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Foreign Stock Roundup: Nintendo’s Switch Surpasses Wii Record Sales, Petrobras to Settle Investor Lawsuit for $2.95B

Zacks

Global markets started the New Year on a strong note, notching up record gains. Stocks of automobile companies were the leading gainers in the Eurozone. Meanwhile, the FTSE 100 hit record levels on multiple occasions. Asian markets also registered strong performances, with the Nikkei 225 hitting a fresh 26-year high. Strong economic data from the Eurozone and China lifted the Bovespa to record levels.

Auto Stocks Lead Gains on the STOXX, FTSE 100 Hits Record Highs

Markets across Europe closed mixed last Tuesday as investors remained weary following heightened unrest in Iran. The STOXX 600 lost 0.2% with nearly all the sectors closing in the red and major exchanges closing mixed. Among major losers for the day were auto stocks which declined by 0.1% following poor car registrations data. Signs of a likely conciliation between North and South Korea provided some support to stocks across the world.

The STOXX 600 gained 0.5% last Wednesday with nearly all sectors finishing in the green. The promise of wide reaching financial reforms for the Eurozone boosted stocks during the session. This new legislation known as Mifid II will come into force from Jan 3 and impact the entire region’s financial services system. Auto, oil, tech and industrials were among the day’s leading gainers.

Most European stocks finished in the green last Thursday, after services PMI data indicated that the region was close to its highest growth in seven years. Meanwhile, continuing unrest in Iran lifted oil prices to their highest level in two and a half years. The STOXX 600 gained 0.9% with nearly all sectors finishing in the green. Bullish U.S. car sales data helped auto stocks increase by 1.9%, emerging as the day’s leading gainers. Meanwhile, the FTSE 100 hit an intraday record high.

Gains for Europe’s stocks continued on last Friday with the STOXX 600 advancing by 0.8%. Investors maintained a close watch on the region’s inflation levels and U.S. jobs data. Financials moved higher helping the FTSE 100 achieve yet another record level. Meanwhile, the Swiss blue-chip SMI index hit a new all-time high. Auto stocks led the gains, increasing 2% during the session.

Asia’s Stocks Reach Record Levels, Nikkei Hits Fresh 26-year High

Stocks across Asia closed with gains on the first trading day of the year, ignoring the Street’s moderate gains. The Hang Seng increased 1.8% to hit a 10-year high even as the dollar plummeted to a three-month low. Australia’s S&P/ASX 200 lost 0.1% while South Korea’s Kospi added 0.5%. Improving relations between North and South Korea boosted stocks in Greater China. Apart from the Hang Seng’s ascent, the Shanghai Composite and the Shenzhen Composite gained 1.3% and 1.1%, respectively. Markets in Thailand, New Zealand and Japan were closed due to holidays.

Asia’s markets registered moderate gains last Wednesday following gains on Wall Street. Meanwhile, the dollar continued to languish near record lows. Gains made by large caps boosted South Korea’s Kospi by 0.3%. The S&P/ASX 200 increased by 0.2%, boosted by mining stocks.

Meanwhile, the Shanghai Composite and the Shenzhen Composite each gained around 0.7%. Japan’s markets continued to be closed due to holidays. Also, the MSCI’s broad gauge of Asia Pacific stocks excluding Japan increased 0.3% to trade near all-time highs.

Stocks across Asia closed with gains last Thursday following a strong showing from U.S. stocks and bullish economic data. The Nikkei 225 increased by 3.3% on its first trading day for 2018. Autos, financials and tech stocks emerged as the leading gainers for the day. The Kospi lost 0.8% while the S&P/ASX 200 inched up by 0.1%. The Shanghai Composite and the Shenzhen Composite advanced by 0.5% and 0.4%, respectively with energy stocks emerging as the leading performers.

Asia’s markets advanced once again on Friday with the Dow exceeding the 25,000 mark a day earlier. Markets across the Eurozone gained to trade around multi-year record levels. The Nikkei increased by 0.9% to hit a 26-year high. The Kospi and the S&P/ASX 200 gained 1.3% and 0.7%, respectively. Also, the Shanghai Composite and the Shenzhen Composite increased by 0.2% and 0.04%, respectively.

Bovespa Hits Record Levels on Strong Global Economy, Oil Spike

Stocks across Latin America started the New Year on a strong note. Encouraging global economic indicators helped investors shrug of their year-end weariness. Most significantly, China’s Final Caixin Manufacturing PMI increased to 51.5 in December, its highest level in four months, and defying expectations of a decline.

This strong reading from the world’s leading consumer of commodities added to the optimism created by bullish manufacturing numbers from the Eurozone. Brazil’s Bovespa led gains for the region’s indexes last Tuesday, increasing by 1.6%.

These gains occurred following a meeting between the country’s policymakers and representatives of ratings agencies intended at fending off a likely downgrade. Such recourse became likely for ratings firms after Brazil delayed a vote on pension reforms.

Strong economic data from across the world continued to buoy the region’s stocks on last Wednesday. Also boosting investor sentiment was a spike in oil prices. The MSCI Emerging Markets Index gained 0.5%, hitting its highest level since May 2011. The Bovespa increased 0.1% to touch a record high, closing just under 78,000 points.

The Bovespa gained 1.3% on last Thursday, hitting all-time intraday highs for the second consecutive session. These gains were a result of rising optimism among domestic and international investors about the country’s general direction at the beginning of 2018. Argentina’s Merval gained 0.3% to emerge as the region’s worst performing index.

