Market Update
Rate-cut Expectations Keep Wall Street Indexes Near Record Highs
Barry Adams
16 May, 2024
New York City
Stocks on Wall Street inched forward 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 tech and high-growth stocks in the hopes that the Federal Reserve has more flexibility in lowering interest rates in the second half.
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 0.1% to 5,310.06, and the Nasdaq Composite rose 0.5% to 16,752.71.
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.
Europe Movers: Aegon, BT, Deutsche Telekom, easyJet, Eni, Future PLC, Sage Group, Siemens, Swiss Re, Zurich Insurance
Inga Muller
16 May, 2024
Frankfurt
European market indexes traded around the high reached in the previous session, and investors assessed the latest batch of quarterly results.
The DAX index decreased by 0.3% to 18,815.31; the CAC-40 index fell by 0.6% to 8,190.17; and the FTSE 100 index inched lower by 0.3% to 8,422.45.
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%.
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.
European Markets Trade Near Record Highs; Bond Yields Edged Lower and Euro Edged Higher
Bridgette Randall
16 May, 2024
Frankfurt
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 0.3% to 18,815.31; the CAC-40 index fell by 0.6% to 8,190.17; and the FTSE 100 index inched lower by 0.3% to 8,422.45.
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 $0.30 to $82.44 a barrel, and the Dutch TTF natural gas rose by €0.63 to €30.11 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.
Japan's GDP Contracted After Consumers and Businesses Curb Spending
Akira Ito
16 May, 2024
Tokyo
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 Data and Earnings Releases
Li Chen
16 May, 2024
Hong Kong
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.
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.
India Movers: LIC Housing, NCC, Paradeep Phosphates, Pricol, Somany Ceramics, TCI, Titagarh Rail
Arun Goswami
16 May, 2024
Mumbai
Stocks in Mumbai advanced, and investors reacted positively to the latest batch of quarterly results.
The Sensex index increased by 0.3% to 73,170.32, and the Nifty index rose by 0.2% to 22,238.50.
On the Mumbai stock exchange, 96 stocks traded at their 52-week highs, and 17 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched lower to 7.06%, and the Indian rupee edged lower at ₹83.46 against the U.S. dollar.
Transport Corporation of India advanced 1.5% to ₹895.65 after the logistics and supply chain management company reported positive quarterly results.
Revenue in the March quarter increased 10.2% to ₹1,079 crore from ₹979.3 crore, and net income soared 25.3% to ₹102.1 crore from ₹85.1 crore a year ago, respectively.
Somany Ceramics increased 1.1% to ₹625.70 after the tiles and flooring material maker reported strong gains in the latest quarter.
Revenue in the March quarter increased 8.6% to ₹737.5 crore from ₹679.2 crore, and net income jumped 26.8% to ₹30.8 crore from ₹24 crore a year ago, respectively.
NCC Ltd. increased 1.8% to ₹256.0 after the industrial construction company reported a rise in revenue and earnings in the latest quarter.
Revenue in the March quarter rose 31% to 6,485 crore from 4,949 crore, and net income advanced 25.2% to 239.2 crore from 191 crore a year ago, respectively.
Paradeep Phosphates decreased 0.9% to ₹71.45 after revenue declined in the latest quarter.
Revenue in the March quarter fell 38.5% to ₹2,242.7 crore from ₹3,644 crore, and net income rose to ₹21.5 crore from ₹10.0 crore a year ago, respectively.
Pricol Ltd. rose 2.8% to ₹448.75 after the automotive component maker reported strong gains in revenue and earnings.
Revenue in the March quarter rose 11.0% to ₹566.2 crore from ₹509.7 crore, and net income advanced 39.3% to ₹41.5 crore from ₹29.8 crore a year ago, respectively.
LIC Housing Finance increased 0.5% to ₹631.10 after the company reported mixed quarterly results.
