At the end of a week of risk on the markets due to geopolitical tensions, Wall Street ended in disarray. The S&P500 lost -0.88%, marking a 6th consecutive session of decline. The index breaks 5,000 points, and returns to 4,967 pts. After spending the entire week in the red zone, the S&P 500 lost -1.87% weekly. The Dow Jones defended itself better and gained +0.56% to 37,986 pts this Friday. The industrial values index also gained +0.67% over the week. The Nasdaq, in a 6th consecutive session of decline, is looking for support. The technology stock index lost -2.05% to 15,282 pts at the close this Friday, and a weekly decline of -3.8%.
The announcement of an attack by Israel against Iran during the night reinforces tensions in the region and fears of a conflagration in the Middle East. In addition to these geopolitical concerns, and contrary to expectations, operators must now face rates that will remain higher for longer. A series of solid economic figures and several hawkish speeches from members of the Fed have indeed led investors to reduce their bets on rate cuts this year. This revision of expectations was reinforced this week by Jerome Powell’s latest statements.
In the absence of macroeconomic data across the Atlantic, the black gold market has abandoned itself to speculation in the wake of geopolitical tensions involving Iran. A barrel of American light crude WTI gained +0.5% to $83.19, moving between a low of $82.68 and a high of $86.04.
The dollar trades at 0.9371 against the euro.
Gold had a good week (+0.29%) and ended the session appreciating +0.42% to $2,388 per ounce. Bitcoin rebounded by +1.15% to $64,341 while the famous ‘halving’ should take place in the early hours of the day, Saturday.
Values
* Paramount Global (+8.36% to $22.82). Sony Pictures Entertainment (-0.71%) and Apollo Global Management (+0.31%) could make a joint offer for Paramount Global. According to ‘Reuters’ sources, the two companies have not yet contacted their target, which is in exclusive talks with Skydance Media, although some investors have urged Paramount to explore other options. The duo’s offer, which is still being structured, would be in cash and would lead to a privatization of the famous studio behind ‘Mission Impossible’ and ‘The Godfather’.
Under the proposed deal, Sony would acquire a majority stake in the joint venture and operate the media company as well as its film library. Sony Pictures Entertainment Chairman Tony Vinciquerra would likely run the studio and benefit from Sony’s marketing and distribution. Apollo would take control of the CBS television network and its local stations, a move required by laws that limit foreign ownership of U.S. television networks. The private equity firm previously made a $26 billion offer to buy Paramount Global, whose enterprise value at the end of 2023 was around $22.5 billion. However, a special committee of Paramount’s board of directors chose to continue advanced negotiations with Skydance, rather than pursue a deal “that may not come to fruition” with Apollo.
* American Express (+6.23% to $231.04). The credit card giant had a very good start to the year, continuing to benefit from its high-end positioning. The New York-based group reported a net profit per share of $3.33 for the quarter ended at the end of March, against a consensus of $2.96, for revenues up 11% to 15.8 billion. $. Billed activity, which represents the value of transactions on AmEx cards and other payment products, increased 6% to $367 billion. “We continue to attract high-spending, high-credit quality customers to the franchise,” says CEO Stephen Squeri. AmEx set aside $1.3 billion in provisions for the first quarter ($1.1 billion a year earlier), a figure in line with analysts’ expectations. For the full year, the company maintained its expectations of growth between 9 and 11 percent and its EPS forecast of $12.65 to $13.15.
* Fifth Third Bancorp (+5.93% to $36.25). The bank posted a net profit down 10% in the 1st quarter, as the rise in deposit costs weighed on the bank’s interest income. Regional banks have steadily increased the interest rates they offer on deposit accounts in a bid to retain customers looking to earn better returns by putting their money into higher-yielding alternatives. Net interest income – the difference between what a bank earns on loans and pays on deposits – fell nearly 8.8% to $1.38 billion in the quarter. The net interest margin thus contracted to 2.86% (3.29% the previous year). Net income reached $480 million, or 70 cents per share ($535 million or 78 cents per share a year earlier). The Cincinnati-based group continues to expect its 2024 NII to decline between 2% and 4%.
* Nordstrom (+0.96% to $18.92). The department store chain’s founding family has expressed interest in a possible delisting, prompting the company’s board to form a special committee of independent directors to evaluate any proposal.
* Smith & Wesson (+0.71% to $16.91) and Sturm Ruger & Co (+1.37% to $46.75) are being monitored. U.S. arms manufacturers have asked the U.S. Supreme Court to hear their petition in Mexico’s $10 billion lawsuit to hold them responsible for facilitating arms trafficking to drug cartels. drugs along the US-Mexico border.
