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Foreign Stock Roundup: RDS.A & AZN Impress, NVO & BABA Disappoint

Swarup Gupta

Losses on Wall Street and falling bond yields weighed on global markets this week. Investors in Europe continued to receive earnings reports and economic data. Asia’s stocks languished in the red for most of the week with the Nikkei 225 suffering a six-day losing stretch. Bank stocks and strong U.S. jobs data weighed on Brazil’s stocks over the week.

Surging Yields, Wall Street’s Losses Weigh on STOXX

Markets across Europe finished in the red last Monday as investors continued to receive earnings numbers and economic reports. The STOXX 600 lost 0.2% with nearly all major sectors and exchanges closing with losses. Stocks of basic resources companies were the leading gainers and ended the day 1.3% higher.

The STOXX 600 declined 0.8% last Tuesday with nearly all major exchanges and sectors finishing in the red. Stocks of basic resources companies were the leading losers, ending the session 1.5% lower following prospects of a power crisis in China. Stocks of banks, telecom, oil and gas and auto companies also lost more than 1%.

Investors eagerly awaited the outcome of the Fed’s recent policy meeting last Wednesday even as they continued to receive earnings numbers. The STOXX 600 declined 0.2% with major sectors ending the day mixed. While Germany and Frances’s exchanges closed nearly flat, the FTSE 100 lost 0.7%. Media stocks were the largest gainers for the day, ending 0.6% higher following several ratings changes.

Markets across Europe suffered losses on last Thursday even as Wall Street closed in the red. The STOXX 600 lost 0.5% with all sectors closing in negative territory even as investors continued to monitor earnings numbers. Telecom stocks were the worst losers for the day. Meanwhile, IHS data showed that factories across the region continue to enjoy robust growth.

The STOXX 600 declined 1.4% last Friday with all sectors closing in the red. The index also experienced its worst loss in a week since November 2016, weighed down by bank stocks and surging yields. Shares of Deutsche Bank DB lost more than 11% over last week after reporting its third straight annual loss.

Nikkei Experiences 6-Day Losing Stretch, Apple Suppliers Suffer

Stocks across Asia closed mixed last Monday after China’s bourses lost out on early gains. The Nikkei 225 failed to hold onto an early lead and closed almost unchanged. The Kospi and the S&P/ASX 200 gained 0.9% and 0.4%, respectively. China‘s stocks suffered losses after a government agency predicted that the economy could be impacted by sudden shocks. The Shanghai Composite and the Shenzhen Composite declined 1% and 1.6%, respectively. Meanwhile, the blue chip heavy CSI 300 lost 1.8%.

Losses on Wall Street led to Asia’s markets ending with losses on last Tuesday. The Nikkei 225 declined 1.4%. Suppliers of Apple Inc. AAPL across the region suffered losses following reports that the software giant was looking to cut production of its iPhone X model. The Kospi and the S&P/ASX 200 lost 1.2% and 0.9%, respectively. The Shanghai Composite and the Shenzhen Composite lost 1% and 0.5%, respectively.

Stocks across Asia finished in the red last Wednesday after ignoring Wall Street’s losses early in the day. The Nikkei 225 lost 0.8%, ending in negative territory for the sixth straight session. The Kospi lost 0.1% while the S&P/ASX 200 inched up 0.3%. The Shanghai Composite and the Shenzhen Composite declined 0.2% and 1.7%, respectively. China’s manufacturing PMI came in at 51.3, missing most estimates.

The Nikkei rebounded on last Thursday ending up 1.7% even as indexes across the region finished in the green. The Kospi and the S&P/ASX 200 gained 0.1% and 0.9%, respectively. However, China’s stocks finished mostly in the red. The Shanghai Composite and the Shenzhen Composite lost 1% and 3%, respectively.

