Category: Stock Market News

Shares in Sports Direct International PLC traded 12% lower on Friday after the U.K. sporting goods retailer warned about the British pound’s flash crash during Asian trade hurting earnings. “In light of recent downward currency movements, the company entered into a hedging arrangement with respect to the GBP/USD rate,” Sports Direct said in a news release. “Extreme movements overnight resulted in a crystallization of that rate at 1.19, resulting in a negative impact of approximately £15m [$19 million] on the company’s FY17 underlying EBITDA expectation.” EBITDA refers to earnings before interest, taxes, depreciation and amortization. “In addition, after taking into account the hedging referred to above, if the GBP/USD rate is 1.20 on average for the remainder of FY17, then the negative impact on the company’s FY17 underlying EBITDA expectation would be in the order of a further £20m,” the company added.

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U.S. stocks opened modestly higher on Friday, following a payroll report that came in below expectations but was not seen as derailing the expectation that the Federal Reserve would raise rates at its December meeting. Following the report, Cleveland Federal Reserve President Loretta Mester told CNBC that the U.S. was at full employment and that gradual rate hikes were needed. Mester is a voting member of the policy-setting Federal Open Market Committee, who has been a proponent of hiking rates sooner than later. The Dow Jones Industrial Average [S: DJIA] rose 36.64 points, or 0.2%, to 18,310.62. The S&P 500 [S: SPX] rose 3.98 points, or 0.2%, to 2,164.92. The Nasdaq Composite Index [S: COMP] rose 7.92 points, or 0.2%, to 5,314.05.

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Heritage Insurance Holdings Inc. shares surged 11% in premarket trade Friday, after the property & casualty insurer said it expects losses from hurricane Matthew will be absorbed by the insurance and reinsurance industries. The company, which offers commercial and residential home insurance, said it estimates its own insured losses at about $500 million, well within its $1.9 billion catastrophe reinsurance coverage tower. “As of this morning, Hurricane Matthew has remained east of the Florida coast,” said Chief Executive Bruce Lucas. “As a result, projected losses could be substantially lower than the estimated loss guidance of $500 million.” Shares were down 43% in the year through Thursday’s close, while the S&P 500 has gained 6%.

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The U.S. dollar weakened against the euro on Friday, following a September jobs report that came in below expectations but was not seen as derailing the expectation that the Federal Reserve would rates at its December meeting. Following the report, Cleveland Federal Reserve President Loretta Mester told CNBC that the U.S. was at full employment and that gradual rate hikes were needed. Mester is a voting member of the policy-setting Federal Open Market Committee, who has been a proponent of hiking rates sooner than later. The ICE U.S. Dollar index [S: DXY], which rose as high as 0.27% after the report, paired its gains to trade up 0.08%. The euro [S: EURUSD] was at $1.1148 from $1.1139 late Thursday while the pound [S: GBPUSD] was at $1.2341 from $1.2352. Earlier on Friday, the pound rose as high as $1.2484.

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Treasury yields wavered Friday as investors struggled with how to interpret the Labor Department’s September jobs report. Initially declining after the data were released, the 10-year yield rose 2.4 basis points to 1.760%. The two-year yield was marginally lower at 0.850%. The 30-year yield climbed 3.1 basis points to 2.485%. Bond prices move inversely to yields. The U.S. economy added 156,000 jobs in September, falling short of investors expectations, while the unemployment rate ticked higher to 5%. But traders quickly determined that the data wouldn’t stop the Fed from raising interest rates later this year. “Even though September nonfarm payrolls weren’t quite as high as expected, Janet Yellen has still been given all the ammunition she needs for a December rate hike,” said Dennis de Jong, managing director of UFX.com, referring to the Fed Chairwoman.

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Shares of paint-maker PPG Industries Inc. tumbled 5% in premarket trade, after the company said it’s disappointed with its third-quarter per-share earnings growth rate and unveiled restructuring plans. PPG said it expects a net loss per share of 74 cents to 77 cents, after EPS of $1.52 a year ago. Excluding pension settlement charges, it expects EPS of $1.54 to $1.57, well below the current FactSet of $1.71. Sales are expected to come to about $3.8 billion, in line with the current consensus. “We are disappointed with this quarter’s EPS growth rate as we continue to operate in a sluggish economic environment with no clear near-term catalyst for improving global GDP growth,” Chief Executive Michael McGarry said in a statement. PPG is planning to reduce costs, focusing on areas where economic conditions are weakest. At the same time, it is planning to continue with cash deployment aimed at boosting earnings. “We expect spending on acquisitions and share repurchases for the combined years 2015 and 2016 to be at the top end of the previously communicated $2.0 billion to $2.5 billion range,” McGarry said. The company’s board has approved a $2 billion share buyback, that will add to an existing authorization that has $520 million remaining. Shares have gained 3.4% in the year so far, while the S&P 500 is up about 6%.

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WASHINGTON (MarketWatch) – The U.S. added 156,000 jobs in September, an increase large enough to keep the Federal Reserve on track to raise interest rates before year end. Economists polled by MarketWatch had predicted a 172,000 gain in new nonfarm jobs. The unemployment rate rose to 5% from 4.9%, the government said Friday, mainly because more than 440,000 people joined the labor force in search of work. A broader measure of unemployment known as U6 was flat at 9.7%. Average hourly wages rose 0.2% to $25.79 last month. Hourly pay increased 2.6% from September 2015 to September 2016. Total employment gains for August and July, meanwhile, were 7,000 lower than previously reported. The government said 167,000 new jobs were created in August instead of 151,000. July’s gain was trimmed to 252,000 from 275,000.

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European Central Bank President Mario Draghi on Friday reiterated his pledge to act if needed to boost inflation and economic growth in the eurozone. Speaking at the International Monetary and Financial Committee meeting in Washington, the ECB boss said inflation has remained low and is still being pulled down by declines in oil prices. “If warranted, we will act by using all the instruments available within our mandate,” he said. “The ECB intends to run asset purchases until the end of March 2017 or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation towards levels below, but close to, 2% over the medium term,” he added.

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Shares of Silicon Motion Technology Corp. jumped 7.1% in premarket trade Friday, after the Taiwan-based memory chip company raised its sales outlook for the third quarter. The company now expects revenue to rise 11% to 13% from the sequential second quarter, compared with a previous outlook of flat to 5% growth. Based on reported second-quarter revenue of $140.7 million, the revised outlook implies revenue of $156.2 million to $159.0 million, above the FactSet consensus of $143.8 million. Gross margin for the quarter is now expected to be 48% to 49%, above the previous outlook of 46% to 48%. The stock has rocketed 64% year to date through Thursday, while the PHLX Semiconductor Index has climbed 26% and the S&P 500 has gained 5.7%.

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Forterra said Friday in a filing that the pipe maker expects its initial public offering to price between $19 to $21 a share. The company is offering 18.4 million shares in the IPO to raise up to $386.2 million, or could raise as much as $444.8 million if the underwriters purchase the options to buy additional shares. The stock is expected to list on the Nasdaq global select market under the symbol “FRTA.” The lead underwriters are Goldman Sachs, Citigroup and Credit Suisse.

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