Market Update
India Movers: Dr. Reddy's, Havells, Nitco, Puravakaran, Vodafone Idea
Arun Goswami
14 Jun, 2024
Mumbai
Investors added exposure to stocks in Friday's trading and extended weekly gains in the hopes that the central government would accelerate infrastructure spending and announce new initiatives to support manufacturing.
The Sensex index increased by 0.1% to 76,912.43, and the Nifty index rose by 0.3% to 23,464.95.
On the Mumbai stock exchange, 166 stocks traded at their 52-week highs, and 7 stocks traded at their 52-week lows.
Vodafone Idea jumped 0.5% to ₹16.16 after the troubled wireless company's board approved the allocation of equity holdings in the company to two telecom equipment makers, Nokia and Ericsson, in a bid to lower its outstanding debts.
The company's board approved the allocation of 1,027 million (or 102.7 crore) shares to Nokia and 633.7 million (or 63.37 crore) shares to Ericsson in exchange for prior debt.
Dr. Reddy's Laboratories decreased 0.7% to ₹6,054.15, and Life Insurance Corporation of India said it increased its stake in the company to 5.01% from 4.95% through stock purchases in the open market at an average price of 6,059.82 per share.
Puravankara Ltd. jumped 1% to ₹440.0 after the company's board approved the plans to raise as much as ₹1,000 crore through an institutional offering.
Havells India edged up 0.3% to ₹1,842.95, and the maker of consumer goods said it plans to expand its air conditioner production capacity to 15 lakh units at two facilities located in Ghiloth, Rajasthan, and Sricity, Andhra Pradesh.
The company said it plans to invest between 50 and 60 cores and complete its expansion plans before March 2025.
Nitco jumped 5% to ₹80.28, and the company signed an agreement to sell its land in Kanjurmarg, Mumbai, to Runwal Construction Private Limited.
Markets Hover Near Record Highs as Inflation Cools
Alexander Garcia
13 Jun, 2024
Miami
Market indexes lost early morning momentum as investors reviewed the second inflation report in as many days, indicating price pressures may be waning.
The S&P 500 index and the Nasdaq Composite hovered around the flatline after producer price inflation eased more than expected, a day after consumer price inflation unexpectedly cooled in May.
Producer price inflation slowed to an annual pace of 2.2% in May from 2.3% in April, the U.S. Bureau of Labor Statistics reported Thursday.
Core producer prices, which exclude food, energy, and trade services, rose at an annual pace of 3.2%, matching the rate in April.
On a monthly basis, producer prices declined 0.2% after rising 0.5% in April, and most of the decline in inflation in May could be traced to a 7.1% fall in gasoline prices.
The latest update on factory-gate inflation follows the Federal Reserve's decision to hold its target rate range between 5.25% and 5.50%.
The S&P 500 index and the Nasdaq Composite closed at new record highs for two consecutive days after consumer price inflation rose less than expected, and producer price inflation updates today showed price pressures may finally weaken to the Fed's target rate of 2%.
Consumer price inflation peaked just above 9% in June 2022, and over the next year, price increases slowed to 3%.
However, since then, inflation has failed to weaken, despite the Fed's eleven rate hikes in 2022 and 2023.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.2% to 5,430.37, and the Nasdaq Composite advanced 0.7% to 17,737.21.
The yield on 2-year Treasury notes edged higher to 4.72%, 10-year Treasury notes decreased to 4.27%, and 30-year Treasury bonds edged higher to 4.47%.
WTI crude oil increased $0.17 to $78.67 a barrel, and natural gas prices fell 7 cents to $3.01 a thermal unit.
Gold increased by $6.34 to $2,314.35 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 104.91.
U.S. Stock Movers
Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.
Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.
Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.
European Markets Turn Lower Amid Rising Trade Tensions with China
European markets faced headwinds amid interest rate path uncertainty and rising trade tensions with China.
Benchmark indexes in Paris, London, and Frankfurt fell around 1% after the European Commission imposed additional tariffs on electric vehicles imported from China.
After seven months of investigation, the European Union imposed smaller-than-expected tariffs between 17.4% and 38% on Chinese automakers.
Beijing is likely to retaliate with its own tariffs on agriculture, meat, and dairy imports from the European Union.
Despite the additional tariffs imposed by the European Union, Chinese electric vehicle makers are likely to grow their market share in Europe amid rising demand for longer-range batteries and shorter battery recharge times.
On the economic front, Germany's wholesale price index fell at a slower pace in May, and the eurozone's industrial output shrank in April.
Eurozone Industrial Output Shrank in April
Industrial output in the eurozone rose 3% from a year ago in April, after a revised 1.2% decline in the previous month, Eurostat said in its monthly update.
On a monthly basis, industrial output fell 0.1%, reversing a downwardly revised 0.5% increase in the previous month.
Production of capital goods rose at a slower pace of 0.7% compared to 0.9% in March, and industrial output declined, deepening to 0.4% from 0.2%.
However, energy equipment production rebounded to 0.4% from a decline of 0.1%, durable goods to 0.3% from a fall of 0.6%, and non-durable goods to 3.4% from a fall of 2.7%.
Germany's Wholesale Prices Decline Slowed in May
Germany's wholesale prices in May declined 0.7% from a year ago, following a 1.8% decline in the previous month, Destatis reported Thursday.
Wholesale prices declined for the 13th month in a row but fell at the slowest pace in the period due to the 13.9% decline in chemical product prices.
Prices for iron, steel, and ferrous semi-finished metal products dropped 12.1%, and compared to April, these prices fell by 0.5%.
