Foreign Stock Roundup: Taiwan Semiconductor Beats, Shell Buys Stake in Silicon Ranch

Global markets largely echoed Wall Street’s fortunes over last week. Stocks across Europe were buoyed by notable earnings performances and strong economic data. Meanwhile, in Asia, the Nikkei lingered near 26-year highs while encouraging growth numbers buoyed China’s stocks. A bullish economic outlook helped stocks in Brazil scale new highs during this period.

STOXX Gains on Strong Economic Data, Earnings

Volumes remained low across Europe on last Monday as markets took a breather after two weeks of notable gains. The STOXX 600 recovered partially to close 0.2% lower even as most sectors closed in the red. The FTSE 100, CAC 40 and DAX declined 0.12%, 0.13% and 0.3%, respectively.

Only Italy’s benchmark FTSE MIB added 0.5%. News that British construction firm Carillion had declared itself bankrupt weighed on sentiment but helped boost other stocks from the sector. Utilities also notched up considerable gains.

The STOXX 600 advanced by 0.1% last Tuesday even as most major sectors finished in the green. However, a fall in commodity prices dampened investor sentiment even though foreign markets registered strong gains. The FTSE 100 lost 0.2% but the CAC 40 and DAX gained 0.1% and 0.4%, respectively. Stocks of oil companies lost 0.9% following a significant decline in crude prices.

A strong performance on Wall Street failed to lift Europe’s stocks last Wednesday. Corporate developments dominated the proceedings as the STOXX 600 lost 0.1%. The FTSE 100, CAC 40 and the DAX each lost around 0.4%. Most sectors closed in the red with media stocks declining by 0.6%.

The STOXX 600 advanced by 0.2% on last Thursday, buoyed by a strong showing on Wall Street. Nearly all of the index’s sectors closed in the black. Tech stocks gained 1.4%, boosted by encouraging earnings numbers.

Similarly, strong economic data triggered gains for the region’s stocks on last Friday. The STOXX 600 added 0.5%, touching its highest point since Aug 2015. Basic resources stocks were the major gainers of the session, fueled by encouraging demand data from China.

Strong GDP Boosts China Stocks, Nikkei Lingers Near 26-year High

Stocks across Asia ended higher on last Monday following record gains on Wall Street. The Nikkei added 0.3% defying the rise in the yen. Meanwhile, the Kospi and the S&P/ASX 200 increased by 0.3% and 0.1%, respectively. In Australia, materials and gold mining stocks emerged as the day’s best performers.

However, the Hang Seng closed in the red after a disappointing last hour of trading. The Shanghai Composite and the Shenzhen Composite declined by 0.6% and 1.8%, respectively.

Markets across Asia closed higher on last Tuesday following the dollar’s overnight losses. The Nikkei 225 gained 1%, breaching a 26-year record earlier in the session. The Kospi overcame early losses to end 0.7% higher. Meanwhile the S&P/ASX 200 lost 0.5%. The Shanghai Composite and Shenzhen Composite advanced by 0.8% and 0.7%, respectively.

Stocks across Asia closed in the red on last Wednesday following losses on Wall Street. The Nikkei 225 moved 0.4% after touching a 26-year high in the preceding session. The Kospi lost 0.3% while the S&P/ASX 200 declined by 0.5%. The Shenzhen Composite and the CSI 300 declined by 0.3% and 0.2%, respectively. Only the Shanghai Composite index defied the prevailing trend to finish 0.3% higher.

The Nikkei slipped from a new 26-year high on last Thursday and finished the session 0.4% lower. Markets across the region ended mixed as investors received key economic data on China. Official data showed that China’s economy had recorded an annual growth rate of 6.9%, exceeding the targeted rate of 6.5%. Additionally, industrial production numbers also exceeded estimates.

The Kospi inched up 0.02% while the S&P/ASX 200 ended in the red. Meanwhile, the Shanghai Composite, Shenzhen Composite and the CSI 300 added 0.9%, 0.1% and 0.6%, respectively.
 
Asia’s stocks largely finished in the green on last Friday. The Nikkei added 0.2% even as financials stocks registered strong gains. The Kospi gained 0.2% while the S&P/ASX 200 declined by 0.2%. The Shanghai Composite increased by 0.4%, adding the record gains logged on Thursday. However, the Shenzhen Composite lost out on early gains to end 0.1% lower.

Bovespa Surges on Economic Outlook, Chile’s Stocks Scale New Highs

The Bovespa gained 0.5% on last Monday following expectations that President Trump would likely moderate his stance on NAFTA renegotiations. On last Tuesday, Brazil’s stocks inched up to a fresh all-time high. The Bovespa gained 0.1%, moving above the 80,000 mark at one point during the session. Optimism over the country’s economic prospects fueled the day’s gains. Meanwhile, Mexico’s S&P/BMV IPC stock index gained more than 0.2%.

The Bovespa gained 0.6% on last Wednesday, moving above the 80,000 mark following strong foreign capital inflows. Corporate developments also helped boost stocks on this occasion. Shares of Petrobras PBR gained around 2% after the government set it was creating a committee to deal with a long standing dispute over oil rights.

On last Thursday, the Bovespa gained 0.2% even as Chile’s stocks touched an intraday high. Meanwhile, Argentina’s benchmark Merval index also hit a new one-time high, gaining more than 1.1%. Brazil’s stocks continued to linger near record levels on last Friday. The Bovespa gained 0.3%, creating a new intraday record. Meanwhile, the Merval slipped from the record achieved in the previous session, losing 1.3%.

