Markets finished higher for yet another week, with the AUD acting as a tailwind for a change. Asian markets – Hong Kong and China in particular – were standouts. This is the ninth consecutive week that the Dow and Nasdaq have had positive returns. For the Dow, the last time that happened was 24 years ago in May 1995!
Drivers include progress on US / China trade and of course the Federal Reserve has communicated that it intends to adopt a more cautious posture in lifting interest rates any further in 2019.
Weekly returns to 22 February 2019
(AUD return far right- hand column)
- 10-Year Treasury yield: -1 basis points to 2.65%
- WTI crude oil: +2.6% to US$57.26
- AUD/USD: 71.33
Year to date returns to 22 February 2019
(AUD returns far right column)
A great start to the year. China best of the bunch.
U.S corporate earnings results
Baidu (NASDAQ: BIDU)
Baidu Q4 Non-GAAP EPS of $1.92 beat by $0.16. Revenue of $3.96B (+9.4% Y/Y) beat by $80M. In-line Q1 outlook has revenue of $3.42B to $3.6B compared to the $3.56B consensus estimate. Active online market customers grew 15% in the quarter while the revenue per market customer fell roughly 4%. Adjusted EBITDA totaled $577M and Baidu ended the quarter with $20.57B in cash and equivalents.
Kraft Heinz (NASDAQ: KHC)
Kraft Heinz Q4 Non-GAAP EPS of $0.84 misses by $0.10; GAAP EPS of -$10.34. Revenue of $6.89B (+0.7% Y/Y) misses by $50M. The company wrote off $15.4B related to previous acquisitions. Much of KHC's unadjusted Q4 loss was due to the impairment charges "to lower the carrying amount of goodwill in certain reporting units, primarily U.S. Refrigerated and Canada Retail, and certain intangible assets, primarily the Kraft and Oscar Mayer trademarks”. KHC said in its earnings conference call that it is cutting its quarterly dividend by 36% to $0.40/share.
The week ahead
Looking to the week ahead, we’ll see the first preliminary fourth quarter gross domestic product announcement from the U.S.
In Europe, a host of consumer price inflation (CPI) data will be released with France, Germany, and the composite Eurozone reporting season is underway. In Asia, Japan will report CPI figures as well, along with unemployment rate.
Chart of the day
Google, Facebook and Amazon are the 800-pound gorillas of digital advertising. Rankings unlikely to change anytime soon. Amazon expected to approach 10% by 2020.
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