Marketmind: Corporate scatter
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[February 09, 2023] A
look at the day ahead in U.S. and global markets from Mike Dolan.
A hail of mega corporate updates distracted stock markets from a
confusing macro picture - but offers little more clarity with scattergun
fortunes and ambiguous readouts for the wider economy.
Shares in Walt Disney surged 6% ahead of Thursday's open after the firm
announced a sweeping restructuring under reinstated CEO Bob Iger and cut
7,000 jobs - 3.6% of its workforce - in an effort to save $5.5 billion
and make its streaming business profitable.
Disney's job shedding is yet another sign that January's red-hot U.S.
employment reading may not be the full picture as company apes many big
tech and digital firms in downsizing its staff this year.
The share price reaction, however, was in contrast to the bizarre
Alphabet swoon on Wednesday.
Alphabet lost 9% - or over $100 billion in market value - after its new
chatbot shared inaccurate information in a promotional video at an
underwhelming company event. The flub fed worries that the Google parent
is losing ground to rival Microsoft in the renewed craze around
artificial intelligence.
Fears over ailing Swiss bank Credit Suisse dominated in Europe. Its
shares dropped 5% after it reported its worst annual loss since the 2008
global financial crisis and warned of a further "substantial" loss this
year. The mood didn't improve even as it marked out another step towards
creating a standalone investment bank by buying Michael Klein's advisory
boutique for $175 million.
For inflation worriers, consumer goods firms bear close watching.
Unilever said on Thursday it would continue to raise prices for its
detergents, soaps and packaged food to offset rising input costs but the
pace of price rises was slowing and would ease up more in the second
half of 2023.
Price increases would continue in the second half "but it will be a
lower rates of increases...we are probably past peak inflation, but not
yet past peak pricing," finance chief Graeme Pitkethly said.
That disinflation drum continued to beat in Germany, where consumer
prices inflation fell more than anticipated last month, easing back
below the 10% expected to 9.2% on the year.
Sweden's central bank emphasised that rising global interest rates were
still some way from their peaks as it raised its key rate by half a
percentage point to 3.0%, forecasting more to come.
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A screen shows the logo and a ticker
symbol for The Walt Disney Company on the floor of the New York
Stock Exchange (NYSE) in New York, U.S., December 14, 2017.
REUTERS/Brendan McDermid/File Photo
Federal Reserve officials again on Wednesday said more rate hikes
were on the cards, although none were ready to suggest that
January's strong employment report would push them back to a more
aggressive monetary policy stance.
Moving to a funds rate of between 5.00% and 5.25% "seems a very
reasonable view," said New York Fed chief John Williams.
More generally, U.S. stock futures were higher on Thursday, with
Treasury yields and the dollar falling back. European shares touched
a fresh nine-month high on Thursday as Germany's Siemens and UK's
AstraZeneca boosted earnings euphoria, while Britain's bank,
commodity and pharma heavy FTSE100 hit another record high.
The share in troubled Indian giant Adani took another negative
twist. Financial index provider MSCI said some Adani securities
should no longer be designated as free float, after market
participants raised concerns about the eligibility of the Indian
conglomerate's companies for some of its indexes.
Norway's $1.35 trillion sovereign wealth fund said it had recently
divested virtually all its remaining shares in the Adani group.
Key developments that may provide direction to U.S. markets later on
Thursday:
* U.S. weekly jobless claims
* Bank of England Governor Andrew Bailey, European Central Bank
board member Luis de Guindos speak
* European Union summit
* U.S. Treasury auctions 30-year bond
* U.S. corp earnings: AbbVie, PepsiCo, S&P Global, PayPal, Apollo,
Hilton, Expedia, News Corp, Ralph Lauren, Lyft, Kellogg, Motorola
Solutions, Mohawk Industries, Philip Morris, Huntington Ingalls,
Duke Energy, Wills Towers Watson
(By Mike Dolan; mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
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