Restaurant Stocks Hit by Flurry of External Headwinds — Market Talk
0851 ET - Restaurant stocks are once again under pressure from a host of external factors--"some real, some perhaps overplayed, all hard to predict," Morgan Stanley analysts say in a note. Higher gas prices, interest rates and cost pressures are all weighing on the industry, the analysts say. Political uncertainty and geopolitical disruptions are also overhangs, they say. "As for AI, we'll see," they add. Restaurant demand data, meanwhile, doesn't look much different overall but continues to be choppy in some pockets under the surface, they say. "We could call this an overreaction from a stock standpoint (like the ones we have seen before)," they say. ([email protected])0847 ET - The European Union's proposition to make Canada the bloc's first associate member looks positive for the region's spirits sector, an industry group says. "We were pleased to see Ursula von der Leyen underline the importance of the EU extending its strong, strategic trading partnerships in her speech," trade director Pauline Bastidon at SpiritsEurope says. As a highly export-driven sector, furthering open trade is crucial, Bastidon says. "We view closer ties with Canada positively and will be watching with interest as this relationship develops," she adds. ([email protected])0819 ET - OpenAI's valuation may continue climbing ahead of its hotly-anticipated initial public offering. The ChatGPT maker has held early talks with investors about a new funding round that could value it at more than $1.2 trillion, WSJ reports, up from a valuation of $852 billion in March. The potential for fresh funding comes on the heels of the release of Astra, OpenAI's latest cutting-edge model which it described as the world's most intelligent and aligned model. It would also come ahead of the company's IPO that's now expected next year. ([email protected])0727 ET - Cryptocurrency companies are facing a more volatile regulatory environment as a result of the Clarity Act's failure to pass a procedural Senate vote, Bitget Chief Executive Gracy Chen says. The crypto-friendly legislation fell 11 votes short of progressing through the upper house Tuesday. Though the Securities and Exchange Commission is moving to establish market structure rules regulating crypto exchanges, decisions by government agencies are vulnerable to administration changes, Chen says. "Building against rules that could change under a future administration is a very different investment decision from building against legislation," Chen says. "Firms will still invest in the U.S., but will do it more cautiously." Coinbase and Robinhood rise around 0.5% premarket, while Hyperliquid Strategies adds 1% after shares in the exchanges fell sharply Tuesday. ([email protected])0337 ET - Ether stays under pressure after reaching a two-week low Tuesday when the Senate failed to pass the Clarity Act, aimed at establishing a regulatory framework for digital assets, in a procedural vote. The market is also largely pricing in an interest-rate rise by the Federal Reserve in a decision at 1800 GMT. While ether exchange-traded funds are attracting inflows, large holders of ether--known as "whales"--have recently sold the cryptocurrency, Zaye Capital Markets analyst Naeem Aslam says in a note. If whale selling accelerates and ETF inflows weaken, ether could fall further, he says. Ether drops 0.4% to $2,398 after reaching as low as $2,359 Tuesday, LSEG data show. ([email protected])0336 ET - London's miners rise in opening trade Wednesday as oil prices fall and commodities gain. Oil prices slip as immediate supply concerns are eased by an unexpected jump in U.S. inventories. Miners are some of the world's largest consumers of diesel. Gold prices also rebound 1% on easing oil prices and a fall in Treasury yields. Silver is up 2.3% while three-month LME copper futures are 0.8% higher. Anglo American gains 1.8% while BHP's London shares rise 1.4%. Copper miner Antofagasta is nearly 3% higher while silver and gold miner Fresnillo trades up 3.1%, and peer Endeavour Mining moves 2.6% higher. ([email protected])0300 ET - Stellantis' recovery is taking time, Berenberg's Romain Gourvil and Tommy Whitfield write as they downgrade the stock to hold from buy and cut the target price to 5.10 euros from 7.80 euros. There are now legitimate questions over the carmaker's margin trajectory over the remainder of the year, especially as inventory destocking could become a volume headwind, they say. Management say improving pricing in North America, stabilizing pricing in Europe and accelerating cost-savings will help offset this, they say. However, intensifying raw material costs and still-competitive pricing conditions could offer more challenges, they add. Shares closed at 4.49 euros on Tuesday. ([email protected])0116 ET - The market underappreciates Newmont's recent deal with Barrick on its Fourmile project, according to UBS. Newmont has performed broadly in line with senior gold peers--excluding Barrick--since the deal, despite a significant improvement in visibility on cash returns and implied growth in gold equivalent ounces per share, the bank says. "A potential large cash payment from NEM to Barrick to equalize the ownership of [Barrick's] Fourmile project in the Nevada JV had been the key overhang for NEM's investment case," says UBS. It has a buy rating on Newmont's Australian shares, with a price target of 210.00 Australian dollars. The stock is up 2.6% at A$175.20. ([email protected]; @RhiannonHoyle)