Grain, raw tobacco, seeds, and animal feed declined 5.1% from a year ago but rose 3.4% from the previous month; milk, milk products, eggs, edible oils, and dietary fat prices eased 5.1% from a year ago.
However, prices for fruits, vegetables, and potatoes increased by 6.4%; tobacco products increased by 5.4%; and sugar, confectionary, and baked products advanced by 7.2%.
Europe Indexes and Yields
The DAX index decreased by 1.2% to 18,417.31; the CAC-40 index fell by 1.4% to 7,757.89; and the FTSE 100 index declined by 0.5% to 8,174.73.
The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.18%; the UK gilts edged lower to 4.18%; and Italian bonds decreased to 3.97%.
The euro edged higher to $1.079; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.65 Swiss cents.
Brent crude decreased $0.47 to $82.12 a barrel, and the Dutch TTF natural gas rose by €1.33 to €36.29 per MWh.
Europe Stock Movers
Automakers in Germany, France, and Italy declined after the EU imposed additional tariffs on Chinese electric vehicles.
Mercedes-Benz Group fell 1.9% to €63.55, Volkswagen Group plunged 3.7% to €105.55, and Stellantis eased 2.0% to €19.82.
Wise PLC tumbled 11.5% to 745.0 pence after the international money transfer service provider targeted lower underlying income growth in the current year.
Revenue in the fiscal year 2024 ending in March soared to £1.05 billion from £846.1 million, and pre-tax profit surged 229% to £481 million.
The company estimated organic earnings growth in the current fiscal year to range between 15% and 20%.
Crest Nicholson dropped 11.4% to 213.40 pence after the UK-based home builder swung to a net loss in the first half and lowered its annual earnings outlook again.
Revenue in the first half fell to £257.5 million from £282.7 million, reflecting fewer new home bookings at the beginning of 2024.
Net income in the first half ending on April 30 swung to a pre-tax loss of £30.9 million compared to a pre-tax profit of £28.4 million a year ago.
The home builder lowered its 2024 pre-tax profit outlook to between £22 million and £29 million, from the previous range between £45 million and £50 million released in November.
The company completed 788 homes in the first half, compared to 894 homes a year ago.
The board declared an interim dividend of 1.0 pence per share, compared to a dividend of 5.5 pence per share a year ago.
Yen Drifts Near Recent 35-year Low, Japan's Business Sentiment Decline Softens
In mixed trading, market indexes lacked direction in Tokyo ahead of the Bank of Japan's monetary policy decisions on Friday.
The Nikkei 2225 and the broader Topix index meandered around the flatline ahead of the widely anticipated Bank of Japan's decision to hold rates steady.
In addition, investors are looking forward to Governor Kazuo Ueda's comments about the central bank's plan to purchase government bonds.
The Japanese yen weakened to 157.07 against the U.S. dollar, and the yield on 10-year Japanese government bonds hovered near 0.976%.
The Bank of Japan is expected to hold interest rates steady, despite the recent acceleration in producer price inflation and rising inflationary pressures for consumers.
The central bank's dovish stance is likely to weigh heavily on the yen, and the Japanese currency is expected to weaken to between 165 and 170 over the next six months.
The Bank of Japan policymakers believe that a steady decline in the yen is the best possible outcome for the Japanese economy, supporting the price competitiveness of Japanese manufacturing products exported.
The business survey index of large manufacturing companies fell less than expected, and forward-looking expectations rebounded, according to the survey results released by the Cabinet Office.
The business climate index among large manufacturers declined by 1% in the second quarter after falling 6.7% in the first quarter.
The mood improved after manufacturing companies reported solid earnings in the first quarter and ramped up domestic capital spending.
Manufacturers anticipate business conditions to improve by 9.2% in the third quarter and 10.7% in the fourth quarter.
Japan Stock Movers
The Nikkei 225 Stock Average decreased 0.2% to 38,812.40, and the Topix Index fell 0.6% to 2,739.37.
In the tech sector, Advantest, Tokyo Electron, Disco Corp., and Screen Holdings declined between 0.8% and 3.5%.
Banks also participated in the downturn, and Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui fell more than 1%.
Among the leading gainers, Renaissance Electronics soared 4.9% to ¥3,101.0, Taio Yuen advanced 4.3% to ¥3,793.0, and Recruit Holdings jumped 2.5% to ¥7,910.0.
On the downside, Tokyo Electric Power, Chubu Electric Power, and Kansai Electric Power declined between 2% and 4%.
Konica Minolta, T&D Holdings, Eisai, and Denka fell around 3%.
China Markets Attempt to Rebound, EV Makers Surge Brushing Off EU Tariffs
Benchmark indexes in Shanghai and Hong Kong rebounded amid hopes of additional market-supportive measures from the Chinese government.
The CSI 300 and the Hang Seng index inched higher from the one-month level reached in Wednesday's trading as investors pinned their hopes on new market-supportive measures from the People's Bank of China and local Chinese governments.
The three-monthlong market rally peaked in late May, and the benchmark indexes have lost as much as 9% in the last three weeks of trading.
However, market sentiment recovered on the hopes that weakening inflation in the U.S. may support the case for at least one rate cut before the year's end.
Moreover, the Hong Kong Monetary Authority held its key lending rate unchanged at 5.75%, reflecting the U.S. Federal Reserve's decision to hold its target rate range steady.
The Hong Kong dollar is linked to the U.S. dollar, and the city's monetary authority revises rates following the rate announcements by the U.S. Federal Reserve to maintain the local currency's peg with the U.S. dollar.
China Stock Movers
The CSI 300 index declined 0.4% to 3,528.92, and the Hang Seng index rose 0.5% to 18,034.42.
