Equity markets retreated this week, with US stocks on Tuesday plunging the most since October. Investors sought refuge in bonds, pushing Treasury yields lower.
The patience of investors is being tested by US President Donald Trump, as growth-supportive initiatives, like Trump’s “phenomenal” tax plan and the dismantling of ObamaCare, are still not presented. Stock markets declined globally, with investors taking profits and entering a wait-and-see mode. Financial players retreated most, as the sector was impacted by declining interest rates. The utilities sector was the best performing sector this week. Utility companies tend to benefit from lower interest rates.
The earnings season is coming to an end. This week, Nike and FedEx presented their results. Nike disappointed, as the company is losing market share to Adidas and Under Armour. Nike is known for its ability to leverage its brand name to increase profit margins. But now that online shopping is gaining more attention from consumers, the company is forced to offer more discounts to boost sales. FedEx reported earnings that were below expectations. However, we think the company is moving in the right direction. FedEx’s margins are improving, the company has the capability to benefit from its superior infrastructure and the integration of TNT is well on track.
In the Netherlands, chemicals company AkzoNobel was in focus. US-based chemicals player PPG approached AkzoNobel for a second and third time this week, in an attempt to acquire the Dutch company. All offers were rejected instantly, as Akzo believes current bids do not reflect its actual value and that the takeover proposal would lead to job losses. Investors seem to lose faith in the possibility of a takeover deal, as the stock declined 2% after the last rejection. AkzoNobel currently trades approximately 12% below the latest offer.
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