Stock Market Update and Analysis: September 5th, 2024

Global Markets

Canada

Canada’s main stock index experienced a modest increase, driven primarily by gains in crude oil and metal prices.  Vancouver and Toronto’s housing markets saw sales decline steadily in August as consumers struggle with their balance sheets amid cost struggles.

United States

American stock markets were volatile, as steady data from the service sector and a weaker-than-expected employment report was being digested by investors. The service sector data indicated that economic activity remained stable, which is generally supportive of equity markets as it suggests continued economic expansion. However, the employment data showed further weakness, reflecting ongoing challenges in the labor market.

Europe

European stocks were mixed, with gains in the utilities sector balancing out losses in mining stocks. This mixed performance reflects a broader trend where certain sectors benefit from specific conditions while others struggle.  UK markets remained flat as forecasts were updated for the UK economy, which is now expected to grow by 1.1% in 2024, up from the 0.8%from the previous forecasts.

Asia

• Japan: The Nikkei 225 Index fell, primarily driven by losses in semiconductor-related stocks. The technology sector in Japan, and especially semiconductor stocks, has been under pressure from global supply chain issues and potential shifts in tech demand. This sector’s downturn weighed heavily on the overall index performance.
• China: Chinese stocks ended slightly higher, buoyed by expectations of policy easing. The Chinese government’s potential to introduce supportive measures, such as fiscal stimulus or monetary easing, created a favorable environment for the stock market. This optimism reflects investor hopes for measures that could boost economic growth and stability.
• Yen: The Japanese yen appreciated to a one-month high against the U.S. dollar, driven by speculation about imminent rate hikes by the Bank of Japan. The yen’s strength often indicates investor confidence in Japan’s monetary policy or a shift in capital flows seeking safety in Japanese assets.

Corporate Stock News

Alphabet Inc

Google may face antitrust issues in Europe for allegedly blocking Enel’s e-mobility app, JuicePass, from its Android Auto platform. An adviser to the EU’s top court suggested Google’s refusal might breach competition rules. The Italian antitrust authority previously fined Google $113.2 million for this action, and the final ruling is awaited.

Alimentation Couche-Tard Inc

Japanese retailer Seven & i plans to inform Couche-Tard that its takeover bid price is inadequate. Seven & i will request Couche-Tard to reconsider the offer, citing competition law concerns, especially in the U.S., but continues to negotiate.

ASML Holding NV

ASML’s CEO criticized U.S.-led restrictions on its exports to China as economically motivated rather than purely security-focused. He expects increased push-back against these restrictions but noted that Chinese progress in chipmaking is slowing due to existing limitations. Russian firms have also obtained ASML parts despite EU sanctions.

Canadian Imperial Bank of Commerce

CIBC announced a major executive reshuffle effective November 1. Jon Hountalas will become vice chair of North American banking, with Susan Rimmer, Harry Culham, and Panossian taking over his previous roles. Christian Exshaw will become deputy head of capital markets with added responsibilities.

C3.ai Inc

C3.ai missed quarterly subscription revenue estimates, reporting $73.5 million against expectations of $79.1 million. While total revenue beat expectations, the company maintained a lower-than-expected revenue forecast for fiscal year 2025.

Copart Inc

Copart’s fourth-quarter profit fell due to higher expenses and declining used-car values. Net income decreased to $322.6 million, though revenue rose 7.2% to $1.07 billion, in line with analyst estimates.

Eni Spa & Shell PLC

Eni and Shell led a $30 million funding round for Mantel Capture, a climate tech startup. Mantel aims to capture 95% of CO2 emissions using molten salts. The funds will support building a demonstration project at a paper mill.

Fortive Corp

Fortive plans to spin off its Precision Technologies segment into a new company by Q4 2025. The new entity, “NewCo,” will include Fortive’s Precision Technologies brands, while Fortive retains its other business segments. CEO James Lico and CFO Chuck E. McLaughlin will retire, with Olumide Soroye and a new CFO stepping in.

Frontier Communications Parent Inc & Verizon Communications Inc

Verizon will acquire Frontier Communications for $20 billion in cash. The deal aims to expand Verizon’s fiber network and enhance its competitive position. Frontier shares fell in premarket trading, while Verizon shares increased. The acquisition is expected to close in about 18 months.

General Motors Co

GM will produce hybrid-flex vehicles in Brazil that can run on 100% ethanol, gasoline, or both. The new models, set to be produced in São Paulo state, are expected to launch in 2025. GM is also exploring a plug-in hybrid-flex model.

Harmony Gold Mining Company Ltd

Harmony Gold increased its dividend after reporting a more than doubled annual profit, driven by higher gold production, improved grades, and record prices. Headline earnings per share rose significantly, and production exceeded targets.

Hewlett Packard Enterprise Co

Hewlett Packard Enterprise raised its annual profit forecast due to increased demand for AI servers. However, shares fell after a decline in revenue from data analysis and traditional cloud segments. The company reported strong quarterly server revenue and raised its adjusted earnings per share forecast.

Honeywell International Inc

Honeywell appointed Mike Stepniak as CFO to succeed Greg Lewis. Stepniak, currently a vice president at Honeywell Aerospace Technologies, will take over after the company announces its 2024 results. Lewis will transition to a new role within the company.

HSBC Holdings PLC

HSBC named Oliver Kadhim as the regional head of institutional client group for Asia-Pacific, effective September 17. Fabien Melero was appointed sole head of cash equity execution for the region.

Johnson & Johnson

J&J plans to increase its settlement offer to over $9 billion to resolve legal claims related to its talc products. The settlement, which spans 25 years, will be finalized through a subsidiary bankruptcy process.

Nike Inc

Norway’s wealth fund will support a proposal for Nike to improve its human rights agreements with workers in high-risk countries and oppose excessive executive pay. However, the fund will not support a proposal to assess the effectiveness of Nike’s supply chain policies.

Robinhood Markets Inc

Robinhood Crypto will pay $3.9 million to settle claims that it failed to allow customers to withdraw their cryptocurrencies between 2018 and 2022. The settlement also mandates that the platform allows customers to withdraw crypto assets to their wallets.

Stellantis NV

Stellantis will resume production at select U.S. assembly plants after making adjustments. The company had recently paused production of Jeep Wrangler and Grand Cherokee SUVs. Stellantis also appointed Bob Broderdorf as the head of Jeep North America.

United States Steel Corp

Japanese minister Taro Kono criticized the potential U.S. block of Nippon Steel’s $14.9 billion acquisition of U.S. Steel, arguing that government intervention should not be arbitrary. The Biden administration has expressed concerns about national security related to the deal.

Vaxcyte Inc

Vaxcyte will raise $1.3 billion by selling stock and warrants following a record high in its share price due to promising vaccine trial results. The offering includes 10.2 million shares and 2.4 million warrants, priced at discounts to the current stock price.