Electric vehicle makers advanced after the European Union's size of tariffs was deemed not restrictive enough for most Chinese vehicle makers.
The European Union imposed between 17.4% and 38% tariffs on electric vehicles imported from China, according to a statement released by the European Commission.
Companies participating in the seven-month EU probe faced a lower tariff rate, as tariffs imposed on Geely were 20% and on BYD 17.4%, but SAIC, which did not participate in the EU's subsidy probe, faced 38.1% import duties.
The new tariffs will be in addition to the existing duty of 10%, effective July 4.
Including the latest tariffs, Chinese vehicle makers will lose their price advantage but are likely to compete on design and advanced features, but makers may suffer from poor reliability and shoddy engineering practices.
Geely Automobile Holdings, the largest vehicle exporter to the European Union, is likely to face fewer-than-expected hurdles in exporting cars to the region.
Li Auto jumped 2.2% to HK$74.55, and BYD surged 6.5% to HK$234.20.
QuantumPharm, a drug researcher using artificial intelligence technology, advanced more than 10% from its initial public offering price of HK$5.28 on the first day of trading in Hong Kong.
U.S. Movers: Broadcom, Dave & Buster's, Oxford Industries
Scott Peters
13 Jun, 2024
New York City
Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.
Revenue in the first quarter decreased 1.5% to $588.1 million from $597.3 million, net income fell to $41.4 million from $70.1 million, and diluted earnings per share declined to 90 cents from $1.45 a year ago.
Comparable sales declined by 5.6% compared to the same calendar period in 2023.
Year to date, the company has repurchased 1.0 million shares at a cost of $50.0 million, representing 2.4% of the company's outstanding shares as of the end of fiscal 2023.
The company has $150 million remaining on its share repurchase authorization.
Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.
Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.
Revenue in the fiscal first quarter ending on May 4 declined 5.2% to $398.2 million from $420.1 million, net income dropped to $38.3 million from $58.5 million, and diluted earnings per share fell to $2.42 from $3.64 a year ago.
For the second quarter of fiscal 2024, the apparel retailer expects net sales to range between $430 million and $450 million, compared to net sales of $420 million in the second quarter a year ago.
The company estimated earnings per share in a range of $2.82 to $3.02 in the second quarter, compared to $3.22 in the second quarter of fiscal 2023.
Adjusted EPS is expected to be between $2.95 and $3.15, compared to adjusted EPS of $3.45 in the second quarter of fiscal 2023.
For fiscal 2024 ending on February 1, 2025, the company revised its sales and earnings per share outlook.
The company now expects net sales in a range of $1.59 billion to $1.63 billion as compared to net sales of $1.57 billion in fiscal 2023.
In fiscal 2024, GAAP earnings per share are expected to be between $7.99 and $8.39, compared to $3.82 a year ago, and adjusted earnings per share are expected to be between $8.60 and $9.00, compared to $10.15 a year ago.
Waning Inflation Pressures Keep Alive Hopes for at least One Rate Cut in 2024
Barry Adams
13 Jun, 2024
New York City
Benchmark indexes are set to advance to a new record close for the third day in a row after the second report on inflation showed waning price pressures.
The S&P 500 index and the Nasdaq Composite hovered around the flatline after producer price inflation eased more than expected, a day after consumer price inflation unexpectedly cooled in May.
Producer price inflation slowed to an annual pace of 2.2% in May from 2.3% in April, the U.S. Bureau of Labor Statistics reported Thursday.
Core producer prices, which exclude food, energy, and trade services, rose at an annual pace of 3.2%, matching the rate in April.
On a monthly basis, producer prices declined 0.2% after rising 0.5% in April, and most of the decline in inflation could be traced to a 7.1% fall in gasoline prices.
The latest update on factory-gate inflation follows the Federal Reserve's decision to hold its target rate range between 5.25% and 5.50%.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.2% to 5,430.37, and the Nasdaq Composite advanced 0.7% to 17,737.21.
The yield on 2-year Treasury notes edged higher to 4.72%, 10-year Treasury notes decreased to 4.27%, and 30-year Treasury bonds edged higher to 4.47%.
WTI crude oil increased $0.17 to $78.67 a barrel, and natural gas prices fell 7 cents to $3.01 a thermal unit.
Gold increased by $6.34 to $2,314.35 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 104.91.
U.S. Stock Movers
Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.
Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.
Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.
Europe Movers: Alstom, Automakers, Crest Nicholson, Halma, Wise
Inga Muller
13 Jun, 2024
Frankfurt
European markets turned lower amid rising political turmoil in France and growing trade tensions between the European Union and China.
France's Parti republicain expelled its chief, Eric Ciotti, after the leader appealed to form an alliance with the far-right National Rally Party.
The DAX index decreased by 1.2% to 18,417.31; the CAC-40 index fell by 1.4% to 7,757.89; and the FTSE 100 index declined by 0.5% to 8,174.73.
The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.18%; the UK gilts edged lower to 4.18%; and Italian bonds decreased to 3.97%.
Automakers in Germany, France, and Italy declined after the EU imposed additional tariffs on Chinese electric vehicles.
Mercedes-Benz Group fell 1.9% to €63.55, Volkswagen Group plunged 3.7% to €105.55, Stellantis eased 2.0% to €19.82, and Renault SA decreased 2.6% to €49.50.
Alstom SA decreased 2.5% to €16.36 after the railroad company said it completed raising €1 billion, the final step of its €2 billion deleveraging plan.
Halma plc jumped 12.2% to 2,637.0 pence after the health and safety device maker reported strong fiscal year results.
