Market Update
The UK's Labour Party Returns to Power In a Landslide Victory Amid Myriad Economic Challenges
Bridgette Randall
05 Jul, 2024
London
European markets traded higher and extended weekly gains after the center-left Labour Party won a landslide victory, ending the 14-year Conservative Party government.
Benchmark stock indexes and the pound in London held steady on the hopes that the new government will retain financial policies in place to lower the national debt below 100% of gross domestic product.
The new UK government is going to face a tough task in lowering the budget deficit, balancing the increase in social spending, and altering the tax regime.
In France, voters are heading for the second round of elections on Sunday, and preliminary polls predict a hung parliament as the National Rally Party faces a coalition of parties aligned to prevent the far-right party from winning a majority.
On the economic front, France's international goods trade deficit widened to €8 billion in May from a downwardly revised €7.5 billion in April, the ministry of finance and economy reported Friday.
The trade gap reached its largest level since October 2023, after exports decreased 1.8% to €50.2 billion and imports eased 0.7% to €58.2 billion.
The good trade balance has been negative since 2003, and the monthly deficit hovered around €5 billion before 2019 before deteriorating due to the surge in the cost of imported energy.
Industrial production in Germany declined 6.7% from a year ago in May, adjusted for seasonal and calendar factors, the Federal Statistical Office, or Destatis, reported Friday.
Euro Area retail sales increased 0.3% from a year ago in May and slowed from a 0.6% rise in the previous month, Eurostat reported on Friday.
On a monthly basis, retail sales increased by 0.1% from the previous month and rebounded from an upwardly revised decline of 0.2%.
Europe Indexes and Yields
The DAX index increased by 0.9% to 18,608.56; the CAC-40 index rose by 0.4% to 7,723.98; and the FTSE 100 index rose by 0.001% to 8,240.89.
The yield on 10-year German bonds edged lower to 2.56%. French bonds inched lower to 3.20%; the UK gilts inched lower to 4.16%; and Italian bonds decreased to 3.95%.
The euro edged lower to $1.08; the British pound inched higher to $1.28; and the U.S. dollar weakened to 89.90 Swiss cents.
Brent crude increased $0.17 to $87.27 a barrel, and the Dutch TTF natural gas fell by €0.21 to €33.24 per MWh.
Europe Stock Movers
Home builders in the UK traded higher after the Labour Party won in a landslide, and the new government plans to ramp up the building of affordable housing over the next five years by 1.5 million units.
Persimmons, Barratt Developments, Vistry Group, and Taylor Wimpey gained between 2% and 3%.
HSBC Holdings declined 1.9% to 678.30 pence, and a report suggested that UBS and BNP Paribas may be interested in the company's German wealth management unit.
Volkswagen, BMW, and Mercedes-Benz advanced more than 1% after the European Union imposed additional tariffs of as much as 38% on the imported Chinese electric vehicles.
Aixtron SE soared 17.5% to €22.19 after the chipmaking equipment maker reported stronger-than-expected orders in the second quarter.
Nikkei and Topix Trimmed Weekly Gains, Japan's Household Spending Unexpectedly Declined In May
Akira Ito
05 Jul, 2024
Tokyo
Benchmark indexes in Tokyo traded down and trimmed weekly gains after rallying in five sessions in a row.
The Nikkei 225 and the Topix fell ahead of the U.S. jobs report later in the day, and the yen slightly rebounded from its 38-year low to 160.62 against the U.S. dollar.
Japan's household spending unexpectedly declined in May by 1.8% to 290,328 yen, the internal affairs ministry reported Friday.
Household spending fell after rising 0.5% in the previous month and declined in 13 of the last 14 months.
Spending on food fell 3.1% as purchases of vegetables and seaweed fell after poor crops pushed prices higher.
Spending on housing declined by 3.5%, reversing the gain of 3.5% in the earlier month, but medical care spending accelerated to 6.4% from 1.2% in the previous month.
The resumption of the decline in household spending dashed hopes for the Bank of Japan's policymakers to start the spiral of higher spending and wages, supporting the upward momentum.
