Market Update
Japan's Nikkei 225 Extended Weekly Losses; Lasertec Dropped 16%, Panasonic Jumped 8%
Akira Ito
01 Nov, 2024
Tokyo
Stock market indexes in Tokyo traded down and extended weekly losses following a sharp selloff on Wall Street in Thursday's trading.
The Nikkei 225 Stock Average and the Topix index dropped 2% after tech stocks dropped as much as 5% in Tokyo.
Market indexes in Tokyo were under pressure after Microsoft and Meta Platforms announced robust quarterly results, but their forward-looking statements dampened investor sentiment in New York.
Microsoft cautioned sales growth is likely to slow in the current quarter, and Meta Platforms said elevated investment in artificial intelligence is likely to impact its future earnings.
Stocks were also under pressure after investors reassessed comments from Bank of Japan Governor Kazuo Ueda's less dovish comments during a press conference held at the end of a two-day policy meeting on Thursday.
The yen traded at 152.53 against the U.S. dollar as Governor Ueda left the door open for a possible rate increase in December, citing optimism about the global and domestic economies.
The au jibun Bank Japan Manufacturing PMI index was revised higher to 49.2 in October from the preliminary reading of 49.0 and a final 49.7 in the previous month, S&P Global reported Friday.
Factory activities declined for the fourth month in a row and fell at the fastest pace since March as business sentiment was nearly unchanged from September's 21-month low.
Japan Stock Movers
The Nikkei 225 index decreased 2.5% to 38,100.16, and the Topix index dropped 1.8% to 2,647.79.
Tech stocks led the declines in Friday's trading and extended weekly losses.
Advantest Corp. declined 4.2% to ¥8,767.0, Tokyo Electron dropped 3.9% to ¥22,485.0, Disco Corp. fell 3.8% to ¥42,770.0, and Renesas Electronics plunged 5.6% to ¥1,985.50.
Lasertec plunged 16% to ¥19,630.0 after the company reported weak quarterly results and said it will no longer provide quarterly guidance, citing short-term volatility.
Revenue in the September quarter declined 22.3% to 36.7 billion yen, net income attributable to shareholders rose 16% to 8.9 billion yen, and diluted earnings per share rose to 98.94 from 85.33 yen a year ago.
The company reiterated its fiscal year sales estimate of 12.4% increase to 240 billion yen, net income attributable to shareholders to advance 25.3% to 74 billion yen, and net income per share of 820.52 yen.
Sumitomo Mitsui Financial declined 1% to ¥3,239.0, Mitsubishi UFJ fell 0.5% to ¥1,620.50, and Mizuho Financial decreased 0.1% to ¥3,210.0.
Seven & I Holdings declined 1.8% to ¥2,159.50, Isetan Mitsukoshi dropped 2.8% to ¥2,257.50, and Fast Retailing Co. fell 2.9% to ¥48,140.0.
Panasonic Holdings increased 8.5% to ¥1,343.50 after the electronics manufacturing firm reported a decline in profit in the first half, but the company reaffirmed its annual outlook.
Consolidated sales in the first-half ending in September increased 3.2% to 4.3 trillion yen from 4.1 trillion yen, net profit attributable to shareholders fell 34.5% to 188.9 billion yen, and diluted earnings per share fell to 80.90 from 123.51 yen a year earlier.
The company guided full-year fiscal 2025 sales to increase 1.2% to 8.6 trillion yen, net income attributable to shareholders to decline by 30.2% to 310 billion yen, and earnings per share of 132.80 yen.
New Home Sales In China Rebounded In October, Stock Indexes Pare Weekly Losses
Li Chen
31 Oct, 2024
Hong Kong
Stock market indexes in China and Hong Kong advanced and pared weekly losses in the hopes that the property market may be on a path to early recovery.
The Hang Seng index gained 1.5%, the mainland-focused CSI 300 index added 0.9%, and they increased 0.2% and declined 0.7% in the week, respectively.
New home sales at 22 leading home developers across mainland China soared 66% from the previous month in October and advanced 2% from a year ago, according to China Real Estate Information Corp.
New home sales rose for the first time this month after the People's Bank of China announced a raft of monetary measures and local governments eased restrictions on purchases.
The October sales added to optimism that the property market may be stabilizing after four years of decline and contribute to an economic recovery.
China's leading property developers have been mired in speculative residential projects funded by huge debts from local banks, shoddy construction practices, and unfinished homes that have been fully paid in advance by customers.
The widespread mismanagement and cozy relationship between local politicians, banks, and property developers have saddled millions of property buyers with mortgages and unfinished homes.
