Stock Markets
Shares slip, yields rise as market awaits likely hawkish tone from Fed
© Reuters. FILE PHOTO: Passersby walk past an electric board displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato
By Herbert Lash and Harry Robertson
NEW YORK/LONDON (Reuters) – Global stocks eased and the benchmark Treasury yield rose close to levels last seen in 2007 as a plunge in U.S. homebuilding in August underscored the balancing act the Federal Reserve faces in signaling its outlook on interest rates this week.
Traders and investors avoided big bets ahead of rate decisions by the Fed on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday, in a week with policy decisions also expected from other central banks.
Oil prices rose for a fourth straight session, with futures for global benchmark climbing past $95 a barrel, to further exacerbate inflation concerns and question whether rates need to go higher to quash inflation.
The U.S. central bank will likely pause its aggressive hiking of interest rates and also indicate its outlook on rates and economic growth in the months ahead when Fed Chairman Jerome Powell speaks on Wednesday.
“The story is a function of how dovish versus how hawkish he is going to be,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York, referring to Powell.
“The more dovish he is leads to an environment where yields are likely to move higher,” he said. “The less willing they are to assure being restrictive, the more likely inflation is to come back and bother them.”
The impact of rising interest rates crimped demand in U.S. housing as a resurgence in mortgage rates led homebuilding last month to plunge to more than a three year-low.
The yield on benchmark rose 2 basis points at 4.339%, just below the 4.366% level reached on Aug. 22, which was the highest since late 2007.
Stocks slid as expectations interest rates will stay higher for longer put a damper on the market. Futures show the Fed will keep its overnight lending rates above the 5% mark until late July 2024.
MSCI’s gauge of stocks across the globe shed 0.46%, while the pan-regional index in Europe lost 0.18%.
On Wall Street, the fell 0.69%, the lost 0.65% and the dropped 0.84%. The , which gauges the currency against six major peers, was 0.08% at 105.00, not far from Thursday’s six-month high of 105.43.
Investors and central bankers are contending with a sharp rise in oil prices as demand has picked up while Saudi Arabia and Russia have limited supply, and weak U.S. shale output has increased concerns.
futures rose 1.55% to $92.90 a barrel, while Brent was at $95.49, up 1.12%.
Samuel Zief, head of global FX strategy at JPMorgan Private Bank, said central banks should not be overly concerned by the run-up in oil prices, which he said should fade as economies slow.
“What the central banks are really, really focused on, it’s not really the supply-side energy shocks anymore, it’s really the sticky services part of the inflation basket,” he said.
The Bank of England sets policy on Thursday and is expected to hike rates by 25 basis points to 5.5%, in what many investors believe will be the last increase of the cycle.
The Bank of Japan is expected to leave rates on hold in negative territory on Friday, although it too will be scrutinized for clues about the outlook after Governor Kazuo Ueda hinted at a move away from ultra-loose policy.
In Asia, fell 0.87% under the weight of big losses for chip-related stocks including Tokyo Electron.
Japanese markets were closed Monday, when Asian tech stocks were sold off following a Reuters report that TSMC had asked its major vendors to delay deliveries.
In a turbulent market environment, Five9 (NASDAQ:) Inc’s stock has touched a 52-week low, reaching a price level of $28.74. This significant downturn reflects a broader trend for the cloud software company, which has seen its shares plummet by -58.79% over the past year. Investors are closely monitoring Five9’s performance as it navigates through a period of heightened volatility and shifting industry dynamics, which have contributed to the stock’s current valuation at this low point. The company’s efforts to rebound from this position will be under scrutiny in the coming quarters as market participants look for signs of a strategic turnaround or further indications of market pressures.
In other recent news, Five9 Inc . has achieved an annual revenue run rate exceeding $1 billion in Q2, a significant milestone despite lowering its annual revenue guidance by 3.8% due to customer budget constraints. The company’s adjusted EBITDA margin rose to 17% of revenue, contributing to a strong operating cash flow of $126 million. The company also confirmed plans to reduce its global workforce by approximately 7% by the end of 2024, a strategic move projected to cost between $12 million and $15 million.
Five9’s recent acquisition of Acqueon, a firm specializing in proactive outbound omnichannel customer engagement, aims to expand its AI offerings and bolster its growth. This move is in line with the company’s focus on managing expenses and improving profitability, with initiatives like FedRAMP and expansion into India anticipated to improve gross margins.
In their analysis, Piper Sandler maintained an Overweight rating for Five9, with a steady price target of $47.00, while Needham and BTIG both maintained a Buy rating with price targets of $48.00 and $45.00 respectively. These ratings reflect the firms’ confidence in Five9’s strategic positioning and potential for growth, despite the current challenges and workforce reduction.
InvestingPro Insights
Amid the current market conditions, Five9 Inc’s recent performance can be put into perspective with select data from InvestingPro. The company’s market capitalization stands at roughly $2.15 billion, indicating the size and scale of the business amidst its challenges. Despite the stock’s decline, analysts are showing a hint of optimism, with 20 analysts having revised their earnings estimates upwards for the upcoming period. This could signal a potential turnaround in sentiment or underlying business performance.
