Financialbuzz.com: 'Market Recap' Week Ending May 31st, 2019
FinancialBuzz.com News Commentary
NEW YORK, May 31, 2019 /PRNewswire/ -- U.S. markets were closed on Monday in honor of Memorial Day, however, on Tuesday, markets quickly retreated throughout the day amid renewed trade war tensions between the U.S. and China. Early on Tuesday morning, markets started off slightly higher, but the persisting trade war fears caused markets to tumble after U.S. President Donald Trump mentioned uncertainty over a U.S.-China trade deal happening. Trump noted that the U.S. wasn't ready to make a deal with China on Monday and that tariffs on Chinese goods could increase. On Wednesday, markets continued to fall during early trading hours due to continued trade tensions and the heightened fear of a potential recession. Both the 10-year Treasury note and the 3-month Treasury bill edged towards negative territory on Wednesday, stirring yet more fear amongst investors. Investors and analysts usually view the yield curve as a recession indicator. Furthermore, Chinese officials issued a warning to the U.S. that the country might attempt to leverage its global supply of rare-earth metals in retaliation to the U.S. in the trade war. On Thursday, U.S. markets closed slightly higher as positive corporate financials also weighed into the market on Thursday. Dollar General and Dollar Tree reported better-than-expected results before the market open on Thursday, which complemented the stronger market. Costco Corporation and Uber Technologies then reported their financial results after the market close and surpassed analyst expectations. The Dow Jones Industrial Average finished Thursday 43.4 points or 0.17% higher. The S&P 500 rose by 5.84 points or 0.21%, while the Nasdaq Composite gained 20.41 points or 0.27%. Total Systems Services (NYSE: TSS), Beyond Meat, Inc. (NASDAQ: BYND), Canada Goose Holdings Inc. (NYSE: GOOS), Abercrombie & Fitch Co. (NYSE: ANF), Uber Technologies, Inc. (NYSE: UBER)
Despite Thursday's optimistic performance, the Dow Jones has now fallen by 503.08 points or 1.9% this week. The S&P 500 slipped by 46.11 points or 1.6% throughout the week, while the Nasdaq Composite edged lower by 106.23 points or 1.3%. "The U.S.-China trade war continues to deepen with China ending purchases of U.S. soybeans. U.S. first quarter GDP slipped slightly to 3.1% as had been widely expected, but core personal consumption was revised down to 1.0%, below the 1.3% street estimates," said Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, in a note, according to MarketWatch. Cieszynski noted, however, that the silver lining is that "there's no pressure on the Fed to raise rates any time soon, perhaps not at all this year."
Total Systems Services (NYSE: TSS) and Global Payments (NYSE: GPN) have entered into a definitive agreement to combine in an all-stock merger. The merger sent TSYS shares 8.8% higher on Tuesday morning, while Global Payments' shares edged lower by 1%. The transaction combines two of the largest players within the payments processing marketspace. The combined company will provide payment and software solutions to approximately 3.5 million predominantly small-to-mid sized (SMB) merchant locations and more than 1,300 financial institutions across over 100 countries. TSYS will also expand Global Payments' e-commerce and omnichannel solutions presence within the U.S. as well as provide further opportunities for multinational omni channel market share gains. The merger is expected to significantly enhance the financial strength of the two combined companies. The Company expects pro forma adjusted net revenues plus network fees of approximately USD 8.6 Billion, adjusted EBITDA of USD 3.5 Billion and approximately USD 2.5 Billion in adjusted free cash flow.
Beyond Meat, Inc. (NASDAQ: BYND) shares rose by 7.1% on Tuesday after the Company partnered with Zandbergen World's Finest Meat to produce plant-based meats in Zoeterwoude, the Netherlands. Zandbergen will create a new manufacturing facility and upon completion in 2020, the partnership will mark Beyond Meat's first international production capability outside of the U.S. Locally produced products are expected to reduce the brand's transportation footprint, while increasing the speed in which Beyond Meat can get products to customers across Europe.
Canada Goose Holdings Inc. (NYSE: GOOS) reported its fourth quarter and fiscal 2019 financial results before the opening bell on Wednesday. The Toronto-based Company reported weaker-than-expected revenue, causing shares to plunge by 21.5%. For the fourth quarter, Canada Goose reported earnings of CAD 0.09 per share on revenue of CAD 156.2 Million. Analysts expected earnings of CAD 0.05 per share on revenue of CAD 159.2 Million. For fiscal 2020, Canada Goose is forecasting revenue growth of at least 20% and annual growth in adjusted income per diluted share of at least 25%. The Company provides this guidance based on expectations of wholesale revenue growth in the high-single digits by the end of the winter selling season. Additionally, Canada Goose expects to open eight new retail stores as well as one new digital concept store. Canada Goose said that it expects "materially larger losses" during the next quarter. The Company's forecast is largely due to the number of operating stores during off-peak periods and higher corporate investments.
Abercrombie & Fitch Co. (NYSE: ANF) reported its first quarter financial results before the market open on Wednesday. The Company reported weaker same-store sales growth, which caused shares to tank by 24% shortly after the opening bell on Wednesday. For the first quarter, Abercrombie & Fitch reported an earnings loss of USD 0.29 per share on revenues of USD 734 Million. Analysts expected earnings loss of USD 0.43 per share on revenues of USD 733.4 Million. Despite the earnings and revenue beat, the retailer missed same-store sales growth estimates. For the quarter, Abercrombie reported that same-store sales were up 1%, however, analysts expected 1.3%. U.S. comparable sales were 4% for the quarter, however, international comparable sales were down 4%, offsetting U.S. same-store growth. As a result of weaker comparable sales, Abercrombie ultimately closed down several stores worldwide. The retailer closed its Hong Kong, Copenhagen, Milan, Fukuoka, and Soho store in New York City.
Uber Technologies, Inc. (NYSE: UBER) reported its first financial results since launching its initial public offering on Thursday. Uber's shares rose by 0.4% during Thursday's extended trading hours after reporting in-line net losses. For the quarter, Uber reported net losses of USD 1.01 Billion on revenue of USD 3.1 Billion. Analysts expected net losses of USD 1.01 Billion on revenue of USD 3.04 Billion. Uber's revenue increased by 20% year-over-year, largely due to the increase in monthly active platform consumers and trips. During the quarter, the Company witnessed its monthly active platform consumers increase by 33% year-over-year to 93 million. Similarly, trips increased by 36% to 1.55 billion trips compared to 1.13 billion trips during the same quarter last year.
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