Market Update
Europe Movers: 3i Group, Automakers, Barclays, Centamin, Nationwide Building Society, Next, Veolia, Virgin Money UK
Inga Muller
21 Mar, 2024
Frankfurt
European markets traded at new intraday record highs after the U.S. Federal Reserve reiterated its estimate to cut rates as many as three times this year.
The Swiss National Bank led other major central banks and cut its key lending rate by 25 basis points to 1.5%, while the Norges Bank held its policy rate at 4.5%, citing elevated inflationary pressures.
The DAX index increased by 0.5% to 18,101.10, the CAC-40 index rose by 0.05% to 8,164.23, and the FTSE 100 index inched higher by 0.9% to 7,809.41.
The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.
Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February.
Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions.
Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook.
3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively.
Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society.
The Nationwide Building Society jumped 1% to £135.73.
Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates.
Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025.
European Markets Trade at Record Highs; Switzerland Leads with a First Rate Cut
Bridgette Randall
21 Mar, 2024
Frankfurt
European stock market indexes hovered at multi-year highs as investors reviewed monetary policy decisions from several central banks.
Benchmark indexes in Germany and France traded at new record intraday highs, and the index in London jumped 1% ahead of the Bank of England's rate decision.
U.S. Federal Reserve Holds Rates Steady, Lifts Growth Estimate
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Swiss National Bank Cuts Rates by 0.25%
The Swiss National Bank unexpectedly lowered its key lending rate for the first time in nine years, making it the first major central bank to ease monetary policy.
The central bank cut its key lending rate by 25 basis points to 1.5%, citing reduced inflationary pressures and an appreciation of the Swiss franc in real terms over the past year.
The central bank also estimated an annual inflation rate of 1.4% in 2024, 1.2% in 2025, and 1.1% in 2026.
Despite the low inflation, the economy is expected to struggle, and annual economic growth in 2024 is expected to hover around 1.0%.
Norges Bank Holds Rates Steady at 4.5%
The Monetary Policy and Financial Stability Committee of Norges Bank decided to keep the policy rate unchanged at 4.5% at its meeting on Thursday.
The central bank reiterated the need to keep rates elevated as inflation is slowing but still too high; the depreciation of the Norwegian krone and high business costs and wage growth are keeping the inflation elevated.
“The policy rate will likely need to be maintained at the current level for some time ahead in order to bring inflation back to the 2 percent target within a reasonable time horizon," said Governor Ida Wolden Bache.
The central bank projected that inflation is expected to remain elevated over the next six months before moderating in the final quarter of the year, and economic growth is expected to "remain low" in the first half of the year before picking up.
Hybrid Car Market Share Expands In the EU
New car sales advanced for the second month in a row in February in the European Union, driven by strong demand in its four largest markets, especially France and Italy.
The new car registration increase slowed to 10.1% from 883,608 units a year ago, following a 12.1% rebound in January.
Passenger car sales rose 13% in France, 12.8% in Italy, 9.9% in Spain, and 5.4% in Germany.
The market share of hybrid electric cars expanded 2.47% to 28.9%, and battery electric car sales increased 9% with a stable market share of 12%.
However, diesel car sales contracted 5.1% and its market share eased to 12.9%, and petrol car sales increased 6.1% but its market share fell to 35.5% from 36.9% in the previous month.
Europe Indexes and Yields
The DAX index increased by 0.5% to 18,101.10, the CAC-40 index rose by 0.05% to 8,164.23, and the FTSE 100 index inched higher by 0.9% to 7,809.41.
The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.83%; the UK gilts edged lower to 4.0%; and Italian bonds inched lower to 3.64%.
The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.
Brent crude decreased $0.19 to $85.74 a barrel, and the Dutch TTF natural gas fell by €0.54 to €28.20 per MWh.
Europe Stock Movers
Volkswagen, Renault, Porsche, and Stellantis advanced between 0.3% and 0.7% after passenger car sales jumped more than 10% in the European Union in February.
Barclays PLC gained 2.7% to 180.50 pence after the UK-based bank is expected to announce job cuts in the investment banking division as the company looks to reduce costs in underperforming divisions.
Next plc jumped 5% to 8,943.50 pence after the UK-based apparel retailer reported improved pre-tax income and confirmed its current-year outlook.
3i Group advanced 5.4% to 2,665.0 pence after the private equity group said its largest portfolio company, the discount retailer Action, reported 2023 net sales increased 28% to €11.32 billion and operating earnings rose 34% to €1.62 billion from a year ago, respectively.
Virgin Money UK jumped 2.5% to 213.10 pence after the company agreed on purchase terms with the Nationwide Building Society.
The Nationwide Building Society jumped 1% to £135.73.
Centamin PLC jumped 4.5% to 110.40 pence after the gold miner reported annual gold production in line with the company estimates.
Veolia Environnement SA gained 0.6% to €29.25 after the French water works company was selected by the Greater Paris Water Authority to manage its storage and distribution of water for 12 years starting in 2025.
Asian Markets Rebound After U.S. Rate Decision; Japan's Exports Jump 8%
Arjun Pandit
21 Mar, 2024
Mumbai
Asian markets advanced, tracking gains in New York after the Federal Reserve held rates steady as widely expected.
The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year.
The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December.
Stocks on Wall Street soared and powered a global market rally after the central bank's solid economic growth outlook with moderating inflation and interest rate expectations.
Japan Indexes Close at New 34-year Record Highs
Market indexes in Japan advanced following the U.S. Federal Reserve's rate decisions and the central bank confirming inflationary forces had eased "substantially."
Market sentiment was also positive after exports rose for the third month in a row in February, and manufacturing activities contracted at the slowest pace since November in March.
The au Jibun Bank Japan Manufacturing PMI increased to 48.2 in March from a final 47.2 in the previous month, which was the lowest level since August 2020, according to the preliminary report by S&P Global.
Factory activities contracted for the tenth consecutive month, the weakest drop since last November.
The Nikkei 225 Stock Average jumped 1.9% to 40,777.70, and the Topix index advanced 1.5% to 2,792.94 and traded at a 34-year high.
The yen traded around 151 against the U.S. dollar after the U.S. rate decision.
Tech stocks led the gainers, with Softbank, Tokyo Electron, Advantest, and Screen Holdings gaining between 3% and 5%.
Banks also scaled higher for the second week in a row in the hopes that the Bank of Japan will continue with its rate hike campaign.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group gained between 2% and 4%.
Japan's Exports Rise 8% In February
Japan's trade deficit decreased sharply to 379,358 billion yen, or $2.5 billion, in February from 928.908 billion in the same period of the prior year.