Wise PLC tumbled 11.5% to 745.0 pence after the international money transfer service provider targeted lower underlying income growth in the current year.
Revenue in the fiscal year 2024 ending in March soared to £1.05 billion from £846.1 million, and pre-tax profit surged 229% to £481 million.
The company estimated organic earnings growth in the current fiscal year to range between 15% and 20%.
Crest Nicholson dropped 11.4% to 213.40 pence after the UK-based home builder swung to a net loss in the first half and lowered its annual earnings outlook again.
Revenue in the first half fell to £257.5 million from £282.7 million, reflecting fewer new home bookings at the beginning of 2024.
Net income in the first half ending on April 30 swung to a pre-tax loss of £30.9 million compared to a pre-tax profit of £28.4 million a year ago.
The home builder lowered its 2024 pre-tax profit outlook to between £22 million and £29 million, from the previous range between £45 million and £50 million released in November.
The company completed 788 homes in the first half, compared to 894 homes a year ago.
The board declared an interim dividend of 1.0 pence per share, compared to a dividend of 5.5 pence per share a year ago.
European Markets Turn Lower Amid Rising Trade Tensions with China
Bridgette Randall
13 Jun, 2024
Frankfurt
European markets faced headwinds amid interest rate path uncertainty and rising trade tensions with China.
Benchmark indexes in Paris, London, and Frankfurt fell around 1% after the European Commission imposed additional tariffs on electric vehicles imported from China.
After seven months of investigation, the European Union imposed smaller-than-expected tariffs between 17.4% and 38% on Chinese automakers.
Beijing is likely to retaliate with its own tariffs on agriculture, meat, and dairy imports from the European Union.
Despite the additional tariffs imposed by the European Union, Chinese electric vehicle makers are likely to grow their market share in Europe amid rising demand for longer-range batteries and shorter battery recharge times.
On the economic front, Germany's wholesale price index fell at a slower pace in May, and the eurozone's industrial output shrank in April.
Eurozone Industrial Output Shrank in April
Industrial output in the eurozone rose 3% from a year ago in April, after a revised 1.2% decline in the previous month, Eurostat said in its monthly update.
On a monthly basis, industrial output fell 0.1%, reversing a downwardly revised 0.5% increase in the previous month.
Production of capital goods rose at a slower pace of 0.7% compared to 0.9% in March, and industrial output declined, deepening to 0.4% from 0.2%.
However, energy equipment production rebounded to 0.4% from a decline of 0.1%, durable goods to 0.3% from a fall of 0.6%, and non-durable goods to 3.4% from a fall of 2.7%.
Germany's Wholesale Prices Decline Slowed in May
Germany's wholesale prices in May declined 0.7% from a year ago, following a 1.8% decline in the previous month, Destatis reported Thursday.
Wholesale prices declined for the 13th month in a row but fell at the slowest pace in the period due to the 13.9% decline in chemical product prices.
Prices for iron, steel, and ferrous semi-finished metal products dropped 12.1%, and compared to April, these prices fell by 0.5%.
Grain, raw tobacco, seeds, and animal feed declined 5.1% from a year ago but rose 3.4% from the previous month; milk, milk products, eggs, edible oils, and dietary fat prices eased 5.1% from a year ago.
However, prices for fruits, vegetables, and potatoes increased by 6.4%; tobacco products increased by 5.4%; and sugar, confectionary, and baked products advanced by 7.2%.
Europe Indexes and Yields
The DAX index decreased by 1.2% to 18,417.31; the CAC-40 index fell by 1.4% to 7,757.89; and the FTSE 100 index declined by 0.5% to 8,174.73.
The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.18%; the UK gilts edged lower to 4.18%; and Italian bonds decreased to 3.97%.
The euro edged higher to $1.079; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.65 Swiss cents.
Brent crude decreased $0.47 to $82.12 a barrel, and the Dutch TTF natural gas rose by €1.33 to €36.29 per MWh.
Europe Stock Movers
Automakers in Germany, France, and Italy declined after the EU imposed additional tariffs on Chinese electric vehicles.
Mercedes-Benz Group fell 1.9% to €63.55, Volkswagen Group plunged 3.7% to €105.55, and Stellantis eased 2.0% to €19.82.
Wise PLC tumbled 11.5% to 745.0 pence after the international money transfer service provider targeted lower underlying income growth in the current year.
Revenue in the fiscal year 2024 ending in March soared to £1.05 billion from £846.1 million, and pre-tax profit surged 229% to £481 million.
The company estimated organic earnings growth in the current fiscal year to range between 15% and 20%.
Crest Nicholson dropped 11.4% to 213.40 pence after the UK-based home builder swung to a net loss in the first half and lowered its annual earnings outlook again.
Revenue in the first half fell to £257.5 million from £282.7 million, reflecting fewer new home bookings at the beginning of 2024.
Net income in the first half ending on April 30 swung to a pre-tax loss of £30.9 million compared to a pre-tax profit of £28.4 million a year ago.
The home builder lowered its 2024 pre-tax profit outlook to between £22 million and £29 million, from the previous range between £45 million and £50 million released in November.
The company completed 788 homes in the first half, compared to 894 homes a year ago.
The board declared an interim dividend of 1.0 pence per share, compared to a dividend of 5.5 pence per share a year ago.
Yen Drifts Near Recent 35-year Low, Japan's Business Sentiment Decline Softens
Akira Ito
13 Jun, 2024
Tokyo
In mixed trading, market indexes lacked direction in Tokyo ahead of the Bank of Japan's monetary policy decisions on Friday.
The Nikkei 2225 and the broader Topix index meandered around the flatline ahead of the widely anticipated Bank of Japan's decision to hold rates steady.
