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Carnival’s stock cruises after Q4 results

 

Thursday, December 22, 2022

The news shaping the markets today

Ukraine’s President Volodymyr Zelenskyy met US President Joe Biden at the White House, which was followed by a joint press conference. The US dollar index eased slightly after the event.


The People’s Bank of China announced an injection of 157 billion yuan in reverse repos into the country’s banking system, which lent support to the CNY/USD forex pair.


The Philippines said its government budget deficit had narrowed to ₱123.9 billion in November, from ₱128.7 billion in the year-ago month. Despite this, the PHP/USD pair fell slightly in forex trading this morning.


South Korea’s producer prices rose 6.3% year-over-year in October, versus the 7.3% rise in the prior month, lending support to the KRW/USD forex pair.


Argentina’s unemployment rate increased to 7.1% in the third quarter, from 6.9% in the earlier period. However, the figure came in below market estimates of 7.2%. The ARS/USD pair remained mostly flat in forex trading this morning.

 

What’s happening: Shares of Carnival Corporation gained on Wednesday, after the company reported results for its fiscal fourth quarter.

What happened: The cruise operator reported a narrower-than-expected loss for the latest quarter on Wednesday.

Despite strong sales growth, the company failed to meet expectations as several factors impacted its overall results.

How were the results: The Miami, Florida-based company reported a sharp rise in sales for the quarter ending November 30, but the top-line figure missed market views.

  • Revenues climbed to $3.84 billion, from $1.29 billion in the year-ago period, but missed the consensus estimates of $3.91 billion.
  • Net loss shrank to about $1.60 billion, or $1.27 per share, versus a year-ago loss of $2.62 billion, or $2.31 per share.
  • Adjusted net loss came in at 85 cents per share, narrower than the Street expectations of a loss of 87 cents per share

Why it matters: Carnival is the biggest cruise company in the world, followed by Royal Caribbean Cruises and Norwegian Cruise Line Holdings, which released quarterly results in early November.

Although Carnival has been offering discounts to attract more customers, high inflation levels have impacted consumer discretionary spending.

The ongoing Russia-Ukraine conflict has also impacted profit margins of cruise companies. Other factors, like higher fuel prices, strength in the US dollar and rising interest rates, also continued to weigh on overall results.

For the cruise segment, Carnival’s revenue per passenger cruise day rose 0.5% above the 2019 levels, while occupancy was 19 points below.

Selling and administrative expenses climbed 27.8% to $741 million in the quarter. Carnival said costs remained elevated due to higher advertising expenses to accelerate 2023 revenues.

“Booking volumes strengthened following the relaxation in protocols, cancellation trends are improving globally, and we have seen a measurable lengthening in the booking curve, across all brands. The momentum has continued into December, which bodes well for 2023 overall as more markets open for cruise travel, protocols continue to relax, our closer to home itineraries play out, our stepped-up advertising efforts pay dividends and our brands continue to hone all aspects of their revenue generating activities,” CEO Josh Weinstein said during the earnings call.

Management projected an occupancy rate of 90% and adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) of $250-$350 million for the first quarter of fiscal 2023.

How shares responded: Carnival’s shares gained 4.7% to close at $8.48 on Wednesday, following the release of quarterly results. The stock has tumbled around 60% year to date.

What to watch: Investors will keep an eye on the macro environment, inflation rates around the world and rate hikes by the major central banks.

The markets today

US stocks will be in focus today ahead of a basket of economic reports

Context: Wall Street recorded gains for a second straight day on Wednesday, following upbeat earnings reports from two bellwethers.

Details: Nike’s shares rose sharply, gaining more than 12% on Wednesday, after the sport apparel maker reported better-than-expected results for its latest quarter. The upbeat results from Nike also provided support to other retail stocks.

FedEx’s stock also climbed around 3.4%, after the company reported upbeat earnings for the latest quarter.

The US consumer confidence report provided further support to equity market sentiment. The Conference Board’s consumer confidence index rose to 108.3 in December, from 101.4 in the previous month. The reading not only reached the highest level since April, but also was higher than expectations of 101.0 for the month.

Investors also cheered the narrowing of US current account deficit by 9.1% to $217.1 billion in the third quarter.

Despite the gains recording on Wednesday, all three major US indices are on track to record losses for 2022, ending a three-year winning streak.

The Dow Jones index surged around 527 points, or 1.6%, to close at 33,376.48 on Wednesday. The S&P 500 rose 1.49% to 3,878.44, while the Nasdaq 100 added 1.48% to settle at 11,235.88.

What are expectations: Investors await the release of economic reports on GDP growth rate, Chicago Fed National Activity Index and jobless claims. The US economy is expected to expand by an annualised 2.9% in the third quarter, while the Chicago Fed National Activity Index is expected to decline to -0.18 in November, from -0.05 in October. The number of Americans filing new claims for jobless benefits had fallen by 20,000 to 211,000 in the week ending December 10 and is expected to increase to 225,000 in the latest week.

Other Markets: European trading indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.72%, 1.54%, 2.01% and 1.71%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0626 and 1.0631 Negative
USD/CAD – 1.3593 and 1.3598 Positive
Nasdaq 100 – 11213.46 and 11249.53 Negative
CAC 40  – 6573.16 and 6584.23 Negative
Silver – 24.165 and 24.232 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0641, 0.32%) Dow ($33,633, 0.19%) Brent ($82.83, 0.3%)
GBP/USD (1.2130, 0.37%) S&P500 ($3,915, 0.24%) WTI ($78.65, 0.5%)
USD/JPY (131.73, -0.55%) Nasdaq ($11,369, 0.30%) Gold ($1,828, 0.1%)

What else to watch today

Saudi Arabia’s balance of trade, UK’s current account, GDP growth rate and business investment, Indonesia’s central bank interest rate decision, Italy’s industry sales and producer prices, Turkey’s foreign exchange reserves and Central Bank of Turkey’s interest rate decision, Mexico’s mid-month inflation rate, Canada’s average weekly earnings, US corporate profits, price index for personal consumption expenditures, CB leading index, natural gas stocks change and Kansas City Fed’s manufacturing production index, Russia’s consumer confidence indicator, corporate profits and industrial production, China’s foreign direct investment, as well as Argentina’s leading economic index.


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