Net interest income in the March quarter rose 12.4% to ₹2,237.6 crore from ₹1,990.3 crore, and net income dropped 7.6% to ₹1,090.8 crore from ₹1,180 crore a year ago, respectively.
Power Finance rose 3.7% to ₹452.85 after the financial services provider to electric utilities reported a surge in earnings and revenues.
Revenue in the March quarter rose 20% to ₹12,243.7 crore and net income advanced to 18.4% to ₹4,135 crore, from a year ago, respectively.
The company declared a final dividend of ₹2.50 per share, in addition to the ₹11 per share paid during the fiscal year.
Retail Sales Flat in April
Brian Turner
15 May, 2024
Washington, D.C.
Retail sales in April rose less than expected as consumers battled elevated prices for food and shelter and high interest rates.
Advance retail sales adjusted for seasonal factors but not for inflation were flat compared to the previous month in April, the U.S. Census Bureau reported Wednesday.
Retail sales rose 3.0% from a year ago to $705.2 billion, indicating consumers are still spending but staying focused on the basics and avoiding discretionary items.
March retail sales were upwardly revised to 0.7% from the previous estimate of a 0.6% increase.
Retail trade sales were virtually unchanged from March but up 2.7% above last year.
Nonstore retailers were up 7.5% from last year, while food services and drinking places were up 5.5% from April 2023.
S&P 500 and Nasdaq Soar 1% After Consumer Price Inflation Eased
Alexander Garcia
15 May, 2024
Miami
Stocks and benchmark indexes advanced in Wednesday's trading after consumer price inflation rose at a slower-than-expected pace in April.
The S&P 500 index and the Nasdaq Composite advanced 1% and traded at new record highs following the weaker-than-expected increase in inflation.
Investors overlooked the acceleration of producer price inflation data released on Tuesday and increased exposure to tech and high-growth companies in the belief that the Federal Reserve is more likely to cut interest rates later in the year.
Despite the easing of consumer price inflation in April, prices are still rising at a faster pace than the Fed's target rate of 2%, even after eleven rate hikes over the last three years.
Retail Sales Flat in April
Retail sales in April rose less than expected as consumers battled elevated prices for food and shelter and high interest rates.
Advance retail sales adjusted for seasonal factors but not for inflation were flat compared to the previous month in April, the U.S. Census Bureau reported Wednesday.
Retail sales rose 3.0% from a year ago to $705.2 billion, indicating consumers are still spending but staying focused on the basics and avoiding discretionary items.
March retail sales were upwardly revised to 0.7% from the previous estimate of a 0.6% increase.
Retail trade sales were virtually unchanged from March but up 2.7% above last year.
Nonstore retailers were up 7.5% from last year, while food services and drinking places were up 5.5% from April 2023.
Core Consumer Price Inflation Drops to a 3-year Low
Consumer price inflation rose at a slower annual pace of 3.4% in April from 3.5% in March, the U.S. Bureau of Labor Statistics reported Wednesday.
The seasonally adjusted inflation index rose 0.3% in April after rising 0.4% in March on a monthly basis.
The index for shelter and gasoline rose, and combined, these two indexes contributed over seventy percent of the increase in all items.
The energy index increased 1.1% over the month, and the food index was unchanged.
The prices for used and new vehicles, household furnishings, and operations declined in the month.
The so-called core index, which excludes energy and food prices, slowed to a 0.3% increase after rising to 0.4% in each of the three previous months.
The annual pace of core consumer price index dropped to 3.6%, the lowest level since April 2021.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.9% to 5,291.54, and the Nasdaq Composite rose 1.0% to 16,679.48.
The yield on 2-year Treasury notes edged lower to 4.76%, 10-year Treasury notes decreased to 4.37%, and 30-year Treasury bonds edged lower to 4.53%.
WTI crude oil decreased $0.11 to $78.13 a barrel, and natural gas prices increased 6 cents to $2.39 a thermal unit.
