Investing.com -- Pepsi, Costco (NASDAQ: COST ) and Constellation Brands (NYSE: STZ ) get the third-quarter earnings bandwagon rolling as the market struggles to recover from the worst sell-off in two months. Oh, and your Parmigiano Reggiano and Scotch whisky are about to get more expensive. Here's what you need to know in financial markets on Thursday, 3rd October.
1. Stocks set for dead cat bounce
Wall Street is set for a weak bounce at the open Thursday, with no indication of any serious rethink of the fears that were behind Wednesday’s sell-off, the worst in two months.
PepsiCo (NASDAQ: PEP ) started the day’s earnings roll with a year-on-year decline in per share earnings on a modest increase in revenue. Both top and bottom lines were marginally above expectations. Brewer Constellation Brands is due up next, while CostCo reports after the closing bell.
2. Trump announces tariffs on EU imports
The Trump administration opened a new front in the trade war, announcing import tariffs on a range of European products after getting the go-ahead from the World Trade Organization to retaliate against unfair state aid to Airbus.
In addition to a 10% tariff on Airbus planes, there are 25% tariffs on Scotch whisky, Parmesan cheese and various luxury goods, although not leather goods. The tariffs on Airbus exempt components shipped to the company’s factory in Mobile, Alabama, something that may appease U.S. airlines who lobbied against having to pay more for Airbus aircraft.
The tariffs announced were at the mild end of a range of expectations. Airbus (PA: AIR ) was the biggest gainer on the Paris exchange Thursday morning, along with spirits maker Pernod Ricard (PA: PERP ) and luxury goods group LVMH (PA: LVMH ).
3. Growth fears resurface after weak PMIs, Brexit news
The day’s data calendar is dominated by the release of IHS Markit’s services and composite purchasing managers indices, along with the Institute of Supply Management’s non-manufacturing surveys. They're due at 9:45 AM ET (1345 GMT) and 10 AM ET (1400 GMT) respectively.
Markit’s numbers for Europe were worse than expected, with the eurozone composite PMI falling to 50.1, only a whisker above the line that divides expansion from contraction. The U.K. composite index fell below 50 to 49.3., triggering a further sell-off in U.K. stocks, compounded by a negative reaction from Brussels to Prime Minister Boris Johnson’s proposals for a tweaked withdrawal deal to ensure an orderly Brexit on Oct. 31.
4. Tesla, GoPro disappoint
Tesla (NASDAQ: TSLA ) fell short of its own – and the market’s – expectations with its third-quarter deliveries, which totalled 97,000. CEO Elon Musk had predicted the company would crack 100,000 for the first time.
The figures set the company up for an earnings disappointment too, given that the sales mix is now heavily skewed to the lower-margin Model 3. Tesla shares fell 4.0% in after-hours trading.
Another company to disappoint after the closing bell on Wednesday was GoPro (NASDAQ: GPRO ), whose shares fell 16% after production delays to its new Hero8 Black camera caused it to cut its outlook for the second half. GoPro has moved some production from China to Mexico in the last year but the company said that wasn’t responsible for the delays.
5. Impeachment depositions
Kurt Volker, a former U.S. envoy to Ukraine, will be deposed behind closed doors Thursday by the three House committees looking into President Trump’s pressure on Ukraine to investigate the son his political rival, Joe Biden. He’s the first of five current and former State Department staff who’ve been called to appear before the House over the issue.
Trump increased his attacks against House Intelligence Committee leader Adam Schiff at a press conference on Wednesday, calling for him to resign and be investigated for ‘treason’.
The official who first assessed the whistle-blower’s complaint against Trump, Intelligence Community Inspector General Michael Atkinson, will testify behind closed doors on Friday, according to Bloomberg.
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