Market Update
PBOC Holds Loan Prime Rates and Announces Measures to Facilitate Residential Property Market
Li Chen
19 May, 2024
Hong Kong
Market indexes in Shanghai and Hong Kong advanced and extended weekslong gains after the People's Bank of China announced measures to support the property market.
The People's Bank of China lowered the down payment requirement, removed the floor on mortgage rates, and provided 300 billion yuan to regional authorities to buy unsold existing homes.
China's central bank announced a total of 1 trillion yuan in additional financing for the property sector, which includes 300 billion yuan to support the regional government's move to expand affordable housing market activities.
The multi-prong move is likely to inject much-needed liquidity into the faltering property market, encourage buyers to acquire property, and support the regional governments' plans to provide more affordable housing.
Benchmark indexes edged higher in Shanghai and Hong Kong in Monday's trading and extended gains of 5-week and 4-week, respectively.
Economists and market watchers welcomed the central bank's supportive measures, but those steps are likely to fall short of reviving consumer confidence and repairing the balance sheets of troubled real estate companies.
In addition, on Monday, the People's Bank of China left its two key lending rates steady after announcing measures to revive the property market.
The one-year loan prime rate was held at 3.45%, and the five-year loan prime rate was held at 3.95%, meeting financial market expectations.
A five-year rate is used as a reference rate for setting the mortgage rate, and a one-year loan prime rate is the guiding rate for consumer and business loans.
China Stock Movers
The CSI 300 index added 0.2% to 3,685.63, and the Hang Seng index advanced 0.4% to 19,637.32.
Property stocks advanced for the second day in a row after the announcement of supportive measures from the People's Bank of China.
China Vanke soared 5.6% to HK$7.25, Longfor Group decreased 1.6% to HK$15.06, and China Resources Land edged up 0.5% to HK$32.90.
Henderson Land Development gained 3.2% to HK$27.30, and CK Asset Holdings advanced 1.6% to HK$36.35.
Bank of China added 1.6% to HK$3.92, Agriculture Bank of China was unchanged at HK$3.81, ICBC inched higher 0.2% to HK$4.72, and HSBC Holding added 0.6% to HK$68.95.
Tech stocks led the gainers in Hong Kong trading.
Tencent Holdings decreased 1.4% to HK$394.60, JD.com advanced 3.2% to HK$138.20, and Meituan Holdings added 0.3% to HK$125.90.
U.S. Movers: GameStop, Take Two Interactive
Scott Peters
17 May, 2024
New York City
Take Two Interactive declined 0.7% to $145.05 after the online game developer said Grand Theft Auto is now scheduled for its next release in the fall of 2025.
Total net revenue in the fiscal fourth quarter declined to $1.399 billion from $1.44 billion, net loss expanded to $2.9 billion from $610 million, and diluted loss per share soared to $17.02 from $3.62 a year ago.
GameStop Corp. declined 21.6% to $21.70 after the video game retailer posted weaker-than-expected preliminary quarterly results.
Revenue in the fiscal fourth quarter ending on February 3 declined to $1.794 billion from $2.226 billion, and net income increased to $63.1 million from $48.2 million a year ago, respectively.
The specialty retailer also plans to sell as many as 45 million shares in a secondary offering.
S&P 500 and Nasdaq Extend Weekly Gains Amid Rate Path Uncertainty
Barry Adams
17 May, 2024
New York City
Stocks and benchmark indexes rested in early trading on Friday, and the yield on U.S. Treasury notes rebounded.
The bond yield edged higher after three Federal Reserve officials stressed the need for higher interest rates until more evidence emerges indicating that inflation is trending towards the 2% target rate.
The S&P 500 and the Nasdaq Composite traded at new highs in Wednesday's trading, and benchmark indexes traded down on Thursday and extended the weakness in Friday's trading.
Market indexes are hovering near record highs amid widespread beliefs that inflation is not likely to rebound in the months ahead, providing enough elbow room for policymakers to cut rates twice in the second half of the year.
However, rate-cut optimism may be misplaced if wages continue to rise above 4% and service sector inflation hovers close to 4%.
Moreover, home prices are still rising at a rapid pace across the nation, contributing to overall inflationary forces.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.1% to 5,294.90, and the Nasdaq Composite fell 0.1% to 16,682.22.