Gold increased by $29.01 to $2,384.60 an ounce, and silver rose 85 cents to $29.46.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.41.
U.S. Stock Movers
AMC Entertainment decreased 7.8% to $6.89, and GameStop Corp. plunged 10% to $43.70.
Nextracker Inc. increased 14.5% to $49.24 after the solar technology company said revenue in the fiscal fourth quarter increased more than expected.
Revenue in the quarter rose 42% to $737 million from $518.9 million, net income advanced to $223.2 million from $27.5 million, and diluted earnings per share rose to $1.51 from 2 cents a year ago.
The company estimated fiscal 2025 revenue between $2.8 billion and $2.9 billion, net income between $369 million and $399 million, and diluted earnings per share between $2.41 and $2.61.
Boot Barn Holdings dropped 6.3% to $100.31 after the western apparel retailer offered a muted annual outlook.
Net sales fell 8.7% to $388.5 million, and decreased 2.2% when $28.3 million of sales in the 14th week of the prior-year period were excluded.
Same-store sales declined 5.9% in the first quarter compared to the prior-year period, and same-store sales on a 3-year stack basis rose 55%.
The 5.9% decrease in consolidated same-store sales is comprised of a 5.7% decrease in retail store sales and a 7.6% decrease in e-commerce.
Net sales declined to $388.5 million from $425.6 million, net income dropped to $29.4 million from $46.4 million, and diluted earnings per share dropped to 96 cents from $1.53 a year ago.
The company guided fiscal 2025 sales to fall between $1.766 billion and $1.800 billion, representing growth of 5.9% to 8.0% over the prior year.
The retailer estimated net income of $140.2 million to $149.3 million and net income per diluted share of $4.55 to $4.85 based on 30.8 million weighted average diluted shares outstanding.
European Markets Close at Record Highs
European market indexes advanced and extended further into record territory after the release of the GDP, employment, and industrial production data.
Benchmark indexes in Paris, London, and Frankfurt advanced between 0.2% and 0.5%, and the euro strengthened against the dollar and other leading currencies.
The Eurozone Economy Expands in the First Quarter
Seasonally adjusted GDP in the first quarter rose 0.3% from the previous quarter, Eurostat, the statistical office of the European Union, reported in its flash estimate on Wednesday.
The economy expanded in the first quarter after shrinking in the previous two quarters in a row by 0.1%, when measured on a quarterly basis.
GDP in the first quarter rose 0.4% from a year ago, faster than the 0.1% annual increase in the fourth quarter of 2023.
GDP in Germany contracted for the third quarter in a row by an annual 0.2%, in France it expanded by 1.1%, in Spain by 2.4%, and in Italy by 0.6%.
Ireland led the currency union with a decline of 4.9%, Estonia by 2.1%, and Austria by 1.3%.
Employment Growth Slowed In the First Quarter
The statistical agency also said the number of employed persons in the eurozone increased by 0.3% from the previous quarter to 169.8 million.
From a year ago, the total number of people on the payroll increased by 1.0%, slower than the 1.2% increase in the fourth quarter.
Employment in Germany increased by 0.2%, in France by 0.2%, and in Italy by 0.3%.
Eurozone Industrial Production Eased in March
Seasonally adjusted industrial production rose 0.6% from the previous month in March, according to the first estimate released by the statistical agency on Wednesday.
On an annual basis, industrial production declined by 1.0% in both the Euro Area and the European Union.
Industrial production of energy decreased by 3.5%, intermediate goods fell by 2.3%, durable consumer goods dropped by 8.3%, non-durable consumer goods declined by 7.0%, and capital goods increased by 1.8%.
The largest annual decreases in industrial production were recorded in Finland by 7.7%, in Bulgaria by 7.6%, and in Austria by 7.0%.
The largest increases were observed in Ireland by 37.0%, in Cyprus by 8.5%, and in Romania by 3.5%.