Losses on Wall Street and a surge in government yields led to Asia’s stocks closing in the red on last Friday. The Nikkei 225 declined 0.9% with tech stocks emerging as the worst losers. The Kospi lost 1.7% while the S&P/ASX 200gained 0.5%.Meanwhile, the Shanghai Composite and the CSI 300 added 0.5% and 0.6%, respectively.

Bovespa Weighed Down by Banks, U.S. Jobs Data

Equity markets across Latin America ended mixed last Monday. The Bovespa declined by 1% after investors booked profits following recent record breaking gains. However, shares of Fibria Celulose SA FBR gained more than 5% following reports that a Netherlands-based paper producer was looking to acquire the company.

Stocks across the region continued to decline on last Tuesday as investors turned risk averse ahead of a key Fed policy meeting. Itaú Unibanco Holding SA ITUB was the largest loser for the Bovespa which closed 0.8% lower. Shares of Fibria gained 2% following bullish third quarter earnings.

A rally in bank stocks helped the Bovespa increase 1.1% on last Wednesday. Shares of Banco Santander Brasil SA BSBR jumped after posting encouraging fourth quarter earnings numbers. Shares of Banco Bradesco SA BBD and Itaú Unibanco also recorded impressive gains.

Markets across the region posted modest gains on last Thursday. Only Argentina and Venezuela’s bourses closed in the red. The Bovespa gained 0.7% after a disappointing margins forecast from Banco Bradesco curbed the day’s gains.

Strong job additions and robust wage increases in the United States weighed on Latin America’s stocks last Friday. This is because impressive employment data indicates that the Fed could hike rates at a faster than anticipated pace over the year.

Additionally, prospects for long pending pension reforms continued to remain dim. Consequently, the Bovespa lost 1.5% with Itaú Unibanco and Banco Bradesco leading the losers for the day.

Stocks in the News

Alibaba Group Holding Limited BABA reported third-quarter fiscal 2018 (ended Dec 31, 2017) earnings of $1.63 per share, missing the Zacks Consensus Estimate of $1.65. However, earnings increased 26% year over year.

Zacks Rank #3 (Hold) Alibaba reported revenues of RMB83 billion (US$12.8 billion), increasing 50.6% sequentially and 56% year over year. Also, revenues came in above the Zacks Consensus Estimate of US$12.1 billion.

The increase was driven by continued revenue growth in the China and International commerce retail business, strong improvement in Alibaba’s cloud business and the consolidation of Cainiao Network. (Read: Alibaba Q3 Earnings Lag Estimates, Revenues Grow Y/Y)

Roche Holding AG's RHHBY reported sales of CHF13.8 billion in the fourth quarter of 2017, up 5% from the year-ago period. Sales in 2017 came in at CHF 53.3 billion, up 5%. Earnings per share came in at CHF 15.34 in 2017, up from CHF 14.53 in 2016. 

Sales at the Pharmaceuticals division increased 5% driven by strong growth in Tecentriq, Ocrevus, Alecensa and Perjeta. Diagnostics division sales climbed 5% primarily on the back of strong immunodiagnostic business.

Zacks Rank #3 Roche now expect sales to remain stable or grow in low-single digits. The company expects core earnings to grow in high-single digits. The company intends to further increase its dividend in 2017 in local currency. (Read: Roche Posts Solid 2017 Sales on Tecentriq & Alecensa)

Royal Dutch Shell plc RDS.A reported strong fourth-quarter results on all round contribution from all its segments. In particular, rebounding commodity prices and cost cuts helped the company in coming out with better-than-expected numbers.

The Hague-based Shell reported earnings per ADS (on a current cost of supplies basis, excluding items -- the market’s preferred measure) of $1.04, going past the Zacks Consensus Estimate of $1.02 and the year-ago adjusted profit of 44 cents. The profit growth further confirms the industry's resurgence from the deep oil slump.