Exports advanced by 7.8% from a year ago to 8,249.21 billion, or $55 billion, driven by strong demand from the U.S. and China and higher shipments of automobiles and electrical machinery.
China-bound shipments increased only 2.5%, suggesting moderate demand growth, while exports to the U.S. and European Union advanced 18.4% and 14.6%, respectively.
Exports advanced for the third month in a row, imports increased for the first time in eleven months, and trade balances swung to deficit for the second month in a row, the Ministry of Finance reported Thursday.
However, the weak prices of energy products drove the increase in imports at a slower pace of 0.5% from a year ago (8,628.57 billion, or $60 billion), following the recovery in domestic demand.
In 2023, Japan reported a trade deficit of 9.29 trillion yen, the third trade gap in a row reflecting the elevated price of energy in international markets.
Hong Kong Property Stocks Soar After the HKMA Holds Rates Steady
Stock market indexes in Shanghai and Hong Kong diverged after the U.S. Federal Reserve announced its rate decision.
Stocks on the mainland changed little in the absence of local economic news, but property stocks soared on the hopes that interest rates would be lower in the months ahead, following the lower U.S. interest rate outlook.
The Hong Kong Monetary Authority, which tracks U.S. monetary policy, left its interest rate unchanged at 5.75% on Thursday, as the city's currency is pegged to the U.S. dollar.
The CSI 300 index decreased 0.05% to 3,582.50, and the Hang Seng index soared 2.2% to 16,905.51.
Longfor Group, China Vanke, China Resources Land, and Henderson Land gained between 3% and 6%.
Tech stocks also participated in the market rally, and Tencent Holdings, JD.com, Alibaba Group, Meituan, and Baidu advanced between 2% and 4%.
India Indexes Rebound 1%
Stocks in Mumbai rebounded and participated in the global market rally after the U.S. Federal Reserve held its interest rates steady.
The Sensex and the Nifty indexes jumped as much as 1%, the Indian rupee held firm near its one-month low, and the yield on Indian government bonds held steady.
The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.
India Movers: Cyient, NBCC, NTPC, Rail Vikas Nigam, Torrent Power, TVS Motor, Wockhardt
Arun Goswami
21 Mar, 2024
Mumbai
Stocks in Mumbai rebounded after two days of lackluster trading and participated in a global market rally following the U.S. Federal Reserve's rate decisions.
The central bank held its key lending rates steady, signaled as many as three interest rate cuts before the year's end, and lifted the economic growth outlook sharply higher to 2.1% from the previous estimate of 1.4%.
The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.
On the Mumbai stock exchange, 26 stocks traded at their 52-week highs and 25 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds increased to 7.07%, and the Indian rupee edged lower to ₹83.07 against the U.S. dollar.
TVS Motor increased 1.1% to ₹2,055.55 after the company's board approved a 4-to-1 bonus plan of non-convertible and redeemable preference shares worth up to ₹1,900 crore.
Torrent Power jumped 0.5% to ₹1,226.0 after the company agreed to acquire a Solapur transmission for ₹7 crore from Power Finance Corporation.
After the acquisition, the company plans to link renewable power projects in Maharashtra with the national transmission grid.
Rail Vikas Nigam increased 2.5% to ₹245.20 after the company's bid for a 167 crore project for the Southeastern Railway was deemed to be the lowest bid.
NBCC India gained 5% to ₹114.80 after the company was selected by the Consulate General of India in Jeddah for project management consultancy service for a residential construction project worth $30 million of ₹249 crore.
The consultancy project is expected to generate fees of ₹11 crore.
Wockhardt rose 2.2% to ₹558.50 after the company launched its institutional offering with a floor price of ₹544.02 per share.
The company did not indicate the size of its offering.
Cyient Ltd. increased 0.2% to ₹2,003.75, and the information outsourcing company's joint venture with Hindustan Aeronautics Limited initiated corporate insolvency proceedings.
NTPC advanced 2.2% to ₹323.55 after the company said it plans to raise ₹1,500 crore through the sale of two-year unsecured bonds.
The Federal Reserve Holds Interest Rates Steady and Reiterates the Possibility of Three Rate Cuts This Year
Brian Turner
20 Mar, 2024
New York City
The Federal Reserve left its key lending rate unrevised, signaled possible rate cuts, and lifted its economic growth outlook.
The Federal Open Market Committee left the fed funds target rate range unrevised between 5.25% and 5.50% for the fifth meeting in a row and held rates steady at a 23-year high.
The rate-setting committee, also noted in the so-called dot plot, anticipates three rate cuts that could bring down the fed funds rate range to between 4.50% and 4.75%.
At the same time, the committee raised its forecast for rates at the end of 2025 to a range of 3.75% to 4.0% from the December forecast range between 3.50% and 3.75%.
Investors bid up stocks after the monetary policy decisions indicated the possibility of as many as three rate cuts in the next nine months.
Policymakers noted that the economy is growing at a faster-than-anticipated pace, but that is not likely to fuel inflation as job market conditions are moderating but still healthy.
The Federal Reserve also lifted its economic growth outlook for the current year to 2.1% from the previous estimate of 1.4%, for 2025 to 2.0% from 1.8%, and for 2026 to 2.0% from 1.9%.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%," the accompanying statement released by the Federal Reserve noted.
Despite the progress on the inflation front over the last year, the committee revised its inflation outlook, confirming that inflation is likely to stay elevated over the next two years.
The committee also left its current year PCE inflation outlook at 2.4% but raised it to 2.2% for 2025 and also revised its outlook for the core rate of inflation to 2.6% from 2.4% but held steady its estimate at 2.2% in respective years.
The latest unemployment rate projections suggest that the Federal Reserve anticipates the job market to remain healthy over the next two years.
The committee lowered its estimate of the jobless rate in the current year to 4% from the previous estimate of 4.1% but left its estimate at 4.1% for the next year.
Benchmark indexes on Wall Street turned sharply higher after the Federal Reserve reiterated its plan to lower rates over the next nine months.
Investors interpreted the Fed's latest rate-cut decisions and projections as saying that policymakers are still ready to lower rates and support economic expansion and believe that inflation is high but is expected to slowly decline to 2% over the long run.
Fast Rising Wages Complicates the Fed's Struggle to Balance Economic Growth and Overall Inflation
Barry Adams
20 Mar, 2024
New York City
Stocks on Wall Street rested, and benchmark indexes hugged the flatline ahead of the Federal Reserve's monetary policy announcement later today.
Investors are also keenly awaiting the Fed's views on the rate path, and if and when rates are likely to be revised downward, many investors are hoping that the central bank will start that process as early as June.
Policymakers are struggling to keep inflation in check while keeping the economy growing with minimal impact on the labor market.
