Market Update
Tech Stocks Drive a Rebound In Japan Indexes, Yen Faces Persistent Downward Pressure
Akira Ito
18 Jun, 2024
Tokyo
Market indexes in Tokyo rebounded and erased most of the losses in the previous session following a rebound in tech stocks in overnight trading in New York.
The Nikkei 225 and the Topix indexes jumped more than 0.4% in Tuesday's trading after tech stocks led the gainers in Tokyo.
Mega-cap tech stocks in New York traded higher, lifting the S&P 500 index and the Nasdaq Composite to new highs despite Treasury yields rebounding in Monday's trading.
The yen edged stabilized at 157.56 against the U.S. dollar after weakening in Friday's trading after the Bank of Japan held its interest rate steady and showed little urgency in tapering government bond purchases.
Governor of the Bank of Japan, Kazuo Ueda, told lawmakers today that the central bank is prepared to raise rates after the next policy meeting in July if future economic data support the move.
Ueda also stressed that a weak yen could increase operating costs for businesses and dampen consumer purchases, but higher wages could also support consumer sentiment and revive retail sales.
The yen has been under pressure and trading near a three-decade low after the Bank of Japan has shown little interest in raising rates or lowering government bond purchases, and the wide and persistent yield gap between the U.S. and Japan has also negatively impacted the currency.
The yen is expected to depreciate further over the next six months, as the finance ministry and the Bank of Japan prefer a steady and slow depreciation of the currency and avoid expensive market interventions.
Japan Stock Movers
The Nikkei 225 stock average rose 0.7% to 38,388.05, and the Topix index advanced 0.4% to 2,710.20.
Takeda Pharmaceuticals declined 3% to ¥4,043.0 after a seizure drug failed in late-stage trials.
Rakuten Group jumped 4.5% to ¥824.0 after the company reached a settlement with IBM for a patent dispute.
TDK Corp. soared 6.9% to ¥9,428.0 after the electronic component and data-storage media maker said that the latest improvement in battery technology will enhance battery life for wearable devices.
Nintendo, Murata, Nexon, Mitsubishi Heavy Industries, Konami Group, and Murata advanced more than 3%.
Mercari Inc. declined 2.5% to ¥2,034.50, and Sony and Mitsubishi Electric declined around 0.3%.
China Stocks Drift Lower Amid Lackluster Trading and Rising Trade Frictions with the EU
Li Chen
18 Jun, 2024
Hong Kong
Market sentiment was weak in Shanghai and Hong Kong trading amid rising trade tensions between China and the European Union.
The CSI 300 index and the Hang Seng index lacked direction in early afternoon trading after China retaliated with an anti-dumping investigation on pork imports from Europe.
The move comes after the European Union placed an additional tariff of up to 38% on electric vehicle imports from China following a seven-month investigation.
Investors were on the defensive a day after China's statistics bureau reported a flood of mixed economic data, indicating a revival in consumer spending overshadowed by the deepening malaise in the property sector.
Moreover, the People's Bank of China held its one-year medium-term lending rate at 2.5%, dashing hopes of some investors looking for a rate cut to revive property transactions.
China's property sector is battling on two fronts: buyers are holding back amid falling prices, and property developers are struggling amid heavy debt loads and overbuilding.
China's property prices are falling at a rapid pace in the second- and third-tier cities, but prices are still elevated in the top-tier cities like Beijing and Shanghai, raising affordability issues for first-time home buyers.
China Stock Movers
The CSI 300 index increased 0.3% to 3,545.64, and the Hang Seng index fell 0.2% to 17,903.06.
BYD decreased 0.1% to HK$233.20, and Warren Buffett-controlled Berkshire Hathaway lowered its stake in the electric vehicle maker to 6.9% from 7.0%. ahead of the European Union tariffs.
Li Auto declined 3.7% to HK$71.15, and Geely Automobile fell 0.1% to HK$8.86.
Zijin Mining Group declined 2.5% to HK$15.90 after the company announced its plan to sell convertible bond debt and stocks to raise $2.5 billion.
Wuhan Youji Holdings soared more than 78% to HK$9.85 after the maker of toluene derivative products used in oil refining and paints priced its initial public offering at HK$5.50 per share.
India Movers: Adani Ports, Bharti Airtel, Central Bank of India, IndiGo, Spicejet, TCS, Vodafone
Arun Goswami
18 Jun, 2024
Mumbai
Stocks in Mumbai opened higher, and investors looked ahead to the release of the national budget next month in the absence of near-term catalysts.
The Sensex index increased by 0.1% to 77,113.08, and the Nifty index rose by 0.2% to 23,502.40.
On the Mumbai stock exchange, 117 stocks traded at their 52-week highs, and 7 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched lower to 6.99%, and the Indian rupee edged lower at ₹83.52 against the U.S. dollar.
Vodafone Idea jumped 1.5% to ₹16.99, and the company is looking to sell a full or partial stake of its entire stake of $2.3 billion in Indus Tower as early as next week.
Interglobe Aviation Ltd. increased 0.6% to ₹4,297.65, and the aviation regulator said the company's domestic air travel market share increased to 61.6% in May from 60.6% in April.
Spicejet increased 0.1% to ₹55.14, and the company's domestic air travel market share declined to 4.0% in May from 4.7% in April, according to an update by the aviation regulator.
Central Bank of India gained 0.4% to ₹65.66, and the Reserve Bank of India fined the bank ₹1.45 crore for failing to meet compliance requirements for loans and customer information.
Brightcom Group traded at ₹9.38 on June 11, and the company reiterated its commitment to release its financial statements for the third and fourth quarters of the fiscal year 2023 by July 31.
