Before the bell: Investors Obediently Follow the Great Leader

Stocks soar again. Corporate earnings impress, with SAP leading the charge.

Investing can be simple: just follow the signals from the U.S. government and bet accordingly. Yesterday, there were rumors of renewed talks between the U.S. and China—though it seemed more like wishful thinking on the American side. After all, if you knock someone out cold, you’ll need some patching up before you can even talk again. But jokes aside—who really cares? Big money fled safe havens like gold (-3.5%) and poured back into equities. The S&P 500 jumped 2%, while the Nasdaq surged 2.9%. Europe joined the party, with Germany’s DAX leading the pack at +3%. To be fair, many companies posted stellar quarterly earnings. SAP (+10.6%) cemented its position as Europe’s biggest stock. Adidas (+3%), AkzoNobel (+7.3%), and even Galapagos (+1.9%) gave investors something to smile about. In the U.S., Boeing (+6%) and Tesla (+5.3%) bounced back despite Tesla’s dismal sales figures earlier this week. IBM gained 5% in after-hours trading on strong software revenue.

In Asia, the new trading day kicked off on a mixed note: Hong Kong dipped 1.1%, while Tokyo edged up 0.4%. Investors are now looking to Alphabet’s earnings, due after the U.S. market closes. Before the bell, Procter & Gamble, PepsiCo, and Gilead will report results. In Europe, Unilever, BNP Paribas, and KPN release earnings as well. Specialty chemicals firm Azelis posted weak results this morning, with a 4% drop in operating profit. The company says it will offset the dip through cost-cutting measures.

Share Price Climbs in Line with Revenue

German software giant SAP reported 11% higher revenue in Q1, but more impressively, operating profit rose 60%. The Frankfurt-area company is benefitting from soaring demand for cloud-based applications, driving its “software as a service” sales. This shift, however, has reduced traditional software license revenue, which dampens overall top-line growth. Still, SAP’s balanced approach of strong offerings and tight cost control makes for an attractive mix. Investors rewarded the stock, which rose nearly one percent for every percent increase in revenue. While trading at 30 times expected earnings might seem pricey, strong results make the valuation easier to digest.

Premium Chocolates for the Long Haul

Yes, it’s a small Belgian holding with a patchy track record—but there’s room for improvement. Compagnie du Bois Sauvage held its General Meeting yesterday in its historic headquarters near the St. Gudula Cathedral in Brussels. Shareholders expressed frustration over the company’s low share price, which trades at more than a 50% discount to its net asset value. Roughly 55% of that value comes from its chocolate business, including Neuhaus pralines. Another 25% lies in real estate, much of it acquired before interest rates surged—poor timing for quick gains. Still, the holding company insists it’s playing the long game, including expansion plans in Asia for its chocolate arm. Are these sweet treats affected by trade tariffs? “Not really,” said the company. “Ingredient costs are only a fraction of the retail price.” In other words, those pralines are sold with massive profit margins.

Did you know…

that ECB President Christine Lagarde told The Washington Post she sees favorable conditions for more rate cuts? She explained that U.S. trade tariffs could actually lower prices in Europe, as Chinese goods may increasingly be exported here instead.

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