Wall Street Breakfast: Europe Stocks Rise, U.S. Set To Open In The Green
Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on iTunes, Stitcher and SoundCloud (click the highlighted links).
Stoxx Europe 600 Index is up for the sixth straight day and has risen 0.7%, and FTSE 100 Index has gained 1.1% after BP's (BP) Q4 earnings beat. U.S. stock average futures continue to hold steady ahead of another crop of earnings, including Archers Daniels Midland (ADM), Becton Dickinson (BDX), and Emerson Electric (EMR) before the open and Disney (DIS), Anadarko Petroleum (APC) and Ashland (ASH) set for after the close. S&P futures (+0.13%) and Nasdaq futures (+0.15%) point to a weak opening on the upside, while Dow futures, up 0.25%, are slightly stronger. Meanwhile in Asia, most markets are closed for the Lunar New Year Holiday.
Eurozone businesses started out 2019 with their weakest growth rate since mid-2013 as a slowdown that started in manufacturing spread to services, with demand weakening for the first time in more than four years. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index, a measure of overall economic health, slipped to 51.0 from 51.1 in December, its lowest point since July 2013. A reading of over 50 indicates growth, while less than 50 indicates contraction. IHS Market chief business economist Chris Williamson says the PMI points to Q1 economic growth of 0.1%, much slower than the 0.4% projected in a Reuters poll last month.
Australia's dollar swung into positive ground against the greenback after the country's central bank kept rates at record lows with a less dovish tinge than expected. But markets still seem to be pricing in a heavy chance of easing ahead. And the country's big four banks (OTCPK:CMWAY, OTCPK:NABZY, ANZBY, WBK) all jumped as a long-awaited report on financial misconduct left them largely unscathed despite proposing dozens of rule changes.
After U.S. sanctions effectively wiped out trading of Venezuelan government debt, JPMorgan’s bank index team is said to be considering removing the securities from its flagship emerging-market bond indexes, Bloomberg reports, citing people familiar with the matter. Removing the notes from the indexes could force some of the largest holders of Venezuelan bonds, including Fidelity Management, Allianz SE and BlackRock (BLK) to offload debt based on their mandates to track benchmark indexes. With trading on both sovereign and state-controlled Petroleos de Venezuela now essentially stopped, it's not clear who would buy the securities if the asset managers are forced to sell.
Puerto Rico's restructuring deal that wipes out a third of its $18B in sales-tax bond debt received court approval Monday, making headway in fixing its broken finances, the Wall Street Journal reports. The write-downs on the revenue bonds known as Cofinas will save the island's government $17B in interest and principal payments in the coming decades. Creditors holding over $14.5B in Cofina debt supported the deal. The settlement is tied to a split of the sales taxes pledged to Cofina that releases 46% of the money back to the island's government, giving it an average of $456M a year that otherwise would have been set aside for bondholders.
Though Q4 EPS and revenue beat estimates, Google parent Alphabet (GOOG, GOOGL) dropped in after-hours trading as operating income of $8.2B fell short of the $8.61B consensus estimate and operating margin of 21% trailed the 22.1% estimate. Google Properties paid clicks grew 86% Y/Y and costs per click fell 29%.Traffic acquisition costs, or TAC, of $7.4B were lower than consensus of $7.62B. As a percentage of revenue, TAC was 23%, down a percentage point from last year’s Q4.
The deal with Starboard Value that gave Papa John's International (PZZA) shares a 9% boost on Monday could also lead to restarting a process to sell the company. The New York Post cites a source who notes that Starboard gets new convertible preferred stock that shrinks the stake of founder John Schnatter to about 26% from 31.1% -- and Schnatter's higher stake was considered a discouragement to private-equity suitors for the company.
The first public report from the spun-off mobile phone unit of SoftBank Group (OTCPK:SFTBY) contained a 24% gain in operating profit. SoftBank Corp. (OTCPK:SOBKY) also reiterated guidance for a full-year gain of 10% in operating profit, to ¥700B. That result comes amid poor stock performance since the unit's blockbuster IPO, and as it faces continuing competitive pressure from the likes of NTT DoCoMo (OTCPK:DCMYY) and new market entrant Rakuten (OTCPK:RKUNY).
Trying to keep up with soaring global demand and its rival Airbus (OTCPK:EADSY, OTCPK:EADSF), Boeing (NYSE:BA) is pushing to speed up assembly of its 737 jetliner to the first week in June, Reuters reports. The jet manufacturer aims to reach the new rate of 57 single-aisle jets per month starting on June 3, up from the current rate of 52. The extra five planes per month would prove a key to Boeing’s bid to raise profit margins on its top-selling jetliner, which can carry a list price of as much as $130M and is the company’s largest source of profit. The goal is contingent on Boeing overcoming persistent supplier delays on engines and other issues that have slowed production of the 737 at varying degrees since last summer, though the company has said it’s making progress.
Chevron has named Pierre Breber, currently Executive VP of Downstream and Chemicals, as its new CFO, effective April 1. Breber will replace Patricia Yarrington, who has elected to retire after 38 years with the company. Breber joined Chevron (CVX) in 1989, becoming VP and treasurer in 2009, VP of Gas & Midstream in 2014, Executive VP of Gas & Midstream in 2015 and Executive VP of Downstream and Chemicals in 2016.
Sears Holdings argued in front of a bankruptcy judge on Monday that a sale to Eddie Lampert's hedge fund would keep at least 425 stores open. The judge is considering objections from creditors for several days this week on the sales process itself and the deal price that Sears (OTC:SHLDQ) agreed to accept. The final decision from the judge could arrive by the end of the week.
Alphabet (GOOG, GOOGL) -2.5% AH despite Q4 beat.
Gilead Sciences (GILD) -3% AH on muted 2019 guidance.
Seagate Technology (STX) -5.3% AH on challenging demand environment.
Glu Mobile (GLUU) -12% AH after Q4 loss.
Hartford Financial Services (HIG) +2.4% AH on Q4 beats, stock buyback.
Versum Materials (VSM) -4.4% AH after Q1 miss, reduced full-year guidance.
Control4 (CTRL) -9.6% AH on mixed Q4, downside guide.
Advanced Energy Industries (AEIS) -6% AH after Q4 earnings miss.
Beazer Homes (BZH) -3.3% AH on disappointing Q1 revenue.
Legg Mason (LM) -5.2% AH on rising costs.
In Asia, Japan -0.19%. Hong Kong closed. China closed. India +0.20%.
In Europe, at midday, London +1.12%. Paris +0.92%. Frankfurt +1.07%.
Futures at 5:40, Dow +0.25%. S&P +0.13%. Nasdaq +0.15%. Crude +1% to $55.10. Gold -0.26% to $1,315.90. Bitcoin +0.6% to $3,506.
Ten-year Treasury Yield flat at 2.731%.
8:55 Redbook Chain Store Sales
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
1:00 PM Results of $24B, 3-Year Note Auction
This article was written by