Consumer price inflation has eased in the last nine months, but the core rate of inflation is still sharply above the Fed's target rate of 2%.
Moreover, interest rates are still not restrictive enough because, despite eleven rate hikes over the last two years, prices are still rising, labor market conditions are still tight, and the U.S. economy is growing at a pace faster than the annual rate of 2%.
None of the current economic conditions are conducive enough for consumer price inflation to dip to the Fed's target rate of 2%, especially while wages are still rising at an annual pace of 4.5%.
The tough balancing act also requires policymakers to review factors such as supply chain challenges and import price inflation, including the price of crude oil and other energy products, that could impact inflationary forces.
Over the last eighteen months, goods price inflation has moderated but service price inflation has remained elevated, keeping the core rate of inflation significantly higher than the Fed's target rate of 2%.
U.S. Indexes and Yields
The S&P 500 index increased 0.04% to 5,176.89, and the Nasdaq Composite fell 0.05% to 16,154.39.
The yield on 2-year Treasury notes decreased to 4.69%, 10-year Treasury notes inched down to 4.29%, and 30-year Treasury bonds edged down to 4.44%.
WTI crude oil increased $1.69 to $81.03 a barrel, and natural gas prices decreased 4 cents to $1.69 a thermal unit.
Gold decreased by $1.01 to $2,156.22 an ounce, and silver fell 1 cent to $24.90.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.12.
U.S. Stock Movers
Chipotle Mexican Grill jumped 5.6% to $2,955.0 after the company announced a 50-for-1 stock split subject to shareholder approval at its next annual meeting on June 6.
After the approval, shareholders, as of June 18, will receive an additional 49 shares.
Intel rose 3.4% to $43.47 on reports that the U.S. government is ready to approve up to $8.5 billion in CHIPS Act funding and as much as $11 billion in additional long-term loans.
Samsung Electronics jumped 5.6% in Seoul after Nvidia said at its annual developer's conference that the company's high-bandwidth memory chips are in the "qualifying" stage to be included in its next generation of graphic processors.
General Mills increased 2.8% to $70.60 after the food product maker reported better-than-expected quarterly earnings.
JetBlue Airways declined 1.1% to $6.63 after the regional airline canceled several unprofitable routes and focused on stronger routes amid constrained aircraft capacity.
Signet Jewelers declined 7.3% to $95.0 after the specialty retailer's weak outlook outweighed an increase in dividends and better-than-expected earnings.
German Producer Price Inflation Slowed Eighth Consecutive Month, UK Inflation Eased
European stock market indexes traded sideways as investors awaited a monetary policy decision from the Federal Reserve later in the day.
Benchmark indexes in Frankfurt, Paris, and London rested ahead of the Fed's rate decision, views on the economy, and interest rate and inflation outlook.
The Fed is expected to hold rates steady, and investors are looking forward to policymakers comments about the interest rate and inflation outlook.
Consumer price inflation has eased in the last nine months, but the core rate of inflation is still sharply above the Fed's target rate of 2%.
Moreover, interest rates are still not restrictive enough because, despite eleven rate hikes over the last two years, prices are still rising, labor market conditions are still tight, and the U.S. economy is growing at a pace faster than the annual rate of 2%.
The Bank of England is also set to announce its interest rate decision on Thursday, and the central bank is expected to hold rates steady.
Germany's producer price declined in February at a slower pace than in January, the Federal Statistical Office, or Destatis, reported Wednesday.
Producer price index, the measure of wholesale prices, declined at an annual pace of 4.1% in February after falling to 4.4% in January.
The UK's consumer price inflation slowed in February, largely driven by a slower price increase in food, restaurants, and hotels and a slower pace of cost decreases in transportation and utilities.
Consumer price inflation in February slowed to 3.4% from 4.0% in January, the slowest rate since September 2021, the Office for National Statistics reported Wednesday.
Core rate of inflation, which excludes volatile food and energy prices, fell to 4.5%, the lowest rate since January 2022.
Europe Indexes and Yields
The DAX index increased by 0.1% to 18,014.31, the CAC-40 index fell by 0.4% to 8,167.70, and the FTSE 100 index inched higher by 0.1% to 7,744.38.
The yield on 10-year German bonds edged down to 2.41%; French bonds inched lower to 2.85%; the UK gilts edged lower to 4.04%; and Italian bonds inched lower to 3.67%.
The euro edged higher to $1.083, the British pound inched higher to $1.269, and the U.S. dollar held steady at 89.12 Swiss cents.
Brent crude decreased $1.49 to $85.91 a barrel, and the Dutch TTF natural gas fell by €0.40 to €28.47 per MWh.
Europe Stock Movers
Prudential Plc decreased 6.5% to 738.60 pence despite the UK-based financial services reporting strong financial results for 2023.
Stellantis NV declined 0.05% to €26.63, and the Italian-American automaker acquired a stake in optical radar start-up SteerLIght.
Braemar NV gained 1.4% to 256.44 pence after the shipbroking and chartering company reiterated its 2024 revenue and profit outlook.
Johnson Matthey PLC soared 7.7% to 1,839.0 pence after the UK-based specialty chemical company agreed to sell its medical device business for $700 million to the private equity firm Montagu Private Equity.
Credit Agricole SA increased 0.06% and Worldline SA fell 0.8% to €9.88 after the two companies agreed to form a joint venture to provide digital payment services to merchants in France.
Indus Holding AG increased 3.5% to €25.65 after the engineering and infrastructure company swung to a pre-tax profit of €56.1 million from a loss of €41.4 million a year ago.
Valneva dropped 3.8% to €3.63 after the French biotech company reported weak financial results in 2023.
Revenue in 2023 declined to €153.7 million from €361.3 million, and the company suffered a loss of €101.4 million.
Asian Markets Struggle Ahead of Fed's Rate Decision
Asian markets lacked momentum, and investors reacted to domestic corporate and economic news.
China held steady its one-year and five-year rates as widely expected, but investor confidence remained weak amid a lack of new catalysts and a protracted property market downturn.
The yen in Asian trading drifted lower for the second day in a row after the Bank of Japan ended its negative interest rate regime after eight years, but the central bank stressed it will continue to provide liquidity to the Japanese government bond market.
Yen Hovers Near a 25-year Low
Financial markets in Tokyo were closed on Wednesday for the Vernal Equinox holiday, and investors shifted their focus to trading in yen in Asia.
Benchmark indexes in Japan rebounded in Tuesday's trading after the Bank of Japan announced a sweeping overhaul of monetary policy.
The yen continued to drift for the second day in a row on Wednesday and traded near a 4-month low of 151.35 against the U.S. dollar despite the central bank ending its negative rates and abandoning its yield curve policy.