In addition, investors are looking forward to Governor Kazuo Ueda's comments about the central bank's plan to purchase government bonds.
The Japanese yen weakened to 157.07 against the U.S. dollar, and the yield on 10-year Japanese government bonds hovered near 0.976%.
The Bank of Japan is expected to hold interest rates steady, despite the recent acceleration in producer price inflation and rising inflationary pressures for consumers.
The central bank's dovish stance is likely to weigh heavily on the yen, and the Japanese currency is expected to weaken to between 165 and 170 over the next six months.
The Bank of Japan policymakers believe that a steady decline in the yen is the best possible outcome for the Japanese economy, supporting the price competitiveness of Japanese manufacturing products exported.
The business survey index of large manufacturing companies fell less than expected, and forward-looking expectations rebounded, according to the survey results released by the Cabinet Office.
The business climate index among large manufacturers declined by 1% in the second quarter after falling 6.7% in the first quarter.
The mood improved after manufacturing companies reported solid earnings in the first quarter and ramped up domestic capital spending.
Manufacturers anticipate business conditions to improve by 9.2% in the third quarter and 10.7% in the fourth quarter.
Japan Stock Movers
The Nikkei 225 Stock Average decreased 0.2% to 38,812.40, and the Topix Index fell 0.6% to 2,739.37.
In the tech sector, Advantest, Tokyo Electron, Disco Corp., and Screen Holdings declined between 0.8% and 3.5%.
Banks also participated in the downturn, and Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui fell more than 1%.
Among the leading gainers, Renaissance Electronics soared 4.9% to ¥3,101.0, Taio Yuen advanced 4.3% to ¥3,793.0, and Recruit Holdings jumped 2.5% to ¥7,910.0.
On the downside, Tokyo Electric Power, Chubu Electric Power, and Kansai Electric Power declined between 2% and 4%.
Konica Minolta, T&D Holdings, Eisai, and Denka fell around 3%.
China Markets Attempt to Rebound, EU Imposes Additional Tariffs On Chinese Electric Vehicles
Li Chen
13 Jun, 2024
Hong Kong
Benchmark indexes in Shanghai and Hong Kong rebounded amid hopes of additional market-supportive measures from the Chinese government.
The CSI 300 and the Hang Seng index inched higher from the one-month level reached in Wednesday's trading as investors pinned their hopes on new market-supportive measures from the People's Bank of China and local Chinese governments.
The three-monthlong market rally peaked in late May, and the benchmark indexes have lost as much as 9% in the last three weeks of trading.
However, market sentiment recovered on the hopes that weakening inflation in the U.S. may support the case for at least one rate cut before the year's end.
Moreover, the Hong Kong Monetary Authority held its key lending rate unchanged at 5.75%, reflecting the U.S. Federal Reserve's decision to hold its target rate range steady.
The Hong Kong dollar is linked to the U.S. dollar, and the city's monetary authority revises rates following the rate announcements by the U.S. Federal Reserve to maintain the local currency's peg with the U.S. dollar.
China Stock Movers
The CSI 300 index declined 0.4% to 3,528.92, and the Hang Seng index rose 0.5% to 18,034.42.
Electric vehicle makers advanced after the European Union's size of tariffs was deemed not restrictive enough for most Chinese vehicle makers.
The European Union imposed between 17.4% and 38% tariffs on electric vehicles imported from China, according to a statement released by the European Commission.
Companies participating in the seven-month EU probe faced a lower tariff rate, as tariffs imposed on Geely were 20% and on BYD 17.4%, but SAIC, which did not participate in the EU's subsidy probe, faced 38.1% import duties.
The new tariffs will be in addition to the existing duty of 10%, effective July 4.
Including the latest tariffs, Chinese vehicle makers will lose their price advantage but are likely to compete on design and advanced features, but makers may suffer from poor reliability and shoddy engineering practices.
Geely Automobile Holdings, the largest vehicle exporter to the European Union, is likely to face fewer-than-expected hurdles in exporting cars to the region.
Li Auto jumped 2.2% to HK$74.55, and BYD surged 6.5% to HK$234.20.
QuantumPharm, a drug researcher using artificial intelligence technology, advanced more than 10% from its initial public offering price of HK$5.28 on the first day of trading in Hong Kong.
India Movers: Bondada Engineering, One 360 WAM, PNB Housing, Saksoft, Tata Power
Arun Goswami
13 Jun, 2024
Mumbai
Market indexes continued their ascend in Mumbai, and the yield on Indian government bonds edged lower.
Core consumer price inflation dropped to a record low in May, and industrial output eased to a three-month low in April.
The Sensex index increased by 0.3% to 76,845.23, and the Nifty index rose by 0.3% to 23,391.95.
On the Mumbai stock exchange, 166 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 higher to 6.99%, and the Indian rupee edged higher at ₹83.52 against the U.S. dollar.
Tata Power increased 1.7% to ₹457.0, and the company's renewable power subsidiary said it has installed 850 charging points in key metropolitan areas, including Mumbai, Delhi, Amdavad, Bengaluru, and Lucknow.
Saksoft advanced 3.2% to ₹268.50, and the company agreed to acquire Augmento Private Labs with an initial consideration of ₹35 crore and pay up to an additional ₹65 crore over the next two years.
Bondada Engineering jumped 5.0% to ₹2,320.80, and the company received an order worth ₹940 crore to set up a 600 MW solar power project over the next three years from NLC India.
PNB Housing Finance gained 0.5% to ₹819.95, and the company's board plans to meet on June 18 to approve the sale of non-convertible bonds worth ₹10,000 crore.