The current monetary and expected fiscal measures are not likely to have a lasting impact on the residential market, as consumers have little faith in property developers and local governments.
Investors took an optimistic view of the latest update on manufacturing activities, and the Caixin China General Manufacturing PMI showed a rebound in the sector.
The index increased at the fastest pace in four months in October to 50.3 from 49.3 in the previous month, after a series of stimulus measures from Beijing in late September.
On Thursday, the official data showed that the manufacturing sector returned to growth after contracting for five months in a row.
China Stock Movers
The Hang Seng index increased 1.5% to 20,620.22 and the mainland-focused CSI 300 index rose 0.9% to 3,924.96.
China Overseas Land and Investment increased 5.9% to HK $15.74, China Resources Land Ltd. added 5.6% to HK $27.30, and China Vanke Co. increased 1% to HK $27.30.
Tencent Holdings increased 4.2% to HK $421.40, Alibaba Group added 1.1% to HK $95.65, and JD.com Inc. increased 3% to HK $160.10.
Li Auto decreased 7.1% to HK $99.80 after the electric vehicle maker reported better-than-expected quarterly results, but weaker-than-expected fourth quarter sales guidance dragged the stock down.
The company reported strong third-quarter sales and guided higher sales in the fourth quarter, but the forecast fell short of market expectations.
Revenue in the third quarter increased 23% to 42.9 billion yuan; gross margin contracted to 21.5% from 22% from a year ago and from 19.5% in the second quarter.
Adjusted earnings per share in the quarter were 3.63 yuan, or 52 cents.
Vehicle delivery in the third quarter soared 45.4% to 152,000, and the company estimated between 160,000 and 170,000 vehicles in the fourth quarter.
The company guided revenue between 43.2 billion yuan and 45.9 billion yuan (between $6.2 billion and $6.5 billion).
T.S. Lines traded at HK$4.0 after falling as much as 5% in its first day of trading in Hong Kong.
The shipping company priced 250.9 million shares at HK $4.18 per share and raised HK $940.9 million.
The company has set the price range for its initial public offering between HK $3.50 and HK $4.50 per share.
The 225.8 million-share international offering was oversubscribed 2.2 times, and the 25.1 million-share domestic offering was oversubscribed 12 times.
Wall Street Losses Accelerate, European Markets Register Largest Monthly Declines In 2024
Alexander Garcia
31 Oct, 2024
Miami
Stock market indexes on Wall Street eased after Microsoft and Meta Platforms' stellar earnings were overshadowed by cautious forward-looking statements.
The S&P 500 index fell 1.5%, the Nasdaq Composite declined 2.5%, Microsoft dropped 5.5%, and Meta Platforms declined 4.4%.
Microsoft reported earnings and revenue that were ahead of market expectations, but the company's sales outlook overshadowed its stellar performance.
Meta Platforms' sales and earnings also exceeded investor expectations, but the user growth fell short, and the company signaled capital expenditure will rise significantly in 2025.
Investors also reacted to the latest quarter results from Uber Technologies, eBay, Roku, Starbucks, Carvana, and Booking Holdings.
On the economic front, the Personal Consumption Expenditure Price Index rose by 0.2% from the previous month in September, following a 0.1% increase in the previous month, the U.S. Bureau of Economic Analysis reported Thursday.
The Core PCE index, which excludes food and energy prices, accelerated to a five-month high of 0.3% from the upwardly revised 0.2% in the previous month.
On an annual basis, the alternative measure of inflation fell to 2.1%, the lowest since February 2021, from an upwardly revised 2.3% in the previous month.
The annual core rate of inflation was steady at 2.7%, highlighting the stubborn and well-anchored inflation into the economy.
Despite eleven interest rate hikes over 2022 and 2024, the Fed has failed to bring down inflation to its target rate of 2%, and prices are still rising at a faster rate as many businesses and service providers are looking to pass on higher costs to consumers.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 1.4% to 5,730.26, the Nasdaq Composite fell 2.3% to 18,175.43, and the Russell 2000 index declined 0.8% to 2,214.54.
The yield on 2-year Treasury notes edged higher to 4.20%, 10-year Treasury notes inched higher to 4.30%, and 30-year Treasury bonds inched higher to 4.50%.
WTI crude oil increased $0.46 to $69.08 a barrel, and natural gas prices edged down 12 cents to $2.71 a thermal unit.
Gold fell by $44.34 to $2,741.12 an ounce, and silver decreased by $1.11 to $32.62.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 103.91.
U.S. Stock Movers
Microsoft Corp. declined 4.8% to $411.89 after the software company reported strong quarterly results, but the company's revenue outlook for the current quarter fell short of investor expectations.