Revenues of $88,124 million were 31.3% above the fourth-quarter 2016 sales of $67,092 million. Meanwhile, operating expenses edged down in the quarter, coming in at $9,776 million, compared to $9,895 million in the corresponding period last year. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Novo Nordisk A/S NVO  reported fourth-quarter 2017 earnings of 53 cents per American Depositary Receipt (“ADR”) missing the Zacks Consensus Estimate of 57 cents. However, the reported figure was ahead of 50 cents earned a year ago.

Quarterly revenues were up 3% year over year (up 1% in local currency) to $4.42 billion. The top line also beat the Zacks Consensus Estimate of $4.27 billion. Sales in 2017 increased 2% in local currencies.  Earnings per ADR for 2017 was $2.34.

Zacks Rank #3 Novo Nordisk provided guidance for 2018. The company expects sales growth (in local currencies) to be in the range of 2-5%.  Operating profit growth is anticipated to be in the range of 1-5%. (Read: Novo Nordisk Misses Q4 Earnings Estimates, Sales Beat)

AstraZeneca plc AZN reported fourth-quarter 2017 core earnings of 65 cents per American Depositary Share (ADS), which beat the Zacks Consensus Estimate of 45 cents. Core earnings rose 13% year over year at constant exchange rates (CER). Higher product sales boosted profits in the quarter.

Total revenues rose 2% at CER to $5.78 billion in the reported quarter. Revenues also beat the Zacks Consensus Estimate of $5.59 billion. In 2017, Product sales declined 5% to $20.15 billion, primarily due to generic competition for Crestor and Seroquel XR and pricing pressure for Symbicort in the United States.

Zacks Rank #3 AstraZeneca provided EPS guidance for 2018, which is expected in the range of $1.65 to $1.75 per ADR. The Zacks Consensus Estimate stands at $1.71 per ADR. The company also expects revenues to grow in low single digit percentage. (Read: AstraZeneca Beats on Q4 Earnings, Guides for 2018)

Honda Motor Co., Ltd. HMC reported consolidated income of ¥570.2 billion or ¥318.50 per share ($2.82 per ADR) in the third quarter of fiscal 2018 (ended Dec 31, 2017), up ¥224.83 from the year-ago period. The Zacks Consensus Estimate for earnings per share during the quarter was 78 cents.

Consolidated sales revenues increased 13% year over year to ¥3.96 trillion ($35.06 billion). The figure surpassed the Zacks Consensus Estimate of $33.1 billion. The year-over-year increase can be attributed to higher revenues in all business operations.

For fiscal 2018 (ending Mar 31, 2018), Zacks Rank #3 Honda expects revenues to improve 8.6% to ¥15.2 trillion. Operating income is likely to decline 7.8% to ¥775 billion. Profit before income taxes is projected to rise 3.8% to ¥1.05 trillion. (Read: Honda's Q3 Earnings Rise Y/Y, Revenues Beat Estimates)

Performance of Leading Foreign Stocks

The table given below shows the price movements of 10 of the largest stocks listed on indexes worldwide, over the last five days and during the last six months.

Next Week’s Outlook

Wall Street’s fortunes have largely influenced the movement of global stocks over this week. Reverses on the United States’ bourses and prospects of a faster increase in key rates have rattled investors across the world. In this scenario, regional earnings and economic data have had little impact. Such a situation is likely to prevail over this week as well until Wall Street prices in forthcoming changes. Until then, it is likely that global investors will have to traverse troubled waters. 

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Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Roche Holding AG (RHHBY) : Free Stock Analysis Report
Astrazeneca PLC (AZN) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
Honda Motor Company, Ltd. (HMC) : Free Stock Analysis Report
Deutsche Bank AG (DB) : Free Stock Analysis Report
Banco Bradesco SA (BBD) : Free Stock Analysis Report
Itau Unibanco Banco Holding SA (ITUB) : Free Stock Analysis Report
Banco Santander Brasil SA (BSBR) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
Fibria Celulose S.A. (FBR) : Free Stock Analysis Report
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