Stocks in the News

Taiwan Semiconductor Manufacturing Co. TSM reported fourth-quarter 2017 earnings of 64 cents per ADR, which exceeded the Zacks Consensus Estimate. Further, it increased 13% sequentially and 5% year over year.

Moreover, revenues increased 5.9% year over year and 10.1% sequentially. The increase was primarily driven by major mobile product launches and strong sales from cryptocurrency mining boom.

North America accounted for 67% of the total revenues. Asia Pacific, China, EMEA (Europe, Middle East, and Africa) and Japan accounted for 7%, 13%, 7%, and 6% of the total revenues, respectively.

For first-quarter 2018, Taiwan Semiconductor expects revenues to be in the range of $8.40-$8.50 billion. The Zacks Consensus Estimate is pegged at $8.24 billion. (Read: Taiwan Semi Q4 Earnings Beat on Strong Product Ramp Up)

Toyota Motor Corporation TM has announced that it produced 1,983,723 vehicles at its North American vehicle assembly plants in 2017. The primary driving forces behind 2017 production were robust demand for sports utility vehicles (SUVs) and trucks, sustained economic stability, and low price of fuel. However, the production volume is nearly 1% lower than 2,124,608 vehicles produced in 2016.

In North America, Zacks Rank #3 (Hold) Toyota’s total vehicle production has reached nearly 32 million since 1986. The Japanese auto giant will add its 15th manufacturing plant in a JV with Mazda, in Huntsville, Alabama, in 2021. Also, the vehicle manufacturer announced that it will make large amount of investments in its different manufacturing facilities. (Read: Toyota Produces Nearly 2M Vehicles in North America in 2017)

Ericsson ERIC is undertaking another colossal writedown by booking charges roughly amounting to a whopping $1.8 billion. After an impairment testing, this Swedish telecommunications-equipment maker has decided to write off assets worth SEK 14.2 billion ($1.77 billion). Another SEK 1 billion ($125 million) non-cash charge will be booked due to the recent U.S. tax reform.

Zacks Rank #5 (Strong Sell) Ericsson said that the charges would not impact cash flow, but would affect operating profit in the upcoming fourth-quarter results. The writedowns primarily affect two of its businesses — digital services and the cloud computing and media unit. (Read: Ericsson Books $1.8 Billion in Charges Under Restructuring)

Royal Dutch Shell plc RDS.A has recently inked a deal to acquire a 43.8% stake in Silicon Ranch Corporation from Partners Group. The deal will help Shell leverage its position as one of the top three wholesale power sellers in the United States along with boosting its New Energies division.

Silicon Ranch is a leading solar energy company in the United States and the deal will make Shell its largest stakeholder. Per the deal, the company will continue to operate under its existing management and retain its brand.

The transaction could be valued up to $217 million in cash, contingent on Silicon Ranch’s performance. Subject to regulatory approvals and satisfactory closing conditions, the deal is scheduled for completion in the first quarter of 2018. The stock has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teva Pharmaceutical Industries Ltd. TEVA announced that the FDA has approved the label expansion of Trisenox injection to include first-line treatment of acute promyelocytic leukemia (“APL”) patients in combination with tretinoin. Teva has a Zacks Rank #4 (Sell).

The eligible APL patients should have t(15;17) translocation or PML/RAR-alpha gene expression. Trisenox is currently approved for a similar indication in patients who are refractory/relapsed to retinoid and anthracycline chemotherapy.

The drug is already approved in the EU as both first-line and second-line treatment for this indication. (Read: Teva's Trisenox Gets FDA Approval as First-Line Treatment)

Atlas Copco AB ATLKY recently announced that it will acquire Australia-based Hy-Performance Fluid Power Pty Ltd. Financial consideration of the buyout was not disclosed. Hy-Performance Fluid primarily provides its services — remanufacturing, repair and servicing of hydraulic components — to customers in the mining and infrastructure end markets.

The buyout of Hy-Performance Fluid will strengthen Zacks Rank #2 Atlas Copco’s product line for customers in the mining and infrastructure markets. It will be integrated with the company’s existing Mining and Rock Excavation Technique business. (Read: Atlas Copco on Buyout Spree, to Acquire Hy-Performance Fluid)

AstraZeneca, plc AZN and partner Merck MRK announced that the FDA has approved the supplemental New Drug Application (sNDA) for Lynparza seeking approval for label expansion in metastatic breast cancer. Lynparza is presently marketed for advanced ovarian cancer. AstraZeneca has a Zacks Rank #3.

With the latest FDA approval, Lynparza can now be used to treat previously treated (chemotherapy) patients with HER2-negative metastatic breast cancer, harboring germline BRCA mutations. Moreover, the drug is also approved in patients with HR+ breast cancer who were treated with an endocrine therapy or were ineligible for the same. (Read: AstraZeneca's Lynparza Label Now Includes Breast Cancer)

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 have largely been guided by economic data and earnings numbers over this week. This was most evident in China, where stocks were buoyed by strong growth numbers. Meanwhile, a strong economic outlook for Brazil boosted the country’s stocks. The only impediment at this point seems to be the U.S. government shutdown, an event which is threatening to spoil the markets’ party. An early resolution of this crisis would go a long way toward ensuring the longevity of market gains in the days ahead.

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Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
 
Astrazeneca PLC (AZN) : Free Stock Analysis Report
 
Merck & Company, Inc. (MRK) : Free Stock Analysis Report
 
Ericsson (ERIC) : Free Stock Analysis Report
 
Toyota Motor Corp Ltd Ord (TM) : Free Stock Analysis Report
 
Atlas Copco AB (ATLKY) : Free Stock Analysis Report
 
Teva Pharmaceutical Industries Limited (TEVA) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
 
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