Procter & Gamble stock down despite upbeat sales

The news shaping the markets today

Russia’s missiles hit the southern Ukrainian port city of Mykolaiv, killing the owner of one of the country’s biggest grain exporting companies. The WTI crude oil prices traded lower this morning.

China’s Caixin general manufacturing PMI fell to 50.4 in July, from June’s 13-month high of 51.7. The latest reading also missed market estimates of 51.5 and exerted pressure on the CNY/USD forex pair.

Japan’s au Jibun Bank manufacturing PMI fell to 52.1 in July, from a preliminary estimate of 52.2, following a final reading of 52.7 in June. Manufacturing activity remaining in the expansion zone sent the JPY/USD pair higher in forex trading this morning.

Australia’s Ai Group manufacturing PMI declined to 52.5 in July, from the previous month’s 54, exerting pressure on the AUD/USD forex pair.

New Zealand’s building permits fell 2.3% to 4,028 in June, representing the third monthly decline. However, the NZD/USD pair rose slightly in forex trading this morning.

What’s happening: Shares of Procter & Gamble fell on Friday, despite the company reporting better-than-expected sales for its fourth quarter.

What happened: Procter & Gamble missed market expectations for earnings due to strength in the US dollar and higher commodity and transportation costs.

Although the company reported a rise in sales at most of its divisions, sales at some of its major segments declined in the quarter.

How were the results: The Cincinnati, Ohio-based company reported single-digit growth in sales for the fourth quarter ended June 30, exceeding market views.

• Sales grew 3% year-over-year to $19.52 billion, surpassing the consensus estimate of $19.37 billion.
• Adjusted earnings came in at $1.21 per share, up 7.1% from the year-ago quarter, but missing Street expectations of $1.23 per share.

Why it matters: Several big retailers had started raising prices in the face of higher costs. Despite US inflation levels remaining at 40-year highs, some retailers began lowering prices amid concerns around growing inventories.

P&G reported slight growth in sales with an 8% increase in pricing, which was partially offset by a 1% decline in volumes amid covid-19 related restrictions in China and lower business in Russia.

The company’s sales in the Beauty segment declined 1%, while the Grooming segment sales fell 3%. Sales in Health Care, Fabric & Home Care and Baby, Feminine & Family Care rose 5%, 4% and 3%, respectively.

Gross profits fell 5% year-over-year to $8.7 billion, with gross margins contracting 370 basis points to 44.6% during the quarter. As of June 30, 2022, the company held cash and equivalents worth $7.2 billion.

“As we look forward to fiscal 2023, we expect another year of significant headwinds,” CEO Jon Moeller warned. Management guided to organic revenue growth of 3%-5% for the year. The company also projected earnings of $5.93 per share at the midpoint, short of the consensus estimate of $6.12 per share.

How shares responded: P&G’s shares fell 6.2% to close at $138.91 on Friday, after the release of quarterly earnings. The stock has declined more than 3% over the past month.

What to watch: Investors will continue monitoring rising inflation and supply chain issues. Markets will also keep an eye on the strength of the US dollar, as a stronger greenback significantly impacts the company’s earnings from other regions.

The markets today

Gold will be in focus today after rising on Friday

Context: Gold futures settled higher on Friday and also recorded gains for the week.

Details: Gold traders have so far been cautious with the Federal Reserve raising interest rates aggressively. Higher interest rates support the US dollar, which adversely impacts commodity and metal prices.

Fed Chairman Jerome Powell’s comments on Wednesday suggested that the central bank may slow its monetary tightening and send gold prices higher.

Weakness in the US dollar provided support to gold prices. The US dollar index, which measures the greenback’s performance versus a basket of major rivals, fell around 0.5% on Friday.

December gold contract climbed $12.60, or 0.7%, to close at $1,781.80 an ounce on Friday. The yellow metal ended the week with more than 3% gains. However, for the month, gold was down 1.4%.

Silver for September delivery added 33 cents, or 1.7%, to close at $20.197 an ounce, following a 6.8% surge in the previous session. Silver prices climbed 8.5% last week, but recorded a 0.8% decline for July.

Palladium for September delivery rose 2.4% to $2,129.70 an ounce, surging more than 11% in July. Platinum for October delivery added 1.5% to $889.80 per ounce, recording a monthly loss of 0.6%. Copper for September delivery added around 2.9% to close at $3.5735 Friday but was down 3.7% for the month.

What to watch: Traders will continue monitoring comments from Federal Reserve officials. Markets will also keep an eye on the release of NFP (nonfarm payrolls) data for July, scheduled for release on Friday.

Other Markets: European trading indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.06%, 1.52%, 1.72% and 1.28%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Germany’s retail sales and manufacturing PMI, Russia’s manufacturing PMI, Turkey’s manufacturing PMI, Spain’s manufacturing PMI and total vehicle sales, Italy’s manufacturing PMI, car registrations and unemployment rate, France’s manufacturing PMI, Eurozone’s manufacturing PMI and unemployment rate, UK’s manufacturing PMI, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s business confidence, manufacturing PMI and foreign exchange reserves, Brazil’s balance of trade, manufacturing PMI and Central Bank of Brazil’s focus market readout, Central Bank of Russia’s monetary policy report, Russia’s money supply M2, as well as US manufacturing PMI, ISM manufacturing PMI and construction spending.