Before the bell: European earnings season off to a strong start

It seems the European earnings season has begun on a positive note, with LVMH and ASML both reporting strong results. Later today, several major U.S. banks will follow with their own earnings releases.

The U.S.–China trade war appears to have flared up again — though so far only in symbolic jabs. After China refused to buy additional soybeans from the U.S., Donald Trump threatened to stop purchasing cooking oil from China. The markets reacted indifferently to this latest chapter in the trade dispute: the S&P 500 slipped 0.2%, while the Nasdaq lost 0.8%. Interestingly, Bunge Global, one of the world’s largest seed oil processors, gained 1.8%.

In Asia, the Hang Seng Index rose 1.2% this morning after three straight days of losses. Notably, the price of WTI crude fell to 58.57 dollar per barrel — its lowest level in five months. With earnings season underway, there’s plenty of company news to digest. ASML surprised investors with a strong outlook for the fourth quarter: it expects revenue between 9.2 and 9.8 billion euro and a gross margin between 51% and 53%, both above expectations. Meanwhile, Stellantis announced plans to invest 13 billion dollar in the U.S. over the next four years to avoid import tariffs. Later today in the U.S., we’ll see quarterly results from Bank of America, Dollar Tree, Morgan Stanley, Abbott, and United Airlines.

Barco kicks off the Belgian earnings season

Traditionally, Barco opens the Belgian earnings season. Expectations weren’t high. Analysts had forecast 2% revenue growth to 227 million euro. Barco delivered 227.1 million euro, meeting forecasts — but just barely. New orders fell 4% year-on-year to 222.1 million euro, which weighed on the results. Still, investors received a consolation prize: Barco will launch a new share buyback program of up to 30 million euro over the next six months. Shareholders should mark 23 October in their calendars — that’s when Barco will host its Investor Day in Kortrijk to present its updated strategy.

Luxury sells again in China

It looks set to be a positive trading day for investors in LVMH. After several quarters of weakness caused by disappointing Chinese sales, the luxury group has returned to growth in the region. Revenue in Asia rose 2%, compared to a 9% decline in the first half of the year. Dior perfumes sold better than expected, and more Moët & Chandon champagne was poured. The LVMH share price has fallen 40% since its 2023 peak. In our view, this is exactly the positive surprise investors needed to help turn sentiment around. We expect a bright green open for the stock this morning.

Did you know…

that palm oil is the most widely used vegetable cooking oil in the world? It’s especially popular in Asia, where it’s a cheap, heat-resistant oil with a long shelf life. On the Brussels Stock Exchange, Sipef is the largest producer of palm oil.

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