Markets were heading higher on Friday morning after China surprisingly announced a rate cut. This marks the first time in over two-years that the second-largest economy cut it’s rates. The news came shortly after they announced a slowing in manufacturing growth. Alexandre Baradex, chief marketing analyst with IG Paris, said, “It comes right after China’s disappointing PMI figures showing that manufacturing is getting dangerously close to contraction.” The People’s Bank of China announced that the one-year benchmark lending rates would be slashed by 40 basis points. This will drop their rate to 5.6%, and the new rates will go into effect on Saturday.
Shares of Toyota Motor Corporation (TM) were on the rise after the company announced a new recall on their Lexus vehicles. There are 422,509 Lexus cars located in the United States that are affected by the recall. The models being recalled are the Lexus LS made between 2007 and 2010, Lexus GS made between 2006 and 2011 and the Lexus IS made between 2006 and 2011. The reason for the recall is that there is a possibility the fuel might leak where the fuel pressure sensor is connected to the fuel delivery pipe. This could potentially lead to a fire if there was a spark. Toyota said they have not been made aware of any injuries from the recall yet.
Shares of Best Buy (BBY) were heading higher after the company reported earnings that beat out analysts’ expectations. The company announced that same-store sales were up 2.2% during the third-quarter, which blew the expected 2% drop analysts were expecting out of the water. Anthony Chukumba, a senior research analyst with BB&T Capital Markets, said, “One of the things that bears have said is ‘Okay, they’re cutting costs but they can’t grow their top line. Well guess what? They grew their top line.’” Revenue was up 2.3% to $7.99 billion, which was fueled by a strong demand for televisions, appliances and computers. Net income reached $107 million, or 30 cents per share, which was up substantially from the $54 million, or 16 cents per share this time last year. Analysts had been projecting profits of 25 cents per share on revenue of $9.33 billion. Best Buy’s CEO, Hubert Joly, said, “In the third quarter, our teams delivered positive comparable sales, improved profitability and continued progress in our transformation. As we enter the fourth quarter, we are excited about our holiday plan.”
That’s all for today,
Warren Gates, Normandy Research