The yen is also trading near a 25-year low, as the central bank supported weakening currency to support goods exports and drive tourism activities.
In a historic move, the central bank lifted rates for the first time in 17 years and ended negative rates after 8 years, but policymakers stressed that an that an accommodative stance is expected to continue.
The Japanese economy has struggled despite decades of stimulus from the central bank, largely because private sector companies have been investing in foreign markets and higher corporate profits over the last two decades did not lead to higher wages at home.
Stock indexes edged higher and the Nikkei scaled near record highs as investors shifted their focus to corporate earnings.
The central bank's ending of negative rates is expected to lift bank earnings in the quarters ahead and strengthen the yen, which in turn is likely to increase repatriation of corporate profit from overseas subsidiaries.
In Tuesday's trading, the Nikkei 225 Stock Average increased 0.7% to 40,003.60, and the Topix index advanced 1.% to 2,750.97.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group traded down between 0.3% and 0.6%.
Vehicle makers advanced on the weakness in the yen, and Toyota Motor gained 2.5%, Honda Motor added 1.3%, and Nissan Motor edged higher by 0.1%.
China Indexes Struggle to Hold Gains After Li Ning and China Unicom Results
Benchmark indexes in Shanghai and Hong Kong erased morning gains, and investors turned cautious after the People's Bank of China held rates as expected.
Stocks traded higher in the morning session after Li Ning and China Unicom reported strong earnings, but market sentiment turned cautions on the lack of catalysts after the central bank held rates steady and offered no new concessions.
The CSI 300 index increased 0.2% to 3,584.88, and the Hang Seng index advanced 0.2% to 16,559.77.
Li Ning jumped 6.4% to $21.60 after the sportswear maker reported better-than-expected annual earnings.
Revenue in 2023 increased by 7% to 27.6 billion yuan, and net income attributable to shareholders decreased to 3.2 billion yuan from 4.0 billion yuan a year ago.
The retailer said inventories by the year's end declined by mid-single-digit compared to a year ago, and total retail sales, including online and offline channels, increased in the "low teens."
The company's board declared a final dividend of 18.54 cents, increasing the total dividend to 54.74 cents and the total payout ratio to 45%.
Anta Sports jumped 3% to HK$80.0 following the results of Li Ning.
China Unicom gained 2.2% to HK$5.69 after the communication equipment company reported record earnings in 2023, driven by higher equipment demand for cloud computing, 5G networks, and connected devices.
China Vanke jumped 0.5% to HK$5.39 after the troubled real estate developer finalized a 1.4 billion yuan or $194 million loan from the state-controlled Industrial Bank for 14 years secured by its subsidiaries Shanghai Vanke and Shanghai Central District.
Last week, Moody's downgraded the real estate developer's debt to Ba1, or junk rating, from the lowest investment grade rating of Baa3.
China held rates steady.
The central bank held a steady 5-year loan prime rate of 3.95%, the reference rate used for mortgage loans, and a 1-year loan prime rate of 3.45%, the reference rate for household and corporate loans.
The move was widely anticipated by investors, and the central bank also drained liquidity from the financial system, dashing all hopes of stimulus to stabilize financial markets.
Both loan prime rates are at record lows as policymakers eased monetary conditions to revive flagging consumer confidence and spur housing demand amid a protracted downturn in the property sector.
Earlier in the week, the central bank held steady its one-year medium-term loan rate at 2.5%.
Policymakers lowered the 5-year loan prime rate by 25 basis points, a record rate cut, in February to support consumer spending and housing activities.
India Indexes Climb Higher Amid Inflation and Valuation Worries
Stocks in Mumbai struggled as investors debated future interest rate paths and inflationary trends.
The Sensex and the Nifty indexes in the early hours of the session diverged but traded in a tight range ahead of the monetary policy decisions from the U.S. later in the day and the Bank of England on Thursday.
Investors also reviewed the latest economic update from the Reserve Bank of India, citing elevated inflation risks in the economy.
Investment-led economic growth in the December quarter was supported by robust consumer demand, higher tax collection, and rising personal incomes, as policymakers highlighted in the State of the Economy report released by the RBI.
Economic growth in the current fiscal year is likely to surpass the 7.6% projected by the statistical agency and may be closer to 8%.
In addition, the central bank cited elevated inflation risks because of persistent food price shocks driven in part by inclement weather conditions in several regions of the country.
Overall inflation is expected to stay at 5.4% in the current fiscal year before declining to 4.4% in the next fiscal year ending in March 2025.
The Sensex index increased 0.3% to 72,215.90, and the Nifty index edged up 0.2% to 21,873.45.
The yield on the 10-year Indian government bonds increased to 7.09%, and the Indian rupee edged lower to ₹83.01 against the U.S. dollar.
U.S. Stocks On Hold Ahead of Rate Decision and Inflation Outlook
Barry Adams
20 Mar, 2024
New York City
Stocks on Wall Street rested, and benchmark indexes hugged the flatline ahead of the Federal Reserve's monetary policy announcement later today.
The S&P 500 index and the Nasdaq Composite edged down 0.1% as investors awaited the Fed's rate decision, interest rate, and inflation outlook.
Investors are also keenly awaiting the Fed's views on the rate path, and if and when rates are likely to be revised downward, many investors are hoping that the central bank will start that process as early as June.
Policymakers are struggling to keep inflation in check while keeping the economy growing with minimal impact on the labor market.
The tough balancing act also requires policymakers to review factors such as supply chain challenges and import price inflation, including the price of crude oil and other energy products, that could impact inflationary forces.
Moreover, over the last eighteen months, goods price inflation has moderated but service price inflation has remained elevated, keeping the core rate of inflation significantly higher than the Fed's target rate of 2%.
U.S. Indexes and Yields
The S&P 500 index increased 0.04% to 5,176.89, and the Nasdaq Composite fell 0.05% to 16,154.39.
The yield on 2-year Treasury notes decreased to 4.69%, 10-year Treasury notes inched down to 4.29%, and 30-year Treasury bonds edged down to 4.44%.
WTI crude oil increased $1.21 to $81.51 a barrel, and natural gas prices increased 4 cents to $1.69 a thermal unit.
Gold decreased by $3.98 to $2,153.24 an ounce, and silver fell 3 cents to $24.94.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.12.
U.S. Stock Movers
Chipotle Mexican Grill jumped 5.6% to $2,955.0 after the company announced a 50-for-1 stock split subject to shareholder approval at its next annual meeting on June 6.
After the approval, shareholders, as of June 18, will receive an additional 49 shares.