Adani Ports increased 0.7% to ₹1,440.25, and the company said it received approval for the Mundra Port expansion from an environmental agency.
Tata Consultancy decreased 0.1% to ₹3,828.50, and the company lost a case in a court in the U.S. for violating the Defense-related Information Disclosure Act.
The U.S. District Court in Dallas, Texas, fined the company $56.2 million and punitive damages of $112.3 million in a lawsuit filed by Computer Science Corporation and DXC Technology.
Bharti Airtel advanced 0.6% to ₹1,435.50 and paid the final installment of 7,904 crore to the Department of Telecom for the outstanding payment related to the purchase of wireless spectrum acquired between 2012 and 2015.
U.S. Indexes Overcame Morning Doldrums to Advance 1%
Alexander Garcia
17 Jun, 2024
Miami
In a holiday-shortened week, market indexes rested around the flatline in Monday's trading.
The S&P 500 index and the Nasdaq Composite lacked direction on Wall Street but managed to stay above the flatline and extend gains to new record highs in the early afternoon as investors awaited the release of retail sales data on Tuesday and housing starts and completions updates later in the week.
Retail sales in May are expected to rebound by 0.3%, and industrial output is expected to rise by 0.2%.
Investors are hoping that building permits, housing starts, and completions will show sustained increases reflecting the prior month's growth rate.
The S&P500 index and the Nasdaq Composite advanced in seven of the last eight weeks, and market participants are hoping that the benchmark indexes can retain their upward bias.
Last week, market indexes in the U.S. created a series of new highs, political turmoil engulfed many countries in Europe in the wake of the European Union elections, and trade tensions rose between China and the EU.
The U.S. Federal Reserve held steady its key interest rate range as widely expected and also retained its economic growth and jobless rate outlook.
But the central bank also lowered the number of possible rate cuts to only one from the previous estimate of as many as three in March.
Moreover, the pace of consumer price inflation slowed to 3.3% in May, and the core rate of inflation slowed to a three-year low of 3.4%.
Fed policymakers have struggled over the last year in bringing down inflation from over 3% to the Fed’s target rate of 2%, despite eleven rate cuts spread over 2022 and 2023.
On the earnings front, CarMax, Darden Restaurants, Kroger, and Lennar are some of the leading companies scheduled to release earnings this week.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.8% to 5,474.08, and the Nasdaq Composite rose 1% to 17,870.31.
The yield on 2-year Treasury notes edged lower to 4.74%, 10-year Treasury notes decreased to 4.26%, and 30-year Treasury bonds edged higher to 4.40%.
WTI crude oil increased $0.53 to $78.98 a barrel, and natural gas prices fell 5 cents to $2.82 a thermal unit.
Gold decreased by $14.31 to $2,318.15 an ounce, and silver fell 29 cents to $29.25.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.56.
U.S. Stock Movers
Autodesk increased 4.5% to $235.03 after activist investor Starboard Value acquired a $500 million stake in the software developer.
Nvidia edged up 0.1% to $131.94 after State Street said its Technology Select SPDR Fund will have nearly 21% weighting in the ETF after the rebalancing from the current 5%.
The Technology Select Fund has about $71 billion, meaning the fund will acquire about $10 billion of Nvidia towards the end of this week.
The ETF will lower its stake in Apple from 21% to 4.5% while rebalancing at the end of this week.
Lennar Corp. declined 0.4% to $154.50 ahead of the company's quarterly results this week.
The home builder reported, in the quarter ending in May 2023, revenue of $8.05 billion, net income of $871.69 million, and diluted earnings per share of $2.94.
European Market Sentiment Remains Weak, French Bond Stabilized
European markets lacked direction in Monday's trading after falling sharply last week amid rising political turmoil in France.
Benchmark indexes in Paris, Frankfurt, and London traded around the flatline, and the French bond yields stabilized after rising to a seven-month high of 3.24% last week.
Investor sentiment was on edge after French President Emmanuel Macros called a snap election, following the European Union election results showing the sharp rise of far-right parties.
Local opinion polls indicate that the National Rally Party is likely to make significant gains in the parliamentary elections scheduled for June 30 and July 7, which could worsen the country's fiscal situation and threaten the stability of the eurozone.
France's debt to gross domestic product is hovering just over 110% and its annual budget deficit is near 5%, which is likely to miss the 3% target in 2027.
On the economic front, wages in the eurozone rose in the first quarter, matching the rate in the final quarter of 2022, Eurostat reported on Monday.
In Europe, the Bank of England is expected to hold steady its key policy rate at 5.25%, and the UK’s consumer price inflation is expected to slow to 2%.
In addition, the Norges Bank and the Swiss National Bank are also scheduled to release their monetary policy decisions.
In other economic news in the region, investors are looking forward to the release of the EU's new car registration, the UK's retail sales, and Germany’s producer price inflation.
Eurozone Wage Growth Accelerated in the First Quarter
Negotiated hourly wages and salaries in the eurozone advanced 5.3% from a year ago in the first quarter, following an upwardly revised 3.2% increase in the previous quarter.
Of the four largest economies in the region, calendar-adjusted wages in Germany accelerated to 6.3% from 2.1% in the previous quarter; Italy rose 3.3% from flat; Spain edged slightly higher to 4.5% from 4.4%; and France slowed to 2.6% from 2.7%, respectively.
Wage growth accelerated in professional scientific and technical activities to 6.7% from 1.6%, construction to 6.1% from 4.4%, manufacturing to 5.8% from 4.7%, and financial and insurance activities to 5.8% from 4.4%, respectively.
Meanwhile, wage growth slowed for the mining and quarrying sector to 7.8% from 11.1% in the previous quarter, water supply and sewage to 5.7% from 5.5%, transport and storage to 5.1% from 5.8%, utilities to 2.3% from 5.3%, and retail trade to 4.6% from 4.9%.
