Europe markets tick higher; Volvo shares tumble
European shares started Friday’s trading session slightly higher.
The pan-European Euro Stoxx 600 index was last up by just over 1% mid-morning London time. Financial services stocks led the rise, adding 1.88%, followed by basic resources, which rose 1.79%.
Shares in Volvo Cars tumbled as much as 14% early on Friday as its Chinese parent company Zhejiang Geely Holding Group began a sale of around 100 million shares of the Swedish carmaker, but recovered some losses as the day continued.
— Sophie Kiderlin
We expect to breakeven by 2025, says Xpeng’s president
Chinese electric car company Xpeng’s deliveries exceeded 40,000 units in the third quarter of 2023. Subsequently, the automaker predicts that vehicle deliveries will surge to between 59,500 and 63,500 in the fourth quarter.
“The earnings we announced actually has shown very encouraging signs of renewed growth for the company … with further growth expected for the current fourth quarter,” Brian Gu, vice chairman and president of Xpeng told CNBC’s “Street Signs Asia.”
He added that Xpeng has seen “meaningful profit margin improvement starting the fourth quarter,” thus anticipating a positive margin and stronger cash flow going forward.
Gu also expects Xpeng to improve its profitability and breakeven by 2025.
— Quek Jie Ann
Oil prices little changed on Friday, set for fourth week of falls
Oil prices were little changed on Friday but were set for the fourth straight week of declines after hitting four month-lows in the previous session.
The price of U.S. crude oil fell 5% on Thursday as inventories rose while slowing industrial activity raised concerns about waning demand.
The West Texas Intermediate inched 0.14% higher at $73 a barrel in Asia trading hours, while the Brent gained 0.11%, to $77.54 a barrel.
U.S. crude and the global benchmark both traded at their lowest level since early July on Thursday.
“The shift lower was likely driven initially by oversupply concerns,” Commonwealth Bank of Australia analysts wrote in a note. “Demand concerns added to oversupply narrative, particularly with U.S. continuing jobless claims rising to the highest level in almost two years.”
— Shreyashi Sanyal
Alibaba shares plunge 9% to a 12-month low after scrapping cloud spinoff plans
Signage at the Alibaba Group Holding Ltd. offices in Beijing, China, on Wednesday, March 29, 2023. Alibaba’s overhaul could serve as a template for a restructuring of China Tech itself: a shake-up that achieves Beijings aim of carving up the countrys tech titans while unlocking potentially billions of dollars in pent-up shareholder value.
Bloomberg | Bloomberg | Getty Images
Shares of Alibaba plunged 9% in early Hong Kong trading on Friday after the Chinese e-commerce giant said it would not proceed with the full spinoff of its cloud group due to U.S. chip export restrictions.
Alibaba shares fell to their lowest level since late November last year, last trading at about 73 Hong Kong dollars. Hong Kong-listed shares of the company have fallen over 13% since the beginning of the year, underperforming the main Hang Seng index’s 11.2% YTD decline.
The company reported quarterly earnings on Thursday, with net income of 27.7 billion yuan ($3.8 billion) for the September quarter, below the 29.7 billion yuan expected by analysts.
Revenue met expectations at 224.79 billion yuan, up 9% year over year.
Alibaba also announced it will issue its first-ever annual cash dividend in 2023. Dividends are a way of sharing a portion of profit made by companies with their shareholders.
The company’s board approved an annual $0.125 per ordinary share or $1 per American depositary share cash dividend for the fiscal year.
— Shreyashi Sanyal, Ryan Browne
Big retail ETF suffers its worst day since May as Walmart shares tumble
Shares of big retailers tumbled on Thursday, and they dragged the SPDR S&P Retail ETF (XRT) to its worst day in nearly six months.
XRT slid 3.4%, marking its worst day since May 19.
The ETF’s decline arrived on the heels of Walmart‘s fiscal third-quarter report. The big-box retailer beat analysts’ expectations on the top and bottom lines, but issued a weak forecast for the year and gave a guarded outlook on consumer spending. Shares slid 8%.
Bath & Body Works, another component of XRT, dropped nearly 7%. The retailer of soaps and candles posted adjusted earnings that beat the Street’s forecasts, but came in line on revenue. Bath & Body Works noted that it had “lower sales expectations for the fiscal year.”
–Darla Mercado, Chris Hayes
6 transportation stocks to watch, according to Goldman Sachs
Lackluster volume and underwhelming margins spelled a very difficult third-quarter earnings season for the transport sector, said Goldman Sachs.
“Our general view is that volumes may be stabilizing, but the sharp bounce off the bottom type of recovery out of a freight recession may be more muted in this cycle owing to uncertainty around the consumer and the pace of shipper re-stocking trends,” analyst Jordan Alliger wrote. “As such, we generally prefer those names that can do well in a lower growth volume recovery; including the rails, and parcel who stand to benefit by leveraging potentially more modest freight growth against a relatively high fixed cost base.”
Alliger shared six stocks “with idiosyncratic opportunity and reasonable relative valuations” that investors should watch. These include Union Pacific, Norfolk Southern, J.B. Hunt Transport Services, United Parcel Service, FedEX and XPO.
— Lisa Kailai Han, Michael Bloom
Emerging market equities will deliver highest returns in next decade, UBS says
Stocks, specifically emerging market equities, will deliver the highest return among major asset classes in the next decade, according to UBS.
“Aggregate earnings growth should be well supported by robust growth in companies driving technological, energy, and healthcare disruption,” the bank wrote in its year-ahead outlook.
However, it clarified that equity valuations are likely to be lower due to higher interest rates.
“Global diversification will be important to navigate a deglobalizing world,” the bank added. “Emerging market stocks, for example, are trading at sizable discounts to historical levels, and we expect them to deliver the highest rates of return over the next decade.”
— Lisa Kailai Han
Stock futures open little changed
Stock futures opened little changed on Thursday, after the Dow Jones Industrial Average snapped a four-day winning streak during regular trading.
Dow futures added 25 points, or 0.07%, while S&P 500 futures climbed 0.06%. Nasdaq futures slipped 0.06%.
— Brian Evans