Intel rose 3.4% to $43.47 on reports that the U.S. government is ready to approve up to $8.5 billion in CHIPS Act funding and as much as $11 billion in additional long-term loans.
Samsung Electronics jumped 5.6% in Seoul after Nvidia said at its annual developer's conference that the company's high-bandwidth memory chips are in the "qualifying" stage to be included in its next generation of graphic processors.
General Mills increased 2.8% to $70.60 after the food product maker reported better-than-expected quarterly earnings.
JetBlue Airways declined 1.1% to $6.63 after the regional airline canceled several unprofitable routes and focused on stronger routes amid constrained aircraft capacity.
Signet Jewelers declined 7.3% to $95.0 after the specialty retailer's weak outlook outweighed an increase in dividends and better-than-expected earnings.
U.S. Stock Movers: Chipotle Mexican Grill, General Mills, Intel, JetBlue, Samsung Electronics, Signet Jewelers
Scott Peters
20 Mar, 2024
New York City
Chipotle Mexican Grill jumped 5.6% to $2,955.0 after the company announced a 50-for-1 stock split subject to shareholder approval at its next annual meeting on June 6.
After the approval, shareholders, as of June 18, will receive an additional 49 shares.
Intel rose 3.4% to $43.47 on reports that the U.S. government is ready to approve up to $8.5 billion in CHIPS Act funding and as much as $11 billion in additional long-term loans.
Samsung Electronics jumped 5.6% in Seoul after Nvidia said at its annual developer's conference that the company's high-bandwidth memory chips are in the "qualifying" stage to be included in its next generation of graphic processors.
General Mills increased 2.8% to $70.60 after the food product maker reported better-than-expected quarterly earnings.
JetBlue Airways declined 1.1% to $6.63 after the regional airline canceled several unprofitable routes and focused on stronger routes amid constrained aircraft capacity.
Signet Jewelers declined 7.3% to $95.0 after the specialty retailer's weak outlook outweighed an increase in dividends and better-than-expected earnings.
Europe Movers: Braemar, Credit Agricole, Indus Holdings, Johnson Matthey, Prudential, Stellantis
Inga Muller
20 Mar, 2024
Frankfurt
European stock market indexes rested ahead of the monetary policy decisions from the central banks in the U.S. and U.K.
Germany's producer price index, a measure of wholesale inflation, eased for the eighth month in a row in February after prices of energy and intermediate goods continued to decline from a year ago.
The UK's consumer price inflation slowed in February after food, restaurant, and hotel inflation eased in the month from a year ago.
The DAX index increased by 0.02% to 17,988.44, the CAC-40 index fell by 0.9% to 8,128.83, and the FTSE 100 index inched lower by 0.2% to 7,720.48.
The yield on 10-year German bonds edged down to 2.41%; French bonds inched lower to 2.85%; the UK gilts edged lower to 4.04%; and Italian bonds inched lower to 3.67%.
Prudential Plc decreased 6.5% to 738.60 pence despite the UK-based financial services reporting strong financial results for 2023.
Stellantis NV declined 0.05% to €26.63, and the Italian-American automaker acquired a stake in optical radar start-up SteerLIght.
Braemar NV gained 1.4% to 256.44 pence after the shipbroking and chartering company reiterated its 2024 revenue and profit outlook.
Johnson Matthey PLC soared 7.7% to 1,839.0 pence after the UK-based specialty chemical company agreed to sell its medical device business for $700 million to the private equity firm Montagu Private Equity.
Credit Agricole SA increased 0.06% and Worldline SA fell 0.8% to €9.88 after the two companies agreed to form a joint venture to provide digital payment services to merchants in France.
Indus Holding AG increased 3.5% to €25.65 after the engineering and infrastructure company swung to a pre-tax profit of €56.1 million from a loss of €41.4 million a year ago.
Lonza Group increased 5.4% to CHF 508.20 after the Swiss pharmaceutical company agreed to acquire Genentech's manufacturing facility for $1.2 billion in cash.
Roche acquired full-control of Genentech for $46.8 billion in March 2009.
Valneva dropped 3.8% to €3.63 after the French biotech company reported weak financial results in 2023.
Revenue in 2023 declined to €153.7 million from €361.3 million, and the company suffered a loss of €101.4 million.
German Producer Price Inflation Slowed Eighth Consecutive Month, UK Inflation Eased
Bridgette Randall
20 Mar, 2024
Frankfurt
European stock market indexes traded sideways as investors awaited a monetary policy decision from the Federal Reserve later in the day.
Benchmark indexes in Frankfurt, Paris, and London rested ahead of the Fed's rate decision, views on the economy, and interest rate and inflation outlook.
The Fed is expected to hold rates steady, and investors are looking forward to policymakers comments about the interest rate and inflation outlook.
Consumer price inflation has eased in the last nine months, but the core rate of inflation is still sharply above the Fed's target rate of 2%.
Moreover, interest rates are still not restrictive enough because, despite eleven rate hikes over the last two years, prices are still rising, labor market conditions are still tight, and the U.S. economy is growing at a pace faster than the annual rate of 2%.
The Bank of England is also set to announce its interest rate decision on Thursday, and the central bank is expected to hold rates steady.
Germany's producer price declined in February at a slower pace than in January, the Federal Statistical Office, or Destatis, reported Wednesday.
Producer price index, the measure of wholesale prices, declined at an annual pace of 4.1% in February after falling to 4.4% in January.
The UK's consumer price inflation slowed in February, largely driven by a slower price increase in food, restaurants, and hotels and a slower pace of cost decreases in transportation and utilities.
Consumer price inflation in February slowed to 3.4% from 4.0% in January, the slowest rate since September 2021, the Office for National Statistics reported Wednesday.
Core rate of inflation, which excludes volatile food and energy prices, fell to 4.5%, the lowest rate since January 2022.
Europe Indexes and Yields
The DAX index increased by 0.02% to 17,988.44, the CAC-40 index fell by 0.9% to 8,128.83, and the FTSE 100 index inched lower by 0.2% to 7,720.48.
The yield on 10-year German bonds edged down to 2.41%; French bonds inched lower to 2.85%; the UK gilts edged lower to 4.04%; and Italian bonds inched lower to 3.67%.
The euro edged higher to $1.083, the British pound inched higher to $1.269, and the U.S. dollar held steady at 89.12 Swiss cents.
Brent crude decreased $0.69 to $86.67 a barrel, and the Dutch TTF natural gas fell by €0.75 to €28.12 per MWh.
Europe Stock Movers
Prudential Plc decreased 6.5% to 738.60 pence despite the UK-based financial services reporting strong financial results for 2023.
Stellantis NV declined 0.05% to €26.63, and the Italian-American automaker acquired a stake in optical radar start-up SteerLIght.
