US market valuations reflect confidence in good economic results: Julius Baer CIO
Yves Bonzon, chief investment officer at Julius Baer, said that the value of the US market now shows a high ray of confidence in the results “pretty mild” for the economy over the next few quarters.
German business confidence has improved slightly, Ifo said
German business confidence rose slightly in October, according to a survey from the country’s Ifo Institute, after four declines.
“Companies are more satisfied with the current situation. Hopes are brighter but marked by skepticism. The German economy stopped its decline for the time being,” said Ifo.
However, in the country’s struggling manufacturing sector, businesses are less pessimistic about the future but see the current situation worsening, due to a lack of new orders.
– Jenny Reid
NatWest shares rose to a 9-year high on a bullish outlook
NatWest shares rose 4.3% to their highest level since 2015 after the British bank reported higher third-quarter profits and raised its full-year outlook.
The lender reported an attributable net profit of £1.17 million ($1.52 billion) for the period, up from £866 million a year earlier. Analysts expect net profit of around £990 million, according to the consensus compiled by the company.
Real return on equity rose in the quarter to 17% from 16.4%, while the Common Equity 1 ratio, a measure of financial strength, rose 30 basis points to 13.9%.
NatWest share price history
NatWest said it now expects a real return on equity of above 15% for the full year, up from a previous forecast of 14%, and for earnings excluding essential items of around £14.4 billion, up from £14 billion. This is due to “interest rates and economic activity.”
The bank has seen higher net lending, with particular growth in commercial and institutional customers, along with the acquisition of a £2.3bn mortgage portfolio this summer.
England’s rivals Barclays and Lloyds Bank Group also this week beat profit expectations for the third quarter.
“Improved income and costs are driving today, offset by higher-than-expected impairments, which underpins the trend seen from Lloyds and Barclays. That said, default rates remain low at NatWest and bode well for performance over the medium term,” Matt Britzman, senior equity analyst at Hargreaves Lansdown, said in a note.
– Jenny Reid
Mercedes fell 3.2% after earnings plunge
The stock price of Mercedes.
Mercedes Shares opened 3.2% lower after the German firm reported a sharp drop in profit in its core auto division for the third quarter amid increasing competition in China.
Earnings before interest and taxes (EBIT) at Mercedes-Benz Cars fell 64% year-on-year to 1.198 billion euros ($1.296 billion) as revenue fell 6%. Group EBIT was 48% lower.
The company said that in the auto unit, “weaker macroeconomic conditions and fierce competition, especially in Asia, outweighed the availability of better products.”
It had issued a profit warning last month.
Germany’s leading automaker is trying to shift to electric vehicles as it faces a weak domestic economy and declining demand in China, the world’s largest auto market.
– Jenny Reid
European stocks opened slightly lower
The Stoxx 600 Index.
European Market: Here is the opening call
European markets appeared to open mixed on Friday, according to IG data.
Germany’s DAX was set to open 33 points lower at 19,416, with France’s CAC 40 down 11 points at 7,497. Britain’s FTSE 100 saw a cautious start, up 5 points at 8,279, along with Italy’s MIB, seen up 20 points at 34,544.
– Jenny Reid
CNBC Pro: Short Amazon and Apple at all-time highs, says Itau BBA analyst
As the corporate giant reports its quarterly financials in the coming days, one investment bank is advising investors against two Big Tech stocks.
CNBC Pro subscribers can read more about why analysts are telling clients to short Apple and Amazon here.
– Ganesh Rao
China’s PBOC kept medium-term lending rates unchanged
China’s central bank kept the interest rate on medium-term loans to banks unchanged at 2%, according to the bank’s statement on Friday.
The People’s Bank of China issued 700 billion yuan ($98.36 billion) of one-year medium-term lending facility (MLF) loans to financial institutions at 2%, to “maintain sufficient liquidity in the banking system.”
The bid rate in Friday’s operation ranged from 1.9% to 2.3%, and the total MLF debt balance is now at 6.789 trillion yuan, the central bank said.
— Anniek Bao
CNBC Pro: Power sector ‘transforming,’ Morgan Stanley says, global stock names set to rise 40%
The electricity industry is changing, according to Morgan Stanley, and various power producers, grid operators and utilities are set to benefit.
“Power demand is rising, prices are rising, and the cost of producing clean power has fallen by a third globally since 2023, and even more so in Asia,” the investment bank’s analysts said in an Oct. 23 note.
“The global power market is in shock on many fronts, and investors are searching for a new normal in the power value chain,” he said.
Morgan Stanley analysts named three global stocks rated overweight in the electricity sector that offer more than 40% upside potential.
CNBC Pro subscribers can read more here.
– Amala Balakrishner