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Procter & Gamble stock spikes on upbeat Q3

The news shaping the markets today

Ukraine proposed to hold a special round of talks with Russia “without any conditions” in the besieged city of Mariupol. The news lent support to the RUB/USD forex pair.


Ireland’s KBC Bank consumer sentiment index fell to 57.7 in April, from 67.0 in the previous month. This being the lowest reading since October 2020 exerted pressure on the EUR/USD pair in forex trading this morning.


South Korea’s producer prices climbed 8.8% year-over-year in March, following an 8.5% increase in the prior month. The news exerted pressure on the KRW/USD forex pair.


New Zealand’s annual inflation rate rose to 6.9% in the first quarter, versus 5.9% in the prior period. This being the highest reading since the second quarter of 1990 sent the NZD/USD pair lower in forex trading this morning.


Argentina’s trade surplus shrank to $279 million in March, from $400 million in the year-ago month. However, the ARS/USD forex pair remained flat after the news.

 

What’s happening: Shares of Procter & Gamble jumped on Wednesday, a day after investors shorted the stock ahead of results.

What happened: P&G reported strong quarterly results and boosted its sales growth forecast for fiscal 2022.

The company also reported the strongest growth in two decades in one of its key metrics.

How were the results: The FMCG giant reported a surge in sales, with both top- and bottom-line metrics exceeding market views.

  • Sales grew 7.1% year-over-year to $19.38 billion, exceeding the consensus estimates of $18.73 billion.
  • Adjusted earnings came in at $1.33 per share, up 5.5% from the year-ago quarter and ahead of market expectations of $1.30 per share.

Why it matters: Several of Procter & Gamble’s products are highly popular around the world, including Oral B toothbrushes, Tide laundry detergent and Pampers. The company has been raising prices of these products due to higher cost of materials and logistics. However, the higher prices have not impacted demand.

Despite raising prices of goods, Procter & Gamble managed to report 10% organic sales growth, representing the highest growth since the company began tracking this metric back in 2001. The spike in organic sales was led by 3% growth in shipment volumes.

However, due to rising input costs, the company’s gross margins narrowed 400 basis points to 46.7% and gross profits shrank 1% year-over-year to $9.1 billion.

The company held cash and equivalents worth $8.5 billion as of March 31. Management indicated that dividends worth $8 billion and repurchases worth $10 billion would be made during fiscal 2022.

Procter & Gamble raised its sales growth guidance for the year from its prior estimate of 3%-4% to between 4% and 5%. The company also projected organic sales growth of 6%-7%. Management guided to core earnings growth of 3%-6% for fiscal 2022, from core earnings of $5.66 per share in the previous year.

How shares responded: P&G’s shares gained almost 3% to close at $163.65 on Wednesday, following the release of upbeat quarterly results. The stock has gained less than 0.5% year to date.

What to watch: Investors will keep an eye on accelerating inflation and the impact of P&G’s price hikes on the demand for its goods.

The markets today

European stocks will be in focus today ahead of some major economic reports from the common bloc

 

Context: Equity markets in Europe closed higher on Wednesday, as investors monitored fresh corporate earnings and economic reports.

Details: It was a busy day of earnings releases on Wednesday, with several companies like ASML, Danone and Heineken releasing quarterly reports and many topping sales estimates.

Investors digested some disappointing economic data. Although industrial production in the Eurozone grew 0.7% in February, EU’s new car registrations continued to decline, falling 20.5% year-over-year to 844,187 units in March. The Eurozone reported a trade deficit of €7.6 billion for February, versus a surplus of €23.6 billion in the year-earlier month. Producer price inflation in Germany surged to a record 30.9% in March.

Investors also continued monitoring the Russia-Ukraine war, with Russian forces capturing the eastern city of Kreminna.

Markets maintained a positive sentiment despite the IMF lowering its global growth estimates for 2022 and 2023. The World Bank also reduced its global growth projections for 2022, citing Russia’s invasion of Ukraine.

The pan-European Stoxx 600 index rose 0.84% to close at 460.10 on Wednesday, with tech shares leading the surge. London’s FTSE 100 gained 0.37%, while German DAX 40 and French CAC 40 added 1.47% and 1.38%, respectively.

What to watch: Traders await the release of data on inflation and consumer confidence from the Eurozone today. The annual inflation rate in the Eurozone is expected to climb to an all-time high of 7.5% in March, from 5.9% in February. Analysts expect the consumer confidence indicator to decline further to -20 in April, from -18.7 in March.

Investors will also keep an eye on the ongoing war in Ukraine and rising covid-19 cases in some parts of the world.

Other Markets: US indices closed mixed on Wednesday, with the Dow Jones index closing higher by 0.71%, while the S&P 500 and Nasdaq 100 lower by 0.06% and 1.49%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.0835 and 1.0841 Negative
GBP/USD – 1.3050 and 1.3059 Positive
FTSE 100 – 7619.53 and 7628.01 Negative
DAX 40 – 14338.92 and 14357.34 Negative
S&P 500 – 4456.22 and 4475.72 Positive

 

Market snapshot

What else to watch today

France’s manufacturing climate indicator and business climate indicator, Turkey’s consumer confidence indicator, Turkey’s foreign exchange reserves and MPC meeting summary, India’s money supply M3, US initial jobless claims, Philadelphia Fed Manufacturing index, continuing jobless claims, CB leading index and natural gas stocks change, as well as Argentina’s leading economic index and economic activity estimator.


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