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The article gives an overview of the market on Friday. It also explores Kraft Hienz’s earnings report and the delay of the US tariffs on Chinese goods

An image of Kraft Heinz products
An image of Kraft Heinz products

European markets ended last week on a positive note with the pan-European Stoxx 600 closing up by 0.3%. All major bourses including the FTSE, the DAX and the CAC40 closed higher. Basic resources led the charge after positive sentiment about the China negotiations. The heavily China exposed industry rallied by around 2%. On an individual company basis, Sopra Steria Group surged to the top of the Stoxx 600 index following a better than expected earnings report. The French consultancy group jumped almost 7%.

Similarly, US stocks gained on Friday on the back of US-China trade relations sentiment. The S&P500 gained 0.64% to close at 2,792.67 while the Dow Jones closed 181.18 points higher to close at 26,031.81. Kraft Heinz was by far the biggest loser after a terrible earnings report that lost the food company 27.46% of its market capitalization. On the other hand Wayfair Inc. jumped 27.9% after reporting a smaller than expected loss and a revenue beat.

The MSE Total Return Index ended the week on a negative note losing 0.217%. Go plc and Malta International Airport where the only gainers for the day closing 1.83% and 0.78% higher. A total of five stocks closed in negative territory with Malta Post plc being the biggest loser shedding 3.94%. HSBC plc was another big loser with the price of the local bank losing 3.03% to continue the decline following its worse than expected earnings report.

Kraft Heinz report and problems

Kraft Heinz report on Friday shocked the markets on Friday after a succession of bad news. The American food company announced and EPS of $0.84 missing the consensus estimate of $0.93 and is lower than the EPS a year ago of $0.90. This also led to the company slashing the dividend to 40c. However the earnings miss was the tip of the iceberg. In the report it also disclosed an SEC subpoena as part of an investigation looking into the company’s procurement and accounting policies. While these two pieces of news where already damaging, the biggest shock was by far the fact that the firm had written down the value of two of its brands by $15.4 billion. This led investors to wipe off 27.46% of the company’s worth. Now Kraft Heinz is facing an uphill battle on a financial and a legal front leading to six analysts to downgrade the stock. 

Chinese bull market after tariff deal announcement

Shanghai saw solid gains after the president Trump announced a delay in the tariffs that were to be enforced in March. The announcement was well received by the Asian markets as they saw solid gains during early hours trading. The announcement also shows that there is goodwill between the two leaders increasing the likelihood of a deal rather than further escalation in tariffs. A strong opening in the Chinese market bodes well for the European and subsequent American sessions.

This article was issued by Aaron Saliba, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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