Europe Indexes and Yields
The DAX index increased by 0.4% to 18,068.21; the CAC-40 index rose by 0.9% to 7,571.57; and the FTSE 100 index declined by 0.1% to 8,142.15.
In the last week, the CAC-40 declined 4.3% and fell the most since March 2022, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.
The yield on 10-year German bonds edged lower to 2.38%. French bonds inched lower to 3.14%; the UK gilts edged lower to 4.07%; and Italian bonds decreased to 3.94%.
The euro edged lower to $1.077; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.20 Swiss cents.
Brent crude decreased $0.14 to $82.47 a barrel, and the Dutch TTF natural gas rose by €0.72 to €34.24 per MWh.
Europe Stock Movers
China-linked French luxury stocks traded down after a flood of China's economic data showed a fragile and uneven economic recovery.
Retail sales growth accelerated in May, but property prices continued to drift lower in search of a bottom.
LVMH declined 0.7% to €706.80, Kering dropped 0.1% to €302.15, and Hermes fell 0.6% to €2,100.0.
ING Group increased 1.7% to €15.58 after the Dutch bank targeted annual total income growth between 4% and 5% over the next three years to 2027.
Carl Zeiss Meditec AG dropped 15.5% to €71.10 after the medical devices and technology maker said revenue in the first 8 months to May declined 3% from a year ago to €1.26 billion from €1.3 billion a year ago.
The company said that because of weak order flows in April and May, it has lowered its full-year revenue outlook for the current fiscal year.
The company lowered its full-year fiscal 2024 revenue to €2 billion, excluding the recent acquisition of DORC.
Topdanmark soared 22% to DKK 349.20 after the Finland-based insurer Sampo agreed to acquire its rival for DKK 33 billion, or $4.7 billion.
Ascential PLC increased 1.9% to 337.0 pence after the UK-based event management company reiterated its full-year revenue outlook ahead of its presentation to investors on June 19.
The company recently completed its £300 million stock tender offer and £450 million special dividend.
Japan Indexes Plunge Nearly 2%
Stocks in Tokyo faced selling pressure in Monday's trading as investors stepped back, reassessed the Bank of Japan's monetary policy decisions on Friday, and reversed gains in the previous session.
The Nikkei and the Topix indexes dropped as much as 2% on the worry that persistent weakness in the yen in the long term will negatively impact consumer spending and corporate earnings.
The Bank of Japan held its short-term interest rate steady and said it would continue with its purchase of government bonds at the current level until the next meeting in July.
The central bank also said it plans to announce the tapering of its bond purchase at the conclusion of the next meeting in July, in a nod to letting the market decide long-term interest rates.
Governor Kazuo Ueda ended the negative interest rate in March after the central bank kept it in negative territory for 8 years and raised rates for the first time in 17 years. But the wide interest rate gap between the U.S. and Japan has weakened the yen to a 34-year low.
Japan's core machinery orders, which exclude large and volatile orders for ships and power generation equipment, declined seasonally by 2.9% from the previous month to 885.3 billion yen in April, reversing the 2.9% increase in March.
Core machinery orders from a year ago rose 0.7% after rising 2.7% in the previous month, the Cabinet Office said.
Benchmark indexes soared in the first four months, backed by robust corporate earnings and a weaker yen, but the persistent weakness in the yen is now seen as a liability for the economy.
The yen traded at 157.40 against the U.S. dollar in late afternoon trading in Tokyo.
In the week ahead, ministries in Japan are set to release international trade balance data and inflation updates this week.
Japan Movers
The Nikkei 225 stock average declined 1.9% to 38,081.47, and the Topix index dropped 1.7% to 2,700.51.
Tokyo Electron, Advantest, and Screen Holdings declined between 1% and 3%.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial fell between 1% and 3%.
Major exporters declined despite the weakness in the yen, and Panasonic, Mitsubishi Electric, Canon, and Sony declined between 2% and 4%.
China's Improving Consumer Spending Overshadowed by Weakening Property Sector
Benchmark indexes in Shanghai and Hong Kong attempted to rebound after consumer spending rose in May, but the weaker-than-expected growth in fixed-investment key investors on edge.
Retail sales in May rose 3.7% from a year ago, accelerating from 2.3% in April. Industrial production growth slowed to 5.6% from 6.7%, the National Bureau of Statistics reported Monday.
The increase in retail sales was supported by the spending during the five-day holiday period, during which tourism revenue rose 12.3% to 166.9 billion yuan, or $23 billion, and surpassed the 2019 level of spending by 13.5%.
Fixed-asset investment growth slowed to 4.0% in the first five months of May as high-tech manufacturing and services expanded by 11.5%, offsetting the 10.1% decrease in property investment.
Residential property developers are experiencing falling demand; the floor space of new homes sold plunged by 20.3% in the first five months to May from a year ago, and the total sales value of new homes plunged by 27.9%, respectively.
“We must acknowledge that it will take some time for the effects of policy measures to be shown and that the real estate market is still in the process of adjustment,” NBS spokeswoman Liu Aihua commented in a press conference on Monday after the release of the data.
New home prices declined by 3.9% in May, accelerating from the 3.1% decrease in April, the government report highlighted.
New home prices declined for the eleventh month in a row and fell at the fastest pace since June 2015, despite property market stimulus announced by regional governments.
Prices declined in Guangzhou to 8.3% from 6.9% in the previous month, in Beijing to 1.8% from 0.5%, but in Shanghai prices advanced at a faster pace of 4.5% compared to 4.2%.
