Before the bell: Wall Street closed today

In Brussels, three water companies report their results. Hong Kong trades higher, thanks to one star stock.

Wall Street ended last Friday lower ahead of the long weekend. The S&P 500 slipped 0.6%, while the Nasdaq lost 1.2% on the day. On a weekly basis, both indices finished slightly in the red, though declines were limited to -0.1% and -0.2% respectively. Ulta Beauty (-7.1%), Oracle (-5.9%), Caterpillar (-3.7%), and Nvidia (-3.3%) all weighed on the market, while UnitedHealth (+2.5%) had a strong session. Earlier in the day, European stocks had already taken a hit. The Euro Stoxx 50 dropped 0.8%, closing the week down 2.6%. Selling pressure was evident in Amsterdam, Frankfurt, and Paris, with ASML (-2.7%), SAP (-2%), and LVMH (-1.8%) all underperforming. In Amsterdam, offshore wind foundation maker Sif plunged 13.1% after weak results and a profit warning. The Bel20 shed 0.5% on Friday, ending the week 1% lower—still better than most other European indices. Outside the index, Retail Estates gained 5.6% after a buy recommendation from KBC.

In Tokyo, stocks fell 0.6% this morning, while Hong Kong’s Hang Seng Index gained 1.9%, largely thanks to Alibaba (+18.4%), which rallied as strongly as it did on Wall Street on Friday. Baidu (+4%) also advanced, while BYD (-5.9%) stood out as the laggard. Today, Indian Prime Minister Modi meets Chinese President Xi Jinping in China for the first time in seven years. The meeting has already led to the resumption of direct flights between the two countries, suspended since 2020. In the eurozone, we’ll get business confidence data at 10 a.m. and unemployment figures at 11 a.m. In Brussels, results are expected from Aliaxis, water solutions firm Ekopak, and mineral water producer Spadel. Ekopak reported a sharp drop in revenue and posted a loss. From Wall Street, you can expect little today—the markets are closed for Labor Day. Want to learn more about investing in water companies? Also read: Blue Gold: 10 ways to invest in water.

Why is Alibaba up 18.4% today?

Alibaba reported earnings on Friday, pushing the stock up 12.9% on Wall Street. This morning in Hong Kong, it’s trading another 18.4% higher. Many Spaarvarkens members will be happy, as the stock features in plenty of their portfolios. Were the results spectacular? Not exactly. Revenue grew just 2% year-on-year to 34.6 billion dollar, below expectations of +4%. However, excluding disposals of its stakes in Sun Art (a hypermarket chain) and Intime (a department store chain similar to Inno), revenue would have grown by 10% year-on-year. That looks better. Operating profit (-3%) and net profit (-18%) were weaker, pressured by high investments and depreciation, while competition in e-commerce remains fierce. Still, investors are hopeful for three reasons. First, cloud revenue grew 26%, far outpacing analyst expectations of +18%. Second, the AI business, while still small, more than doubled year-on-year. Finally, investors are excited about Alibaba’s new AI chip, which could reduce reliance on Nvidia and make China more self-sufficient. That may also explain why Nvidia’s stock fell last Friday.

Why is BYD down 5.9% today?

BYD remains by far China’s largest automaker and is steadily growing sales in Europe. But profits are under pressure: quarterly profit fell 30%, the first decline in over three years. The culprit is BYD’s aggressive price cuts aimed at driving weaker domestic rivals out of business. While that strategy appears to be working, it also squeezes BYD’s own margins. Analysts believe the period of heavy price cuts may be coming to an end, especially as Beijing is concerned about overproduction leading to deflation and financial instability in the sector. It’s notable how BYD’s stock trades differently across exchanges. On Wall Street, it lost 6.1% on Friday. In Hong Kong, it fell 5.9% this morning, while in Shenzhen it dropped a more modest 4.2%. Domestic investors appear more confident about the company’s long-term prospects than their international peers. I share that confidence and bought more shares on the Hong Kong exchange this morning at 106.80 Hong Kong dollar per share.

Did you know…

that september is historically the weakest month for the stock market? Over the past 75 years, the S&P 500 has lost an average of 0.7% in September. Hardly a reason to panic, though—sharp market declines often bring new buying opportunities.

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