Europe Indexes and Yields
The DAX index increased by 0.8% to 18,869.36; the CAC-40 index rose by 0.2% to 8,239.99; and the FTSE 100 index inched higher by 0.2% to 8,445.80.
The yield on 10-year German bonds edged down to 2.47%; French bonds inched lower to 2.98%; the UK gilts edged lower to 4.11%; and Italian bonds inched lower to 3.80%.
The euro edged higher to $1.082; the British pound inched higher to $1.252; and the U.S. dollar eased to 90.50 Swiss cents.
Brent crude increased $0.18 to $82.58 a barrel, and the Dutch TTF natural gas fell by €0.17 to €29.48 per MWh.
Europe Stock Movers
InPost increased 10.4% to €16.83 after the Polish parcel delivery company reported that its first quarter core profit surged by 36%.
ABN AMRO Bank declined 3% to €16.18 after the Dutch bank reported weaker capital ratios in the first quarter following the rise of risk-weighted assets, which overshadowed strong earnings.
The bank's CET 1 ratio, a measure of the bank's own capital to risk-weighted assets, decreased to 13.8% in the first quarter from 15.0% a year ago.
Net interest income in the quarter decreased 2% from a year ago to €1.59 billion, and the bank guided 2024 to a net interest income of €6.3 billion.
One of the three largest banks in the Netherlands said higher staffing expenses are likely to increase total costs to €5.3 billion.
However, the bank's profit in the first quarter increased by 29% to €674 million, ahead of the market estimate of at least €510 million.
The bank also confirmed the completion of the €500 million stock buyback plan it launched in February.
Neste Oyj dropped 19.4% to €19.40 after the Finnish biofuel maker lowered its 2024 margin estimate for renewable energy products.
Vodafone Group increased 3.6% to 76.16 pence after the struggling telecom carrier launched a €500 million stock buyback plan.
Britvic Plc soared 7.7% to 988.0 pence after the British beverage maker said revenue and profit in the first half increased and the company announced a £75 million stock buyback plan.
Hunting plc increased 22% to 454.0 pence on news that the engineering company won a new order worth $145 million from Kuwait Oil Company.
ThyssenKrupp declined 1.9% to €4.83 after the German steelmaker lowered its annual sales and earnings outlook for the second time in three months.
Nikkei Index In Tokyo Traded Sideways Amid Yen Worries
Stocks and market indexes in Tokyo edged higher, tracking gains in overnight trading in New York.
Market sentiment was positive in Tokyo despite the hotter-than-expected U.S. producer price inflation in April, suggesting that the Federal Reserve may keep high interest rates for longer.
The Japanese yen dropped by 0.2% to 156.24 against the U.S. dollar after the inflation report highlighted the possibility that a wide interest rate gap between the U.S. and Japan is likely to persist for a long time.
Investors are now looking forward to the release of the consumer price inflation report later in the day, and economists are anticipating the annual inflation rate to hover around 3.2%.
Japan Stock Movers
The Nikkei 225 Stock Average increased 0.1% to 38,391.08, and the Topix index edged up 0.1% to 2,732.38.
Sony Group Corp. soared 9.8% to ¥13,035.0 after the company said its quarterly profit advanced following the strong performance in its movie and game business.
Tech stocks traded higher following the gains in overnight trading in New York.
Tokyo Electron, Advantest, Screen Holdings, and Socinext gained between 1% and 3%.
Banks traded mixed, and Mitsubishi UFJ declined 0.5% to ¥1,597.50, while Mizuho Financial and Sumitomo Mitsui edged higher by 0.45.
Isetan Mitsukoshi soared 13% to ¥2,642.0 after the department store operator's operating earnings outlook surpassed market expectations.
The retailer estimated fiscal fourth quarter revenue to increase 12% to 134.67 billion yen and net income to advance 91% to 24.47 billion yen.
A weak yen and a surge in tourism supported the sharp gains in retail store chain sales.