In international trading, the pound and the euro traded lower as investors worried that new governments in France and the U.K. are likely to step up government spending amid record-high national debts.
The UK's Prime Minister, Rishi Sunak, conceded defeat after the Labour Party won 410 seats in the House of Commons, with 650 seats.
The sharp reversal in voter sentiment came about after a series of recent policy missteps over immigration, healthcare funding, and lack of infrastructure spending during the Conservative government of 14 years.
In France, the far-right National Rally Party is struggling to win an absolute majority in the second round of the election scheduled for July 7, after President Emmanuel Macron's party formed a coalition with the newly formed Popular Front.
Financial markets in New York are set to reopen lower after the Independence Day holiday on July 4.
Japan Stock Movers
The Nikkei 225 stock average declined 0.2% to 40,828.58, and the Topix index fell 0.6% to 2,881.62.
For the week, the two benchmark indexes are set to close up 3%.
Tech stocks were among the leading decliners, and Tokyo Electron, Screen Holdings, Advantest, and SoftBank declined between 1% and 1.5%.
Retailers were in focus again in the hopes of higher earnings, driven by a surge in foreign tourists.
Isetan Mitsukoshi gained ¥3,528.0, Seven & I edged down 0.1% to ¥1,993.50, Mercari gained 4.0% to ¥2,407.50, and Takashimaya added 0.8% to ¥2,953.50.
Nippon Yusen declined 3.5% to ¥4,923.0, Mitsui OSK fell 3.4% to ¥5,111.0, and Kawasaki Kisen dropped 2.5% to ¥2,700.50.
China Markets Remain Under Pressure Ahead of the Third Plenum Next Week
Li Chen
05 Jul, 2024
Mumbai
Market sentiment was weak in Shanghai and Hong Kong after the European Union imposed additional tariffs on Chinese electric vehicles starting Friday.
The Hang Seng index and the CSI 300 index declined 1% after the European Union imposed additional tariffs between 20.8% and 37.6% on Chinese electric vehicles sold in the region.
The additional tariffs, on top of the 10% current duty, are expected to be in place for four months.
Market sentiment remained subdued as investors looked ahead to additional economic and financial market-supportive measures at the end of the Communist Party's Third Plenum.
Expectations are high that policymakers may announce deeper economic reforms to revive the faltering property market and bolster consumer confidence.
However, Chinese policymakers are struggling to devise broad reforms amid falling foreign investments, rising capital outflows, weak consumer sentiment, and record high youth unemployment.
Investors are looking ahead to the start of earnings season next week, and technology and export-heavy industrial companies are likely to meet or exceed earnings expectations.
In international trading, the pound and the euro traded lower as investors worried that new governments in France and the U.K. are likely to step up government spending amid record-high national debts.
The UK's Prime Minister, Rishi Sunak, conceded defeat after the Labour Party won 406 seats in the House of Commons, with 650 seats.
The sharp reversal in voter sentiment came about after a series of recent policy missteps over immigration, healthcare funding, and lack of infrastructure spending during the Conservative government of 14 years.
China Stock Movers
The Hang Seng Index declined 1% to 17,851.36, and the CSI 300 index dropped 0.97% to 3,412.25.
Electric vehicle markets dropped after the European Union's additional tariffs kicked in.
Li Auto declined 2.2% to HK $78.95, BYD fell 0.3% to HK $229.50, Xpeng dropped 3.5% to HK $30.20, and Nio eased 1.5% to HK $37.05.
Shandong Jianbang New Material soared 130% from its initial public offering price of 44.63 yuan on the first day of its trading in Shanghai.
India Movers: BGR Energy, HDFC Bank, IDBI, IDFC First Bank, Krsnaa Diagnostics, Raymond, VST Industries
Arun Goswami
05 Jul, 2024
Mumbai
The Sensex and Nifty indexes are set to close higher for the fifth consecutive week, and investors are looking forward to the start of earnings season next week.