Microsoft estimated revenue in the fiscal second quarter to range between $68.1 billion and $69.1 billion.
Booking Holdings increased 6.3% to $4,745.43 after the online reservation company's adjusted earnings in the latest quarter surpassed market expectations.
Starbucks Corp. increased 2.4% to $95.94 after the coffee chain operator reported sharply lower-than-expected revenue and earnings in its latest quarter amid demand weakness in the U.S. and China.
Global comparable same-store sales plunged 7% in the fiscal fourth quarter.
Uber Technologies dropped 9.9% to $71.77 after the ride-hailing service provider reported strong quarterly earnings but gross bookings disappointed investors.
Carvana Co. jumped 20.4% to $249.39 after the used car dealer reported sharply higher sales and earnings.
The company also lifted its full-year earnings outlook, and added results are expected to surpass the high end of its previous estimate.
European Market Indexes Extended October Losses; Eurozone Inflation Rebounded In October
European stock market indexes turned lower for the third session in a row as investors reviewed the latest batch of earnings and the economic releases.
Benchmark indexes in Paris, Milan, Frankfurt, and London headed lower and extended losses for the month.
The eurozone consumer price inflation rebounded to 2.0% in October from 1.7% in September, which was the lowest since April 2021, Eurostat reported on Thursday.
The rebound in inflation was expected because of the base effects of last year, as last year's sharp declines in energy prices are no longer impacting annual calculations.
Germany's retail sales unexpectedly rose in September, driven by a larger-than-expected increase in non-food sales.
Retail sales rose on an annual basis by 3.8% and on a monthly basis by 1.2% in September, the Federal Statistical Office, or Destatis, reported Thursday.
Europe Indexes and Yields
The DAX index decreased by 1.0% to 19,058.53; the CAC-40 index fell by 1.0% to 7,350.67; and the FTSE 100 index fell by 0.6% to 8,110.10.
The yield on 10-year German bonds edged higher to 2.40%, French bonds inched higher to 3.13%, the UK gilts edged higher to 4.41%, and Italian bonds increased to 3.65%.
The euro edged lower to $1.08; the British pound inched higher to $1.29; and the U.S. dollar weakened to 86.60 Swiss cents.
Brent crude increased $0.43 to $72.59 a barrel, and the Dutch TTF natural gas fell by €3.36 to €38.15 per MWh.
Europe Stock Movers
Airbus SE increased 1.6% to €142.04 after the commercial aviation company reaffirmed its target to deliver 770 aircraft in the current year.
TotalEnergies SE declined 2.9% to €57.43 after the French energy company reported lower-than-expected adjusted earnings in the third quarter.
Societe Generale increased 9.3% to €25.92 after the French lender reported strong quarterly results and a broad management shakeup.
BNP Paribas SA declined 5.5% to €61.92 after the French bank reported weaker-than-expected third quarter earnings.
Revenue increased 3.1% to 11.9 billion from €11.6 billion, and net income increased 7.8% from a year ago to €2.87 billion from €2.66 billion.
Equities trading division revenue rose 13% to €820 million, and revenue from trading of bonds, currencies, and commodities advanced 12% to €1.2 billion.
Corporate and institutional banking divisions reported an increase of 9% in revenue.
However, revenue from the Commercial, Personal Banking, and Services division, the largest division by revenue, decreased 2.6% from a year earlier, largely because of weakness in the automobile lease segment.
Last month, the company agreed to acquire the German private banking operation of HSBC as the company looked for ways to strengthen its wealth management unit in Germany and increase its asset under management to €40 billion.
The company retained its full-year net income target of €11.2 billion.
Anheuser-Busch InBev SA declined 4.9% to €55.52 after the brewery reported a decline in beer sales volume due to weakness in China and Argentina.
BoJ Held Rates Steady; Advantest, Hitachi, and Renesas In Focus After Earnings
Stock market indexes in Tokyo headed lower, tracking losses in overnight trading in New York.
The Nikkei 225 stock average declined 0.9% and the Topix index fell 0.7% as investors reviewed the latest earnings from domestic corporations.
The Bank of Japan held its key lending rate at 0.25%, as widely expected, and retained its inflation and growth outlooks for the current fiscal year.
The policy committee, after a two-day meeting, left its lending rate unrevised and cited weakening inflationary forces following the recent decline in energy prices.
The central bank also kept its core inflation, which excludes fresh food prices, estimate at 2.5% but lowered its overall inflation outlook to 1.9% from the previous estimate of 2.1%.
The BoJ retained its fiscal 2026 inflation estimate at 1.6%.