Sales of high-value-added products continued to drive sales, particularly at the Isetan Shinjuku Main Store, Mitsukoshi Nihombashi Main Store, and Mitsukoshi Ginza Store, with year-on-year sales growth of 115.2% for the total of Isetan Mitsukoshi Ltd. and 111.3% for the total of domestic department stores, the company said in a note to investors.
In addition, both main stores and the Mitsukoshi Ginza Store have outperformed fiscal 2018 for ten consecutive months.
Yokohama Rubber advanced 5.2% to ¥4,158.0 after the company reported another record quarterly sales.
Revenue in the March quarter increased 23.5% to 252.4 billion yen, net income advanced 104% to 19.8 billion yen from 9.7 billion yen, and diluted earnings per share rose to 123.15 yen from 60.39 yen.
Nitori Holdings plunged 17% to ¥17,805.0 after the home furnishing retailer reported lower than expected sales in the March quarter.
Revenue in the quarter fell to 232.05 yen compared to expectations of 236.98 billion yen, and net income declined to 18 billion yen, falling short of the expectation of 26.7 billion yen.
For the full-year 2024, sales declined 5.5% to 895.7 billion yen from 948.1 billion yen, net income attributable to shareholders fell 9% to 86.5 billion yen from 95.1 billion yen, and basic earnings per share fell to 765.62 yen from 841.92 yen a year ago.
U.S. China Tensions Drag Down Stocks In Shanghai
Stock market indexes in Shanghai traded down amid rising tensions between China and the U.S.
Markets in Hong Kong are closed to celebrate the birthday of the Buddha.
Chinese authorities said they will take appropriate measures to defend the interests of their corporations after U.S. President Joe Biden approved a sharp increase in tariffs on electric vehicles, solar panels, batteries, and other renewable energy products imported from China.
The overall impact of the tariffs is expected to be minimal, but the worsening of the tone and growing trade uncertainty are likely to force Chinese companies to relocate manufacturing away from China and closer to its major international markets.
The U.S. move is going to alter the global supply chain in several industries as Chinese companies seek to relocate manufacturing to Mexico and Hungary, taking advantage of regional trade zones to access the U.S. and European markets.
PBOC Holds One-year Lending Rates
The People's Bank of China held its key one-year lending rate at 2.5%, and the central bank launched the sale of 125 billion yuan bonds for financial institutions at the unrevised rate on Wednesday.
Market sentiment has been positive over the last three months after benchmark indexes in Shanghai and Hong Kong rebounded from the lows of February 16.
Last month, China's politburo announced its plans to release market-supportive measures and encouraged state-controlled financial institutions to increase exposure to Chinese stocks.
The announcements supported the three-month rally that lifted the Hang Seng index by more than 20%, but investors have been increasingly doubting the rally's durability after the authorities failed to follow up with specific steps to revive the moribund property market and improve consumer confidence.
Moreover, rising tensions between the U.S. and China also contributed to caution in stock trading this week.
China Stock Movers
The CSI 300 index fell 0.3% to 3,647.19 and the Hang Seng index decreased 0.2% to 19,073.71 in Tuesday's trading.
Electric vehicle makers were in focus amid rising tensions between the U.S. and China.
Dongfeng Motor, BYD, and FAW Jiefang Group declined between 1% and 3%.
Tongwei Co. declined 1.5% to 22.34 yuan in Shanghai trading.
Banks were in focus after the People's Bank of China held its one-year medium-term lending rate at 2.5%.
Bank of China, China Merchants Bank, Agriculture Bank of China, and ICBC gained between 0.1% and 1.3%.
Consumer Price Inflation Eased In April, Core Index Dropped to a 3-year Low
Brian Turner
15 May, 2024
Washington, D.C.
Consumer price inflation rose at a slower annual pace of 3.4% in April from 3.5% in March, the U.S. Bureau of Labor Statistics reported Wednesday.
The seasonally adjusted inflation index rose 0.3% in April after rising 0.4% in March on a monthly basis.