Braemar NV gained 1.4% to 256.44 pence after the shipbroking and chartering company reiterated its 2024 revenue and profit outlook.
Johnson Matthey PLC soared 7.7% to 1,839.0 pence after the UK-based specialty chemical company agreed to sell its medical device business for $700 million to the private equity firm Montagu Private Equity.
Credit Agricole SA increased 0.06% and Worldline SA fell 0.8% to €9.88 after the two companies agreed to form a joint venture to provide digital payment services to merchants in France.
Indus Holding AG increased 3.5% to €25.65 after the engineering and infrastructure company swung to a pre-tax profit of €56.1 million from a loss of €41.4 million a year ago.
Valneva dropped 3.8% to €3.63 after the French biotech company reported weak financial results in 2023.
Revenue in 2023 declined to €153.7 million from €361.3 million, and the company suffered a loss of €101.4 million.
China Holds Rates Steady, Yen Weakness Persists Despite BoJ Hiking Rates
Arjun Pandit
20 Mar, 2024
Mumbai
Asian markets lacked momentum, and investors reacted to domestic corporate and economic news.
China held steady its one-year and five-year rates as widely expected, but investor confidence remained weak amid a lack of new catalysts and a protracted property market downturn.
The yen in Asian trading drifted lower for the second day in a row after the Bank of Japan ended its negative interest rate regime after eight years, but the central bank stressed it will continue to provide liquidity to the Japanese government bond market.
Yen Hovers Near a 25-year Low
Financial markets in Tokyo were closed on Wednesday for the Vernal Equinox holiday, and investors shifted their focus to trading in yen in Asia.
Benchmark indexes in Japan rebounded in Tuesday's trading after the Bank of Japan announced a sweeping overhaul of monetary policy.
The yen continued to drift for the second day in a row on Wednesday and traded near a 4-month low of 151.35 against the U.S. dollar despite the central bank ending its negative rates and abandoning its yield curve policy.
The yen is also trading near a 25-year low, as the central bank supported weakening currency to support goods exports and drive tourism activities.
In a historic move, the central bank lifted rates for the first time in 17 years and ended negative rates after 8 years, but policymakers stressed that an that an accommodative stance is expected to continue.
The Japanese economy has struggled despite decades of stimulus from the central bank, largely because private sector companies have been investing in foreign markets and higher corporate profits over the last two decades did not lead to higher wages at home.
Stock indexes edged higher and the Nikkei scaled near record highs as investors shifted their focus to corporate earnings.
The central bank's ending of negative rates is expected to lift bank earnings in the quarters ahead and strengthen the yen, which in turn is likely to increase repatriation of corporate profit from overseas subsidiaries.
In Tuesday's trading, the Nikkei 225 Stock Average increased 0.7% to 40,003.60, and the Topix index advanced 1.% to 2,750.97.
Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group traded down between 0.3% and 0.6%.
Vehicle makers advanced on the weakness in the yen, and Toyota Motor gained 2.5%, Honda Motor added 1.3%, and Nissan Motor edged higher by 0.1%.
China Indexes Struggle to Hold Gains After Li Ning and China Unicom Results
Benchmark indexes in Shanghai and Hong Kong erased morning gains, and investors turned cautious after the People's Bank of China held rates as expected.
Stocks traded higher in the morning session after Li Ning and China Unicom reported strong earnings, but market sentiment turned cautions on the lack of catalysts after the central bank held rates steady and offered no new concessions.
The CSI 300 index increased 0.2% to 3,584.88, and the Hang Seng index advanced 0.2% to 16,559.77.
Li Ning jumped 6.4% to $21.60 after the sportswear maker reported better-than-expected annual earnings.
Revenue in 2023 increased by 7% to 27.6 billion yuan, and net income attributable to shareholders decreased to 3.2 billion yuan from 4.0 billion yuan a year ago.
The retailer said inventories by the year's end declined by mid-single-digit compared to a year ago, and total retail sales, including online and offline channels, increased in the "low teens."
The company's board declared a final dividend of 18.54 cents, increasing the total dividend to 54.74 cents and the total payout ratio to 45%.
Anta Sports jumped 3% to HK$80.0 following the results of Li Ning.
China Unicom gained 2.2% to HK$5.69 after the communication equipment company reported record earnings in 2023, driven by higher equipment demand for cloud computing, 5G networks, and connected devices.
China Vanke jumped 0.5% to HK$5.39 after the troubled real estate developer finalized a 1.4 billion yuan or $194 million loan from the state-controlled Industrial Bank for 14 years secured by its subsidiaries Shanghai Vanke and Shanghai Central District.
Last week, Moody's downgraded the real estate developer's debt to Ba1, or junk rating, from the lowest investment grade rating of Baa3.
China held rates steady.
The central bank held a steady 5-year loan prime rate of 3.95%, the reference rate used for mortgage loans, and a 1-year loan prime rate of 3.45%, the reference rate for household and corporate loans.
The move was widely anticipated by investors, and the central bank also drained liquidity from the financial system, dashing all hopes of stimulus to stabilize financial markets.
Both loan prime rates are at record lows as policymakers eased monetary conditions to revive flagging consumer confidence and spur housing demand amid a protracted downturn in the property sector.
Earlier in the week, the central bank held steady its one-year medium-term loan rate at 2.5%.
Policymakers lowered the 5-year loan prime rate by 25 basis points, a record rate cut, in February to support consumer spending and housing activities.
India Indexes Climb Higher Amid Inflation and Valuation Worries
Stocks in Mumbai struggled as investors debated future interest rate paths and inflationary trends.
The Sensex and the Nifty indexes in the early hours of the session diverged but traded in a tight range ahead of the monetary policy decisions from the U.S. later in the day and the Bank of England on Thursday.
Investors also reviewed the latest economic update from the Reserve Bank of India, citing elevated inflation risks in the economy.
Investment-led economic growth in the December quarter was supported by robust consumer demand, higher tax collection, and rising personal incomes, as policymakers highlighted in the State of the Economy report released by the RBI.
Economic growth in the current fiscal year is likely to surpass the 7.6% projected by the statistical agency and may be closer to 8%.
In addition, the central bank cited elevated inflation risks because of persistent food price shocks driven in part by inclement weather conditions in several regions of the country.
Overall inflation is expected to stay at 5.4% in the current fiscal year before declining to 4.4% in the next fiscal year ending in March 2025.
The Sensex index increased 0.3% to 72,215.90, and the Nifty index edged up 0.2% to 21,873.45.
The yield on the 10-year Indian government bonds increased to 7.09%, and the Indian rupee edged lower to ₹83.01 against the U.S. dollar.
