Global Market Overview: January 23, 2024
Asia: Japan’s Nikkei closed higher following the Bank of Japan’s decision to maintain ultra-easy policy settings, a move widely expected. Meanwhile, Chinese stocks experienced a more muted recovery after touching their lowest point in five years the previous day.
Europe: European equities edged lower as investors exercised caution before the European Central Bank’s policy meeting later in the week. The anticipation of the central bank’s decisions contributed to a tepid market atmosphere.
North America: The Canadian main stock index witnessed a rise, propelled by gains in gold prices due to a weaker U.S. dollar. Investors maintained caution ahead of the Bank of Canada’s monetary policy meeting scheduled for Wednesday. In the U.S., markets remained subdued as investors awaited the peak in the earnings season.
Commodities: Oil prices fell as traders weighed simmering geopolitical tensions in several regions against supply outages in the U.S. and returning production in Libya.
Corporate Highlights:
Johnson & Johnson (J&J): J&J reported a fourth-quarter profit slightly above Wall Street expectations. The positive performance was attributed to stronger-than-expected demand for its blockbuster psoriasis treatment, Stelara.
Zee Entertainment: Shares of Zee Entertainment plunged, marking their most significant one-day slide since April 2021. This followed Sony India’s decision to scrap a $10 billion merger with the Indian broadcaster, raising concerns about Zee Entertainment’s survival in an increasingly competitive industry.
Logitech International: Logitech International forecasted a smaller decline in its annual sales and reported slightly lower third-quarter revenue. This marked the company’s first set of results under newly appointed CEO Hanneke Faber.
Pharmaceutical Companies (GSK, Pfizer, etc.): GSK, Pfizer, and other pharmaceutical companies are urging a judge in Delaware to find that evidence plaintiffs’ lawyers want to use in about 72,000 lawsuits claiming that the discontinued heartburn drug Zantac caused cancer is not supported by science.
Cellnex (Spain): Cellnex is considering selling a minority stake in its Polish operations. This move is part of the mobile phone tower operator’s broader strategy to reduce its debt through asset disposals.
Specific Company Highlights:
Procter & Gamble (P&G): P&G cut its annual profit forecast, citing slowing price hikes and a writedown in its Gillette business. The company’s quarterly net sales rose, but concerns over the outlook led to a revision in profit expectations.
Canadian Pension Funds: Four of Canada’s largest pension funds, managing nearly C$1 trillion in assets, are expanding significantly into private credit, a domain traditionally dominated by banks.
General Electric (GE): General Electric reported higher fourth-quarter profit, driven by strong demand for spare parts and services in its aircraft engines business. The company also announced the spin-off of its energy businesses, including renewables, into a separate company in early April.
Halliburton: Halliburton reported a fourth-quarter profit that beat market expectations, buoyed by strength in offshore and overseas drilling activities, boosting demand for oilfield services and equipment.
First Quantum Minerals: Shareholder SailingStone Capital Partners expressed concerns to First Quantum Minerals about historic “missed opportunities” in managing its balance sheet. The Canadian miner is grappling with the aftermath of the sudden closure of its flagship Panama copper mine.
3M Co: The U.S. industrial conglomerate 3M forecasted full-year earnings below analysts’ estimates, contributing to a decline in its shares in premarket trading. The company reported adjusted profit for the fourth quarter, missing expectations.
Brown & Brown Inc: Insurance brokerage Brown & Brown reported an 85% surge in fourth-quarter profit, driven by higher commissions and fees, alongside better investment returns.
D.R. Horton Inc: U.S. homebuilder D.R. Horton missed estimates for first-quarter profit, sending its shares down in premarket trading. The company flagged expectations of a sequential decline in homebuilding gross margins.
RTX Corp: Aerospace and defense giant RTX Corp reported a 10% surge in fourth-quarter revenue, driven by demand for aftermarket services, commercial engines, and military equipment. The company forecasted a 2024 profit target while anticipating revenue challenges due to supply issues in the global aerospace industry.
Telefonaktiebolaget LM Ericsson: Ericsson anticipates a further decline in 5G gear demand from mobile operators in 2024, including in key growth markets like India. The company beat fourth-quarter operating profit expectations, aided by software sales.
United Airlines Holdings Inc: United Airlines provided an upbeat outlook for the full year despite warning of a wider-than-expected loss in the quarter through March due to the grounding of Boeing 737 MAX 9 airplanes. The airline reported an adjusted profit in the fourth quarter, surpassing Wall Street estimates.
Verizon Communications Inc: Verizon forecasted annual profit above estimates after strong demand for its wireless plans and Black Friday promotions. The company posted its highest quarterly subscriber additions in nearly two years.
Zions Bancorporation NA: Zions Bancorporation forecasted a slight decline in net interest income (NII) for 2024 after posting a 58% drop in its fourth-quarter profit. Lenders, including Zions, are facing increased costs to attract and retain customer deposits.
Deals of the Day:
Inhibrx Inc & Sanofi SA: Sanofi, the French healthcare company, agreed to acquire the drug development project INBRX-101 from Inhibrx for around $2.2 billion. The move aims to enhance Sanofi’s rare disease business, focusing on the experimental drug designed to treat Alpha-1 Antitrypsin Deficiency (AATD).
Market Analysis:
P&G, Logitech, GE, Halliburton: These companies reported their quarterly results, influencing market sentiment. P&G’s reduced profit forecast and Logitech’s CEO transition were notable, while GE and Halliburton’s positive performances contributed to market optimism.
Canadian Pension Funds’ Shift to Private Credit: Four major Canadian pension funds’ move into private credit signaled a significant shift in investment strategy, highlighting a departure from traditional banking-dominated sectors.
Oil Prices and Geopolitical Tensions: Oil prices fell as traders considered simmering geopolitical tensions alongside supply outages in the U.S. and returning production in Libya, impacting the energy sector.
Overall Market Sentiment: Global markets showed mixed performance, with varying influences such as central bank decisions, corporate earnings, and geopolitical factors contributing to the nuanced landscape. Investors exhibited caution in anticipation of key events and announcements.
Conclusion: The global market landscape on January 23, 2024, reflected a complex interplay of factors impacting different regions and sectors. From corporate earnings reports to central bank decisions, geopolitical tensions, and strategic shifts in investment approaches, the markets exhibited a range of influences. Investors navigated this landscape with a degree of caution, awaiting key developments that could shape the trajectory of various assets and markets in the days to come.
Top Analyst Ratings
Manulife Financial Corp (MFC):
Evercore ISI Target Price: Raised to C$30 from C$26.
Rationale: Positive anticipation surrounding the insurer’s $13 billion reinsurance transaction.
Sun Life Financial Inc:
Evercore ISI Target Price: Raised to C$78 from C$76.
Rationale: Expectation for the company to continue its sales recovery in the Asian market.
Bank of Hawaii Corp:
Piper Sandler Target Price: Cut to $69 from $70.
Rationale: Adjustment following three consecutive quarters of net interest margin compression.
Mastercard Inc:
JPMorgan Target Price: Raised to $504 from $484.
Rationale: Positive outlook based on the company’s expected 2024 full-year guidance.
News Corp:
JPMorgan Target Price: Raised to $31 from $29.
Rationale: Improved business profile expected for the company in 2024.
Qualcomm Inc:
Wells Fargo Target Price: Raised to $120 from $110.
Rationale: Anticipation of better-than-expected first-quarter results due to accelerating mobile chip sales.
Visa Inc:
JPMorgan Target Price: Raised to $302 from $293.
Rationale: Updated ahead of the company’s first-quarter results scheduled for Thursday.
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