Before the bell: gloom versus moving ahead

Europe taxes car imports, China strikes back with spirits, and announces new stimulus on October 12. Meanwhile, the U.S. celebrates its tech stocks.

European stock markets managed to hold up fairly well on Monday, but yesterday they plunged sharply right from the opening. In the end, the Stoxx Europe 600 index fell by just half a percent, as investors noticed that Wall Street was in a good mood at the start of its trading day. In Europe, there was a significant round of profit-taking on stocks directly or indirectly related to China. This is perfectly normal after such a surge. Additionally, China, as expected, imposed import tariffs on spirits, causing Pernod Ricard to drop by 4.1%, while LVMH, which owns Hennessy cognac, fell by 3.6%. The Bel20 lost 0.9%, with stocks like Umicore (-5.8%) and Syensqo (-5%) being virtually thrown out. The latter possibly suffered extra due to a profit warning from a supplier to aircraft manufacturers. On top of everything else, there’s been a strike at Boeing (-0.7%) for a month. On the other hand, U.S. tech stocks were in high spirits again. The Nasdaq gained 1.5%, and Nvidia (+4%) is nearing its all-time high. In Brussels, Nyxoah jumped by 3.6% after a successful $27 million capital injection from an American investor, possibly aided by the fact that Nyxoah is also listed in New York. Ageas (-0.9%) and BNP Paribas (+0.2%) announced after the close that the French bank had increased its stake in the insurer to 10.9%. The former has plenty of capital, while the latter is gaining traction again after strong results. Ageas has already risen by 24% this year.

Stock markets on the Chinese mainland are trading around 8 a.m. our time with losses of about 3%. The Hang Seng in Hong Kong is ticking slightly higher. Beijing reported that on October 12, it will provide details about an “adjustment to the counter-cyclical fiscal policy.” In other words: government injections into the economy.

Drama queens

Tuesday saw the Hang Seng index suffer its “worst trading day in 16 years” with a loss of 9.4%, according to stock market media. Just the day before, we read in the paper that this might be a structural turnaround. That large daily loss quickly put that scenario in the trash. Dear readers, the same Hang Seng index had risen by over 30% in just a month! A 9.4% drop in that context is perfectly normal. If such a drop makes someone change their outlook by 180 degrees, they may not be cut out for investing. The same goes for individual stocks like Alibaba, which fell by 8.8% in Hong Kong on Tuesday, but is still trading 40% higher than at the start of this year. Today, China’s largest retailer is trading 0.4% higher.

Not in the mood for salty and sweet

There weren’t many expectations for PepsiCo’s (+1.9%) quarterly results, which were announced before U.S. markets opened. The soft drinks and snacks giant saw its revenue decline slightly, earning $2.31 per share. Revenue was lower than the expected $23.9 billion, but profits were slightly better than forecast. The company said revenue growth for the fiscal year would be lower than the previously projected 4%. PepsiCo is managing to hold things together with cost savings for now, but isn’t the problem that the company is out of step with the times as a supplier of salty snacks and sugary soft drinks?

Did you know…

that Dutch company Tennet is planning to bring part of the German high-voltage network to the stock market after a sale to Germany fell through? Elia is successfully managing another part of the German high-voltage grid via 50 Hertz.

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