India Movers: Aurobindo Pharma, GPT Healthcare, IFCI, SBI Cards, Star Health, UltraTech, Vodafone Idea
Arun Goswami
20 Mar, 2024
Mumbai
IFCI Ltd. declined 2.7% to ₹37.55, and the company's board approved the stake sale to the company's promoter, the Ministry of Finance, for ₹500 crore.
NBCC India Ltd. decreased 2.1% to ₹109.20, and the construction company's subsidiary received an order worth ₹14 crore.
GPT Healthcare fell 0.1% to ₹167.30 after the hospital operator reported rising revenue and earnings in the December quarter.
Revenue increased 4.2% to 96.6 crore, and net profit rose 37% to 11.5 crore from a year ago, respectively.
Star Health & Allied Insurance decreased 1.4% to ₹545.05, and ICICI Prudential acquired a 0.61% stake, or 35,7 lakh shares, in the company at an average price of ₹540 per share.
Aurobindo Pharma dropped 2.5% to ₹989.80, and the generic drug maker received approval from the U.S. drug regulator for mometasone furoate monohydrate to treat itching skin conditions in the nasal spray format.
SBI Cards decreased 0.2% to ₹700.0, and the financial service company declared an interim dividend of ₹2.50 per share.
Vodafone Idea eased 3% to ₹12.75, and ATC Telecom asked the embattled telecom company to convert its ₹1,440 crore worth of convertible debentures to common shares.
UltraTech Cement inched lower by 1.4% to ₹9,475.0, and the competition commission approved the company's purchase of the cement business of Kesoram Industries.
Cautious Optimism Prevailed On Wall Street, European Markets Close Near Record Highs
Barry Adams
19 Mar, 2024
New York City
Stocks rebounded from morning losses in Tuesday's trading as investors awaited rate decisions from the Federal Reserve.
The S&P 500 index and the Nasdaq Composite increased 0.3%, and investors booked profits in hot tech stocks.
The Federal Reserve kicked off its two-day policy meeting amid growing worries that policymakers may be influenced by the recent inflation updates, and keep higher rates for longer.
Consumer and wholesale price inflation has cooled over the last fifteen months, and inflation is still above the 2% target rate set by policymakers despite eleven rate hikes.
Moreover, home prices are still rising in most urban markets faster than wage gains, making home ownership a distant possibility for first-time home buyers.
U.S. Housing Starts Jump In February
U.S. housing starts and permits increased in February, the Commerce Department reported Tuesday.
Low home inventories are forcing more and more buyers to buy new homes as buyers struggle with elevated mortgage rates and home affordability.
Seasonally adjusted privately owned housing starts rose to 1.521 million, an increase of 10.7% from January and 5.9% from a year ago.
Single-family housing starts in February were at a rate of 1.129 million, an increase of 11.6% above the revised January level of 1.01 million. T
Building permits increased 1.9% from the previous month and 2.4% from a year ago to a total of 1.518 million.
Single-family authorizations in February totaled 1.031 million, an increase of 1.0% above the revised January level of 1.021 million.
Authorizations of multi-family buildings with five units or more were at a rate of 429,000 in February.
Housing completions surged 19.7% from January and increased 9.7% from a year ago to 1.73 million.
Single-family housing completions in February totaled 1,072,000, an increase of 20.2% above the revised January rate of 892,000.
The February rate for completions of buildings with multi-family units was 644,000.
U.S. Indexes and Yields
The S&P 500 index increased 0.4% to 5,170.25, and the Nasdaq Composite rose 0.3% to 16,154.20.
The yield on 2-year Treasury notes decreased to 4.70%, 10-year Treasury notes inched up to 4.30%, and 30-year Treasury bonds edged down to 4.44%.
WTI crude oil increased $0.94 to $83.66 a barrel, and natural gas prices increased 3 cents to $1.72 a thermal unit.
Gold decreased by $5.68 to $2,154.23 an ounce, and silver fell 8 cents to $24.95.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.88.
U.S. Stock Movers
Nvidia declined 1.9% to $867.99 after the company released its fastest AI graphics processor, dubbed Blackwell, at its first annual developer's GTC conference.
The first Blackwell chip, called BG200, is scheduled to ship later in the year and promises to sharply increase processing power for artificial applications and accelerate training of AI models and tools.
AMD declined 4.6% to $181.99 after Nvidia's announcement of a new chip.
Super Micro Computer declined 10.2% to $898.57 after the company announced its plan to sell as many as 2 million shares.
Super Micro stock has soared more than 250% this year following the enthusiasm for artificial intelligence.
Super Micro is the preferred vendor for building servers using Nvidia's chips for artificial intelligence applications.
Coinbase Global declined 2.2% to $227.04 after bitcoin prices dropped as much as 6.2% in early trading, extending losses from the peak above $73,000 reached last week.
Unilever PLC increased 2.5% to $49.77 after the company announced its plans to spin off its ice cream division, which includes Ben & Jerry's and Magnum brands.
The company also added that it plans to implement a productivity program to accelerate sales, improve its cost structure, and eliminate as many as 7,500 jobs.
European Markets Trade In Tight Range
Benchmark indexes in Europe flatlined, and investors awaited monetary policy announcements from the U.S. Federal Reserve and the Bank of England.
The DAX index and the CAC-40 index edged up 0.2% and traded near record highs as investors debated future rate paths in the eurozone and reviewed the latest monetary policy decisions from the Bank of Japan.
Hourly Labor Cost Growth Slows in the Fourth Quarter
The broad swathe of changes announced by the central bank surprised many market watchers, and the Japanese yen edged fractionally lower to 149.90 against the U.S. dollar after the announcement.
Hourly labor cost in the eurozone rose 3.4% from a year ago in the fourth quarter of 2023, following a downwardly revised 5.2% increase in the previous three months, Eurostat reported Tuesday.
The labor cost growth decreased in the quarter after the pace of increase of slowed in construction to 4.4% from 6.0%, industry eased to 4.2% from 5.7%, and services inched down to 4.1% from 5.7% a year ago, respectively.
Europe Indexes and Yields
The DAX index increased by 0.3% to 17,988.13, the CAC-40 index rose by 0.6% to 8,201.03, and the FTSE 100 index inched lower by 0.2% to 7,738.30.
The yield on 10-year German bonds edged down to 2.43%; French bonds inched lower to 2.87%; the UK gilts edged lower to 4.08%; and Italian bonds inched lower to 3.67%.
The euro edged higher to $1.084, the British pound inched higher to $1.267, and the U.S. dollar held steady at 88.78 Swiss cents.
