month Sales Rise 8.1%; Co. Lifts FY Margin Outlook
- VIV FP : Vivendi Aims to Double Ebita to About EU2b in 3 Or 4 Yrs: Echos
>>> Up
*Concordia Maritime Raised to Buy at Swedbank, PT SEK19
*DAN IM Raised to Outperform at MedioBanca
*GN Raised to Buy at HSBC, PT DKK185
*Sabadell Raised to Buy at Citi, PT EU2.15
*Sky Raised to Buy at Jefferies, PT 1,200p
*Vaisala Raised to Accumulate at Inderes, PT EU42
*VW Raised to Buy at Bankhaus Lampe, PT EU190
>>> Down
*Coloplast Cut to Hold at HSBC, PT DKK585
*Grenke Cut to Hold at HSBC, PT EU188
*Hispania Activos Inmobiliarios SOCIMI Cut to Neutral at Goldman
*Innogy Cut to Reduce at HSBC, PT EU31
*Next Cut to Underperform at Jefferies
*SAP Cut to Sell at Stifel, PT EU75
*Severn Trent Cut to Reduce at HSBC, PT GBP22
*Tele2 Cut to Neutral at New Street Research, PT SEK90
*William Demant Cut to Reduce at HSBC, PT DKK135
>>> Initiation
*Autogrill New Buy at Deutsche Bank, PT EU11.50
*Compass New Hold at Deutsche Bank, PT 1,600p
*Edenred New Hold at Deutsche Bank, PT EU24
*Elior Group New Buy at Deutsche Bank, PT EU25
*Genfit New Buy at Natixis, PT EU45
*Nets New Neutral at Citi, PT DKK122
*Sodexo New Buy at Deutsche Bank, PT EU125
*SSP New Hold at Deutsche Bank, PT 440p
>>> Call
Asia Mid-Session Market Update: Australia CPI returns to RBA target range; Risk-on flows continue on earnings and Trump tax cut speculation
***US Session Highlights***
- (US) Apr Philadelphia Fed Non-Manufacturing General Regional Business Conditions: 30.1 v 35.4 prior
- (CO) Colombia Central Bank Gov Echavarria: Sees room to cut interest rates - financial press
- (US) Weekly Redbook Sales w/e Apr 22nd +1.7% y/y; Apr MTD +1.2% m/m; Apr MTD +1.9% y/y
- APR RICHMOND FED MANUFACTURING INDEX: 20 V 16E
- (US) MAR NEW HOME SALES: 621K V 584KE (strongest level since July)
- (US) APR CONSUMER CONFIDENCE: 120.3 V 122.5E (outlook for jobs market was also less upbeat)
- Stock markets continue to extend the rally that started the week on renewed confidence in Euro area stability and strong earnings data expectations. S&P profits were estimated to have risen 11% in Q1, the most since 2011. Talk of a new tax deal also helped the Dow break 21,000 and the NASDAQ pierce the 6,000 ceiling for the first time.
***US markets on close: Dow 1.1%, S&P500 0.6%, Nasdaq 0.7%***
- Best Sector in S&P500: Materials
- Worst Sector in S&P500: Telecommunication
- Biggest gainers: CAT +7.9%; FCX +7.1%; WAT +6.9%; NFLX +5.8%
- Biggest losers: R -13.8%; ESRX -10.7%; TROW -4.2%; LH -3.9%
- At the close: VIX 10.8 (-0.1pts); Treasuries: 2-yr 1.28% (+5bps), 10-yr 2.33% (+5bps), 30-yr 2.98% (+5bps)
***US movers afterhours***
-IRBT Reports Q1 $0.58 v $0.26e, R$168.5M v $151Me; +9.9% afterhours
-EW Reports Q1 $0.94 v $0.82e, R$884M v $777Me- Guides Q2 $0.82-0.92 v $0.86e, R$810-850M v $817Me - Raises FY17 $3.43-3.55 v $3.40e; +8.5% afterhours
-DECK Announces review of strategic alternatives; +5.7% afterhours
-CMG Reports Q1 $1.60 v $1.28e, R$1.07B v $1.05Be; Discloses recent incident of unauthorized activity on its payment network; +2.9% afterhours
-COF Reports Q1 $1.75 v $1.93e, R$6.5B v $6.59Be; -3.3% afterhours
-DFS Reports Q1 $1.43 v $1.42e, R$1.89B v $1.81Be; Provision for loan losses $586M v $424M y/y; -3.5% afterhours
-CREE Reports Q3 $0.11 v $0.14e, R$341.5M v $325Me; to form JV with China's San'an Optoelectronics Co; -7.5% afterhours
-X Reports Q1 -$0.83 v +$0.30e, R$2.73B v $2.92Be; Cuts FY17 adjusted EBITDA $1.1B v $510M y/y (prior FY17 adjusted EBITDA $1.3B); -16.9% afterhours
***Key economic data***
- (AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.6%E; Y/Y: 2.1% (highest since Q2 of 2014) V 2.2%E; TRIMMED MEAN Q/Q: 0.5% V 0.5%E ; Y/Y: 1.9% (5-quarter high) V 1.8%E