The Sensex index decreased by 0.5% to 79,649.22, and the Nifty index decreased by 0.4% to 24,211.50.
On the Mumbai stock exchange, 199 stocks traded at their 52-week highs, and 12 stocks traded at their 52-week lows.
Raymond Ltd. increased 2.6% to ₹3,040.0, and the company said in a regulatory filing that the company's board has approved the spin-off of its real estate unit.
Current shareholders will receive one share of the newly formed Raymond Realty for every share held in the company and trade on the NSE and the BSE.
IDFC First Bank increased 0.03% to ₹81.19, and the company said it sold shares to six insurance companies, including LIC, HDFC Life, Aditya Birla Sun Life, Bajaj Allianz, SBI General Insurance, and ICICI Lombard.
IDFC sold 39.68 crore shares at ₹80.63 per share and raised ₹3,200 crore.
VST Industries increased 1.8% to ₹4,114.15, and investor Radhakishan Damani has increased his stake in the tobacco company to 3.47% from 1.95% at the end of March.
IDBI Bank increased 0.2% to ₹83.86, and the bank said total deposits increased 13% from a year ago to ₹2.77 lakh crore and net advance increased 17% to ₹1.94 lakh crore.
BGR Energy Systems jumped 4.5% to ₹44.08, and the company board approved the rights offering plan to raise ₹1,000 crore.
Krsnaa Diagnostics increased 1% to ₹695.25, and the company won an order from Bhabha Atomic Research Centre to provide tele reporting services for radiology to the institute's hospital in Mumbai.
HDFC Bank declined 3.5% to ₹1,665.65, and the company said total outstanding loans decreased 0.8% from the previous quarter and rose 14.9% to ₹24.9 lakh crore.
Excluding the merger with HDFC, deposits increased 16.5% from a year ago and were flat from the previous quarter to ₹23.8 lakh crore.
Europe Movers: Barclays, French Banks, Nordex, Smith & Nephew, Spectris
Inga Muller
04 Jul, 2024
Frankfurt
European markets advanced and extended weekly gains, and bond yields edged higher amid election uncertainty in France and the U.K.
German factory orders declined in May due to fewer orders for large-ticket items, and Swiss inflation, one of the lowest in the world, eased in June to 1.3% from 1.4% in May.
The DAX index increased by 0.3% to 18,437.71; the CAC-40 index rose by 0.8% to 7,692.10; and the FTSE 100 index rose by 0.9% to 8,244.87.
The yield on 10-year German bonds edged lower to 2.57%; French bonds inched lower to 3.22%; the UK gilts inched lower to 4.20%; and Italian bonds decreased to 4.0%.
French banks were in focus ahead of the French government bond sale.
Credit Agricole jumped 2.8% to €13.63, Societe Generale gained 2.8% to €23.59, and BNP Paribas advanced 2.5% to €64.29.
Barclays PLC increased 2.3% to 224.32 pence, and the UK-based bank said it agreed to sell its German consumer finance business to Austria-based BAWAG.
Spectris plc gained 1.3% to 2,886.0 pence, and the instrumentation company agreed to acquire SciAps for an initial payment of $200 million and a performance-based payment of as much as $60 million.
Nordex SE advanced 4.4% to €12.48, and the wind turbine company said DenkerWulf placed an order for seven N149/5.X turbines.
Smith & Nephew soared 7.3% to 1,057.50 pence after activist investor Cevian Capital disclosed a 5% stake in the medical equipment maker.
European Markets Extend Weekly Gains and Bond Yields Edged Higher
Bridgette Randall
04 Jul, 2024
London
European market indexes advanced for the second day in a row as voting began across polling stations in the U.K.
Benchmark indexes in London and Paris jumped nearly 1%, and preliminary polls suggest a dramatic shakeup in British politics.
The Labour Party is expected to win a historic majority between 429 and 484 seats, and the Conservative Party is likely to struggle to win even 65 seats.
After 14 years of ruling, the Conservative Party is likely to shrink to a minority party on the British political scene, which could see a change in policy at several levels, including immigration and government spending priorities.