A separate report by the statistical agency showed that the urban jobless rate held steady in May at 5.0%, matching the rate in the previous month.
The People's Bank of China held its one-year medium-term lending rate at 2.5%.
China Movers
The CSI 300 index decreased 0.2% to 3,534.45, and the Hang Seng index inched higher by 0.4% to 17,978.30.
Market sentiment was positive in the early morning after consumer spending growth accelerated, but indexes turned lower in the afternoon amid rising trade tensions with the European Union.
The noodle maker Tingyi Holding Corp. increased 4.2% to HK$9.70, and China Mengniu advanced 2.3% to HK$13.06 on the back of improving retail sales.
China Vanke decreased 3.4% to HK$5.12, Longfor Group Holding fell 2.4% to HK$12.08, and China Resources Land edged up 0.1% to HK$27.05.
U.S. Major Averages Struggle to Advance After a Series of Record Highs Last Week
Barry Adams
17 Jun, 2024
New York City
In a holiday-shortened week, market indexes rested around the flatline in Monday's trading.
The S&P 500 index and the Nasdaq Composite lacked direction on Wall Street as investors awaited the release of retail sales data on Tuesday and housing starts and completions updates later in the week.
Retail sales in May are expected to rebound by 0.3%, and industrial output is expected to rise by 0.2%.
Investors are hoping that building permits, housing starts, and completions will show sustained increases reflecting the prior month's growth rate.
The S&P500 index and the Nasdaq Composite advanced in seven of the last eight weeks, and market participants are hoping that the benchmark indexes can retain their upward bias.
Last week, market indexes in the U.S. created a series of new highs, political turmoil engulfed many countries in Europe in the wake of the European Union elections, and trade tensions rose between China and the EU.
The U.S. Federal Reserve held steady its key interest rate range as widely expected and also retained its economic growth and jobless rate outlook.
But the central bank also lowered the number of possible rate cuts to only one from the previous estimate of as many as three in March.
Moreover, the pace of consumer price inflation slowed to 3.3% in May, and the core rate of inflation slowed to a three-year low of 3.4%.
Fed policymakers have struggled over the last year in bringing down inflation from over 3% to the Fed’s target rate of 2%, despite eleven rate cuts spread over 2022 and 2023.
On the earnings front, CarMax, Darden Restaurants, Kroger, and Lennar are some of the leading companies scheduled to release earnings this week.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.1% to 5,427.12, and the Nasdaq Composite rose 0.01% to 17,690.01.
The yield on 2-year Treasury notes edged lower to 4.74%, 10-year Treasury notes decreased to 4.26%, and 30-year Treasury bonds edged higher to 4.40%.
WTI crude oil increased $0.53 to $78.98 a barrel, and natural gas prices fell 5 cents to $2.82 a thermal unit.
Gold decreased by $14.31 to $2,318.15 an ounce, and silver fell 29 cents to $29.25.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.56.
U.S. Stock Movers
Autodesk increased 4.5% to $235.03 after activist investor Starboard Value acquired a $500 million stake in the software developer.
Lennar Corp. declined 0.4% to $154.50 ahead of the company's quarterly results this week.
The home builder reported, in the quarter ending in May 2023, revenue of $8.05 billion, net income of $871.69 million, and diluted earnings per share of $2.94.
Europe Movers: Ascential, Carl Zeiss Meditec, French Luxury Stocks, ING, Topdanmark
Inga Muller
17 Jun, 2024
Frankfurt
Market sentiment in Europe recovered after a week of sharp selloffs that saw indexes plunge as much as 4% in Paris.
The yield spread between German and French bonds stabilized and receded from a 7-year high last week after French President Emmanuel Macron unexpectedly announced a snap election.
The DAX index increased by 0.001% to 18,003.75; the CAC-40 index fell by 0.03% to 7,500.91; and the FTSE 100 index declined by 0.1% to 8,138.79.
For the week, the CAC-40 declined 4.3%, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.
The yield on 10-year German bonds edged lower to 2.38%. French bonds inched lower to 3.14%; the UK gilts edged lower to 4.07%; and Italian bonds decreased to 3.94%.
China-linked French luxury stocks traded down after a flood of China's economic data showed a fragile and uneven economic recovery.
Retail sales growth accelerated in May, but property prices continued to drift lower in search of a bottom.
LVMH declined 0.7% to €706.80, Kering dropped 0.1% to €302.15, and Hermes fell 0.6% to €2,100.0.
ING Group increased 1.7% to €15.58 after the Dutch bank targeted annual total income growth between 4% and 5% over the next three years to 2027.
Carl Zeiss Meditec AG dropped 15.5% to €71.10 after the medical devices and technology maker said revenue in the first 8 months to May declined 3% from a year ago to €1.26 billion from €1.3 billion a year ago.
The company said that because of weak order flows in April and May, it has lowered its full-year revenue outlook for the current fiscal year.
The company lowered its full-year fiscal 2024 revenue to €2 billion, excluding the recent acquisition of DORC.
Topdanmark soared 22% to DKK 349.20 after the Finland-based insurer Sampo agreed to acquire its rival for DKK 33 billion, or $4.7 billion.
Ascential PLC increased 1.9% to 337.0 pence after the UK-based event management company reiterated its full-year revenue outlook ahead of its presentation to investors on June 19.
The company recently completed its £300 million stock tender offer and £450 million special dividend.
European Market Sentiment Remains Weak, French Bond Stabilized Amid Rising Political Turmoil
Bridgette Randall
17 Jun, 2024
Frankfurt
European markets lacked direction in Monday's trading after falling sharply last week amid rising political turmoil in France.
Benchmark indexes in Paris, Frankfurt, and London traded around the flatline, and the French bond yields stabilized after rising to a seven-month high of 3.24% last week.