One 360 WAM increased 1.5% to ₹802.15, and the company signed an agreement to acquire ET Money from Times Internet for a total consideration of ₹365.8 crore.
One 360 WAM, formerly known as IIFL Wealth, agreed to pay 85.8 crore cash and issue 35 lakh crore shares to Times Internet.
ET Money claims to have 9 lakh registered users, including one lakh revenue-generating users, conducting over ₹1,200 crore of monthly investments over the platform.
Fed Holds Rates and Lowers Rate Cut Expectations In 2024
Brian Turner
12 Jun, 2024
Washington, D.C.
The Federal Reserve left the fed funds rate range unchanged between 5.25% and 5.50%, at the end of the two-day policy meeting.
The policymakers committee dialed back on the rate expectations and estimated rates to drop to 5.1% by the end of the year, down from March's estimate of as many as three rate cuts.
The committee also held 2024's GDP growth outlook at 2.1% and the unemployment rate at 4.0%.
But the committee revised its PCE inflation estimate to 2.6% from 2.4% in March and core inflation, which excludes food and energy price inflation, to 2.8% from 2.6%.
Fed officials estimated as many as four rate cuts in 2025, the fed funds rate to drop to 4.1% by the end of 2025, and additional cuts to bring down interest rates to 3.1% in 2026.
At the start of the year, investors were looking for as many as four cuts, but those expectations have been lowered after the persistent inflation over the last eighteen months.
Consumer price inflation peaked in June 2022 at 9.1%, and price pressures have steadily eased to 3% in June 2023.
However, inflation has failed to move lower over the last year and ranged between 3% and 4%, and core inflation has also failed to budge as well.
Despite eleven rate hikes in 2022 and 2023, inflation has failed to dip to the 2% target rate set by the Fed, indicating interest rates are not restrictive enough.
S&P 500 and Nasdaq Composite Scale New Highs, Inflation Cooled In May and Fed Holds Rates
Alexander Garcia
12 Jun, 2024
Miami
Market indexes built on the previous session's record highs as investors digested the latest update on inflation, and the Federal Reserve held rates steady as widely expected.
Stocks opened higher, and Treasury yields edged lower after consumer price inflation eased in May, raising hopes for at least one rate cut before the year's end.
The S&P 500 index and the Nasdaq Composite advanced more than 1% after consumer price and core inflation unexpectedly slowed in May.
Stocks have been under pressure for a few weeks due to rate uncertainty and the dashed hopes of rate cuts, but strong earnings and cooling inflation have stoked the market advance in recent days.
Despite the recent market volatility, the S&P 500 and the Nasdaq Composite closed at record highs, and in today's two bench mark indexes inched higher to set new records.
At the start of the year, investors were looking for as many as four cuts, but those expectations have been lowered after the persistent inflation over the last eighteen months.
Consumer price inflation peaked in June 2022 at 9.1%, and price pressures have steadily eased to 3% in June 2023.
However, inflation has failed to move lower over the last year and ranged between 3% and 4%, and core inflation has also failed to budge as well.
Despite eleven rate hikes in 2022 and 2023, inflation has failed to dip to the 2% target rate set by the Fed, indicating interest rates are not restrictive enough.
The Federal Reserve left the fed funds rate range unchanged between 5.25% and 5.50%, at the end of the two-day policy meeting.
The policymakers committee dialed back on the rate expectations and estimated rates to drop to 5.1% by the end of the year, down from March's estimate of as many as three rate cuts.
The committee also held 2024's GDP growth outlook at 2.1% and the unemployment rate at 4.0%.
But the committee revised its PCE inflation estimate to 2.6% from 2.4% in March and core inflation, which excludes food and energy price inflation, to 2.8% from 2.6%.
Fed officials estimated as many as four rate cuts in 2025, the fed funds rate to drop to 4.1% by the end of 2025, and additional cuts to bring down interest rates to 3.1% in 2026.
Consumer Price Inflation Cools In May but Stays elevated
The annual rate of consumer inflation unexpectedly cooled to 3.4% in May, the U.S. Bureau of Labor Statistics said on Wednesday.
Consumer price inflation decreased for the second month in a row and fell from 3.5% in March to 3.4% in April.
Food price inflation slowed to 2.1% from 2.2% in April, shelter inflation slowed to 5.4% from 5.5%, and transportation dropped 10.5% from 11.2%.
The annual rate of core inflation slowed to 3.4% in May, the lowest rate since April 2021.
On a monthly basis, consumer price inflation was unchanged from the previous month after rising 0.3% in April, and the monthly core rate of inflation slowed to 0.2% from 0.3% in the previous month.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 1.1% to 5,436.70, and the Nasdaq Composite advanced 1.8% to 17,660.57.
The yield on 2-year Treasury notes edged lower to 4.69%, 10-year Treasury notes decreased to 4.29%, and 30-year Treasury bonds edged higher to 4.46%.
WTI crude oil increased $0.85 to $78.75 a barrel, and natural gas prices fell 8 cents to $3.04 a thermal unit.
Gold increased by $20.65 to $2,336.12 an ounce, and silver rose 85 cents to $30.10.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.33.
U.S. Stock Movers
Oracle Corp. soared 11.1% to $138.61 despite the database developer reporting weaker-than-expected quarterly results.
Investors bid up the stock after the company announced an artificial intelligence partnership with Google and OpenAI.
Rubrik declined 1.8% to $34.48 after the cloud computing company reported a weaker-than-expected outlook despite reporting higher-than-expected quarterly revenue of $187 million.
Rentokil Initial soared 14.5% to $30.89 after activist investor Trian Fund acquired a sizeable stake in the company.