On the economic front, Switzerland's consumer price inflation slowed to 1.3% in June from 1.4% in May, the Swiss Federal Statistics Office reported Thursday.
Core inflation, which excludes unprocessed food and energy, decreased to 1.1% in the month from 1.2% in the previous month.
Seasonally adjusted factory orders in Germany in May dropped 8.6% from a year ago and 1.6% from the previous month, Destatis reported Thursday.
On a monthly basis, orders declined for the fifth month in a row.
New orders for April were revised to a decrease of 0.6% from the previous month and a decline of 1.8% from the same month a year ago.
Large orders, which include orders for ships, trains, and planes, dropped 19.2% from the previous month, offset by an 11.2% increase in orders for data processing, electronic, and optical equipment.
Europe Indexes and Yields
The DAX index increased by 0.3% to 18,437.71; the CAC-40 index rose by 0.8% to 7,692.10; and the FTSE 100 index rose by 0.9% to 8,244.87.
The yield on 10-year German bonds edged lower to 2.57%; French bonds inched lower to 3.22%; the UK gilts inched lower to 4.20%; and Italian bonds decreased to 4.0%.
The euro edged lower to $1.08; the British pound inched higher to $1.28; and the U.S. dollar weakened to 90.23 Swiss cents.
Brent crude increased $0.14 to $86.37 a barrel, and the Dutch TTF natural gas fell by €0.17 to €32.14 per MWh.
Europe Stock Movers
French banks were in focus ahead of the French government bond sale.
Credit Agricole jumped 2.8% to €13.63, Societe Generale gained 2.8% to €23.59, and BNP Paribas advanced 2.5% to €64.29.
Barclays PLC increased 2.3% to 224.32 pence, and the UK-based bank said it agreed to sell its German consumer finance business to Austria-based BAWAG.
Spectris plc gained 1.3% to 2,886.0 pence, and the instrumentation company agreed to acquire SciAps for an initial payment of $200 million and a performance-based payment of as much as $60 million.
Nordex SE advanced 4.4% to €12.48, and the wind turbine company said DenkerWulf placed an order for seven N149/5.X turbines.
Smith & Nephew soared 7.3% to 1,057.50 pence after activist investor Cevian Capital disclosed a 5% stake in the medical equipment maker.
Weak Yen and U.S. Rate Cut Hopes Supported Broad Market Rally In Tokyo
Akira Ito
04 Jul, 2024
Tokyo
Benchmark indexes jumped for the fifth session in a row amid a broad rally supported by the strong advance in overnight trading in New York.
The Nikkei 225 and the Topix gained nearly 1% on the interest rate, which cut hopes in the U.S.
The Topix index approached a record high last seen in December 1989.
Investors took an optimistic view of the latest slew of soft U.S. economic data after private sector payrolls rose less than expected in June and initial unemployment claims rose for the fourth week in a row.
Moreover, the service sector unexpectedly contracted in June, supporting the case that the Federal Reserve may cut rates as early as September.
The persistent weakness in the yen also contributed to the market advance as weaker yens boost the profits of export-heavy industries.
The yen traded at 161.39 against the U.S. dollar, and the yield on Japan's 10-year government bonds stayed above 1% but eased to 1.08%.
Japan Stock Movers
The Nikkei 225 stock average advanced 0.9% to 40,952.44, and the Topix index gained 0.91% to 2,898.44.
Kawasaki Heavy Industries dropped 7.9% to ¥5,978.0 after the Ministry of Defense ordered an investigation into allegations that the firm paid bribes to officials for submarine repair contracts.
Tech stocks were among the leading gainers for the second week in a row.
Tokyo Electron, Advantest, Screen Holdings, and SoftBank gained between 1.5% and 3.0%.
Renesas Electronics jumped 3.6% to ¥3,282.0, and Yamaha Motor advanced 5% to ¥1,608.0.
Mitsui Mining jumped 5% to ¥5,346.0, and Mitsubishi Materials advanced 4% to ¥3,139.0 following the rebound in copper prices in international markets.
