Early Morning Call: VIX still down; US banks raise dividends; Nike down
VIX down for 8th consecutive day. European indices consolidate at Monday’s levels apart from UKX which continues its climb; Asia mixed. Four US banks raise dividends. Nike sees good Q4 but stock falls 4.6% after poor guidance.
Indices outlook
The session was mixed in the Asia-Pacific region overnight.
The Japan 225 and Australia 200 closed in positive territory, but Hong Kong’s Hong Kong HS50 traded lower.
This followed the US session in which all three main indices ended in the red, the US Tech 100 posting the worst performance with a decline on 0.72%.
In Europe, the FTSE 100, Germany 40 and France 40 opened higher this morning. In Germany, Gfk consumer confidence fell to -27.4 in July, broadly in line with economists’ expectations.
In the US, economists await a series of macroeconomic indicators. Goods trade balance and wholesale inventories come in at 1.30pm UK time, followed by the S&P/Case-Shiller home price index at 2pm, and Conference Board consumer confidence at 3pm.
US banking sector
Look out for the US banking sector at the open today. Following the Federal Reserve's stress test results late last week, which gave the green light to all 33 banks to raise dividends or increase share buybacks, six of the largest firms have announced yesterday after market close what their plans would be.
Four of them - Morgan Stanley Goldman Sachs BDC Inc, Bank of America Corp (All Sessions) and Wells Fargo & Co (All Sessions) - have decided to hike their dividends. Morgan Stanley also announced a $20 billion share buyback programme.
Morgan Stanley said it plans an increase to 77.5 cents per share and a share buyback program of $20 billion. Goldman Sachs will hike its dividend by 25%, to $2.50 per share. Bank of America raises its dividend by 5% to 22 cents per share and Wells Fargo expects to hike its dividend to 30 cents from 25 cents a share.
JPMorgan Chase & Co (All Sessions) and Citigroup Inc (All Sessions) have decided to keep their dividend flat, respectively at $1 and 51 cents per share. Goldman Sachs, Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are all-sessions stocks on the IG platform.
Nike earnings
NIKE Inc (All Sessions), another all-sessions stock, produced a better-than-forecast quarterly report yesterday.
Earnings came in at 90 cents per share, on revenue of $12.23 billionl. Analysts had expected earnings per share (EPS) of 81 cents and revenue of 12.07bn.
However, share price fell in extended hours as the group forecast first quarter revenue below estimates. Nike Chief Financial Officer, Matthew Friend, said the company is "taking a cautious approach to Greater China, given uncertainty around additional Covid disruptions." and expects first quarter revenue to be flat to slightly up, below estimates of a 5.1% increase.
Nike also has to deal with its stock. The company's inventories rose 23% to $8.4 billion at the end of May. Supply disruption means that more products remain in transit, and late arrivals will have to be discounted, putting pressure on the group's gross margins.
Commodities
Oil prices are rising this morning. According to Reuters, citing a report prepared ahead of the OPEC+ meeting scheduled on Thursday, the organisation has cut its projected 2022 oil market surplus to one million barrels per day, from 1.4 million previously.
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