Investor sentiment was on edge after French President Emmanuel Macros called a snap election, following the European Union election results showing the sharp rise of far-right parties.
Local opinion polls indicate that the National Rally Party is likely to make significant gains in the parliamentary elections scheduled for June 30 and July 7, which could worsen the country's fiscal situation and threaten the stability of the eurozone.
France's debt to gross domestic product is hovering just over 110% and its annual budget deficit is near 5%, which is likely to miss the 3% target in 2027.
On the economic front, wages in the eurozone rose in the first quarter, matching the rate in the final quarter of 2022, Eurostat reported on Monday.
In Europe, the Bank of England is expected to hold steady its key policy rate at 5.25%, and the UK’s consumer price inflation is expected to slow to 2%.
In addition, the Norges Bank and the Swiss National Bank are also scheduled to release their monetary policy decisions.
In other economic news in the region, investors are looking forward to the release of the EU's new car registration, the UK's retail sales, and Germany’s producer price inflation.
Eurozone Wage Growth Accelerated in the First Quarter
Negotiated hourly wages and salaries in the eurozone advanced 5.3% from a year ago in the first quarter, following an upwardly revised 3.2% increase in the previous quarter.
Of the four largest economies in the region, calendar-adjusted wages in Germany accelerated to 6.3% from 2.1% in the previous quarter; Italy rose 3.3% from flat; Spain edged slightly higher to 4.5% from 4.4%; and France slowed to 2.6% from 2.7%, respectively.
Wage growth accelerated in professional scientific and technical activities to 6.7% from 1.6%, construction to 6.1% from 4.4%, manufacturing to 5.8% from 4.7%, and financial and insurance activities to 5.8% from 4.4%, respectively.
Meanwhile, wage growth slowed for the mining and quarrying sector to 7.8% from 11.1% in the previous quarter, water supply and sewage to 5.7% from 5.5%, transport and storage to 5.1% from 5.8%, utilities to 2.3% from 5.3%, and retail trade to 4.6% from 4.9%.
Europe Indexes and Yields
The DAX index increased by 0.001% to 18,003.75; the CAC-40 index fell by 0.03% to 7,500.91; and the FTSE 100 index declined by 0.1% to 8,138.79.
In the last week, the CAC-40 declined 4.3% and fell the most since March 2022, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.
The yield on 10-year German bonds edged lower to 2.38%. French bonds inched lower to 3.14%; the UK gilts edged lower to 4.07%; and Italian bonds decreased to 3.94%.
The euro edged lower to $1.077; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.20 Swiss cents.
Brent crude decreased $0.14 to $82.47 a barrel, and the Dutch TTF natural gas rose by €0.72 to €34.24 per MWh.
Europe Stock Movers
China-linked French luxury stocks traded down after a flood of China's economic data showed a fragile and uneven economic recovery.
Retail sales growth accelerated in May, but property prices continued to drift lower in search of a bottom.
LVMH declined 0.7% to €706.80, Kering dropped 0.1% to €302.15, and Hermes fell 0.6% to €2,100.0.
ING Group increased 1.7% to €15.58 after the Dutch bank targeted annual total income growth between 4% and 5% over the next three years to 2027.
Carl Zeiss Meditec AG dropped 15.5% to €71.10 after the medical devices and technology maker said revenue in the first 8 months to May declined 3% from a year ago to €1.26 billion from €1.3 billion a year ago.
The company said that because of weak order flows in April and May, it has lowered its full-year revenue outlook for the current fiscal year.
The company lowered its full-year fiscal 2024 revenue to €2 billion, excluding the recent acquisition of DORC.
Topdanmark soared 22% to DKK 349.20 after the Finland-based insurer Sampo agreed to acquire its rival for DKK 33 billion, or $4.7 billion.
Ascential PLC increased 1.9% to 337.0 pence after the UK-based event management company reiterated its full-year revenue outlook ahead of its presentation to investors on June 19.
The company recently completed its £300 million stock tender offer and £450 million special dividend.
Japan Indexes Plunge Nearly 2% Amid Persistent Yen Weakness and Slow BOJ Response
Akira Ito
17 Jun, 2024
Tokyo
Stocks in Tokyo faced selling pressure in Monday's trading as investors stepped back, reassessed the Bank of Japan's monetary policy decisions on Friday, and reversed gains in the previous session.
The Nikkei and the Topix indexes dropped as much as 2% on the worry that persistent weakness in the yen in the long term will negatively impact consumer spending and corporate earnings.
The Bank of Japan held its short-term interest rate steady and said it would continue with its purchase of government bonds at the current level until the next meeting in July.
The central bank also said it plans to announce the tapering of its bond purchase at the conclusion of the next meeting in July, in a nod to letting the market decide long-term interest rates.
Governor Kazuo Ueda ended the negative interest rate in March after the central bank kept it in negative territory for 8 years and raised rates for the first time in 17 years. But the wide interest rate gap between the U.S. and Japan has weakened the yen to a 34-year low.
Japan's core machinery orders, which exclude large and volatile orders for ships and power generation equipment, declined seasonally by 2.9% from the previous month to 885.3 billion yen in April, reversing the 2.9% increase in March.
Core machinery orders from a year ago rose 0.7% after rising 2.7% in the previous month, the Cabinet Office said.
Benchmark indexes soared in the first four months, backed by robust corporate earnings and a weaker yen, but the persistent weakness in the yen is now seen as a liability for the economy.
The yen traded at 157.40 against the U.S. dollar in late afternoon trading in Tokyo.
In the week ahead, ministries in Japan are set to release international trade balance data and inflation updates this week.
