US market ratings reflect confidence in positive outcomes for the economy: Julius Baer CIO
Yves Bonzon, chief investment officer at Julius Baer, said the current valuation of the U.S. market reflects high confidence in the “pretty good” outcome of the economy in the coming quarters.
German business confidence improves slightly, IFO announces
Business confidence in Germany improved slightly in October after four consecutive years of decline, according to a survey by the country’s Ifo Institute.
Ifo said, “Companies have become more satisfied with the current situation.Expectations have brightened, but skepticism has also been noticeable.The German economy has halted its decline for the time being.”
However, in the country’s struggling manufacturing industry, companies were less pessimistic about the future, pointing to a lack of new orders and seeing the current situation as significantly worsening.
— Jenny Reid
NatWest shares soar to nine-year high as outlook raised
NatWest shares rose 4.3%, the highest since 2015, after the British bank reported strong third-quarter profits and raised its full-year outlook.
The lender reported an attributable net profit of £1.17 ($1.52 billion) for the period, up from £866 million a year earlier. Analysts had expected net profit to be around 990 million pounds, according to consensus compiled by the company.
Return on tangible equity increased from 16.4% to 17% quarter-over-quarter, and common equity Tier 1 ratio, an indicator of financial strength, rose 30 basis points to 13.9%.
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NatWest stock price.
NatWest said it now expects full-year return on tangible equity to be above 15%, up from 14% previously expected, and profit excluding notable items to be around 14.4 billion pounds, up from 14 billion pounds. This is attributed to “interest rates and economic activity.”
The bank saw an increase in net lending due to the acquisition of Metro Bank’s £2.3bn mortgage portfolio over the summer, as well as growth in commercial and institutional customers, among other things.
British rivals Barclays and Lloyds Banking Group also reported better-than-expected third-quarter profits this week.
“Earnings and cost improvements drove the beat today, offset by higher-than-expected impairments, bucking the trend seen at Lloyds and Barclays. That said, NatWest’s default levels “It remains low and bodes well for medium-term performance.” Matt Blitzman, senior equity analyst at Hargreaves Lansdown, said in a note.
— Jenny Reid
Mercedes falls 3.2% as profits plummet
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Mercedes stock price.
Mercedes shares opened 3.2% lower after the German company announced a sharp decline in third-quarter profit at its main car division due to increased competition in China.
Mercedes-Benz Cars’ earnings before interest and taxes (EBIT) fell 64% year-on-year to 1,198 million euros ($1,296 million), due to a 6% decline in sales. Group EBIT decreased by 48%.
The company said that in the automotive sector, “improved product availability was outweighed by weak macroeconomic conditions and increased competition, primarily in Asia.”
The company had already issued a profit warning last month.
Famous German automakers are trying to transition to electric vehicles in the face of a weak domestic economy and declining demand in China, the world’s largest car market.
— Jenny Reid
European stocks open slightly lower
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STOXX 600 index.
European Market: Click here for opening call
European markets are expected to open mixed on Friday, according to IG Data.
Germany’s DAX is set to open 33 points lower at 19,416, while France’s CAC40 is down 11 points at 7,497. Britain’s FTSE 100 index rose five points to 8,279, while Italy’s MIB rose 20 points to 34,544, a cautiously positive start.
— Jenny Reid
CNBC Pro: Itau BBA analyst says to short Amazon and Apple as they head for all-time highs
As major companies report their quarterly financials in the coming days, an investment bank is offering investors a bet on two Big Tech stocks.
CNBC Pro subscribers can read more about why analysts are telling their clients to short Apple and Amazon.
— Ganesh Rao
People’s Bank of China leaves medium-term lending rates unchanged
The People’s Bank of China has kept its medium-term lending rate to banks unchanged at 2%, according to a statement from the People’s Bank of China on Friday.
The People’s Bank of China has issued one-year medium-term lending facility (MLF) loans worth 700 billion yuan ($98.36 billion) to financial institutions at 2% to “maintain sufficient liquidity in the banking system.”
According to the central bank, the bidding rate in Friday’s operation ranged from 1.9% to 2.3%, and the total amount of MLF loans now stands at 6.789 trillion yuan.
— Anique Bao
CNBC Pro: Morgan Stanley says power sector is ‘transforming’, global stock prices will rise 40%
According to Morgan Stanley, the power industry is undergoing a transformation that will benefit multiple power producers, grid operators, and utilities.
“Electricity demand is surging, prices are volatile, and the cost of producing clean electricity is expected to fall by a third worldwide from 2023 onwards,” analysts at the investment bank wrote in an Oct. 23 note. “This is even more pronounced in Asia.”
“Global electricity markets are bringing surprises on many fronts, and investors are navigating a new normal for the electricity value chain,” they added.
Morgan Stanley analysts named three global stocks in the power sector with overweight ratings, saying they have room for gains of more than 40%.
CNBC Pro subscribers can read more here.
— Amara Balakrishna
