Before the bell: inflation? Who cares about that?

The U.S. inflation report didn’t trigger major movements yesterday. Today, the focus shifts to earnings from Walt Disney and JD.com.

It’s a familiar scene in recent quarters: investors gathered around their screens on a Wednesday afternoon to check the latest U.S. inflation numbers. Higher-than-expected inflation figures were a negative, as they could lead to more interest rate hikes, which tend to hurt stocks. But when central banks began cutting rates, the game changed, and investors started paying less attention to inflation. Yesterday’s U.S. inflation reading was right on target at 2.6%, a clear sign that inflation is no longer the main concern. What’s still noteworthy, though, is that the ten-year yield keeps rising, now sitting at 4.46%. So far, the rising rate hasn’t impacted the markets, but that could change. In Asia, the Hang Seng Index is losing ground again and has dropped 8.3% over five days.

This morning was also one of the busiest for earnings reports in Belgium. Unifiedpost, a specialist in digitalizing business documents, reported no revenue growth due to a decline in traditional communication services. Real estate developer Atenor provided an update, stating it is focused on debt reduction, aiming to reduce it by at least 150 million euros this year. The position of Proximus CEO Guillaume Boutin is uncertain as political parties MR and N-VA consider intervening in the management. DEME raised its revenue forecast, expecting growth of over 20%. Agfa-Gevaert saw a revenue decline and plans to restructure its film division, reporting a 13 million euro loss this quarter. ASML holds its investor day today, and Shell is going ex-dividend. This afternoon, we’re watching for earnings from Walt Disney and JD.com, with Applied Materials releasing results later tonight.

Fifth time’s the charm?

We’ve been writing for several quarters about AI and how it’s boosting tech stock prices. But one thing stands out: AI isn’t benefiting all companies equally. Take Cisco, for example—a tech giant with a market cap of 235 billion dollars. It’s no small player, active in IT security, networking, data centers, and the Internet of Things, making it a perfect candidate to benefit from AI, or so you’d think. The reality? Revenue has been declining for four consecutive quarters, and yesterday was no different. Revenue fell by nearly 900 million dollars to 13.84 billion dollars, and net earnings dropped from 0.89 dollars per share to 0.68 dollars. Although the results were slightly better than expected, they’re hardly a reason for investor excitement. Cisco hopes to generate more revenue from AI this year, but so far, things aren’t going smoothly. We expect a slightly negative opening.

Don’t write off oil just yet

In times when fossil fuels are widely criticized, it’s interesting to note that suppliers to the sector are still performing well. One of these is SBM Offshore, which leases offshore oil platforms to major oil players. This morning, the company reported that third-quarter revenue was higher than expected due to the sale of the FPSO Prosperity to ExxonMobil. As a result, the company now expects an EBITDA of 1.9 billion dollars this year, up from the previous estimate of 1.3 billion dollars. Revenue rose by 26% to 2.8 billion dollars. Additionally, the company announced a new project for the development of the GranMorgu field in Suriname for TotalEnergies. Although the world wants to move away from oil, it can’t do so entirely. Investors shouldn’t write off oil producers just yet.

Did you know…

that Elon Musk is set to lead the yet-to-be-formed U.S. Department of Government Efficiency? Whether that’s good for investors remains to be seen. The U.S. has a significant budget deficit that boosts the economy, and cutting back could harm economic growth.

This article was translated from Dutch and was originally published on Spaarvarkens.be.