Japan Movers
The Nikkei 225 stock average declined 1.9% to 38,081.47, and the Topix index dropped 1.7% to 2,700.51.
Tokyo Electron, Advantest, and Screen Holdings declined between 1% and 3%.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial fell between 1% and 3%.
Major exporters declined despite the weakness in the yen, and Panasonic, Mitsubishi Electric, Canon, and Sony declined between 2% and 4%.
China's Improving Consumer Spending was Contrasted by the Weakening Property Sector In May
Li Chen
17 Jun, 2024
Hong Kong
Benchmark indexes in Shanghai and Hong Kong attempted to rebound after consumer spending rose in May, but the weaker-than-expected growth in fixed-investment key investors on edge.
Retail sales in May rose 3.7% from a year ago, accelerating from 2.3% in April. Industrial production growth slowed to 5.6% from 6.7%, the National Bureau of Statistics reported Monday.
The increase in retail sales was supported by the spending during the five-day holiday period, during which tourism revenue rose 12.3% to 166.9 billion yuan, or $23 billion, and surpassed the 2019 level of spending by 13.5%.
Fixed-asset investment growth slowed to 4.0% in the first five months of May as high-tech manufacturing and services expanded by 11.5%, offsetting the 10.1% decrease in property investment.
Residential property developers are experiencing falling demand; the floor space of new homes sold plunged by 20.3% in the first five months to May from a year ago, and the total sales value of new homes plunged by 27.9%, respectively.
“We must acknowledge that it will take some time for the effects of policy measures to be shown and that the real estate market is still in the process of adjustment,” NBS spokeswoman Liu Aihua commented in a press conference on Monday after the release of the data.
New home prices declined by 3.9% in May, accelerating from the 3.1% decrease in April, the government report highlighted.
New home prices declined for the eleventh month in a row and fell at the fastest pace since June 2015, despite property market stimulus announced by regional governments.
Prices declined in Guangzhou to 8.3% from 6.9% in the previous month, in Beijing to 1.8% from 0.5%, but in Shanghai prices advanced at a faster pace of 4.5% compared to 4.2%.
A separate report by the statistical agency showed that the urban jobless rate held steady in May at 5.0%, matching the rate in the previous month.
The People's Bank of China held its one-year medium-term lending rate at 2.5%.
China Movers
The CSI 300 index decreased 0.2% to 3,534.45, and the Hang Seng index inched higher by 0.4% to 17,978.30.
Market sentiment was positive in the early morning after consumer spending growth accelerated, but indexes turned lower in the afternoon amid rising trade tensions with the European Union.
The noodle maker Tingyi Holding Corp. increased 4.2% to HK$9.70, and China Mengniu advanced 2.3% to HK$13.06 on the back of improving retail sales.
China Vanke decreased 3.4% to HK$5.12, Longfor Group Holding fell 2.4% to HK$12.08, and China Resources Land edged up 0.1% to HK$27.05.
U.S. Movers: Adobe, RH
Scott Peters
14 Jun, 2024
New York City
RH declined 14.4% to $237.02 after the high-end furniture retailer reported a larger loss in its latest quarter.
Revenue in the fiscal first quarter ending on May 4 declined to $726.9 million from $739.1 million, net income swung to a loss of $3.6 million from a profit of $41.9 million, and diluted earnings per share were a loss of 20 cents compared to a profit of $1.76.
The company's weak sales growth outlook dampened investor enthusiasm, and the retailer estimated revenue in the fiscal second quarter to increase between 3% and 4% and adjusted operating margin between 11% and 12%.
"While we expect business conditions to remain challenging until interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout fiscal 2024.
As previously communicated, due to the extensive transformation of our assortment, we expect revenue to lag demand during the year by approximately 4 to 8 points until we read and react to the new collections, reduce backorders, and shorten special order lead times," said chief executive officer Gary Friedman in a letter to shareholders.
Adobe Inc. soared 14.5% to $525.34 after the software company reported better-than-expected quarterly results and lifted its annual outlook.
Receding Inflation Expectations Drive U.S. Indexes to Record Highs for Fifth Consecutive Day
Barry Adams
14 Jun, 2024
Mumbai
Market indexes on Wall Street edged lower, but they are set to close higher for the week after inflation eased and investors held out for at least one rate cut in the year.
The S&P 500 index and the Nasdaq Composite declined more than 0.2% in Friday's trading as investors reassessed the inflation and interest rate outlook.
Despite Friday's market jitters, two benchmark indexes are set to close higher after a busy week of economic releases and monetary decisions from the Federal Reserve.
Investors are hoping that the recent weakening in inflationary pressures may drive overall inflation towards the 2% target rate set by the Fed's policymakers.
Consumer price inflation peaked in June 2022 and fell sharply to over 3% in June 2023, following the eleven interest rate hikes in 2022 and 2023.
However, since last June, progress on inflation has stalled and stayed above 3% for eleven months, despite the Fed's hawkish comments and talks of restrictive interest rates.
Moreover, home prices across the nation have doubled over the last four years, and food, energy, and automobile prices are also up between 100% and 300%, despite the Fed's tough talk and persistent drumbeat of price stability.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.3% to 5,416.70, and the Nasdaq Composite fell 0.3% to 17,623.82.
The yield on 2-year Treasury notes edged lower to 4.69%, 10-year Treasury notes decreased to 4.22%, and 30-year Treasury bonds edged higher to 4.36%.
WTI crude oil increased $0.14 to $78.76 a barrel, and natural gas prices fell 5 cents to $2.91 a thermal unit.
Gold increased by $27.23 to $2,329.79 an ounce, and silver rose 30 cents to $29.22.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.64.
