European markets were mixed as cautious sentiment persisted; Avast up 42%
European stocks were mixed on Wednesday, continuing the cautious regional trend this week.
The pan-European Stoxx 600 Index is down 0.2% in early trade, with autos down 1.5% while technology shares are up 1.2%.
It’s a profitable day in Europe, with Commerzbank, SocGen, BMW, Banco BPM, Siemens Healthineers, Veolia and Wolters Kluwer among the companies reporting before the bell.
Shares of Czech cybersecurity company Avast surged 42% after the UK competition regulator temporarily agreed to sell $8.6 billion to its US counterpart NortonLifeLock.
Focus on the data, not what Fed speakers say, says Art Hogan
Despite the “Fed Speakers Review,” that’s not what investors should focus on, according to Art Hogan, chief market strategist at B. Riley Financial.
“I think investors should pay more attention to what the data tells us than every single speaker at the Fed, whether they are voters or not, should be saying what our expectations should be,” Hogan told CNBC. Asia.”
However, he said that Fed officials were able to shift expectations of where Fed policy is heading.
St. Louis Federal Reserve Chairman James Bullard said Tuesday that the central bank will need to raise interest rates, and the federal funds rate is likely to rise to 3.75%-4% by the end of 2022. San Francisco Fed President Mary Daly said ” Our work is far from done” on fighting inflation, while Chicago Fed President Charles Evans said another rate hike is possible, though he hopes it can be avoided.
After last week’s meeting, some expected the Fed to continue rising to 3.25%-3.5% before pivoting in 2023, Hogan said.
“I think this week’s parade of Fed speakers has done a very good job of undoing that, and lowering those expectations,” he said.
Jefferies says these stocks are poised to return if inflation peaks
There may be a slowdown on the horizon, and further earnings declines are expected in the future. If inflation peaks, as some analysts expect, Jefferies says, this combination of factors will favor one class of stock.
Jefferies has produced a screen of such stocks that investors can buy, based on a list of metrics that include high profitability, reasonable valuations and good cash flow. Professional subscribers can read the story here.
– Weezin Tan
PayPal soars on earnings and stock buyback announcement
PayPal shares rose more than 11% after hours. The payments company beat analyst earnings and revenue estimates for the second quarter and issued optimistic guidance for the full year. PayPal also announced a $15 billion share buyback program.
Share buybacks provide a way for companies to increase their earnings per share and boost the value of their shares, especially while the market across the board suffers from a sharp drop in prices this year. The company started a $10 billion program four years ago.
Elliott Management said it has a $2 billion stake in the payments giant. PayPal announced that it has entered into an agreement to share information on value creation with the activist investor.
— Tanaya Macheel
Despite Fed Talk About Fighting Inflation, ‘Easing Cycle’ Is Emerging, Says Jim Poulsen of Leuthold
Leuthold Group chief investment analyst Jim Poulsen said that despite the Fed’s “continuous rants toward fighting inflation” through monetary tightening, there are several factors that suggest the market may be entering an “emerging easing cycle”.
He said in a note to investors late Tuesday that bond yields have made a significant cut in interest rates, the dollar is finally rolling in and unwanted spreads have eased.
“The media, policy officials and investors are primarily focused on the fight against inflation and how aggressively the Fed will need to keep raising rates,” Paulsen said. “However, with real economic growth already falling to a crawl and evidence mounting that inflation is abating, the case for further Fed tightening at its September meeting is rapidly collapsing.”
“Investors should put appropriate weight on the pioneering nature of economic policies,” he added. “Tightening today means lower real and nominal growth tomorrow.”
— Tanaya Macheel
MatchGroup shares falter after hours
Shares of dating app operator Match Group fell as much as 23% after the company reported revenue of $795 million for the second quarter, compared to FactSet’s estimate of $803.9 million. Match also issued weak guidance on income and adjusted operating income for the current quarter.
— Tanaya Macheel
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