The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0913 GMT - European defense stocks rose in early morning trade following the likely Republican victory in the U.S. presidential election. German arms makers Hensoldt and Rheinmetall led the increases, with shares advancing 8% at 34.38 euros, and 4.2% at 500.6 euros respectively. The U.K.'s BAE Systems is up 4.2% at 13.34 pounds, followed by Italy's Leonardo, which is up 3.9% at 24.45 euros. Shares in French aerospace and defense group Thales rose 3% at 154.45 euros. (cristina.gallardo@wsj.com)
0857 GMT - BMW's third-quarter results are consistent with its September profit warning, but investors' focus is on the prospects for next year, RBC Capital Markets' Tom Narayan says in a note to clients. The German luxury car-maker's third-quarter automotive EBIT missed consensus expectations, but its financial-services segment was better than forecast, RBC says. The company reiterated its 2024 guidance, but this year's outcome seems less important than that of next year's, the analyst says. BMW sees the brake issue that led to a recall largely isolated to third-quarter results, though there could be implications on consumer sentiment, RBC says. Shares fall 4%. (adria.calatayud@wsj.com)
0849 GMT - European defense sector is likely to take a hit on a Republican victory in the U.S. presidential election, serving as an opportunity to buy, Berenberg analysts write in a note. The general view is that the European defense sector will react negatively to a Trump victory, given his ambitions to rapidly broker peace in Ukraine, according to Berenberg. However, weakness following a Trump victory would offer an attractive entry point into a structural growth sector, the analysts say. A Trump presidency would add further impetus to accelerate European defense spending, they say. Berenberg highlights Germany's RENK and Rheinmetall as best sector picks. (christian.moess@wsj.com)
0828 GMT - European pharmaceutical and automotive companies are at risk if new U.S. tariffs arise under a Republican administration, Morningstar analysts say. The U.S. is the largest destination for EU exports and the two sectors represent about a third of these exports. New tariffs could cut into the already-pressured profits of European OEMs in the auto sector. Long-term, this could push companies to shift more production to the U.S., which would be a costly, long-term process, Morningstar says. However, tariffs would likely have limited immediate impact on European pharmaceutical sales due to steady demand, and the U.S. is expected to focus more on imports from China. (christian.moess@wsj.com)
0318 GMT - BYD's net profit per car could rise to over 11,000 yuan in 4Q on increasing scale effect and better product mix, Jefferies analysts say in a research note. The EV maker's 4Q sales volumes could reach 1.54 million units supported by strong demand after its record high sales volume in October, they say. South America has emerged as a significant growth driver for BYD's exports this year, while Southeast Asia and Europe remain key markets, the analysts note. In light of BYD's stronger-than-expected monthly sales volume, Jefferies raises its 2024 and 2025 sales? volume forecasts to 4.3 million and 5.2 million units, respectively. Jefferies maintains a buy call on BYD and raises the target to CNY426.00 from CNY356.00. BYD's A Shares are last 1.3% lower at CNY303.42.(sherry.qin@wsj.com)
1756 GMT - Sensata Technologies' business in China is veering off course. The reason? Carmakers there don't need as many sensors. The company, which makes sensors for use in cars, says on a call with analysts that local manufacturers in China are expected to have two-thirds market share by the end of this year, up from 55% last year. CEO Martha Sullivan says Sensata is still winning business with local OEMs in China, but those companies require about half as many sensors and other products from the company. Less content per vehicle will likely limit the company's growth in China, Sullivan says. Sensata falls 6%.(ben.glickman@wsj.com; @benglickman)
1740 GMT - Sensata Technologies is bracing for impact from further cuts to auto production in the coming months. The company's 4Q guidance disappoints investors, with an expected drop in revenue partially due to reduced production expectations in automotive and heavy vehicle industries. Interim CEO Martha Sullivan says on a call with analysts that, based on customer conversations and current inventory levels, it is "highly likely" that third-party forecasters will reduce their production forecasts again in 4Q, following cuts earlier this year. Automotive markets were down about 5% year-on-year in 3Q, Sensata says. Sensata skids 6% in afternoon trading. (ben.glickman@wsj.com; @benglickman)
1624 GMT - Wedbush analysts say a Trump presidency would be an overall negative on the electric-vehicle market, as the administration is likely to pull EV rebates and tax incentives. Elon Musk's endorsement of Trump is a bet on the fact that a non-EV subsidy environment gives Tesla a clear competitive advantage, given its unmatched scale and scope within the sector, they note. Though Tesla could still be hurt by likely higher China tariffs, which would additionally keep cheaper Chinese EV-makers from flooding the U.S. market, analysts say. "If Harris wins we would expect the EV tax credits to remain the same and ultimately increase in 2025 as the goal to get more US consumers towards EVs would be a laser focus in a Harris Administration," they write. (connor.hart@wsj.com)
1541 GMT - Two-way trade for Canada faces near-term downside from port strikes in both Montreal and British Columbia, adding to ongoing sluggishness in imports that reflects weak underlying demand in the economy and should keep the Bank of Canada on track to cut interest rates a further half percentage point in December, CIBC Capital Markets' Katherine Judge says. The economist adds the recently completed Trans Mountain pipeline should continue to support export growth ahead, while central bank cuts will be positive for demand in the coming year. (robb.stewart@wsj.com; @RobbMStewart)
1444 GMT - Magna International shifting into gear on share buybacks is seen as risky given the supplier's exposure to lagging North American carmakers. The company says it received approval to repurchase about 10% of its public float. S&P Global Ratings says the move will cause Magna's debt to earnings ratio to remain higher for longer. One major risk factor: Magna's revenue growth is expected to slow in the next year, especially given its exposure to Detroit. Geopolitical risks and slower EV adoption are also of concern. S&P revises its outlook on Magna to negative from stable. (ben.glickman@wsj.com; @benglickman)
1342 GMT - Egypt's economy has taken a $6 billion hit from ship diversions in the Suez Canal since Houthi rebels in Yemen began attacking cargo ships in the Red Sea a year ago, according to Egypt's foreign minister Badr Abdel Aati. He mentioned the figure in talks with the International Maritime Organization, the UN shipping regulator, according to people involved in the conversations. Tolls for the Suez Canal are one of Egypt's biggest foreign exchange earners averaging $700 million per month before the ship diversions. The Houthis say they will continue their strikes on ships until there was a ceasefire in Gaza and Lebanon.(Costas.Paris@wsj.com)
1305 GMT - Freight forwarder Expeditors International of Washington is cautioning that unpredictability in shipping may be the new normal. The company reports 3Q results ahead of Wall Street's expectations as shippers pulled forward some shipments due to concern around geopolitical disruption and port strikes. Results were also lifted by higher pricing from geopolitical events. The company has for multiple quarters cautioned that the freight market is uncertain. "Unpredictable events seem to occur with such increased regularity as to make us wonder if disruption is the new state of normal," says CEO Jeffrey Musser in a statement. Shares rise 5.7% pre-market. (ben.glickman@wsj.com; @benglickman)
(END) Dow Jones Newswires
November 06, 2024 04:20 ET (09:20 GMT)
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