Here is what you need to know.
The People’s Bank of China cut rates. China’s central bank lowered its 1-year lending rate 25 basis points to 4.35%.
The decline in China’s home prices is slowing. New home prices in China rose in 39 of 70 cities and posted a 0.3% month-over-month gain in September. However, prices were still down 0.9% from a year ago. Shenzhen seems to be the hot market right now, recording price growth of 37.6% compared to last year. Shanghai and Beijing saw YoY gains of 8.3% and 4.7%, respectively. The Chinese yuan ended stronger by 0.1% at 6.3506.
European PMIs mostly topped expectations. The latest PMI results in Europe showed improvement across most of the spectrum. French manufacturing climbed to 50.7 to hit its best level since April 2014. A 55.2 print for German services was the best reading since March. Not all the data was good as German manufacturing dipped to 51.6 from its previous look of 52.3, making for the worst number since May. The eurozone as a whole saw manufacturing hold at 52.0 and services 55.2. The euro is little changed near 1.1100.
Italian and Spanish 2-year yields are negative. Investors are gobbling up short-term maturities in Europe’s periphery after Thursday’s European Central Bank meeting struck a dovish tone. At the meeting, ECB head Mario Draghi hinted the central bank could expand its quantitative easing program at its December meeting. Both the Italian and Spanish 2-year yields are holding near -0.002%.
Amazon crushed estimates. The online retailer announced earnings of $US0.17 per share, easily surpassing the $US0.13 loss that was expected. Revenue climbed 23.2% to $US25.4 billion, which surpassed the $US24.9 billion that analysts were forecasting. The real story was Amazon’s AWS cloud-computing segment recording $US1.8 billion in sales. Additionally, Prime Day, a day full of Black Friday-type deals, contributed 2% to Amazon’s global revenue in the quarter. For the quarter, Amazon posted net income of $US79 million. The stock ended after-hours trade up close to 10%.
Google beat on the top and bottom lines and announced a huge buyback program. The search engine behemoth earned $US7.35 per share, topping the $US7.21 that analysts were anticipating. Revenue surged 13% to $US18.7 billion, outpacing the $US18.53 billion that was forecasted. Paid clicks jumped 23% versus last year while aggregate cost-per-clicks sunk 11%. Google announced it would buyback $US5 billion of its stock. The stock was up more than 10% after Thursday’s close.
Microsoft crushed estimates, but there’s a catch. The tech giant announced adjusted earnings of $US0.67 per share, easily beating the $US0.59 that Wall Street was forecasting. Revenue fell 6.6% to $US21.66 billion, but that was still ahead of the $US21.03 billion that was anticipated. Notable was the growth in Microsoft’s Intelligent Cloud unit, which saw revenue jump 8%. Business Insider’s Julie Bort notes, the report separated Microsoft into three business units from the previous structure of two major units. Under the old structure only the cloud business and devices business showed growth. Microsoft was up more than 5% in after-hours trade.
Kellogg wants to buy Diamond Foods. Kellog Co. is in talks to buy Diamond Foods, which makes Kettle Chips, and Pop Secret popcorn, for about $US1.5 billion, according to the New York Post. The deal is reportedly worth $US35 to $US40 per share. “Kellogg is somewhere between aggressive and desperate to use mergers to try to evolve its business away from breakfast cereal,” a source close to the discussions told the Post. Diamond Foods ended Thursday’s session at $US32.83 per share.
Stock markets around the world zoom higher. Japan’s Nikkei (+2.1%) led the way higher in Asia and Germany’s DAX (+2%) paces the gains in Europe. S&P 500 futures are higher by 7.50 points at 2060.50.
Earnings reporting is moderate. American Airlines, LM Ericsson, LyondellBasell, Procter & Gamble, State Street and Whirlpool highlight the names reporting ahead of the opening bell.