- (AU) AUSTRALIA MAR SKILLED VACANCIES M/M: -0.6% V -0.3% PRIOR
- (NZ) New Zealand Mar Net Migration: 6.1K v 6.0K prior
- (NZ) NEW ZEALAND MAR CREDIT CARD SPENDING M/M: +0.8% V -1.4% PRIOR; Y/Y: 7.1% V 5.3% PRIOR
- (US) Kelley Blue Book: New-car sales to fall 3% to 1.45M units in April 2017; 2017 forecast calls for 16.8-17.3M in sales, first y/y decline after 7 years of increases
***Asia Session Notable Observations, Speakers and Press***
- Asian equity indices remain bid, tracking 2nd straight day of strong gains on Wall St. Optimism from weekend French election has been displaced by expectation of pro-business tax reform announcement from the White House on Wednesday. One press report anticipates the plan to feature tax cuts for small pass-through businesses to 15% from 39.6%, along with a 10% levy on US companies offshore profits. Treasury Sec Mnuchin and EA Cohn have met with Congressional leaders Tues evening, and White House suggests "everyone is on the same page". The tax plan will also reportedly not contain House Speaker Ryan's border-adjustment proposal.
- In FX, dollar majors were rangebound for much of the Asia session. USD/JPY tracked rick-on flows to the upside, regaining ¥111 handle to approach 111.50 for a 2-week high. AUD/USD was also volatile following mixed Q1 CPI data from Australia. While headline y/y moved back into RBA 2-3% target range for the first time in 2 years, it missed expectations, sending AUD down over 30pips toward $0.75 level. Analysts also noted that much of the price increase was in auto fuel and housing, ominously implying living costs are outpacing wage gains. Capital Economics said it no longer expects RBA rate cuts after the CPI data, but Barclays believes RBA will wait for CPI to be consistent above 2% before signalling policy shifts.
China
- (CN) China Iron and Steel Association (CISA): Increase in domestic output and decline in export demand to weigh on prices - press
- (CN) China NDRC: To monitor long term coal supply contract implementation
- (CN) China's monetary policy does not need to be too tight - Chinese press citing unidentified analysts
Japan
- (JP) Japan Fin Min Aso: Regional economies are experiencing moderate recovery
Australia/New Zealand
- (AU) Capital Economics: No longer expect RBA to cut rates further after today's CPI data - SMH
- (NZ) New Zealand's Home Loan Affordability Reports sees prices in Auckland the least affordable on record (since 2004) - NZ press
Korea
- (KR) US military reportedly starts moving THAAD anti-ballistic missile system into planned site in South Korea - Korea press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.7%, Hang Seng +0.6%, Shanghai Composite +0.4%, ASX200 +0.7%, Kospi +0.3%
- Equity Futures: S&P500 flat; Nasdaq flat, Dax +0.1%, FTSE100 flat
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0920-1.0945; JPY 110.95-111.35; AUD 0.7505-0.7555; NZD 0.6920-0.6955
- June Gold -0.1% at 1,266/oz; June Crude Oil -0.2% at $49.44/brl; July Copper -0.1% at $2.60/lb
- (US) Weekly API Oil Inventories: Crude: +0.9M v -0.8M prior; first buld in 4 weeks
- SLV iShares Silver Trust ETF daily holdings rise to 10,178 tonnes from 10,119 tonnes prior
- GLD SPDR Gold Trust ETF daily holdings fall 5.9 tonnes to 854.3 tonnes
- USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.8845 V 6.8833 PRIOR
- (CN) PBOC to inject combined CNY80B v CNY80B prior in 7-day, 14-day and 28-day reverse repos, 7th straight injection
- (CN) China MoF sells 3-yr bonds; avg yield 3.23%; bid-to-cover 1.59x
***Asia equities / Notables / movers by sector***
Australia
- A2 Milk (A2M) +6.7%; Harbour Asset Management announces notice of initial substantial holder with 5.1% stake
