Tesla, ABB, TSMC get Q2 earnings off to downbeat start
2023-07-20 - Scroll down for original article
Company: ABB
Summary
ABB is a multinational corporation specializing in electrification, motion, and robotics technology. Being a bellwether for the industrial economy, ABB's performance is closely watched. In the second quarter of 2023, ABB experienced a 9% decline in orders in China, its second-largest market. This decline, along with other negative news from companies like TSMC and Electrolux, has raised concerns about global economic health.
Article Analysis
The article highlights ABB's warning of slowing Chinese demand and lower orders in its electrification, motion, and robotics divisions. These developments indicate weaker industrial activity, which could have a ripple effect on other sectors and overall economic growth. The downbeat tone of the article suggests negative sentiment towards ABB and its industry.
Market Reaction
To assess the market reaction, we can look at historical data from previous news events impacting ABB. Similar news of declining orders in China and lower demand has previously led to a decrease in ABB's stock price. Investors may react negatively to this news, potentially causing a decline in the stock price.
Investor Sentiment
Investor sentiment towards ABB may be negatively affected by the article. The decline in orders and lower demand could lead to concerns about the company's future performance. Changes in trading volume, options activity, and analyst opinions should be monitored to gauge investor sentiment accurately.
Competitor Comparison
It is essential to compare ABB's performance and market position to its competitors to assess the impact of the article. If ABB's competitors also face similar challenges, the impact may be mitigated. However, if competitors are performing better, ABB's competitive position within the industry could be weakened.
Risk Factors
The article highlights several risk factors for ABB, including slowing Chinese demand, global economic woes, and challenges in protecting profit margins due to high energy and raw material costs. These risks could contribute to a decline in ABB's stock price. While the likelihood and magnitude of these risks materializing may vary, they should be carefully monitored.
Conclusion
The news article on ABB's declining orders and lower demand raises concerns about the company's performance and the broader industrial economy. Investors should closely monitor market reactions and investor sentiment. The negative sentiment and associated risks may impact ABB's stock price in both the short term and long term. It is advisable for investors to conduct further research and consult with a financial professional before making any investment decisions.
Disclaimer
This financial report is for informational purposes only and does not constitute financial advice. Readers should conduct their own research and consult with a financial professional before making any investment decisions.
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[1/5] A Tesla logo is seen on a wheel rim during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. REUTERS/Aly Song/File Photo Summary Companies Musk says we're in "turbulent times"; shares fall Shoppers seek cheaper appliances, says Electrolux ABB says China orders fell in Q2 Results will deepen worries about China's faltering economy LONDON, July 20 (Reuters) - ABB (ABBN.S) warned on Thursday of slowing Chinese demand, Taiwanese chipmaker TSMC forecast a drop in 2023 sales and Electrolux cautioned shoppers are seeking cheaper appliances, deepening worries about global corporate and economic health. The news cast a pall over stocks as second-quarter earnings season ramps up. The S&P 500 and Nasdaq futures were indicating lower, while European stocks recovered ground lost in early trade. ABB said its orders in China, its second-biggest market, fell 9% in the three months to the end of June, with its electrification, motion and robotics divisions all seeing lower demand. ABB, whose results are seen as a bellwether for the health of the broader industrial economy with its motors, drives, controllers and electrification products used in transport systems and factories, also saw lower demand in Germany. The comments will unsettle investors, who had hoped that Beijing's decision to abandon strict and prolonged COVID curbs at the end of last year would revive the world's second-biggest economy. Data this week showed China's economy grew at a frail pace in the second quarter as demand weakened at home and abroad, with post-COVID momentum faltering rapidly. Adding to the overall gloom, Taiwanese chipmaker TSMC (2330.TW) forecast a 10% drop in 2023 sales as global economic woes dented demand for chips used in applications as varied as cars, cellphones and servers. Some earnings highlighted the challenge for companies trying to protect margins after raising prices to offset high energy and raw material costs since last year. Analysts have warned easing input costs will put pressure on companies to start cutting prices, or they may lose business. Late on Wednesday, Tesla (TSLA.O) CEO Elon Musk signalled he would cut prices again on electric vehicles to shield against competition and economic uncertainty. Its shares were down almost 4% in pre-market U.S. trade. "One day it seems like the world economy is falling apart, next day it's fine. I don't know what the hell is going on," Musk told analysts on a conference call. "We're in, I would call it, turbulent times." Swedish hygiene product maker Essity's (ESSITYa.ST) second-quarter earnings missed market expectations, hit by wage inflation, bigger marketing costs in its consumer goods unit, and lower volumes after price hikes. Electrolux (ELUXb.ST), Europe's biggest home appliances maker, swung to a loss as cash-strapped shoppers opted for cheaper products and demand from residential property builders slowed. Investors punished the companies' shares. Essity stock lost 11% in early trading, set for its worst day on record while Electrolux was down 15.7%, the biggest faller in Europe and on track for their worst day in 12 years. DOWNBEAT TONE The results set a downbeat tone early in the earnings season, with soaring shopping and food bills and high interest rates curbing consumer spending and pressures building on corporate profit margins. Also on Wednesday, streaming video pioneer Netflix (NFLX.O) disappointed Wall Street with second-quarter revenue that fell short of analyst estimates, sending shares tumbling nearly 9% in after-hours trading. Earnings at STOXX 600 companies are currently expected to fall by 9.2% in the second quarter, a big downturn from 11% growth in the first three months of the year, based on Refinitiv I/B/E/S data. That's down from 29% a year ago, when the economy was recovering from the end of COVID lockdowns. Revenue is seen falling 6.2%, compared with a rise of 1.1% in the prior quarter. They would be the weakest results since the fourth quarter of 2020. In the United States, earnings are expected to fall 8.2%, compared with growth of 0.2% in the first quarter and a reversal from 8.4% growth a year ago. Revenue is seen falling 0.8%, down from 13.6% a year ago. Reporting by Reuters reporters; Writing by Josephine Mason; Editing by Sharon Singleton Our Standards: The Thomson Reuters Trust Principles.