* Procter & Gamble (+0.54% to $158.14). The group raises its annual targets. The owner of the Tide and Pampers brands, which benefits from regular price increases, reduced raw material costs and productivity gains, now expects its ‘core’ EPS to increase by 10 to 11% at during the 2024 financial year, compared to growth of 8 to 9% previously. Adjusted EPS is therefore expected between $6.49 and $6.55 for organic growth confirmed between 4 and 5%. For the quarter ended March 31, the firm recorded a net profit of $3.75 billion, or $1.52 per share ($3.40 billion and $1.37 per share a year earlier). Adjusted EPS stood at $1.52 ($1.41 consensus). Net sales increased 0.6% to $20.2 billion, slightly below expectations, as higher prices were partially offset by stable volumes and an unfavorable currency effect. Gross margin, an indicator of profitability, on the other hand, exceeded expectations.
* Netflix (-9.09% to $555.04). Big plunge for the streaming giant which nevertheless recorded its best start to the year since 2020. Operators preferred to retain rather disappointing revenue forecasts for the 2nd quarter. The company gained 9.33 million new customers in the first three months of the year, nearly double the level expected by the market, thanks to a strong lineup of original programming and a strong crackdown on word sharing. pass. The company estimates that more than 100 million people were using an account they hadn’t paid for. Netflix has attracted new customers around the world, showing particular momentum in the United States and Canada. The group indicated that its offers with advertisements now represent 40% of new subscribers in the markets where they are available. In total, the number of subscribers worldwide reached 269.6 million at the end of March. Over the quarter, Netflix reported net profit of $2.33 billion or $5.28 per share, compared to $2.88 a year earlier, for revenue up 14.8%. at nearly $9.4 billion. Operating profit jumped 54% to $2.6 billion.
Netflix also announced that it will stop reporting quarterly paid subscriptions and revenue per subscriber starting in Q1 2025. These metrics have long been the primary way Wall Street evaluates the company’s performance, but Netflix wants now focus on traditional metrics such as sales and profits. Management clarified that it will continue to report key subscription milestones.
For the current quarter, the group is targeting a turnover of $9.49 billion, against a consensus of $9.537 billion, with an EPS of $4.68 ($4.54 consensus).
* Tesla (-1.92% to $147.05). The electric vehicle manufacturer will recall 3,878 Cybertrucks, its electric pick-up, due to a defect in the accelerator pedal cushion, which could detach and lodge in the interior trim increasing the risk of accident, a said the US National Highway Traffic Safety Administration (NHTSA).
* Blackstone (-1.6% to $118.4). The private equity heavyweight is close to a deal to sell its majority stake in South Korean wholesale drug distributor Geo-Young to North Asian buyout fund MBK Partners, according to three sources cited by Reuters. for more than $1 billion.
* Alphabet (-1.23% to $154.09). The British data protection authority believes that the technology proposed by Google to replace cookies is not sufficient to protect consumers’ privacy, the ‘Wall Street Journal’ reported, citing internal documents.
* Apple (-1.22% to $165). The Apple brand has removed several social media platforms, including WhatsApp and Threads from Meta Platforms, from its application store in China. The iPhone maker also removed the Telegram and Signal messaging services from its store, at Beijing’s request, reports ‘Bloomberg’. Apple, which has consistently adhered to one of the world’s most rigid internet censorship regimes, said China’s Cyberspace Administration had ordered the apps to be removed for national security reasons. “We are obligated to respect the laws of the countries in which we operate, even if we disagree,” an Apple spokesperson told ‘CNN’. “The China Cyberspace Administration ordered the removal of these apps from the China Showcase due to its national security concerns…”.
In August, China required all mobile app developers to register with the government by the end of March or risk ceasing operations. Beijing has banned the use of foreign messaging and social media platforms like WhatsApp for years, using what the industry calls the ‘Great Firewall’. This has helped apps such as Tencent Holdings’ WeChat dominate the local internet, although Chinese users can still use virtual private networks to access foreign media. VPNs are commonly used in China to access content blocked inside the country. Less sensitive apps with larger Chinese operations such as Duolingo should comply with the latest regulatory licensing regime and remain operational, Rich Bishop, co-founder and CEO of AppInChina, told the agency. “This means that Chinese consumers will be limited to Chinese apps, with a small number of international apps,” says the executive, whose consultancy has received dozens of inquiries from companies on how to stay compliant and publish software in China. “It’s a pretty significant change – so it will, in a sense, further cut off Chinese citizens from the rest of the world.”
