Before the bell: China sends Chinese stocks higher

The Chinese government announced additional stimulus yesterday, giving Chinese markets a fresh boost. In Europe, Aalberts will host its investor day later today.

The trading week began strongly for investors in Chinese stocks. On Monday, the Chinese government announced a significant policy shift, promising substantial stimulus measures alongside a loosening of monetary policy. Not since 2011 has China employed such strong language. This announcement buoyed Chinese stocks like Alibaba (+7.4%), Baidu (+7.7%), and JD.com (+11%) as investors anticipated multiple rate cuts and asset purchases by the government. On the other hand, U.S. markets saw declines, with the S&P 500 dropping 0.6%. Nvidia (-2.6%) faced pressure after China announced a market investigation into the company over alleged monopoly practices.

On the corporate front, the news focused on share buybacks. Smartphoto announced that it repurchased 10,000 of its own shares last week. GBL made larger moves, buying millions of euros worth of its shares, raising its self-ownership to 9.1%. The standout was Melexis, which will launch its first share buyback program in over a decade, worth 50 million euros. Meanwhile, D’Ieteren goes ex-dividend today with its massive dividend of 74 euros per share. GameStop will release its earnings later tonight.

The Cost of Innovation

How much is too much when it comes to AI spending? That’s the question on investors’ minds, especially after Oracle’s recent earnings announcement. The company, benefiting from the AI boom through its cloud division, posted a 9% revenue increase to 14.1 billion dollars and earnings per share of 1.47 dollars. While the results were in line with expectations, the staggering costs of developing cloud infrastructure stood out. Customers like Amazon, Microsoft, and Google require infrastructure demanding heavy investment. Oracle’s investments soared over 50% year-on-year, reaching 10.75 billion dollars in a single quarter. Although revenue growth of 7% to 9% is expected next quarter, it currently lags the pace of investment. This discrepancy may lead to some market jitters when trading opens.

Aalberts Investor Day

Could the European construction market be poised for a rebound? If so, Aalberts would be a prime beneficiary. With four divisions, the company derives half its revenue from sustainable building solutions. Today, Aalberts hosts its investor day, providing insights into its future plans. In a preview released to the press, Aalberts outlined its goals for 2030: exceeding 4.5 billion euros in revenue, achieving an EBITA margin above 18%, and generating a return on invested capital of over 18%. However, these ambitions will require additional investments. The investor day may result in significant market movements for Aalberts.

Did you know…

Aalberts was part of the Dutch AEX index until March 23, 2020? At the start of the pandemic, the company’s stock lost half its value in less than a month. While the stock recovered, it has yet to rejoin the AEX.

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