The yield on 2-year Treasury notes edged higher to 4.81%, 10-year Treasury notes increased to 4.41%, and 30-year Treasury bonds edged higher to 4.54%.
WTI crude oil increased $0.01 to $79.24 a barrel, and natural gas prices increased 2 cents to $2.51 a thermal unit.
Gold increased by $10.74 to $2,388.44 an ounce, and silver rose 9 cents to $29.77.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.75.
U.S. Stock Movers
Take Two Interactive declined 0.7% to $145.05 after the online game developer said Grand Theft Auto is now scheduled for its next release in the fall of 2025.
Total net revenue in the fiscal fourth quarter declined to $1.399 billion from $1.44 billion, net loss expanded to $2.9 billion from $610 million, and diluted loss per share soared to $17.02 from $3.62 a year ago.
GameStop Corp. declined 21.6% to $21.70 after the video game retailer posted weaker-than-expected preliminary quarterly results.
Revenue in the fiscal fourth quarter ending on February 3 declined to $1.794 billion from $2.226 billion, and net income increased to $63.1 million from $48.2 million a year ago, respectively.
The specialty retailer also plans to sell as many as 45 million shares in a secondary offering.
Europe Movers: Engie, Land Securities, Richemont, SCOR, Unilever
Inga Muller
17 May, 2024
Frankfurt
European markets halted three-week rally after investors scaled back rate-cut expectations following comments from policymakers.
The DAX index decreased by 0.4% to 18,667.67; the CAC-40 index fell by 0.4% to 8,154.76; and the FTSE 100 index inched lower by 0.4% to 8,407.41.
The yield on 10-year German bonds edged up to 2.48%; French bonds inched higher to 2.98%; the UK gilts edged lower to 4.11%; and Italian bonds inched lower to 3.78%.
Richemont SA increased 5.8% to CHF 145.40 after the Swiss luxury goods company announced several management and board changes.
Richemont appointed Nicolas Bos, currently serving as chief executive of Van Cleef & Arpels, as the company's new chief executive, replacing Jerome Lambert.
SCOR SE declined 7.7% to €29.70 after the French reinsurance company said first-quarter net income dropped 37% to €196 million from €311 million a year ago.
Engie SA decreased 1.6% to €15.53 after the French electric utility reported a slight decline in its operating earnings in the first quarter amid broad weakness in revenue.
Revenue dropped 24.6% to €22.0 billion from €29.6 billion, and operating earnings edged down 0.1% to €5.4 billion.
The company reiterated its 2024 recurring income outlook between €4.1 billion and €4.8 billion and its operating earnings, excluding nuclear division, to range between €7.5 billion and €8.5 billion.
Land Securities declined 2.8% to 670.50 pence after the company said annual rental income declined to £371 million from £393 million in 2023.
Pre-tax losses shrank to 341 million from 622 million, and the basic loss per share fell to 43 pence from 83.6 pence a year ago.
The company hiked the dividend by 2.6% to 39.6 pence from 38.6 pence a year ago.
Unilever advanced 0.6% to 4,307.0 pence after the consumer products company launched its €1.5 billion stock repurchase plan.
European Markets Halt 3-week Rally, French Jobless Rate Held Steady at 7.5%
Bridgette Randall
17 May, 2024
Frankfurt
European markets edged lower for the second day in a row after a nine-day rally in the previous session.
Market sentiment was cautious after several U.S. and European policymakers cautioned against rate cuts.
Benchmark indexes in Frankfurt, Paris, and London extended weekly losses after comments from the European Central Bank rate-setting committee cautioned against additional rate cuts after June.
In addition, three U.S. policymakers stressed the need to keep rates higher for longer until solid evidence emerges that inflation is on the way to 2%.
The eurozone consumer price inflation was confirmed at 2.4% in April, matching the rate in March, the statistical agency Eurostat reported Friday.
French Jobless Rate Held at 7.5%
France's jobless rate held steady at 7.5%, matching rates in the previous two quarters.
The unemployment rate in the first quarter increased by 6,000 to 2.3 million, the statistical agency INSEE reported Friday.
The jobless rate among people between 15 and 24 inched up 0.6% to 18.1% and increased 0.1 percentage point to 5.1% for those older than 50.