European Markets Halted a two-day Selloff, French Politics In Uncharted Territory
European stock market indexes and bonds in the eurozone rebounded after two days of losses following France's surprise election announcement.
The euro held firm for the second day in active trading as investors still assessed the impact of French President Macron's surprise and controversial announcement to dissolve lower house of the parliament and call a legislative election.
The risky move threw French politics into turmoil and raised the prospect of the opposition winning control of the parliament, causing legislative gridlock and slowing down progress in lowering the government's debt, and deepening pension reforms.
Macron's minority government has struggled to win support for its legislative agenda for the last two years.
The results of the European Union election on Sunday showed the far-right political parties winning more seats, but the three leading blocs—the EPP, Renew Europe, and S&D—retained majority control after winning 407 of the 720 seats.
However, the shift to the right led to political upheaval in France, Germany, Austria, and Belgium.
French President Emmanuel Macron dissolved the parliament after the far-right National Rally Party garnered 31.5% of votes, more than 15.2% won by Macron's Renaissance party.
On the economic front, Germany's inflation rose for the first time in five months, as initially estimated, Destatis confirmed Wednesday.
Consumer price inflation in May accelerated to 2.4% from a stable 2.2% in April, which was the lowest level in three years.
Europe Indexes and Yields
The DAX index increased by 1.4% to 18,630.86; the CAC-40 index rose by 0.97% to 7,864.70; and the FTSE 100 index advanced by 0.8% to 8,215.48.
The yield on 10-year German bonds edged lower to 2.60%. French bonds inched lower to 3.20%; the UK gilts edged lower to 4.25%; and Italian bonds decreased to 4.03%.
The euro edged higher to $1.075; the British pound inched higher to $1.275; and the U.S. dollar weakened to 89.58 Swiss cents.
Brent crude decreased $0.78 to $82.70 a barrel, and the Dutch TTF natural gas rose by €0.79 to €34.93 per MWh.
Europe Stock Movers
French banks rebounded after two days of selloffs, and bond yields recovered.
Societe Generale gained 0.9% to €23.08, Credit Agricole rose 2.4% to €13.90, and BNP Paribas advanced 1.7% to €61.79.
Legal & General declined 5% to 230.89 pence after the newly appointed chief executive launched a restructuring plan to focus on three core units.
Rentokil Initial plc soared 12.3% to 466.40 pence after activist investor Trian Fund Management acquired a substantial stake in the company.
Skanska AB jumped 0.7% to SEK 186.90 after the Swedish construction company sold its multi-family rental business in Denmark to NREP for about 737 million Danish kroner, or 1.1 billion Swedish kronor.
Landore Resource surged 33% to 3.80 pence after the gold mining company secured £3.7 million to expand its gold project in Northwestern Ontario, Canada.
The BAM Gold Project, an early-stage development project, is estimated to have at least one million ounces of gold deposits.
The company sold 153.47 million shares at a price of 2.40 pence per share in a two-tranche offering to investors, representing 49.56% of the enlarged share capital.
Japan's Producer Price Inflation Accelerates Fourth Consecutive Month
Benchmark indexes in Tokyo traded down on Wednesday, trimming gains from the week and erasing gains from the previous session.
The Nikkei and the Topix indexes dropped more than 0.5% as investors reviewed the latest update on producer price inflation.
Producer price inflation rose 2.4% in May and accelerated for the fourth month in a row, the Bank of Japan reported on Wednesday.
Investors turned cautious after the annual pace of factory-gate price inflation rose faster than expected, stoking fears of an acceleration in consumer price inflation.
Producer price inflation was positive for the 40th month in a row, indicating manufacturers are passing higher raw material prices on to consumers.
Investors were also cautious ahead of the U.S. Federal Reserve's monetary policy decisions later in the day, and the central bank is widely anticipated to hold its interest rate range steady between 5.25% and 5.5%.
The Japanese yen weakened to 157.23 against the U.S. dollar, and the yield on a 10-year Japanese government bond stayed below 1% at 0.98%.
Japan Stock Movers
The Nikkei 225 stock average declined 0.5% to 38,913.50, and the Topix index fell 0.7% to 2,756.88.
Banks, tech companies, and vehicle makers were among the leading decliners.
Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsubishi declined between 0.5% and 1.5%.
Softbank, Advantest, Tokyo Electron, and Screen Holdings traded mixed and ranged between a decline of 0.3% and a gain of 0.2%.
Toyota Motor decreased 1.4% to ¥3,208.0, Honda Motor rose 0.1% to ¥1,710.0, and Nissan Motor fell 0.1% to ¥545.30.
China Deflation Worries Keep Indexes In Hong Kong and Shanghai Down
Market indexes in Shanghai and Hong Kong traded down after the release of inflation data.
Consumer price inflation rose for the fourth month in a row in May, but the increase of 0.3% in May fell short of market expectations.
On a monthly basis, inflation decreased 0.1% after rising 0.1% in April, indicating persistent demand weakness amid a protracted property market slump and fragile economic recovery.
The annual pace of retail inflation was steady, but food price inflation fell for the 11th month in a row, the National Bureau of Statistics reported on Wednesday.
Core inflation, which excludes food and energy prices, rose 0.6% from a year ago, compared to a 0.7% rise in April.
In a separate report, the statistics bureau said producer price inflation declined 1.4% in May after falling at a 2.5% annual rate in April.
The factory-gate prices fell for the 20th month in a row and fell at the slowest pace since February 2023, amid persistent domestic demand weakness and rising job market uncertainty outside of the top three cities.
