Market News & Analysis: November 21st, 2014

Canadian Markets

Canada’s TSX Composite Index climbed over 1%, supported by rising oil prices amid escalating geopolitical tensions. The rise in crude oil highlighted the market’s sensitivity to disruptions in energy supply chains, bolstering energy sector stocks as a consequence. RBC announced that Canada’s economy was substantially underperforming its peer’s which goes against historical norms.

American Markets

American stocks were mixed as investors digested Snowflake and Nvidia’s earnings, while awaiting for clearer signals for market direction. Uncertainty surrounding Federal Reserve policy and upcoming economic data seemed to temper broader market movements. Tech and energy stocks saw some traction, but a lack of decisive momentum kept indices relatively range-bound, as a sense of profit taking and a risk off approach ensued.

European Markets

European markets were higher on technology stocks, while the auto sector came under pressure over concerns about production costs, supply chain challenges, and tepid demand appeared to undercut the sector.

UK Stocks also rose as JD Sports shares dropped after it said the company’s sales were hit by poor weather, and distraction over the US election which impacted sales.

Japanese Markets

Japanese shares fell, particularly in technology, which mirrored the Nasdaq’s overnight decline. The technology selloff was driven by concerns over stretched valuations and diminishing global chip demand. Conversely, financial stocks in Japan rose, buoyed by hopes of an interest rate hike by the Bank of Japan. Such a move would mark a significant shift after years of ultra-loose monetary policy.

Corporate Stock News

Alphabet Inc

• Google faces potential breakup due to its monopoly in online search. U.S. DOJ proposes measures like selling its Chrome browser, sharing search results with rivals, and ending exclusive agreements that secure its default status on devices, including Apple’s. These measures could be enforced for up to a decade.

Alibaba Group Holding Ltd

• Alibaba plans to integrate its e-commerce platforms into a new unit called the Alibaba E-commerce Business Group, combining Taobao, Tmall, AliExpress, and others. Jiang Fan, formerly demoted in 2020, will lead this new unit.

Altria Group Inc

• The U.S. FDA issued new regulations on flavored tobacco products, which could affect Altria’s portfolio. Investors are concerned about potential declines in product demand.

Baidu Inc

• The company reported a 3% decline in Q3 revenue, meeting market expectations. Its online marketing division saw a 4% drop. However, net income rose 14%, beating consensus estimates.

Boeing Co

• Boeing issued layoff notices to 692 workers in Missouri as part of a broader 17,000 job cut plan to address financial strain. These cuts are part of a global workforce reduction.

Cameco Corp

• RBC raised the target price to C$90, citing stronger uranium prices and production growth, alongside promising nuclear energy prospects.

Deere & Co

• Deere forecasted a lower-than-expected 2025 profit, anticipating reduced demand for farm equipment due to inflation and weak farm incomes. It expects a 10-15% drop in net sales across machinery segments.

Honda Motor Co Ltd

• Honda plans to double its electric car driving range by adopting all-solid-state batteries, which will be developed and tested by 2027. The new batteries will be more efficient and cheaper, with significant investments in production.

Jazz Pharmaceuticals Plc

• The FDA approved Jazz’s drug Ziihera for treating metastatic HER2-positive biliary tract cancer. The drug received accelerated approval, contingent on further clinical trials to confirm its benefits.

Kura Oncology Inc

• Kura is partnering with Japan’s Kyowa Kirin to develop a blood cancer therapy. The deal includes an upfront payment of $330 million and up to $1.2 billion in milestone payments.

Manulife Financial Corp

• Manulife announced a reinsurance deal to transfer C$5.4 billion of its reserves, freeing up C$800 million for stock buybacks. This aligns with its strategy to reduce risk and improve capital flexibility.

Metro Inc

• CIBC raised the target price to C$91, citing Metro’s strong fourth-quarter results, with healthy revenue growth and effective cost control offsetting a slight decline in gross margin.

Meta Platforms Inc & Snap Inc

• Australia’s government proposed a bill to ban social media access for children under 16, potentially impacting platforms like Facebook, Instagram, TikTok, and Snapchat. The law aims to safeguard privacy and prevent fraud.

NexGen Energy Ltd

• RBC raised the target price to C$15, highlighting NexGen’s promising uranium projects, particularly Rook I, which boasts a large, high-quality resource and a favorable geopolitical location.

Novartis AG

• Novartis raised its sales guidance, projecting 6% annual growth through 2028. This is driven by strong performances from recently launched drugs, including a significant increase in Kisqali’s sales forecast.

Nvidia Corp

• Nvidia forecasted slower revenue growth, falling short of some investors’ high expectations. Despite strong demand for its chips, the company’s outlook for the fourth quarter came in lower than anticipated.

Palo Alto Networks Inc

• The company exceeded Wall Street’s expectations for Q1, thanks to strong demand for its cybersecurity services. It also raised its fiscal 2025 revenue forecast and announced a two-for-one stock split.

PDD Holdings Inc

• PDD’s third-quarter revenue growth of 44% failed to meet expectations, signaling challenges in attracting consumers amid increasing competition and a price war in e-commerce.

Reddit Inc

• Reddit experienced a temporary outage affecting tens of thousands of users. The issue was traced to a software bug, which was promptly fixed, restoring access.

Snowflake Inc

• Snowflake raised its annual product revenue forecast to $3.43 billion for 2025, exceeding previous expectations. The company’s strong third-quarter performance and AI partnerships helped drive its growth.

Starbucks Corp

• Starbucks is exploring strategic partnerships for its Chinese operations, after reports that it might sell a stake in the business. The company reaffirmed its commitment to growing in China.

Target Corp

• Jefferies lowered Target’s target price to $165 due to weaker-than-expected Q3 results and a reduced full-year guidance.

TJX Companies Inc

• Goldman Sachs raised TJX’s target price to $137, reflecting better-than-expected Q3 results and an increased full-year outlook.

Tesla Inc

• Tesla’s Q3 earnings beat expectations, driven by increased production and strong demand for its electric vehicles. Despite facing competition, the company has maintained a leading market share.

Walmart Inc

• Walmart’s earnings growth exceeded estimates, boosted by strong e-commerce sales and increased demand for groceries. The company is enhancing its online platform to capture more market share.