The unemployment rate between the ages of 25 and 49 eased by 0.2 percentage points to 6.8%.
Moreover, mixed economic data from China also weighed on market sentiment.
China's Property Market Woes Deepen, Retail Sales Growth Slows
China's retail sales rose less than expected by 2.3% in April, but the jobless rate declined to 5.0% from 5.3% in March.
Industrial output, one of the few bright spots in the Chinese economy, rose faster-than-expected by 6.7% in April.
China's fixed-asset investment rose 4.2% from a year ago in the January–April period, slower than 4.5% in the January–March period.
Property investment deepened to 9.8% in the first four months from 9.5% in the first quarter, prompting calls for wider and faster regulatory reforms.
Meanwhile, overall residential floor space sold in April declined by 20.2%, and the sales value of new homes dropped by 28.3% from a year ago.
Europe Indexes and Yields
The DAX index decreased by 0.4% to 18,667.67; the CAC-40 index fell by 0.4% to 8,154.76; and the FTSE 100 index inched lower by 0.4% to 8,407.41.
The yield on 10-year German bonds edged up to 2.48%; French bonds inched higher to 2.98%; the UK gilts edged lower to 4.11%; and Italian bonds inched lower to 3.78%.
The euro edged higher to $1.084; the British pound inched higher to $1.266; and the U.S. dollar gained to 90.92 Swiss cents.
Brent crude increased $0.07 to $83.34 a barrel, and the Dutch TTF natural gas rose by €0.29 to €30.86 per MWh.
Europe Stock Movers
Richemont SA increased 5.8% to CHF 145.40 after the Swiss luxury goods company announced several management and board changes.
Richemont appointed Nicolas Bos, currently serving as chief executive of Van Cleef & Arpels, as the company's new chief executive, replacing Jerome Lambert.
SCOR SE declined 7.7% to €29.70 after the French reinsurance company said first-quarter net income dropped 37% to €196 million from €311 million a year ago.
Engie SA decreased 1.6% to €15.53 after the French electric utility reported a slight decline in its operating earnings in the first quarter amid broad weakness in revenue.
Revenue dropped 24.6% to €22.0 billion from €29.6 billion, and operating earnings edged down 0.1% to €5.4 billion.
The company reiterated its 2024 recurring income outlook between €4.1 billion and €4.8 billion and its operating earnings, excluding nuclear division, to range between €7.5 billion and €8.5 billion.
Land Securities declined 2.8% to 670.50 pence after the company said annual rental income declined to £371 million from £393 million in 2023.
Pre-tax losses shrank to 341 million from 622 million, and the basic loss per share fell to 43 pence from 83.6 pence a year ago.
The company hiked the dividend by 2.6% to 39.6 pence from 38.6 pence a year ago.
Unilever advanced 0.6% to 4,307.0 pence after the consumer products company launched its €1.5 billion stock repurchase plan.
Yen and Tech Stock Weakness Drive Stock Market Volatility In Japan
Akira Ito
17 May, 2024
Tokyo
Stocks in Tokyo struggled in Friday's trading as investors digested the latest update on GDP and the movement in currency trading.
Market sentiment in Tokyo was cautious a day after Japan's GDP report showed an annual contraction of 2%, and private sector consumption fell for the fourth quarter in a row.
The ongoing natural disaster-related challenges and scandal-ridden production halts at Toyota's Daihatsu Motor also contributed to the economic contraction.
The yen eased to 155.76 against the U.S. dollar after the currency faced renewed pressure on speculation that the Bank of Japan continued to buy Japanese government bonds in the amount matching the previous operation.
Bank of Japan Governor Ueda is widely anticipated to announce the central bank's bond buying program at the next meeting in June.
Earlier in the month, Governor Kazuo Ueda confirmed that the central bank has no plans to sell its exchange-traded fund holdings.
Japan Stock Movers
Stocks in Tokyo traded lower, and tech stocks led the decliners and reversed the previous day's gains.
The Nikkei 225 Stock Average fell 0.6% to 38,703.95, and the Topix index advanced 0.1% to 2,740.22.
For the week, the Nikkei index increased 1.7% and extended this year's gain to 16.4%.
The Topix index added 0.8% in the week and advanced 15.2% in the year so far.