- BHP (BHP) +0.7%; Q3 production
- Beadell (BDR) -16.7%; Q3 production
Japan
- Mitsui OSK (9104) +2.4%; FY17 earnings speculation
- Hitachi (6501) +3.1%; May sell chip unit
- Toshiba (6502) +2.7%; May change auditing firms
- Asahi Kasei (3407) +1.4%; FY16/17 earnings speculation
Hong Kong
- China Vanke (2202) -3.1%; suspected to sell property in 2 Xian projects illegally
- Wynn Macau (1128) +4.8%; Q1 results
- China CITIC (998) -0.8%; Q1 results
After Hours Summary: IRBT +10%, EW +8%, ARNC +5%, WYNN / TSS +4%, CMG / JNPR +3.3% all higher following earnings, DECK +5.6% exploring strategic alternatives... X -17% following earnings and dragging down steel namesAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: IRBT +9.9%, ZIXI +8.4%, EW +7.8%, UVE +4.9%, ARNC +4.8%, KMT +4.2%, WYNN +4%, PRGO +4% (announces restatement of previously issued financial statements; reports Q1 results), TSS +4%, CMG +3.3%, JNPR +3.3%, TX +2.2% (ticking higher), O +1.3%
Companies trading higher in after hours in reaction to news: AKBA +29.3% (Akebia Therapeutics and Otsuka Pharma enter into a collaboration and license agreement; Akebia will receive $208 million or more in committed capital from Otsuka, including $73 million upon signing), ASYS +10.9% (receives follow-on order for the second phase of a multi-phase 1GW project), PETX +8.4% (ticking higher after confirming it recently met with FDA regarding the proposed manufacturing transfer of ENTYCE), AMRI +8.3% (on sale related speculation), NAVB +7.7% (higher on light volume after confirming it has been invited to present data at two 'major' upcoming conferences), DECK +5.6% (Board of Directors has initiated a process to review a broad range of strategic alternatives), DHT +4.9% and FRO +2.2% (Frontline previously disclosed that it has submitted several proposals to the management and Board of DHT Holdings to effectuate a business combination between Frontline and DHT), COST +3% (reports special cash dividend of $7.00 per share and increase in quarterly cash dividend), PBF +2.2% (to join S&P MidCap 400), ARI +1.6% (to join S&P SmallCap 600), LVS 1.6% and MGM 1.5% (WYNN sympathy)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: X -17.1%, OESX -7.8% (thinly traded; issued downside guidance), CREE -7.3% (also forms JV w/ San'an Optoelectronics to produce and deliver to market high-performing, mid-power lighting class LED packaged products in an exclusive arrangement to serve the expanding markets of North and South America, Europe and Japan, and serve China), MTSI -7%, CHRW -6.4%, NUVA -4.5%, ILMN -3.6%, COF -3.5%, DDR -3.2%, DFS -2.6%, JBT -1.5%, BXMT -1.3% (light volume), MRCY -1%, RNG -0.8%, T -0.7%, TXN -0.7%
Companies trading lower in after hours in reaction to news: FLXN -12.2% (commences $125 mln offering of convertible senior notes due 2024), NBIX -3.5% (to offer $450.0 mln aggregate principal amount of convertible senior notes due 2024; provides several updates in conjunction with the $450 mln convertible senior notes offering), MPW -3.1% (commences public offering of 37.75 mln shares of common stock), CLNT -2.7% (after 30%+ move higher today), CCI -0.4% (commences offering of 4,750,000 shares of its common stock in a registered public offering)
Steel stocks down in sympathy to poor response to US Steel's (X) earnings: MT -4.2%, STLD -3.7%, AKS -2.7%, NUE -2%, CMC -0.8%
Closing Market Summary: Earnings Give Stocks a Push on TuesdayBullish catalysts were ripe for the picking on Tuesday as buyers advanced the S&P 500 (+0.6%) for the second time in a row, increasing the benchmark index's week-to-date gain to 1.7%. The Nasdaq (+0.7%) settled a tick higher than the S&P 500 while the Dow blew its peers away, adding 1.1%.