Brent crude decreased $0.57 to $87.38 a barrel, and the Dutch TTF natural gas fell by €0.12 to €28.96 per MWh.
Europe Stock Movers
Thyssenkrupp AG declined 0.6% to €4.80 after the German industrial conglomerate said that the company is exploring alternatives for its Marine Systems business with the private equity group Carlyle.
Deutz AG rose 0.9% to €5.89 after the engine maker reported record earnings, which were in line with market expectations.
The company delivered 186,718 engines, and fiscal year 2023 revenue increased to 9% of €2.1 billion and an adjusted EBIT of €120.4 million.
The company guided fiscal year 2024 revenue to fall between €1.9 billion and €2.1 billion and adjusted its EBIT margin between 5.0% and 6.5%.
Fraport Frankfurt Airport Services decreased 5% to €49.19 after the airport operator reported weaker-than-expected fourth quarter operating earnings and the company's 2024 outlook fell below market expectations.
Close Brothers Group soared 7.2% to 358.80 pence after the financial services company announced its plans to raise £400 million to strengthen its balance sheet.
Trustpilot Group gained 2.4% to 210.0 pence after the business review platform reported a narrower loss in the latest fiscal year, driven by improved sales.
Unilever plc increased 2.8% to 3,925.0 pence after the food products company plans to separate its ice cream division and implement a productivity improvement program.
SThree fell 2.2% to 415.0 pence after the recruitment company said the job market was challenging in the first two months of 2024.
Asian Markets Closed Down
Asian markets struggled to advance amid China's earnings worries and Japan's decision to end its negative rate regime after lagging other major central banks for years.
Market indexes in Tokyo rebounded from a morning slump after the rate decision, but they closed down in Shanghai and Hong Kong after market mood tuned negative on a lack of catalysts and worries about earnings growth compounded market anxieties.
Japan Ends Negative Interest Rate Policy
The Bank of Japan ended its negative interest rate policy and set its policy rate range between zero and 0.1% in a sweeping policy overhaul that ended its negative interest rate regime.
The central bank lifted its policy rate for the first time in 17 years from -0.1% to zero amid high inflation and sharp gains in wages at large companies.
In a 7-2 interest rate decision, policymakers decided to end the negative interest rates, but the accompanying statement provided little guidance about interest rate direction in the future.
Major central banks have raised rates multiple times in the U.S. and Europe for two years, while the Bank of Japan stuck with its negative policy rates first implemented in 2016.
The central bank will also stop buying Japanese stocks through the purchase of ETFs and end its yield control program.
The widely anticipated move exceeded many market watchers' expectations after the central bank announced its plans to end the purchase of stocks and also set a target rate for government bond yields.
Ultraeasy monetary policy in place since 2000 has contributed to the Japanese yen's weakness and stoked inflationary forces since the onset of the COVID-19 pandemic in 2020.
The BoJ said it will continue to purchase Japanese government bonds at the current rate, suggesting that the central bank will continue its easy monetary policy for a while.
After the rate decision announcement, the Japanese yen drifted lower to 149.86 against the U.S. dollar.
The Nikkei 225 Stock Average gained 0.04% to 39,768.19, and the Topix index advanced 0.5% to 2,734.58.
Tokyo Electron and Advantest fell between 1% and 2%, and Disco Corp. and Screen Holdings advanced around 1.5%.
Mitsubishi UFJ Financial Group, Mizuho Financial, and Sumitomo Mitsui Financial Group fell between 0.3% and 1.2%.
In other news in the region, the Reserve Bank of Australia held its policy rate for the third time in a row at 4.35% and softened its hawkish inflation stance.
Earnings Worries Drag Down China Stocks
Stocks in Shanghai and Hong Kong extended losses after corporate earnings lagged market expectations.
The worries about China's fragile economic recovery were compounded by the weaker-than-anticipated pace of earnings growth and the protracted property market slump.
The average earnings growth has lagged market expectations as the rebound in consumer demand has been weaker than expected after the end of zero COVID lockdowns.
The CSI 300 index fell 0.3% to 3,592.42, and the Hang Seng index declined 1.1% to 16,550.90.
Wuxi Apptec dropped 6.6% to HK$39.90 after the company issued a cautious outlook, blaming global macroeconomic headwinds. Wuxi Biologics declined 4.9% to HK$14.04.
Tech stocks and electric vehicle makers faced selling pressure on earnings and valuation worries.
XPeng dropped 4% to HK$38.85 ahead of the company's earnings announcement later in the day.
Li Auto plunged 12%, and Alibaba Group, JD.com, Tencent Holdings, and Meituan Group declined between 1% and 3%.
India Stocks Remain In Negative Territory
Stocks in Mumbai edged lower in early trading following the weakness in Asian markets after the monetary policy decisions from the Bank of Japan and the Reserve Bank of Australia.
The Sensex and the Nifty indexes fell as much as 0.5% amid interest rate uncertainties, rising crude oil prices, and a regulatory crackdown on speculation in small-cap stocks.
The Federal Reserve is set to announce its rate decision tomorrow, and investors are anticipating that the central bank will hold interest rates steady.
The crude oil price extended two-week gains to more than 5% in international trading amid rising tensions in the Middle East.
Small-cap stocks continued their decline after the securities regulatory agency SEBI urged mutual fund companies to halt accepting new fund flows.
The Sensex index decreased 0.4% to 72,462.94, and the Nifty index edged down 0.5% to 21,946.45.
On the Mumbai stock exchange, 17 stocks traded at their 52-week highs and 19 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds increased to 7.08%, and the Indian rupee edged lower to ₹82.92 against the U.S. dollar.
Housing Permits, Starts, and Completions Rise In February
Brian Turner
19 Mar, 2024
New York City
U.S. housing starts and permits increased in February, the Commerce Department reported Tuesday.
Low home inventories are forcing more and more buyers to buy new homes as buyers struggle with elevated mortgage rates and home affordability.
Seasonally adjusted privately owned housing starts rose to 1.521 million, an increase of 10.7% from January and 5.9% from a year ago.
Single-family housing starts in February were at a rate of 1.129 million, an increase of 11.6% above the revised January level of 1.01 million. T
Building permits increased 1.9% from the previous month and 2.4% from a year ago to a total of 1.518 million.
Single-family authorizations in February totaled 1.031 million, an increase of 1.0% above the revised January level of 1.021 million.
Authorizations of multi-family buildings with five units or more were at a rate of 429,000 in February.
Housing completions surged 19.7% from January and increased 9.7% from a year ago to 1.73 million.
Single-family housing completions in February totaled 1,072,000, an increase of 20.2% above the revised January rate of 892,000.
The February rate for completions of buildings with multi-family units was 644,000.