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What’s happening: Shares of Hewlett Packard Enterprise edged higher in after-hours trading on Thursday, following the release of the company’s fourth-quarter results.
What happened: The maker of computer servers posted better-than-expected sales and earnings for the latest quarter.
Although the stock rose after the release, investors remained concerned about HPE’s profitability.
How were the results: The company reported low double-digit growth in sales for the October quarter.
Why it matters: Rising demand for high-powered servers used to run artificial intelligence workloads has resulted in significant gains for hardware developers like Hewlett Packard Enterprise.
Revenues from AI servers grew 16% to $1.5 billion, while server unit sales climbed 32% to $4.71 billion during the quarter. HPE continues to face stiff competition from Dell Technologies in this area.
Revenues from Intelligent Edge contracted by 20% to $1.12 billion.
The company’s adjusted gross margins narrowed to 30.9% in the latest quarter and came in below market expectations of 31.1%.
In January, the company had announced plans to buy Juniper Networks in a $14 billion deal. HPE is looking to close the deal during the “early part” of next year and hopes to increase its networking market share.
Management guided to adjusted earnings between 47 and 52 cents per share in the current quarter, broadly in-line with market expectations. The company also projected revenue growth in the “mid-teens.”
How shares responded: HPE’s shares rose 0.4% to $21.74 in the extended trading hours following the release of quarterly results. The stock has surged around 28% year-to-date.
What to watch: Investors will continue monitoring rising competition from other hardware makers, like Dell and Super Micro Computer.
Context: The US dollar index edged higher this morning as investors assessed the latest economic reports.
Details: Data released on Thursday showed that trade deficit in the US had shrunk to $73.8 billion in October, from $83.8 billion in September. The figure also came in better than market estimates of a $75 billion gap.
Exports from the US fell 1.6% to $265.7 billion, while imports declined by 4% to $339.6 billion.
US initial jobless claims rose to a six-week high of 224,000 in the week ending November 30, compared to 213,000 in the previous week. The latest reading also came in worse than market estimates of 215,000.
Federal Reserve Chairman Jerome Powell recently said that the US central bank is not in a rush to cut interest rates, while also highlighting the economy’s strength and persistent inflationary pressures. However, markets have continued to price in the Fed announcing an interest rate cut at its upcoming meeting this month.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.1% to 105.83 this morning.
The EUR/USD forex pair slipped about 0.1% to 1.0575, while the GBP/USD pair declined 0.1% to 1.2750.
What to watch: Investors await the release of the nonfarm payrolls data from the US today. Analysts expect the US economy to add 200,000 jobs in November, which would represent a significant improvement from the gain of 12,000 recorded in October.
The unemployment rate is expected to rise to 4.2% in November, from 4.1% in October. Average hourly earnings for all employees on private nonfarm payrolls, which rose by 0.4% to $35.46 in October, are expected to rise by 0.3% in November.
The release of data on Michigan consumer sentiment will also remain in focus today. The University of Michigan consumer sentiment, which was revised down to 71.8 for November versus a preliminary reading of 73, is expected to improve to 73 in December.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.16%, 0.63%, 0.37% and 0.40%, respectively.
The French government’s collapse without passing a budget may prevent Paris from increasing its assistance to Ukraine in the war with Russia. The news sent the RUB/USD pair slightly higher in forex trading this morning.
Vietnam’s industrial production grew by 8.9% year-over-year in November, after a 7.1% gain in the previous month, lending support to the VND/USD forex pair.
Philippines’ manufacturing production contracted by 2.2% year-over-year in October, compared to a 6.3% decline in September. Manufacturing output declining for the second straight month sent the VND/USD pair lower in forex trading this morning.
Japan’s household spending declined by 1.3% year-over-year in October, versus a 1.1% fall in the previous month. The decline being less steep than market estimates of 2.6% lent support to the JPY/USD forex pair.
South Korea’s current account surplus widened to $9.78 billion in October, from $7.44 billion surplus in the year-ago month. However, the latest reading marked a contraction from the previous month’s $10.94 billion surplus, which sent the KRW/USD pair lower in forex trading this morning.
Italy’s retail sales (1300 UAE Time), Eurozone’s GDP growth rate (1400 UAE Time) and employment change (1400 UAE Time), India’s foreign exchange reserves (1530 UAE Time), Mexico’s auto exports (1600 UAE Time) and auto production (1600 UAE Time), Russia’s foreign exchange reserves (1700 UAE Time), Canada’s unemployment rate (1730 UAE Time), employment change (1730 UAE Time), average hourly wages (1730 UAE Time) and Ivey PMI (1900 UAE Time), US Baker Hughes oil rig count (2200 UAE Time) and Baker Hughes total rigs count (2200 UAE Time), as well as Argentina’s industrial production (2300 UAE Time).
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