The positive sentiment surrounding the first round the French presidential election continued to linger on Tuesday, but investors turned their attention back to the home front where they were met with a slew of earnings reports. The results were largely favorable with Dow components like Caterpillar (CAT 10442, +7.61), McDonald's (MCD 141.70, +7.47), and DuPont (DD 82.21, +2.84) giving the price-weighted average a clear advantage. CAT shares spiked 7.9% in reaction to a big, upside earnings surprise, better than expected revenues, and upbeat guidance. MCD and DD also settled solidly higher, adding 5.6% and 3.6%, respectively, after beating top and bottom line estimates.
However, not all Dow components rallied around their latest earnings reports. 3M (MMM 195.13, +0.90) added only 0.5% despite beating top and bottom line estimates and issuing upbeat guidance. Coca-Cola (KO 43.11, -0.17) finished lower by 0.4% after a miss on earnings outweighed better than expected revenues.
Sector standings were largely determined by the day's earnings. For instance, MCD's positive performance helped the consumer discretionary sector (+0.8%) outperform while DuPont influenced the materials sector (+1.6%) to the top of the day's leaderboard. In the industrial space (+0.5%), Caterpillar did all it could to give the sector an edge, but Lockheed Martin's (LMT 270.02, -6.19) worse than expected revenues and disappointing guidance weighed, leaving the industrial group just behind the benchmark index.
Biogen (BIIB 286.89, +10.03) rallied the biotech industry, jumping 3.6%, after the company beat top and bottom line estimates. The iShares Nasdaq Biotechnology ETF (IBB 295.55, +3.81) settled higher by 1.3%, however, the health care sector (+0.5%) was held back by big losses from Eli Lilly (LLY 81.20, -2.22) and Express Scripts (ESRX 60.01, -7.24). ESRX plunged 10.8% after disclosing that its contract with Anthem (ANTM 172.46, +4.05) is unlikely to be extended.
With the uncertainty regarding the French presidential election largely in the rear-view mirror, the financial sector (+0.8%) benefited from some belated buying as investors tried to make up for last week's muted response to a host of better than expected earnings reports from top financial components.
Summarizing the sector standings, nine of eleven sectors finished in positive territory. The materials group closed at the top of the standings by a wide margin while the utilities (-0.1%) and telecom services (-0.3%) spaces finished in negative territory at the bottom. The real estate (+0.2%) and consumer staples (+0.3%) sectors underperformed, and the remaining sectors--financials, consumer discretionary, industrials, energy, technology, and health care--settled with gains between 0.5% and 0.8%.
However, it is important to note that while a swath of earnings was the most obvious catalyst behind today's advance, politics certainly played a supporting role. Namely, investors cheered the renewed push for tax reform (with, or without, health care reform), a sense that Congress will avoid a government shutdown this week, and China's diplomatic emphasis on quieting tensions over North Korea.
The resulting risk-on sentiment was felt throughout the bond market with Treasuries closing lower across the board. The 10-yr yield settled six basis points higher at 2.33%, which is notable given the recent resistance the benchmark yield has encountered around the 2.30% mark.
On the data front, investors received several economic reports on Tuesday, including March New Home Sales, April Consumer Confidence, the February Case-Shiller Home Price Index, and the February FHFA Housing Price Index:
- New Home Sales in March hit an annualized rate of 621,000, which was above the revised February rate of 587,000 (from 592,000), and more than the 590,000 that was expected by the consensus.
- The key takeaway from the report is that demand for new homes was strong, notwithstanding higher price points from the same period a year ago.
- The consumer confidence reading for April fell to 120.3 from the prior month's revised reading of 124.9 (from 125.6). The consensus expected the survey to hit 122.3.
- The key takeaway from the report is that confidence remains at high levels and indicative of an expectation that the economy will continue to expand in the months ahead.
- The February Case-Shiller 20-city Index hit 5.9% to follow last month's unrevised 5.7% increase. The consensus expected a reading of 5.8%.
- The FHFA Housing Price Index for February increased 0.8%, which followed a revised uptick of 0.2% (from 0.0%) in January.
Tomorrow, investors will receive only one economic report--the weekly MBA Mortgage Applications Index--at 7:00 ET.
- Nasdaq Composite +11.9% YTD
- S&P 500 +6.7% YTD
- Dow Jones Industrial Average +6.2% YTD
- Russell 2000 +4.0% YTD
