US stocks open mixed
US stocks opened mixed Thursday as a massive rally at start the month eased.
The Dow Jones Industrial Average opened 0.3% lower while the S&P 500 fell 0.2% in early deals. The Nasdaq Composite rose 0.2%.
— Karen Gilchrist
Stocks on the move: Castellum up 7%, Shell down 5%
Shares of Swedish commercial property company Castellum gained 7.3% by mid-afternoon, after it permitted shareholder M2 Asset Management to divest around 40 million shares.
At the bottom of the Stoxx 600, Shell shares dropped 5% after the oil major issued a third-quarter profit warning.
We’re not on the brink of a complete economic collapse, says asset management company
Mathias Heim, chief investment officer at Bellecapital, discusses the outlook for European markets and the Credit Suisse crisis.
Shell dips on third-quarter profit warning
Shell expects a weaker third quarter due to slower demand.
Ina Fassbender | AFP | Getty Images
Energy giant Shell fell 3% in early trading after saying its third-quarter profits would be “significantly” lower.
It reported record profits in the first half as energy prices soared, but said it had seen a sharp drop in refining margins and weaker earnings from natural gas trading.
The European oil and gas sector was 0.45% lower at 9:00 am London time.
Stocks on the move: Zalando up 5%, DS Smith down 3%
Zalando shares gained more than 5% in early trade to lead the Stoxx 600 after the German online retailer sealed a new strategic partnership with US sportswear giant Nike.
At the bottom of the European blue chip index, British packaging company DS Smith slides 3.7%.
CNBC Pro: Goldman Sachs raises crude price forecast after ‘OPEC+ takes on the West’
Oil prices will soar by the end of this year, according to Goldman Sachs.
The Wall Street bank made the call after OPEC+, a powerful group of oil producers, decided to reduce production by 2 million barrels per day from November.
According to the bank’s analysts, it would be “unsustainable” for OPEC+ to maintain the cuts until the end of next year as oil inventories would fully deplete, prompting prices to soar and lead to demand destruction.
CNBC Pro subscribers can read more here.
Barclays: Stocks getting respite from rates and dollar calming, but not ‘out of the woods’ yet
Barclays European equity strategists noted on Wednesday that an attempt calming in rates and the US dollar have offered some respite to “oversold” stocks.
“Amid signs of financial stress, we may be nearer to the pain threshold for central banks, but we think a dovish pivot requires more evidence of weaker growth and a decisive fall in inflation, so we doubt equities are out of the woods yet,” Barclays Head of European Equity Strategy Emmanuel Cau said.
Cau suggests that the bar for a stock market bounce is pretty low, given that major indices are down 25%-30%, sentiment remains “uber-bearish” and the fourth quarter typically offers “positive seasonality.” However, he suggested that the “growth-policy trade-off” remains difficult.
“While de-risking has gone a long way, capitulation may continue without a trigger to ease hard landing fears. Sticky high inflation limits central banks’ ability to do a U-turn and to tolerate premature easing in financial conditions, even as recession looms ,” Cau said.
“As seen in the UK, though, credit stress matters for the central banks’ reaction function, and we may have touched their pain threshold, but markets should not confuse financial stability for monetary stimulus — the end of easy money has broad ramifications that are just now coming into view.”
CNBC Pro: NYU’s Aswath Damodaran names big tech stocks that are a better bet than ‘traditional safe’ ones
NYU’s Aswath Damodaran loves companies that can “withstand a hurricane, a catastrophe if it does happen.”
The professor of finance at New York University, who is sometimes referred to as the “Dean of Valuation, believes big tech stocks can do just that, and reveals the stocks he owns.
Pro subscribers can read more here.
— Zavier Ong
Mizuho says OPEC+ supply cut confirms ‘naked desire for price buoyancy’
OPEC and its allies’ decision to cut production by 2 million barrels per day confirms the group’s “naked desire for price buoyancy, not just support,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
A supply cut of around 1 million barrels per day would have resulted in price gains without a compromise on volumes, but a larger cut shows the alliance’s “disregard for the economic woes of, and geo-political alignment with, global partners,” he wrote .
“What may have been argued as an opportunistic gamble exploiting geo-political supply kinks for self-interest advantage is now in danger of being interpreted as an affront to the US and its allies (in protest of Russia price cap plans) that aligns with Russia ,” he added.
CNBC Pro: “There’s lots to buy in China,” says the fund manager and names these two EV stocks
Despite abysmal returns from Chinese stock markets this year, one fund manager thinks there are pockets of value in certain ‘core sectors’ even when financial conditions are tight.
Edmund Harris, head of Asian & Emerging Market investments at Guinness Asset Management, says companies in the electric vehicle sector, factory automation, and sustainable energy field would likely outperform their global peers over the next 5 to 20 years.
He’s cited two stocks that are likely to benefit from this theme.
CNBC Pro subscribers can read more here.
October could be the start of a bull market rally, Detrick says
Even though stocks pulled back Wednesday, stopping a major two-day win streak, October may still be the start of a new bull market rally according to Ryan Detrick, chief market strategist at Carson Group.
“We think this could be the start of a pretty decent-sized end of year rally,” Detrick said during CNBC’s “Closing Bell: Overtime.”
That’s because, traditionally, stock performance improves in October in midterm election years, said Detrick.
He also noted that even though markets ended the day lower, stocks posted a major rally in the afternoon that regained a lot of lost ground. That’s a positive, according to Detrick.
CNBC Pro: Time to buy the dip? Some stocks are still trading at lows with further big upside
The beginning of this week has brought something of a relief rally to stocks. Still, global as well as Wall Street indexes, are still well in the red year-to-date.
That could present an opportunity for investors looking for quality stocks and future upside in a volatile environment.
CNBC Pro screened for stocks trading within 10% of their 52-week low, but have a buy rating from more than 50% of Wall Street analysts that cover them. The stocks have an average price target upside of 20% or more, and earnings growth expectation for 2022 of at least 10%.
Here are the stocks that turned up. CNBC Pro subscribers can read more here.
European markets: Here are the opening calls
European stocks are heading for a lower open on Wednesday, bucking a positive trend seen in the previous session.
The UK’s FTSE index is expected to open 27 points lower at 7,059, Germany’s DAX 59 points lower at 12,606, France’s CAC 40 down 25 points at 6,005 and Italy’s FTSE MIB 112 points lower at 21,426, according to data from IG.
The declines expected on Wednesday come after European markets rallied yesterday, with the pan-European Stoxx 600 closing 3% higher. Travel and leisure stocks jumped 6.1% to lead gains as all sectors and major scholarships entered positive territory.
The British pound rose Tuesday after the UK government’s dramatic policy U-turn and the yields on Britain’s sovereign bonds also dipped lower after a heavy sell-off last week.
Data releases on Wednesday include final euro zone PMI data for September and German import and export data for August. Earnings come from Tesco and Bang & Olufsen.