U.S. Stock Movers
RH declined 14.4% to $237.02 after the high-end furniture retailer reported a larger loss in its latest quarter.
Adobe Inc. soared 14.5% to $525.34 after the software company reported better-than-expected quarterly results and lifted its annual outlook.
Europe Movers: Casino Guicahrd, Crest Nicholson, French Banks, Tesco
Inga Muller
14 Jun, 2024
Frankfurt
European markets extended weekly losses to between 2% and 4% after France's political realignment, which could change the balance of power after the snap election in two weeks.
The spread between the French and German bond yields soared to a multi-year high.
The DAX index decreased by 1.2% to 18,043.91; the CAC-40 index fell by 2.3% to 7,531.21; and the FTSE 100 index declined by 0.5% to 8,124.45.
For the week, the CAC - 40 declined 4.3%, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.
The yield on 10-year German bonds edged lower to 2.36%. French bonds inched lower to 3.17%; the UK gilts edged lower to 4.05%; and Italian bonds decreased to 3.96%.
French banks and insurance service providers declined for the third day in a row, amid the rising possibility of extreme parties on the right and left gaining a larger share of seats in parliament.
Societe Generale declined 5.3% to €21.76, Credit Agricole dropped 4.5% to €12.83, and BNP Paribas fell €57.60.
Casino Guicahrd dropped 3.3% to €3.30 after the retailer said it entered into exclusive negotiations with Auchan Retail France and Rocca regarding the sale of its Corsican subsidiary, Codim 2.
Crest Nicholson Holdings soared 11.5% to 237.40 pence after the homebuilder rejected the second all-cash offer from its larger competitor, Bellway.
Tesco plc increased 2.7% to 310.50 pence after the company reported a rise in its retail grocery sales operation.
Revenue in retail operations increased by 3.4% on a comparable basis to £15.3 billion in the first three months of the fiscal year.
The global retail sales increase was driven by a better-than-expected sales increase of 4.4% in Ireland to £731 million and a UK sales increase of 4.6% to £11.3 billion.
Sales at the company's wholesale division, Booker, declined 1.3% to £2.23 billion, due to the weakness in tobacco sales and the tough comparison from the previous year.
The retailer reiterated its annual adjusted operating profit outlook to £2.8 billion and free cash flow range between £1.4 billion and £1.8 billion.
European Markets Extend Weekly Losses, French Bond Risk Premium Soares to a 4-year High
Bridgette Randall
14 Jun, 2024
Frankfurt
Rising political uncertainty in France weighed on bonds and stocks in the eurozone for the fifth day in a row.
Benchmark indexes in Paris plunged more than 2% and led the decliners in the region, followed by a 1% loss in Frankfurt and a 0.5% decline in London.
Political realignment and negotiation rose to a dizzying pace in Paris, and a once unthinkable alliance among far-left parties knocked another blow to President Emmanuel Macron's prospect of keeping the lower house of parliament divided.
The Socialists, the far-left La France Insoumise, the Greens, and the Communists agreed on a common election platform and a distribution of seats, which is likely to enhance their share of votes at the upcoming election on June 30.
Conservative and far-right parties are still divided, and they are likely to run their campaigns as independent parties, which could reduce their chances of winning a larger share of votes.
All parties are required to submit their candidate lists by June 16.
Market anxieties were visible in the spread between the French and German bond yields, which rose to 81 basis points from 48 points last week after the credit rating agency S&P Global indicated that it may review the French government bond's long-term credit rating if far-right parties win control of the legislative chamber.
Prior to the European Union elections on June 9, S&P Global lowered its debt rating for France down to AA from AA, indicating that the government's debt is likely to stay above 3% of gross domestic product in 2027.
After the downgrade, France's debt rating was on par with the ratings for the Czech Republic and Estonia.
Eurozone Trade Balance Swings to Surplus in April
The eurozone trade surplus rose to a surplus of €15 billion in April from a gap of €11 billion in the same month a year ago, Eurostat reported Friday.
Exports increased 14% from a year ago to 247.6 billion, and imports advanced 1.8% to €232.5 billion.
In January to April, the Euro Area trade surplus was €72.8 billion, compared to a deficit of €20.5 billion, after imports of chemicals and energy declined but exports of machinery and vehicles, food and drinks, and specialty chemicals advanced.
Europe Indexes and Yields
The DAX index decreased by 1.2% to 18,043.91; the CAC-40 index fell by 2.3% to 7,531.21; and the FTSE 100 index declined by 0.5% to 8,124.45.
For the week, the CAC - 40 declined 4.3%, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.
The yield on 10-year German bonds edged lower to 2.36%. French bonds inched lower to 3.17%; the UK gilts edged lower to 4.05%; and Italian bonds decreased to 3.96%.
The euro edged lower to $1.069; the British pound inched higher to $1.273; and the U.S. dollar weakened to 89.32 Swiss cents.
Brent crude increased $0.12 to $82.87 a barrel, and the Dutch TTF natural gas rose by €0.24 to €35.57 per MWh.
Europe Stock Movers
French banks and insurance service providers declined for the third day in a row, amid the rising possibility of extreme parties on the right and left gaining a larger share of seats in parliament.
Societe Generale declined 5.3% to €21.76, Credit Agricole dropped 4.5% to €12.83, and BNP Paribas fell €57.60.
Casino Guicahrd dropped 3.3% to €3.30 after the retailer said it entered into exclusive negotiations with Auchan Retail France and Rocca regarding the sale of its Corsican subsidiary, Codim 2.
Crest Nicholson Holdings soared 11.5% to 237.40 pence after the homebuilder rejected the second all-cash offer from its larger competitor, Bellway.
Tesco plc increased 2.7% to 310.50 pence after the company reported a rise in its retail grocery sales operation.