Tokyo Electron, Advantest, Screen Holdings, and SoftBank declined between 1% and 3%.
Banks were in focus in Friday's trading after investors debated the future rate paths and assessed the impact of a weaker yen on corporate profits.
Mitsubishi UFJ and Mizuho Financial Group rose about 1.7%, but Sumitomo Mitsubishi Financial declined 1.8%.
Japan Steel Works rose 6.5% to 4,434.0 yen, and earlier in the week, the steelmaker reported slower annual revenue growth in the fiscal year ending in March.
Revenue increased 5.8% to 252.5 billion yen from 238.7 billion yen, profit attributable shareholders rose 19.2% to 14.3 billion yen, and earnings per share increased to 194.02 yen from 162.75 yen a year ago.
The company declared an annual dividend of 29 yen, matching the previous year, and the total dividend increased to 59 yen from 58 yen a year ago.
China's Weak Economic Data Highlighted Difficulties of Meeting 5% Annual Growth Target
Li Chen
17 May, 2024
Hong Kong
Stocks in Shanghai and Hong Kong faced selling pressure after the latest economic data highlighted weak consumer demand.
On Friday, the National Bureau of Statistics reported retail sales, fixed investments, home prices, and industrial output data.
The latest economic data, coupled with credit demand data released last week, highlighted that the government may face challenges in meeting its annual economic growth target of 5% this year.
Weak consumer domestic demand, slowing private sector investment, and ongoing property sector weakness are contributing to the weakening economic growth profile of the second-largest economy.
Retail sales rose less-than-expected 2.3% in April, a 15-month low, as consumers avoided large purchases amid job market uncertainty and ongoing property market weakness.
Retail sales growth slowed from a 3.1% rise in March a year ago.
Industrial output, one of the few bright spots in the Chinese economy, rose faster-than-expected by 6.7% in April.
China's fixed-asset investment rose 4.2% from a year ago in the January–April period, slower than 4.5% in the January–March period.
Property investment deepened to 9.8% in the first four months from 9.5% in the first quarter, prompting calls for wider and faster regulatory reforms.
Meanwhile, overall residential floor space sold in April declined by 20.2%, and the sales value of new homes dropped by 28.3% from a year ago.
Prices of new homes in large and well-developed cities, generally known as first-tier cities, decreased by 0.6% from March, the 11th month of decline in a row, the statistical bureau reported Friday.
At the same time, existing home prices decreased by 0.9% from March.
The National Statistics Bureau said new home prices declined in 64 of 70 medium and large cities in April, an increase from 57 cities in March.
However, existing home prices fell in 69 cities in April, matching the number in March.
Despite the weakening in investment, the jobless rate declined to 5.0% in April from 5.2% in March, the statistical bureau said on Friday.
China Stock Movers
The CSI 300 index decreased 0.2% to 3,633.04, and the Hang Seng index advanced 0.3% to 19,433.14.
Ping An Insurance Group advanced 1.6% to HK$43.70 on widespread rumors that China's insurance giant is considering its stake in UK-based HSBC Holdings.
HSBC decreased 3.1% to HK$67.95.
Property developers were in focus for the second day in a row after property investment in the first four months fell at a faster pace than in the first quarter.
The weakness in property sector investment raised hopes of concrete steps from the government.
China Vanke rose 4.2% to HK$5.97, China Resources Land decreased 1.1% to HK$31.55, and Longfor Group soared 7.4% to HK$14.80.
Banks were among the most actively traded stocks in Shanghai and Hong Kong.
ICBC decreased 0.6% to HK$4.68, Bank of China declined 0.1% to HK$3.87, and Agriculture Bank of China fell 0.2% to $3.81.
Tencent Holdings advanced 0.5% to HK$395.60 and Baidu Inc. fell 0.5% to HK$111.50 after the two leading tech companies reported better-than-expected quarterly results.
India Movers: CONCOR, Eclerx, Endurance Tech. KIMS, Prince Pipes, Triveni Turbine, Ratnamani Metals
Arun Goswami
17 May, 2024
Mumbai
Stocks in Mumbai edged lower and trimmed weekly market gains, and investors reacted to the latest batch of mixed quarterly results.