The index for shelter and gasoline rose, and combined, these two indexes contributed over seventy percent of the increase in all items.
The energy index increased 1.1% over the month, and the food index was unchanged.
The prices for used and new vehicles, household furnishings, and operations declined in the month.
The so-called core index, which excludes energy and food prices, slowed to a 0.3% increase after rising to 0.4% in each of the three previous months.
The annual pace of core consumer price index dropped to 3.6%, the lowest level since April 2021.
U.S. Major Averages Hit New Intraday Records After Core Inflation Dropped to a 3-year Low
Barry Adams
15 May, 2024
New York City
Stocks and benchmark indexes advanced in Wednesday's trading after consumer price inflation rose at a slower-than-expected pace in April.
The S&P 500 index and the Nasdaq Composite advanced 0.5% and traded at new record highs following the weaker-than-expected increase in inflation.
Consumer price inflation rose at a slower annual pace of 3.4% in April from 3.5% in March, the U.S. Bureau of Labor Statistics reported Wednesday.
The seasonally adjusted inflation index rose 0.3% in April after rising 0.4% in March on a monthly basis.
The index for shelter and gasoline rose, and combined, these two indexes contributed over seventy percent of the increase in all items.
The energy index increased 1.1% over the month, and the food index was unchanged.
The prices for used and new vehicles, household furnishings, and operations declined in the month.
The so-called core index, which excludes energy and food prices, slowed to a 0.3% increase after rising to 0.4% in each of the three previous months.
The annual pace of core consumer price index dropped to 3.6%, the lowest level since April 2021.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.5% to 5,274.11, and the Nasdaq Composite rose 0.5% to 16,585.72.
The yield on 2-year Treasury notes edged lower to 4.76%, 10-year Treasury notes decreased to 4.37%, and 30-year Treasury bonds edged lower to 4.53%.
WTI crude oil decreased $0.56 to $77.45 a barrel, and natural gas prices increased 3 cents to $2.37 a thermal unit.
Gold increased by $7.19 to $2,362.67 an ounce, and silver rose 17 cents to $28.76.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.87.
U.S. Stock Movers
AMC Entertainment decreased 7.8% to $6.89, and GameStop Corp. plunged 10% to $43.70.
Nextracker Inc. increased 14.5% to $49.24 after the solar technology company said revenue in the fiscal fourth quarter increased more than expected.
Revenue in the quarter rose 42% to $737 million from $518.9 million, net income advanced to $223.2 million from $27.5 million, and diluted earnings per share rose to $1.51 from 2 cents a year ago.
The company estimated fiscal 2025 revenue between $2.8 billion and $2.9 billion, net income between $369 million and $399 million, and diluted earnings per share between $2.41 and $2.61.
Boot Barn Holdings dropped 6.3% to $100.31 after the western apparel retailer offered a muted annual outlook.
Net sales fell 8.7% to $388.5 million, and decreased 2.2% when $28.3 million of sales in the 14th week of the prior-year period were excluded.
Same-store sales declined 5.9% in the first quarter compared to the prior-year period, and same-store sales on a 3-year stack basis rose 55%.
The 5.9% decrease in consolidated same-store sales is comprised of a 5.7% decrease in retail store sales and a 7.6% decrease in e-commerce.
Net sales declined to $388.5 million from $425.6 million, net income dropped to $29.4 million from $46.4 million, and diluted earnings per share dropped to 96 cents from $1.53 a year ago.
The company guided fiscal 2025 sales to fall between $1.766 billion and $1.800 billion, representing growth of 5.9% to 8.0% over the prior year.
The retailer estimated net income of $140.2 million to $149.3 million and net income per diluted share of $4.55 to $4.85 based on 30.8 million weighted average diluted shares outstanding.
U.S. Movers: AMC Entertainment, Boot Barn, GameStop, Nextracker
Scott Peters
15 May, 2024
New York City
Meme stocks declined a day after surging in the previous session.
