21 October 2024 | Weekly Snapshot
Saward Dawson > Wealth Advisory Insights > Weekly Snapshot > 21 October 2024
Did you know?
One of the key drivers of electric vehicle adoption will be cost. In the USA, EVs are still more expensive than the equivalent internal combustion engines by approx. 43%. In China, the reverse is true, where EVs are 5% cheaper.
Market Movements
The ASX rose 0.84% for the week hitting another fresh record high following very strong jobs data on Thursday, and backing up the 0.79% rise the previous week. Bank of Queensland was one of the strongest performers last week, rising 14.5%. The Company reported full year earnings that beat expectations at the core profit level which was helped by lower than forecast bad debts. Web Travel Group, the owner and operator of WEBJET, was one of the weakest, falling -40.2%, after providing guidance that its WebBeds business is now expecting margins of around 6.4%, down from around 7% following the collapse of FTI Group, a German-based travel and tourism company and one of Europe’s largest tour operators, which could have broader implications for ongoing industry rates.
The ASX Financials Index was the strongest group last week, gaining 4.07%, led by Bank of Queensland, and followed by Judo Capital +11.1%, Bendigo and Adelaide Bank +5.76%, Commonwealth Bank +5.3%, National Australia Bank +5.1%. While the ASX Utilities Index fell -4.42%, driven by APA Group falling -6.41% after its largest shareholder, UniSuper sold its 10% stake at a discount.
US equities finished the week stronger, with the Dow up 0.96%, the S&P up 0.85%, and Nasdaq up 0.80% for the week and all 3 major indices up for the sixth week in a row, in what was a fairly quiet week for the US market. United Airlines rallied 19.9% over the week after releasing Q3 earnings that beat expectations as well as announcing a US$1.5 billion share buyback and suggesting revenue trends had improved thanks to low-fare carriers scaling back their growth plans. CVS Health Corp, who provides health care and retail pharmacy services, fell 9.44% last week as the pharmacy and health care conglomerate announced the sudden departure of its CEO and struggles with sluggish growth.
Portfolio Movements
US Stock Market – Q3 earnings update – Huge week ahead
- With around 14% of index members now having reported, the blended annual earnings growth rate for S&P constituents is sitting at 3.4%, below the 4.3% expected at the beginning of the reporting season. The 4.3% earnings growth estimate had been revised down sharply from the 8.3% earnings growth expected at the start of Q3.
- At this early stage, the Q3 earnings season is off to a mixed start although there remains some cautious optimism for the balance of the Q3 season, and for the expected 14% jump in earnings for Q4.
- The forward 12-month P/E ratio for the S&P 500 is 21.9x, which is above the 5-year average of 19.5x and the 10-year average of 18.1x.
- There are 112 S&P 500 companies scheduled to report results this week
ASML Q3 revenue and earnings beat – Q3 bookings and FY25 guidance miss
- ASML Holding, the world’s leading supplier to the semiconductor manufacturing industry, reported a strong headline Q3 result last night with Q3 net income of €2.08B ahead of the €1.91B expected. Q3 revenue of €7.47B was ahead of the €7.15B expected and ahead of company guidance of €6.7B-€7.3B
- With long lead times due the complexity of the machines they manufacture, net bookings (future revenue) for the September quarter was €2.6 billion, a decent miss on the €5.6 billion expected. ASML also provided FY 2025 total net sales to be between €30B and €35B, the bottom end of the consensus range (consensus was for €35.8B).
- “While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected,” company CEO Christophe Fouquet said in the earnings release.
Bank of America beats Q3 EPS on higher trading revenue
- Bank of America reported better than expected Q3 earnings with Q3 EPS of $0.81 ahead of the $0.76 estimate as year on year net income fell less than expected. Flat Q3 revenue of $25.35B was largely in line.
- Fixed income trading revenue rose 8% to $2.9 billion, topping the $2.74 billion estimate. Equities trading jumped 18% to $2 billion, topping the $1.81 billion estimate. Investment banking fees also surged 18% to $1.40 billion, topping the $1.27 billion estimate.
- For credit quality, analysts seem content with quarterly provision and loss rates but remain concerned on commercial real estate driving some of the nonperforming loan increase. On the other hand, they were pleased by the lower net charge offs in credit cards to 3.70% from 3.88% in Q2.
- Management guided for Q4 Net Interest Income (NII) of $14.3B or more, in line with consensus, though won’t offer FY25 NII guidance until next quarter.
The Week Ahead
- Tuesday: US Leading Index is expected to print at -0.3% in September, compared with the prior reading of -0.2%
- Thursday: US Existing Home Sales are expected to be 3.88m from the prior 3.86m and 0.5% Month on Month (MoM) compared with the prior -2.5% reading and Initial Job Claims are expected to show a reading of 240k, compared with the previous 241k, while Continuing Claims is expected to be 1.876 million compared with the previous reading of 1.867million.
- Friday: US New Home Sales are expected to be 720k compared with the prior 716k, Durable Goods Orders are expected to be -1.0% for September compared to August at 0.0% while S&P Global US Manufacturing PMI is expected to be 47.5 compared to the prior of 47.3, and S&P Global US Services PMI is expected to be 55.0 compared with the prior 55.2
Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice
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