The Sensex index decreased by 0.2% to 73,503.03, and the Nifty index fell by 0.2% to 22,365.05.
On the Mumbai stock exchange, 89 stocks traded at their 52-week highs, and 12 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched lower to 7.07%, and the Indian rupee edged lower at ₹83.49 against the U.S. dollar.
IIFL Securities rose 5.4% to ₹166.0 after the financial services company reported better-than-expected quarterly results.
Revenue in the March quarter increased 68.2% to ₹575.5 crore from ₹342.1 crore, and net income more than doubled to ₹180 crore from ₹86.3 crore a year ago, respectively.
Krishna Institute of Medical Sciences decreased 3.3% to ₹1,889.80 after the hospital chain operator reported a decline in earnings in its latest quarter.
Revenue in the March quarter rose 10% to 633.8 crore from 576 crore, and net income declined 29.8% to 65.4 crore from 93 crore a year ago, respectively.
Prince Pipes & Fittings advanced 2.5% to ₹662.50 despite the tubular products company reporting lower revenue and earnings in its latest quarter.
Revenue in the March quarter decreased by 3.2% to ₹740.1 crore from ₹764.4 crore, and net income decreased by 42% to ₹54.6 crore from ₹94.1 crore a year ago, respectively.
Triveni Turbine increased 3.2% to ₹624.55 after the power generation equipment maker reported better-than-expected quarterly results.
Revenue in the March quarter jumped 24% to ₹458.1 crore from ₹369.8 crore, and net income jumped 36.2% to ₹75.6 crore from ₹55.5 crore a year ago, respectively.
Endurance Technologies soared 8.6% to ₹2,200.00 after the company reported strong gains in revenue and earnings in its latest quarter.
Revenue in the March quarter increased 20.2% to ₹2,648.7 crore from ₹2,234.3 crore, and net income soared 54% to ₹210.1 crore from ₹136.4 crore a year ago, respectively.
Eclerx Services increased 4.7% to ₹2,411.0 despite the business process outsourcing company reporting a decline in earnings in its latest quarter.
Revenue increased 10.6% to ₹766.5 crore from ₹693.1 crore, and net income declined 1.5% to ₹130.5 crore from ₹132.5 crore a year ago, respectively.
Container Corporation of India, or CONCOR, decreased 2.8% to ₹1,007.75 after the company reported weaker-than-expected quarterly results.
Revenue in the March quarter increased 6.5% to ₹2,325 crore, and net income advanced 13.5% to ₹317 crore from ₹279 crore a year ago, respectively.
Ratnamani Metals & Tubes fell 2.4% to ₹3,067.0 after the metal processing company reported muted results in its latest quarter.
Revenue in the March quarter fell 0.2% to ₹1,495.7 crore from ₹1,499.1 crore, and net income edged up to ₹192.2 crore from ₹191.6 crore a year ago, respectively.
Building Permits Declined to a 4-month Low in April
Brian Turner
16 May, 2024
Washington, D.C.
Building permits declined by 3% to a seasonally adjusted annual rate of 1.44 million in April, the U.S. Census Bureau reported Thursday.
The annual pace of building permits dropped to the lowest level since 1.4 million in December 2022.
High interest rates and high land and construction costs continued to dent the market.
Single-family authorization declined by 0.8% to 976,000, and multi-family authorization dropped 9.1% to 408,000.
Permits in the Midwest fell by 18.1% to 167,000, in the West by 14.4% to 292,000, but rose in the South by 4.2% to 827,000 and increased by 5.5% in the Northeast to 154,000.
Housing starts in April increased 5.7% to an annual rate of 1.36 million from the revised March estimate of 1.287 million but below the April 2023 rate of 1.368 million.
Single-family housing starts in April were at a rate of 1.031 million, a decline of 0.4% from the revised March rate of 1.035 million.
Privately-owned housing completions in April were at a seasonally adjusted rate of 1.623 million, an increase of 8.6% from the revised March estimate of 1.495 million and 14.6% higher than the rate of 1.46 million in April 2023.
Single-family housing completions were at a rate of 1.092 million, an increase of 15.4% from the revised rate of 946,000 in March.
Positive Mood Prevails as U.S. Indexes Scale Higher
Alexander Garcia
16 May, 2024
Miami
Stocks on Wall Street inched further into record territory after major indexes soared to new record highs in the previous session.