AMC Entertainment decreased 7.8% to $6.89, and GameStop Corp. plunged 10% to $43.70.
Nextracker Inc. increased 14.5% to $49.24 after the solar technology company said revenue in the fiscal fourth quarter increased more than expected.
Revenue in the quarter rose 42% to $737 million from $518.9 million, net income advanced to $223.2 million from $27.5 million, and diluted earnings per share rose to $1.51 from 2 cents a year ago.
The company estimated fiscal 2025 revenue between $2.8 billion and $2.9 billion, net income between $369 million and $399 million, and diluted earnings per share between $2.41 and $2.61.
Boot Barn Holdings dropped 6.3% to $100.31 after the western apparel retailer offered a muted annual outlook.
Net sales fell 8.7% to $388.5 million, and decreased 2.2% when $28.3 million of sales in the 14th week of the prior-year period were excluded.
Same-store sales declined 5.9% in the first quarter compared to the prior-year period, and same-store sales on a 3-year stack basis rose 55%.
The 5.9% decrease in consolidated same-store sales is comprised of a 5.7% decrease in retail store sales and a 7.6% decrease in e-commerce.
Net sales declined to $388.5 million from $425.6 million, net income dropped to $29.4 million from $46.4 million, and diluted earnings per share dropped to 96 cents from $1.53 a year ago.
The company guided fiscal 2025 sales to fall between $1.766 billion and $1.800 billion, representing growth of 5.9% to 8.0% over the prior year.
The retailer estimated net income of $140.2 million to $149.3 million and net income per diluted share of $4.55 to $4.85 based on 30.8 million weighted average diluted shares outstanding.
Europe Movers: ABN Amro, Britvic, Hunting, InPost, Neste, ThyssenKrupp, Vodafone
Inga Muller
15 May, 2024
Frankfurt
European market indexes advanced after the Euro Area economy expanded, employment rose at a slower pace in the first quarter, and industrial production eased in March.
The DAX index increased by 0.5% to 18,810.12; the CAC-40 index rose by 0.2% to 8,213.46; and the FTSE 100 index inched higher by 0.3% to 8,451.14.
The yield on 10-year German bonds edged down to 2.47%; French bonds inched lower to 2.98%; the UK gilts edged lower to 4.11%; and Italian bonds inched lower to 3.80%.
InPost increased 10.4% to €16.83 after the Polish parcel delivery company reported that its first quarter core profit surged by 36%.
ABN AMRO Bank declined 3% to €16.18 after the Dutch bank reported weaker capital ratios in the first quarter following the rise of risk-weighted assets, which overshadowed strong earnings.
The bank's CET 1 ratio, a measure of the bank's own capital to risk-weighted assets, decreased to 13.8% in the first quarter from 15.0% a year ago.
Net interest income in the quarter decreased 2% from a year ago to €1.59 billion, and the bank guided 2024 to a net interest income of €6.3 billion.
One of the three largest banks in the Netherlands said higher staffing expenses are likely to increase total costs to €5.3 billion.
However, the bank's profit in the first quarter increased by 29% to €674 million, ahead of the market estimate of at least €510 million.
The bank also confirmed the completion of the €500 million stock buyback plan it launched in February.
Neste Oyj dropped 19.4% to €19.40 after the Finnish biofuel maker lowered its 2024 margin estimate for renewable energy products.
Vodafone Group increased 3.6% to 76.16 pence after the struggling telecom carrier launched a €500 million stock buyback plan.
Britvic Plc soared 7.7% to 988.0 pence after the British beverage maker said revenue and profit in the first half increased and the company announced a £75 million stock buyback plan.
Hunting plc increased 22% to 454.0 pence on news that the engineering company won a new order worth $145 million from Kuwait Oil Company.
ThyssenKrupp declined 1.9% to €4.83 after the German steelmaker lowered its annual sales and earnings outlook for the second time in three months.