Revenue in retail operations increased by 3.4% on a comparable basis to £15.3 billion in the first three months of the fiscal year.
The global retail sales increase was driven by a better-than-expected sales increase of 4.4% in Ireland to £731 million and a UK sales increase of 4.6% to £11.3 billion.
Sales at the company's wholesale division, Booker, declined 1.3% to £2.23 billion, due to the weakness in tobacco sales and the tough comparison from the previous year.
The retailer reiterated its annual adjusted operating profit outlook to £2.8 billion and free cash flow range between £1.4 billion and £1.8 billion.
BOJ Holds Short Term Rates Steady and Signals Plans to Discuss Cutting JGB Purchases
Akira Ito
14 Jun, 2024
Tokyo
Stocks in Japan edged higher, the yen raced towards its 34-year low, and Japanese government bond yields remained steady after the Bank of Japan announced its monetary decisions.
The Bank of Japan held its short-term policy rate range steady between zero and 0.1%, as widely anticipated, after lifting the rate for the first time in March and ending the negative rate regime since 2007.
The central bank also said it plans to reduce the purchase of Japanese government bonds after the July meeting, but policymakers continue to stick to the plan to purchase 6 trillion yen worth of bonds a month.
The move is a reflection of the plan announced by Governor Kazuo Ueda to let the market dictate long-term rates after controlling the yield curve for more than two decades.
The central bank's move is likely to increase long-term rates in the future, but it may not arrest a downward slide in the yen.
The interest rate gap between the U.S. and Japan is not likely to narrow in the near future.
On Wednesday, the U.S. Federal Reserve held its interest rate steady and indicated it anticipates only one rate cut in the year from the earlier projection of three rate cuts in March. signaling higher rates are likely to stay longer.
The Japanese yen declined to 158.02 and approached the 34-year low of 160 yen against the U.S. dollar on the persistent yield differential between the U.S. and Japanese bond yields.
Currency traders are anticipating the Japanese yen to test new lows between 165 and 170 over the next six months of trading.
The yield on a 10-year Japanese government bond held firm near 0.94%.
Japan Stock Movers
The Nikkei 225 Stock Average rose 0.4% to 38,875.24, and the Topix index advanced 0.5% to 2,746.23.
In Friday's trading, technology, banking, and automobile makers were in focus.
Tokyo Electron, Advantest, Screen Holdings, and Lasertec declined between 0.2% and 0.4%.
Softbank jumped 3.5% to ¥10,110.0.
Sumitomo Mitsui Financial decreased by 0.3% to ¥10,000.0, Mitsubishi UFJ declined by 1.6% to ¥1,580.0, and Mizhuo Financial Group eased by 0.1% to ¥3,063.0.
Sumco declined 1.9% to ¥2,417.0, Panasonic Holdings rose 0.4% to ¥1,302.50, and Canon jumped 0.5% to ¥4,447.0.
Ocean freight lines were among the actively traded stocks, and Kawasaki Kisen gained 4% to ¥2,321.50, Mitsui OSK Lines jumped 4.4% to ¥4,964.0, and Nippon Yusen K.K. advanced 3% to ¥4,777.0.
China Indexes Extended Weekly Losses Ahead of the Release of Key Economic Data
Li Chen
14 Jun, 2024
Hong Kong
Investors turned cautious ahead of the release of key economic data on Monday amid simmering trade tensions with the European Union.
The CSI 300 index and the Hang Seng index extended weekly losses to more than 2% as investors worried that markets may have risen more than economic fundamentals justify.
Despite the flurry of announcements from Chinese central and local authorities, little has changed in the troubled property market, one of the key drivers of the Chinese economy.
Benchmark indexes in Shanghai and Hong Kong soared as much as 20% from the low in late January to mid-May after the People's Bank of China relaxed mortgage rules and local authorities in Shenzhen and Shanghai eased conditions to buy residential property.
However, consumers have restricted purchases to basic necessities amid job market uncertainty, salary cuts, lengthened payment cycles, an uneven policy response, and falling but elevated property prices.
Market sentiment was cautious ahead of the release of retail sales, fixed investment, and industrial production data on Monday.
The People's Bank of China is set to announce its official lending rates next week and new lending and aggregate lending data on Monday.
China Stock Movers
The CSI 300 index decreased 0.4% to 3,512.03 and the Hang Seng index fell 0.7% to 17,991.04.
Chinese electric vehicle makers declined for the second day in a row after the European Union imposed additional tariffs on Chinese passenger cars.
BYD declined 1.9% to HK$228.20, Li Auto dropped 0.5% to HK$74.0, and Geely Automobile decreased 1.6% to HK$8.90.
Chinese authorities signaled that they are likely to announce their restrictive tariffs on agriculture, cattle meat, and dairy products imported from the European Union.
Chow Tai Fook tumbled 9% to HK$8.61 after the jewelry retailer announced a smaller-than-expected dividend and confirmed weak sales growth in the last two months.
Revenue in the fiscal year ending in March rose 14.8% to HK108.7 billion, net profit advanced 20% to HK$6.6 billion from HK$5.5 billion, and earnings per share increased 21% to 65 HK cents.
The company declared a full-year dividend of 55 HK cents, an 84.6% payout ratio.
The company announced a final dividend of 30 HK cents payable on August 20 to shareholders on record on August 2.
Cloud Factory Technology Holdings declined as much as 10% before recovering to HK$3.90 after the company priced its initial public offering at HK$4.0 per share.
Kweichow Moutai dropped as much as 2% before recovering to a decline of 0.6% to HK¥1,545.36 on reports that some of its expensive distilled liquor products were selling at a discount in mainland China amid cooling demand.