The S&P 500 index and the Nasdaq Composite advanced to new highs after annual core consumer price inflation rose 3.4%, less than expected in April.
The lighter-than-expected inflation report followed the hotter-than-expected producer price inflation update released on Tuesday.
Investors bid up technology and high-growth stocks in the hopes that the Federal Reserve has more flexibility in lowering interest rates in the second half.
On the economic front, industrial production declined by 0.4% in April from a year ago, the Federal Reserve reported Thursday.
Total production declined in April from the upwardly revised 0.1% in February and March.
Manufacturing production, which makes up 78% of total production, fell 0.5%, and mining output decreased 1.3%, offsetting an increase in utility production by 2.3%.
On a monthly basis, industrial production was little changed in April after rising 0.1% in March and 0.8% in February.
Building permits declined in April.
Building permits declined by 3% to a seasonally adjusted annual rate of 1.44 million in April, the U.S. Census Bureau reported Thursday.
The annual pace of building permits dropped to the lowest level since 1.4 million in December 2022.
High interest rates and high land and construction costs continued to dent the market.
Single-family authorization declined by 0.8% to 976,000, and multi-family authorization dropped 9.1% to 408,000.
Permits in the Midwest fell by 18.1% to 167,000, in the West by 14.4% to 292,000, but rose in the South by 4.2% to 827,000 and increased by 5.5% in the Northeast to 154,000.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.2% to 5,320.05, and the Nasdaq Composite rose 0.2% to 16,776.54.
The yield on 2-year Treasury notes edged lower to 4.76%, 10-year Treasury notes decreased to 4.34%, and 30-year Treasury bonds edged lower to 4.49%.
WTI crude oil increased $0.13 to $78.76 a barrel, and natural gas prices increased 2 cents to $2.43 a thermal unit.
Gold decreased by $7.73 to $2,384.29 an ounce, and silver fell 10 cents to $29.62.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.47.
U.S. Stock Movers
Cisco Systems jumped 3.2% to $51.24 after the networking gear maker reported better-than-estimated fiscal third quarter earnings.
Walmart Inc. increased 5.6% to $63.05 after the retail giant reported better-than-expected fiscal first-quarter results.
Chubb Ltd. increased 6.7% to $269.99 after Berkshire Hathaway disclosed in a regulatory filing that it has acquired nearly 26 million shares for $6.7 billion.
Meta Platforms declined 0.9% to $477.45 after the social media platform operator was under investigation by the European Commission for the alleged breaking of the region's content laws regarding child safety.
Deere & Co. decreased 5.8% to $390.0 after the farm equipment maker lowered its annual earnings outlook.
The agriculture equipment maker reported better-than-expected quarterly results and lowered its annual earnings outlook to $7 billion from the previous estimate between $7.50 and $7.75 billion.
European Turn Lower from Record Highs
Stock market indexes in Europe turned lower after reaching new highs in the previous session, and investors shifted their focus to the latest batch of corporate results.
Market indexes in London, Paris, and Frankfurt traded at new highs in the previous session in the hopes that the Bank of England and the European Central Bank are still on track to start cutting rates as early as June.
The rate-cut expectations gained further momentum after U.S. core inflation in April eased to a three-year low of 3.4%, stoking speculation that the Federal Reserve may have more room to cut interest rates in the second half.
In commodities trading, Brent crude dropped to a six-week low and copper traded at a three-year high in the hopes of rising demand fueled by the building of new data centers.
Europe Indexes and Yields
The DAX index decreased by 0.7% to 18,725.71; the CAC-40 index fell by 0.6% to 8,188.49; and the FTSE 100 index inched lower by 0.1% to 8,438.65.
The yield on 10-year German bonds edged down to 2.42%; French bonds inched lower to 2.92%; the UK gilts edged lower to 4.07%; and Italian bonds inched lower to 3.72%.
The euro edged higher to $1.087; the British pound inched higher to $1.267; and the U.S. dollar eased to 90.21 Swiss cents.
Brent crude increased $0.60 to $83.32 a barrel, and the Dutch TTF natural gas rose by €1.07 to €30.55 per MWh.