The central bank held its real economic growth estimate to 0.6% in fiscal 2024 and 1.0 in fiscal 2026, but lifted its fiscal 2025 estimate to 1.1% from the previous estimate of 1.0% in July.
Policymakers are struggling to understand the impact of the results of the recent national election amid rising political instability as the central bank prepares to lay the groundwork to normalize interest rates and decades of negative interest rates.
The Bank of Japan ended its negative rate policy in March with the first rate increase in 17 years, followed by another rate hike in July, after decades of unconventional monetary policy.
Japan Stock Movers
The Nikkei 225 stock average decreased 0.9% to 38,942.64, and the broader Topix index fell 0.7% to 2,685.25.
The yen was relatively unchanged at 152.77 against the U.S. dollar after the Bank of Japan announced its policy decisions.
Tech stocks in Tokyo were under pressure following the weaker-than-expected results from Microsoft and Meta Platforms, and investors questioned the level of investment in artificial intelligence infrastructure.
Advantest Corp. jumped 6.4% to ¥9,148.0 after the company raised its annual earnings outlook for the surge in demand for its AI-related testing tools.
Net sales in the first half ending in September increased 51.4% to 329.2 billion yen, net income surged 167.3% to 69.3 billion yen, and diluted earnings per share increased to 93.64 yen from 35.06 a year ago.
The company estimated revenue in the fiscal year 2024 to increase 31.6% to 640 billion yen, net income to rise 96% to 122 billion yen, and basic earnings per share to increase to 165.01.
Hitachi Ltd. declined 5.6% to ¥3,924.0 after the company reported weaker-than-expected financial results.
Revenue in the first half ending in September decreased 92% to 4.54 trillion yen from 4.96 trillion yen, net income increased to 315.4 billion yen from 232.3 billion yen, and diluted earnings per share rose to 63.22 yen from 44.78 yen.
Renesas Electronics dropped 5% to ¥2,110.0 after the advanced chip maker reported weaker-than-expected financial results.
Revenue in the third quarter declined to 345.3 billion yen from 379.4 billion, and net income fell to 86 billion yen from 108.3 billion yen from a year earlier, respectively.
The company retained its estimate of the full-year revenue range between 1.326 trillion yen and 1.341 trillion yen.
China Indexes Rebound After Factory Activities Resume Expansion
Stock market indexes wavered in China and Hong Kong, and investors awaited the outcome of a key policy legislative meeting to decide the possible fiscal measures.
The Hang Seng index gained 0.5%, the CSI 300 index added 0.2%, and the yuan traded around 7.13 against the U.S. dollar.
Investors are hoping that lawmakers will approve the increase in the central government deficit level, which could provide additional funding to local government after the meeting of the legislative committee of the National People's Congress next week.
The latest official survey of the manufacturing sector showed a slight improvement in activities in October as the recent string of monetary measures and the easing of restrictions to buy residential property began to impact economic conditions.
The official manufacturing PMI in China increased to 50.1 in October from 49.8 in September, according to the National Bureau of Statistics.
Factory activities increased for the first time since April, ending five months of contraction, after output growth reached a six-month high and the growth in new orders stabilized.
The reading above 50 indicates expansion, and below shows contraction in the sector.
The official non-manufacturing PMI in China, which tracks both service and construction sectors, also returned to growth amid rising activities in both sectors.
The construction sector subindex eased to 50.4 in October from 50.7 in September, while the service sector subindex expanded to 50.1 from 49.9 in the previous month.
The service sector activities picked up during the National Day holiday earlier in the month as demand for parcel delivery and air and rail transportation rose.
The shift in policy stance is finally beginning to impact the manufacturing and service sectors, but the construction sector continues to struggle amid weak demand and falling home prices.
The composite PMI, which includes manufacturing and non-manufacturing activities, rose to 50.8 from 50.4 in the previous month.
China Stock Movers
The Hang Seng index increased 0.5% to 20,478.37, and the mainland-focused CSI 300 index advanced 0.2% to 3,897.90.
China Construction Bank increased 0.6% to HK $6.0 after the company reported a 4.5% increase in profit from a year ago in the third quarter.
China Life Insurance rose 2.1% to $16.70 after the insurance company reported a 17-fold increase in income from a year ago in the third quarter following investment gains in stocks.
Industrial and Commercial Bank of China increased 0.7% to HK $4.65 after the bank reported 4% increase in third quarter profit.
Electric vehicle makers struggled with the worry that intense price competition would weigh on profitability.
Li Auto increased 0.6% to HK $109.30, BYD fell 3.3% to HK $285.40, and Geely Automobile Holdings dropped 2.5% to HK $14.06.