Over the first five months, producer price inflation dropped 2.4% from a year ago, and the prices are expected to remain weak for the rest of the year.
China Stock Movers
The CSI 300 index decreased 0.2% to 3,536.85, and the Hang Seng index dropped 1.5% to 17,913.10.
The Hang Seng index extended losses to 9% from the peak last month, as the market rally appears to lose steam amid a lack of consistent policy support and an ongoing decline in the residential property market.
Tech stocks traded lower amid broad market weakness, and Tencent Holdings declined 0.6% to HK$371.20 and Alibaba Group fell 0.9% to HK$74.15.
Real estate developers were under pressure ahead of the U.S. Federal Reserve's monetary policy decisions at 2:00 p.m. ET later today.
The Federal Reserve is widely anticipated to hold the Fed Funds rate range between 5.25% and 5.50%, and the central bank is likely to signal higher rates for the rest of the year.
Hong Kong monetary policy moves in sync with U.S. announcements because the Hong Kong dollar is linked to the U.S. dollar.
Higher interest rates for longer are likely to dampen demand for new properties in Hong Kong, amid an ongoing economic slowdown and elevated home prices in the city.
China Vanke declined 0.9% to HK$5.45, China Resources Land dropped 2.9% to HK$26.70, and Sun Hung Kai fell 1.1% to HK$71.95.
Wuhan Dameng Database, the database developer for banks and state-owned power entities' stock soared nearly 190% on the first day of trading after the company priced its initial offering at 250 yuan per share.
Tencent-backed QuantumPharm priced its initial public offering at HK$5.28 and raised HK$989.3 million ahead of its listing on Thursday.
The public offering of artificial intelligence-based drug research service provider was oversubscribed by 75 times.
U.S. Movers: Oracle, Rentokil Initial, Rubrik
Scott Peters
12 Jun, 2024
New York City
Oracle Corp. soared 11.1% to $138.61, despite the database developer reporting weaker-than-expected quarterly results.
Investors bid up the stock after the company announced an artificial intelligence partnership with Google and OpenAI.
Revenue in the fiscal fourth quarter ending in May rose 3% to $14.3 billion from $13.8 billion; net income dropped to $3.2 billion from $3.3 billion; and diluted earnings per share eased to $1.11 from $1.19 a year ago.
Rubrik declined 1.8% to $34.48, and the cloud computing company reported a weaker-than-expected outlook despite reporting higher-than-expected quarterly revenue of $187 million.
Revenue in the fiscal first quarter increased to $187 million from $135.7 million; net loss soared to $732.09 million from $89.3 million; and diluted loss per share expanded to $11.48 from $1.49 a year ago.
Rentokil Initial soared 14.5% to $30.89 after activist investor Trian Fund acquired a sizeable stake in the company.
S&P 500 and Nasdaq Hit New Record Highs After Inflation Cooled In May
Barry Adams
12 Jun, 2024
New York City
Stocks opened sharply higher, and Treasury yields edged lower after consumer price inflation eased in May, raising hopes for at least one rate cut before the year's end.
The S&P 500 index and the Nasdaq Composite advanced more than 1% after consumer price and core inflation unexpectedly slowed in May.
Stocks have been under pressure for a few weeks due to rate uncertainty and the dashed hopes of rate cuts.
At the start of the year, investors were looking for as many as four cuts, but those expectations have been lowered after the persistent inflation over the last eighteen months.
Consumer price inflation peaked in June 2022 at 9.1%, and price pressures have steadily eased to 3% in June 2023.
However, inflation has failed to move lower over the last year and ranged between 3% and 4%, and core inflation has also failed to budge as well.
Despite eleven rate hikes in 2022 and 2023, inflation has failed to dip to the 2% target rate set by the Fed, indicating interest rates are not restrictive enough.
The Federal Reserve is widely anticipated to leave the fed funds rate range unchanged between 5.25% and 5.50% later today at the end of the two-day policy meeting.
Consumer Price Inflation Cools In May but Stays elevated
The annual rate of consumer inflation unexpectedly cooled to 3.4% in May, the U.S. Bureau of Labor Statistics said on Wednesday.
Consumer price inflation decreased for the second month in a row and fell from 3.5% in March to 3.4% in April.
Food price inflation slowed to 2.1% from 2.2% in April, shelter inflation slowed to 5.4% from 5.5%, and transportation dropped 10.5% from 11.2%.
The annual rate of core inflation slowed to 3.4% in May, the lowest rate since April 2021.
On a monthly basis, consumer price inflation was unchanged from the previous month after rising 0.3% in April, and the monthly core rate of inflation slowed to 0.2% from 0.3% in the previous month.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 1.1% to 5,435.82, and the Nasdaq Composite advanced 1.6% to 17,625.51.
The yield on 2-year Treasury notes edged lower to 4.69%, 10-year Treasury notes decreased to 4.29%, and 30-year Treasury bonds edged higher to 4.46%.
WTI crude oil increased $1.33 to $79.27 a barrel, and natural gas prices fell 8 cents to $3.04 a thermal unit.
Gold increased by $21.50 to $2,335.92 an ounce, and silver rose 65 cents to $29.95.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.38.
U.S. Stock Movers
Oracle Corp. soared 11.1% to $138.61 despite the database developer reporting weaker-than-expected quarterly results.
Investors bid up the stock after the company announced an artificial intelligence partnership with Google and OpenAI.
Rubrik declined 1.8% to $34.48 after the cloud computing company reported a weaker-than-expected outlook despite reporting higher-than-expected quarterly revenue of $187 million.
Rentokil Initial soared 14.5% to $30.89 after activist investor Trian Fund acquired a sizeable stake in the company.