Europe Stock Movers
Deutsche Telekom declined by 0.2% to €21.99 after the German telecommunication network operator reported a sharp decline in earnings.
Net income in the first quarter plunged 87.1% to €1.98 billion from €15.36 billion.
Siemens fell by 5.4% to €177.44 after the industrial equipment company reported a decline in earnings in its fiscal second quarter amid weak demand in its automation business.
Sage Group PLC dropped 9.4% to 1,089.62 pence, despite the U.K.-based software company reporting robust first-half results.
Future plc rose 11.9% to 973.41 pence after the publishing company announced a £45 million stock buyback plan.
The company said revenue in the first half declined 3% to £391.5 million from £404.7 million, pre-tax profit dropped to £46.6 million from £66.4 million, and earnings per share fell 38% to 29 pence from 46.7 pence a year ago.
In the period, the company returned £35.9 million to shareholders, including £32 million through the completed £45 million stock repurchase program and £3.9 million in dividends.
BT Group jumped 11.6% to 126.25 pence after the new chief executive announced plans to more than double free cash flow over the next five years.
EasyJet declined 4.0% to 510.68 pence after the deep discount airline reported a larger-than-expected first-half loss of £350 million.
Aegon NV jumped 0.7% to €6.27 after the Dutch insurance company announced a stock repurchase plan.
Eni SpA decreased by 2.4% to €14.75 after the Italian Economy Ministry announced its plans to sell a 2.8% stake in the company to raise about €1.4 billion.
Swiss Re increased 3.4% to CHF 107.30 after the Swiss reinsurance company reported positive first quarter results.
Zurich Insurance Group advanced 1.9% to CHF 462.10 after the company reported better-than-expected first-quarter results.
Tech Stocks Support Rebound In Japan Indexes
Stocks and benchmark indexes in Toyo advanced following the market rally in overnight trading in New York.
The weaker-than-anticipated U.S. core consumer price inflation in April of 3.4% raised hopes that the Federal Reserve may be able to cut interest rates at least twice in the second half of 2024.
Investors also overlooked the weakness in economic growth in the first quarter, as the country suffered a devastating earthquake on the Noto Peninsula on the first day of 2024.
The Japanese yen traded at 154.19 against the U.S. dollar after the release of the GDP data.
Japan's GDP Contracted In the First Quarter
Japan's economy shrank more than expected in the first quarter on the weakness in consumer spending and business investment, the Cabinet Office reported Thursday.
GDP contracted 0.5% from the previous quarter in the first quarter of 2024, following a downwardly revised stagnation in the final quarter of 2023.
Consumer spending fell at a faster pace of 0.7% in the fourth quarter compared to a decline of 0.4% in the fourth quarter because of weak wage growth and higher prices.
Capital expenditure in the quarter fell 1.8%, largely impacted by the halting of production at Toyota's small car subsidiary, Daihatsu Motor.
International trade also subtracted from economic growth after exports fell by 5.0%, faster than the 3.4% decline in imports.
Japan Stock Movers
The Nikkei 225 Stock Average added 1.1% to 38,826.77, and the Topix index gained 0.1% to 2,733.94.
Tech stocks led the gainers and tracked gains in overnight trading in New York.
Tokyo Electron, Advantest, Screen Holdings, Lasertec, and SoftBank Group gained between 1.5% and 3.5%.
Sumitomo Mitusi Financial and Mizuho Financial gained around 1%.
Mitsubishi UFJ Financial decreased 4% to ¥1,523.50 despite the bank reporting better-than-expected net income and declaring a higher-than-expected dividend.
Net income in the March quarter increased to 192.87 billion yen, and the company declared a cash dividend of 20.50 yen.
Recruit Holdings increased 9% to ¥7,700.0 after the company reported better-than-expected quarterly results but also estimated improving market conditions.
Revenue in the fiscal fourth quarter increased 1.9% to 843.7 billion yen from 827.7 billion yen, and net income rose to 34 billion yen from 22.3 billion yen from a year ago, respectively.
Revenue in the staffing segment increased by 2.4% to 392.8 billion yen; in HR technology, it increased by 0.9% to 253.5 billion yen; and in matching and solutions, it increased by 2.5% to 2081. billion yen.
