Today’s headlines

What’s happening: Shares of Delta Air Lines fell on Thursday, after the company released its results for its third quarter.

What happened: The carrier reported better-than-expected earnings for its third quarter.

However, Delta lowered its profit forecast for the full year due to rising fuel prices and aircraft maintenance costs, which exerted pressure on the company’s stock.

How were the results: The Atlanta, Georgia-based company reported double-digit growth in adjusted earnings for the three months ended September.

• Adjusted operating revenues grew by 13% year-over-year to $14.55 billion, while operating revenues came in at $15.49 billion, topping the consensus estimates of $14.54 billion.
• Adjusted earnings surged 34.4% to $2.03 per share, above Wall Street expectations of $1.94 per share.

Why it matters: US airlines have been able to mitigate higher inflationary pressures with increased fares amid the rush to travel following the pandemic.

However, airline fares have now declined compared last year. Average domestic round-trip airfare for the Thanksgiving holiday is lower by 14% year-over-year, according to online travel agency Hopper.

Delta’s total passenger revenues climbed 14% year-over-year to $13.1 billion in the latest quarter, while cargo revenues contracted by 36% year-over-year to $154 million.

Total revenue per available seat mile slipped 5% year-over-year, falling 2.5% on an adjusted basis. The passenger load factor increased to 88%, from 87% in year-ago quarter.

Delta’s adjusted operating expenses rose 11% year-over-year to $12.59 billion, while non-fuel costs grew 18% to $9.22 billion in the quarter. Adjusted average fuel price fell 21% year-over-year to $2.78 per gallon.

Management guided to revenue growth of 9% to 12% for the fourth quarter, with adjusted earnings of $1.05 to $1.30 per share and adjusted operating margins of 9% to 11%.

For fiscal 2023, the company lowered its adjusted earnings guidance to between $6.00 and $6.25 per share, from its previous forecast of between $6 and $7 per share.

How shares responded: Shares of Delta Air Lines fell 2.3% to close at $35.15 on Thursday, following the release of quarterly results. The stock has lost around 11% over the past month.

What to watch: Investors will monitor higher fuel costs, which could significantly impact the company’s overall profitability. Overall inflation will also remain in focus.

The markets today

European stocks will be in focus today ahead of industrial production data

Context: European equity markets settled mostly higher on Thursday, as investors digested various economic reports.

Details: European stocks trimmed earlier gains following higher-than-expected inflation data from the US. Consumer prices for the US increased 0.4% in September, higher than market estimates of a 0.3% rise.

Investors have been focussing on the Federal Reserve’s future rate moves, following dovish comments from officials earlier this week. Traders widely expect the US central bank to keep rates unchanged in November.

ECB (European Central Bank) officials also reinforced their views that interest rates may have peaked.

The UK reported that its economy had expanded by 0.2% in August. This was in-line with market expectations and marked a significant improvement over the 0.6% contraction recorded in July. Germany’s current account surplus widened substantially to €16.6 billion in August, from €0.7 billion in the year-ago month.

The STOXX Europe 600 Index gained 0.1% to 453.63 on Thursday, after surging to a three-week high earlier in the session. Oil and gas stocks moved higher, while travel and leisure stocks fell after several carriers announced the suspension of flights to Israel.

London’s FTSE 100 index rose 0.3% to close at 7,645 on Thursday, slightly down from session highs. Germany’s DAX 40 fell 0.23%, while France’s CAC 40 lost 0.37%.

What to watch: Investors await the release of industrial production data from the Eurozone today. Industrial production in the region had contracted by 1.1% in July and is expected to increase by 0.1% in August.

Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.51%, 0.62% and 0.37%, respectively.

The news shaping the markets

The International Olympic Committee banned the Russian Olympic Committee for incorporating sports councils in four regions in eastern Ukraine. The news sent the safe-haven US dollar index lower this morning.

Singapore’s GDP expanded by 0.7% year-over-year in the third quarter, topping market estimates of 0.4% growth and lending support to the SGD/USD forex pair.

China’s producer prices declined 2.5% year-over-year in September, following a 3.0% fall in the previous month, which sent the CNY/USD pair slightly lower in forex trading this morning.

New Zealand’s BusinessNZ Performance of Manufacturing Index fell to 45.3 in September, from 46.1 a month ago. This being the weakest reading since August 2021 exerted pressure on the NZD/USD forex pair.

Argentina’s central bank maintained its key Leliq interest rate at 133% at its latest meeting, which sent the ARS/USD pair slightly lower in forex trading this morning.

What else to watch today

India’s wholesale prices, Foreign exchange reserves, balance of trade, and total passenger vehicle sales, France’s inflation rate, Spain’s inflation rate, US export prices, import prices, University of Michigan consumer sentiment and Baker Hughes crude oil rigs, as well as Brazil’s industrial entrepreneur confidence index.