On last Friday, the Bovespa lingered near all-time levels even as profit taking curbed session gains. However, the index still gained 0.4% even as mixed U.S. jobs data raised concerns about the trajectory of Fed rate hikes.

Stocks in the News

Petroleo Brasileiro S.A., aka Petrobras PBR, which has been reeling under severe graft and corruption charges, recently agreed to pay $2.95 billion to settle class-action lawsuits filed by investors. The payout marks the biggest such payment in the United States by a foreign entity and one of the largest securities class action settlements in the U.S. history. The settlement seeks to put to rest one of Brazil’s most notorious cases of fraud. Petrobras has Zacks Rank #2 (Buy).

The settlement will be reflected in the company’s fourth-quarter 2017 results and will be paid out in three installments. However, the deal does not include the admission of wrongdoing by the company, which considers itself a victim of the Carwash Operation scandal. (Read: Petrobras to Pay $2.95B for Settling Investor Lawsuit)

Royal Dutch Shell plc RDS.A has decided not to proceed with the $80 million deal to offload its refinery operations in Denmark. The company had signed the divestment deal with Dansk Olieselskab AS in September 2016, which included the sale of Zacks Rank #1 (Strong Buy) Shell’s Fredericia refinery and local trading and supply activities.

The deal was set for closure by the end of 2017, subject to satisfactory conditions. However, the deal was called off as Shell and Dansk Olieselskab could not reach a consensus regarding matters of sales within the stipulated time. As of now, Shell is not looking for other prospective buyers and intends to retain its refinery operations in Denmark. (Read: Shell Calls off Demark Refinery Unit Divestment Deal)

Nintendo Co., Ltd. NTDOY has sold 4.8 million of its Switch console system in the last 10 months, outshining Wii’s sales record of more than 4 million units. Nintendo’s shares rallied 3.40% to close at $48.53 on Jan 4, 2018. Apart from robust Switch sales, rumors about the launch of Pokemon Go in China drove share price.

Switch is now the fastest-selling home video game system in the United States, primarily driven by a robust portfolio which includes the likes of Super Mario Odyssey, The Legend of Zelda: Breath of the Wild, Mario Kart 8 Deluxe and Splatoon 2.

Nintendo stated that in the United States, more than 60% of Switch owners have Super Mario Odyssey and over 55% own The Legend of Zelda: Breath of the Wild. Roughly 50% and 20% Switch owners possess Mario Kart 8 Deluxe and Splatoon 2, respectively. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nokia Corporation NOK has signed an agreement with T-Mobile TMUS and Intel INTC on 5G network to introduce a 28 GHz outdoor 5G commercial radio system on air in Bellevue, WA. Nokia has a Zacks Rank #3 (Hold).

To that end, Nokia 5G commercial AirScale solution and the 5G Mobile Trial Platform from Intel was employed to conduct a data session on a 28 GHz radio in a field test environment allowing T-Mobile to deploy its first inter-vendor 5G network.

The collaboration supports the companies’ objective to uplift standards, facilitate the 5G ecosystem of chipsets and devices and provide the best network experience to Un-carrier customers. The deal is the first step in moving 5G development from labs to the field, expanding the 5G mmWave radio performance and propagation testing into the real world. (Read: Nokia, T-Mobile & Intel Collaborate to Develop 5G)

Baidu Inc. BIDU and BlackBerry Limited’s BB shares gained 1.3% and more than 12% on Jan 4, 2018 after the two tech giants announced their partnership to help drive the autonomous vehicle revolution. The partnership is aimed at speeding up the deployment of connected and autonomous vehicle technology for automotive OEMs and suppliers across the world.

Per the agreement, BlackBerry’s safety operating system, QNX Hypervisor 2.0 software, will become the foundation for Zacks Rank #4 (Sell) Baidu's autonomous driving open platform, Apollo.

Baidu’s Apollo platform focuses on utilizing the Chinese tech heavyweight’s strengths in artificial intelligence to build a collaborative driverless car ecosystem. As of now, Apollo has already attracted more than 70 global partners, including OEMs, Tier 1 suppliers, developer platforms and technology startups. (Read: Baidu & BlackBerry Collaborate on Self Driving Cars)

Novartis AG NVS recently announced that the FDA has granted the Breakthrough Therapy designation to its breast cancer drug, Kisqali, for the initial endocrine-based treatment of pre- or peri-menopausal women with hormone-receptor positive, human epidermal growth factor receptor-2 negative (HR+/HER2-) advanced or metastatic breast cancer, in combination with tamoxifen or an aromatase inhibitor. Novartis has a Zacks Rank #4.

The above-mentioned designation is based on positive results from the MONALEESA-7 trial, wherein Kisqali, in combination with tamoxifen or an aromatase inhibitor as initial endocrine-based therapy, significantly prolonged progression-free survival (PFS) compared to endocrine therapy.

The designation from the FDA is intended to expedite the development and review of potential new medicines which treat serious or life-threatening conditions. This designation includes all of the Fast Track program features, as well as more intensive FDA guidance on an efficient drug-development program. (Read: Novartis Gets Second Breakthrough Designation for Kisqali)

Performance of Leading Foreign Stocks

The table given below shows the price movements of 10 of the largest stocks listed on indexes worldwide, over the last five days and during the last six months.



Next Week’s Outlook

Stocks across the world have started the New Year on a strong note. Strong economic data from China and the Eurozone and a record showing on Wall Street have been powering these gains. Given the fact that these factors are firmly in place, it is likely that such gains will continue going forward. However, investors will continue to remain wary of certain geopolitical developments, particularly those relating to Iran and North Korea.

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