China Indexes Lack Momentum and Direction, Tier-1 Property Market Shows Strength
Li Chen
04 Jul, 2024
Hong Kong
Stock market indexes in Hong Kong and Shanghai lacked direction, and investors looked overseas amid a lack of new catalysts.
The Hang Seng index and the CSI 300 index traded around the flatline amid a fragile and uneven economic recovery, weak consumer sentiment, and a lack of broad policy reforms.
Investors took an optimistic view of the latest slew of soft U.S. economic data after private sector payrolls rose less than expected in June and initial unemployment claims rose for the fourth week in a row.
Moreover, the service sector unexpectedly contracted in June, supporting the case that the Federal Reserve may cut rates as early as September.
Closer to home, purchasing managers' index for the service sector eased to 48.2 in June from 49.2 in May, according to the latest data provided by S&P Global.
The business activity index contracted for the second month in a row, as any reading below 50 indicates contraction.
Elections in the UK and France are likely to dominate news flow, and bond yields are likely to stay elevated in Europe.
Voters in the UK are set to vote in a parliamentary election on Thursday, and the Labour Party is likely to win the largest share of seats in a historic vote.
Preliminary polls suggest that voters are likely to deliver the biggest shakeup of UK politics in decades, after 14 years of Conservative Party government.
The Labour Party is estimated to win as many as 484 seats in the 650-seat House of Commons' election scheduled for July 4, according to the latest poll released by Survation.
The Conservative Party is estimated to garner only 64 seats, barely reaching the minimum seats needed to be an official opposition party.
China Stock Movers
The Hang Seng index was nearly unchanged at 17,977.45, and the CSI 300 index declined 0.1% to 3,459.11.
Tech stocks were in focus amid speculation that earnings in the second quarter are likely to exceed market expectations.
Meituan jumped 2.3% to HK $119.80, Baidu gained 0.8% to HK $86.90, and Alibaba Group added 1.1% to HK $73.05.
Property stocks were under pressure despite the improving sentiment in the tier-1 cities.
Existing home sales in the largest 14 cities in mainland China in June increased 11.2% on the month and 27.9% from 119,470 units a year ago, the Zhuge Real Estate Data Research Center said on Wednesday.
The monthly sales were the highest since May 2023.
Henderson Land Development, China Vanke, China Resources Land, and Longfor Group declined between 0.1% and 1.3%.
BYD, Li Auto, and Xpeng gained between 2% and 3% on speculation that the European Union may slow or water down the upcoming additional tariffs on Chinese electric vehicles.
India Movers: Bajaj Finance, Bandhan Bank, GE T&D, ITD Cementation, Suraj Estate, Taneja Aerospace, Yatharth Hospital
Arun Goswami
04 Jul, 2024
Mumbai
Stocks extended their recent record-breaking rally, and the Sensex and Nifty indexes advanced to new intraday highs amid supporting international market sentiment.
The Sensex index increased by 0.5% to 80,349.37, and the Nifty index rose by 0.4% to 24,384.65.
On the Mumbai stock exchange, 205 stocks traded at their 52-week highs, and 8 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds inched lower to 6.99%, and the Indian rupee weakened to ₹83.53 against the U.S. dollar.
Bajaj Finance decreased 0.3% to ₹7,239.95, and the non-bank financial services provider said deposits at the end of the June quarter increased 26% from a year ago to 62,750 crore.
Assets under management jumped 31% to ₹3.54 lakh crore.
GE T&D India gained 5% to ₹1,720.80, and the company said it won an order worth Є64 million from Grid Solutions SAS to supply high-voltage products.
ITD Cementation India declined 7.5% to ₹529.95, and a report suggested that the company's promoter, Italian Thai Development Public Company, is looking to divest its entire holding in the company.
Yatharth Hospital & Trauma Care Services increased 0.3% to ₹414.50, and the ICICI Prudential Mutual Fund acquired an additional 2.3% stake in the company at an average price of ₹405 per share.