Importantly, Five9’s liquid assets are reported to surpass short-term obligations, suggesting that the company maintains a degree of financial flexibility to navigate its current difficulties. Furthermore, while the stock is trading near its 52-week low, it’s worth noting that the relative strength index (RSI) suggests the stock is in oversold territory, which can sometimes precede a rebound in share price. Investors looking for comprehensive analysis and additional InvestingPro Tips on Five9 can find more insights, including 14 other tips, at https://www.investing.com/pro/FIVN.
In terms of financial health, the company operates with a moderate level of debt and is expected to become profitable this year, according to analysts’ predictions. These elements may offer some solace to investors considering the stock’s substantial price fall over the last year. For those seeking a deeper dive into Five9’s valuation and future prospects, the InvestingPro platform provides a fair value estimate of $45.04, which is considerably higher than the current trading price, suggesting potential undervaluation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
TD Cowen reiterated its Buy rating on shares of Terns Pharmaceuticals (NASDAQ:TERN), following the company’s investor call. The call was held to manage expectations for the upcoming Phase 1/2 CARDINAL study data for chronic myeloid leukemia (CML). The firm noted the challenges in measuring the efficacy endpoint (EP) due to disease progression and the absence of treatment switch guidelines, which makes major molecular response (MMR) a challenging efficacy endpoint for Phase 1/2 trials.
The interim Phase 1/2 data aims to evaluate descriptive efficacy signals, considering patients’ baseline BCR-ABL levels and treatment history. The analyst highlighted that the once-daily (QD) dosing and the lack of food effect could potentially enhance the quality of life for patients compared to other allosteric tyrosine kinase inhibitors (TKIs).
Terns Pharmaceuticals has been focusing on the development of improved treatment options for CML. The company’s approach to dosing, which does not require food intake, may offer a more convenient alternative for patients, potentially leading to better adherence and outcomes.
The topline data from the 6-month Phase 1/2 CARDINAL study is anticipated to be available in 2025. This data will provide further insights into the treatment’s efficacy and safety, which are critical factors in the ongoing development and potential approval process.
Investors and stakeholders in Terns Pharmaceuticals are expected to closely monitor the progress of the CARDINAL study, as it could have a significant impact on the company’s future prospects and position in the CML treatment landscape.
In other recent news, Terns Pharmaceuticals has experienced significant developments. The biopharmaceutical company reported robust earnings and revenue results, with Mizuho Securities maintaining an Outperform rating on Terns shares, citing strong enthusiasm for the company’s drug, TERN-701, a potential treatment for chronic myeloid leukemia.
The firm expects the first interim Phase 1 CARDINAL study data for TERN-701 in December.
Terns also announced the appointment of Elona Kogan as its new chief legal officer, a move that underscores the company’s strategic development and pipeline advancement.
The company also secured an extension of its office lease in Foster City, California, through 2027, reflecting Terns Pharmaceuticals’ operational stability and long-term planning.
In terms of clinical trials, Terns has made progress in its ongoing Phase 1 study of TERN-701, with interim findings suggesting the drug can be administered once daily with or without food.
This development, coupled with the forthcoming Phase 1 data for another of Terns’ drugs, TERN-601—an oral GLP-1 receptor agonist for obesity—expected next month, underscores the company’s commitment to innovative therapies.
These recent developments, from financial performance to executive appointments and clinical trials, highlight Terns Pharmaceuticals’ ongoing efforts to advance its strategic objectives and deliver on its mission. The company’s activities are closely watched by investors and industry analysts, including those from Mizuho Securities, who continue to support the company’s potential.
InvestingPro Insights
As Terns Pharmaceuticals (NASDAQ:TERN) navigates the complexities of its Phase 1/2 CARDINAL study, investors are keeping a keen eye on the company’s financial health and stock performance. According to InvestingPro, Terns holds more cash than debt, which is a positive signal for financial stability. Additionally, with five analysts revising their earnings upwards for the upcoming period, there is a sense of optimism about the company’s potential performance.
However, it’s important to note that Terns is not currently profitable and has been quickly burning through cash, which may raise concerns about long-term sustainability. The company’s P/E Ratio stands at -5.71, reflecting these profitability challenges. Despite these hurdles, Terns has managed a 1 Year Price Total Return of 45.42%, indicating some investor confidence in the company’s growth prospects. The anticipated fair value from analysts stands at 15 USD, while the InvestingPro Fair Value is calculated at 5.8 USD, highlighting a divergence in valuation perspectives.
For those looking for more in-depth analysis, additional InvestingPro Tips on Terns Pharmaceuticals can be found at https://www.investing.com/pro/TERN, offering a comprehensive look at the company’s financial details and stock performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
PARIS (Reuters) – French President Emmanuel Macron discussed the importance of maintaining support for Ukraine and the need for a ceasefire in Gaza during talks on Friday with German Chancellor Olaf Scholz, said the French presidency.
Regarding Ukraine, the two leaders expressed their determination to support the country “for as long and as intensively as necessary” in its war against Russia, the Elysee said.
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