HR technology segment includes U.S.-based Indeed and Glassdoor, and the company said revenue and job ads continue to decline on job sites by 10.1% in U.S. dollars.
Nisshin Seifun dropped 9% to ¥1,868.50, and Nippon Paper Industries declined 8.5% to ¥1,011.0.
China Indexes Advanced Ahead of Key Economic Releases
Stocks in Shanghai and Hong Kong advanced ahead of the release of key economic data on Friday and earnings from leading tech companies later in the day.
Investors have been increasing exposure to Chinese stocks in the hopes that state-controlled companies will support financial markets through steady buying of large-cap companies.
In Hong Kong, the Hang Seng index advanced after investors returned from a public holiday.
In active trading, stocks in Hong Kong gained following the easing of core consumer price inflation in the U.S. in April to 3.4%, raising hopes that the Federal Reserve could lower rates two times in the second half of 2024.
Despite the market enthusiasm, foreign investors are skeptical about the long-term outlook for Chinese stocks as more Chinese companies shift or expand manufacturing in locations outside China.
Moreover, Chinese authorities are also stepping up oversight and raising barriers for capital repatriations for foreign companies.
In addition, Chinese banks have yet to book losses stemming from large loans issued to property developers, and current earnings do not reflect the weakness in the loan portfolio.
China Stock Movers
The CSI 300 index increased 0.8% to 3,655.44, and the Hang Seng index advanced 1.6% to 19,382.75.
Market sentiment was also bolstered in the hopes that the latest move by the Hangzhou government will be followed by other regional governments in reviving the property market.
The Hangzhou City government announced its plans to buy existing homes in the city and rent them affordable housing. The move was designed to inject liquidity into the property market and make homes available to a wider group of families.
On Friday, the Chinese statistical office is scheduled to release April's retail sales, industrial production, and investments.
Tech stocks advanced following the surge in the sector in overnight trading in New York and ahead of earnings results from Baidu, JD.com, and Meituan.
Baidu decreased 0.2% to HK$109.0, JD.com gained 2.4% to HK$132.20, and Meituan advanced 3% to HK$125.60.
Bank of China, Agriculture Bank of China, ICBC, and China Construction Bank advanced between 3% and 6% in Hong Kong trading in the hopes that interest rates may be lowered following the possible rate cuts in the U.S.
Li Auto and BYD declined 2%, but Xpeng and Nio gained 1% in Hong Kong trading.
U.S. Movers: Cisco Systems, Chubb, Deere, Walmart
Scott Peters
16 May, 2024
New York City
Cisco Systems jumped 3.2% to $51.24 after the networking gear maker reported better-than-estimated fiscal third quarter earnings.
Revenue declined 13% to $12.7 billion from $14.6 billion, net income plunged 41% to $1.9 billion from $3.2 billion, and diluted earnings per share declined to 46 cents from 78 cents a year ago.
Product revenue in the quarter declined by 19%, service revenue rose by 6% in the quarter.
The company completed the acquisition of Splunk in the quarter, and Splunk contributed $413 million in revenue.
The company declared a 40-cent per share cash dividend to shareholders on record on July 5 to be repaid on July 24.
Walmart Inc. increased 5.6% to $63.05 after the retail giant reported better-than-expected fiscal first-quarter results.
Total revenue in the first quarter increased 6% to $161.5 million from $152.3 million, net income soared 205% to $5.1 billion from $1.7 billion, and diluted earnings per share advanced to 63 cents from 21 cents a year ago.
Chubb Ltd. increased 6.7% to $269.99 after Berkshire Hathaway disclosed in a regulatory filing that it has acquired nearly 26 million shares for $6.7 billion.
Meta Platforms declined 0.9% to $477.45 after the social media platform operator was under investigation by the European Commission for the alleged breaking of the region's content laws regarding child safety.
Deere & Co. decreased 5.8% to $390.0 after the farm equipment maker lowered its annual earnings outlook.
The agriculture equipment maker reported better-than-expected quarterly results and lowered its annual earnings outlook to $7 billion from the previous estimate between $7.50 and $7.75 billion.
Revenue in the quarter decreased 12% to $15.3 million from $17.4 million, net income declined to $2.37 billion from $2.86 billion, and diluted earnings per share fell to 8.53 from $9.65 a year ago.