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What’s happening: Shares of FedEx Corporation gained during the extended trading session on Wednesday, after the company released results for its first quarter.
What happened: Investor sentiment was boosted by FedEx reporting better-than-expected earnings for its latest quarter.
Markets are yet to respond to the company’s sales miss and management lowering the full-year revenue guidance.
How were the results: The Memphis-based company reported a single-digit decline in sales for the quarter ended Aug. 31.
Why it matters: Several logistics firms have been under pressure due to a slowdown in the global economic growth and are adjusting costs to match lower overall demand. Last year, FedEx announced layoffs and closed offices as part of its efforts to reduce costs.
However, FedEx fared better than rival UPS. Executives at UPS said customers had shifted 1 million packages per day to alternative carriers, negatively impacting sales by around $200 million. On the other hand, FedEx added approximately 400,000 to its average daily volume by the end of August.
FedEx also benefitted from Yellow filing bankruptcy on August 6 with long-term debt worth $1.2 billion. FedEx added around 5,000 average daily shipments following the bankruptcy news.
Operating income at FedEx Express climbed 18% last quarter, while FedEx Ground’s operating income surged 59%. FedEx closed the quarter with $7.1 billion in cash-on-hand.
“FedEx is well-positioned to continue to deliver improved profitability while becoming an even more flexible, efficient and data-driven organization,” CEO Raj Subramaniam said during the earnings call.
Management lowered their full-year revenue growth guidance to almost flat on a year-over-year basis, versus the earlier forecast of flat to low single-digit percent growth. Earnings projections were also reduced to between $17 and $18.50 per share.
The company expects to repurchase another further $1.5 billion of its common stock in fiscal 2024.
How shares responded: FedEx’s shares climbed 5.8% to $264.99 in after-hours trading following the release of quarterly results. The stock has lost around 4% over the past month.
What to watch: Traders will watch the global economic environment and moves made by competitors to gain market share.
Context: The GBP/USD forex pair moved lower on Wednesday, declining to its weakest level since late May.
Details: Data released on Wednesday showed UK’s inflation in August easing more than projected, which increased prospects of the Bank of England pausing its rate hikes at today’s meeting.
Consumer price inflation in the UK fell to 6.7% in August, from 6.8% a month ago. The figure was also better than market expectations of 7.0%. The latest reading marked the lowest rate since February 2022, amid a slowdown in food inflation. Core inflation also eased to 6.2% year-over-year, from 6.9% in July.
UK’s inflation is still well above the central bank’s 2% target and the highest among major economies.
Food inflation eased to 13.6% year-over-year in August, versus March’s 45-year high of 19.1%. Factory gate prices of goods produced by manufacturers also fell 0.4% year-over-year in August, versus a revised 0.7% decline in the prior month and compared to the consensus estimates of a 0.6% decline.
The data releases fuelled speculations of the BoE raising interest rates by 25 basis points.
The GBP/USD forex pair fell around 0.4% to 1.2344 on Wednesday, after declining as low as 1.2334 just following the inflation data release.
London’s FTSE 100 gained 0.93% to close at 7,731.65 on Wednesday, while the domestically focused FTSE 250 jumped 1.55% to settle at 18,712.37.
What to watch: Investors await the release of the Bank of England’s interest rate decision today. The release of economic data on UK’s public sector net borrowing will also remain in focus.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.22%, 0.94% and 1.46%, respectively.
Russia’s President Vladimir Putin has formally accepted China’s invitation to visit the country in October. The news sent the safe-haven US dollar index higher this morning.
The Hong Kong Monetary Authority held its base rate at 5.75% at its latest meeting, which exerted pressure on the HKD/USD forex pair.
UAE’s central bank kept the base rate of its overnight deposit facility unchanged at 5.4% at its recent meeting. The USD/AED pair remained flat after the news.
Qatar’s central bank maintained its deposit interest rate at 5.75% at its latest meeting, which lifted the USD/QAR forex pair.
Argentina’s unemployment rate fell to 6.2% in the second quarter, from 6.9% in the prior period, sending the ARS/USD pair slightly higher in forex trading this morning.
Saudi Arabia’s balance of trade, France’s business confidence and business climate indicator, Turkey’s consumer confidence, foreign exchange reserves and Central Bank of Turkey interest rate decision, Indonesia’s loan growth and Bank Indonesia interest rate decision, Italy’s construction output, Spain’s balance of trade, South Africa’s building plans passed and South African Reserve Bank interest rate decision, Mexico’s retail sales, Canada’s new housing price index, US Philadelphia Fed manufacturing index, initial jobless claims, current account, continuing jobless claims, existing-home sales, CB Leading Index and natural gas stocks change, Eurozone’s consumer confidence indicator, India’s money supply M3, as well as Argentina’s balance of trade.
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