Bandhan Bank decreased 0.3% to ₹209.79, and the bank said total outstanding loans increased 21.8% to ₹1.03 lakh crore and deposits advanced 22.8% to ₹1.08 lakh crore.
Suraj Estate Developers soared 6.9% to ₹615.25, and the company signed an agreement to sell 22,410 square feet of space for ₹89.8 crore to Clearing Corporation of India.
Taneja Aerospace and Aviation gained 4% to ₹616.0, and the company secured an order from Bharat Electronics.
Inox Wind soared 10.8% to ₹157.79 after the company received an infusion of ₹900 crore capital from a promoter.
Cello World jumped 4% to ₹999.50, and the company launched an institutional offering to raise up to ₹730 crore.
U.S. Trade Deficit Widened In May to an 18-month High
Brian Turner
03 Jul, 2024
Washington, D.C.
International goods and services trade deficit widened to $75.1 billion in May, the U.S. Bureau of Economic Analysis reported Wednesday.
Trade deficit widened to the largest level since October 2022 after exports fell more than imports in the month.
Exports decreased 0.7% to $261.7 billion and imports fell 0.3% to $336.7 billion, resulting in a trade deficit of $75.1 billion.
Deficit with China in May increased to $24 billion from $20.1 billion in the previous month, widened with Mexico to $14.8 billion from $13.7 billion, and narrowed with the European Union to $22.7 billion from $25.9 billion.
Rate Cut Hopes Boost S&P 500 and Nasdaq to New Record Highs
Alexander Garcia
03 Jul, 2024
Miami
Benchmark indexes advanced to new highs in a shortened session as investors overlooked softer economic data.
Benchmark indexes flatlined earlier in the session, and the S&P 500 index and the Nasdaq Composite advanced to new record highs in the final hour of trading.
Two widely followed market indexes closed at new highs as investors bid up mega-cap tech stocks after the service sector index unexpectedly contracted in June, strengthening the case for a rate cut later in the year.
Market sentiment was also bolstered after the latest weekly jobless claims rose for the ninth week in a row and private payroll growth slowed in June.
The service sector index eased to 48.8 from 53.8 in May, contracting at the sharpest rate since April 2020, according to the Institute for Supply Management.
Any reading below 50 indicates a contraction, and the sharp decline in business activity was driven by a fall in new orders and employment at the fastest pace in three months.
Earlier in the week, market participants were worried that the nine-weeklong market gain was based on a narrow list of stocks.
Moreover, investors were also concerned that high valuations may not be sustainable in the second half if corporate earnings fail to meet investor expectations.
Initial jobless claims in the previous week rose more than expected, from 4,000 to 238,000, and continuing claims increased by 26,000 to 1.858 million in the earlier week, the U.S. Department of Labor said in its weekly update on Wednesday.
The New York Stock Exchange closed at 1:00 p.m. ET, and the exchange and other financial markets are closed on Thursday to celebrate Independence Day.
U.S. Trade Deficit Widened In May to an 18-month High
International goods and services trade deficit widened to $75.1 billion in May, the U.S. Bureau of Economic Analysis reported Wednesday.
Trade deficit widened to the largest level since October 2022 after exports fell more than imports in the month.
Exports decreased 0.7% to $261.7 billion and imports fell 0.3% to $336.7 billion, resulting in a trade deficit of $75.1 billion.
Deficit with China in May increased to $24 billion from $20.1 billion in the previous month, widened with Mexico to $14.8 billion from $13.7 billion, and narrowed with the European Union to $22.7 billion from $25.9 billion.
Private Payroll Growth Slows in June
Private payrolls expanded by 150,000 in June, lower than market expectations and the lowest since January, a report by ADP showed on Wednesday.
The payroll increase slowed from the upwardly revised 157,000 in May.
The service sector added 136,000 jobs, and the goods-producing sector created 14,000 jobs.
The leisure and hospitality sector added 63,000, professional and business services 25,000, trade, transportation, and utilities 15,000, and financial services 11,000.
Meanwhile, information services providers cut jobs by 3,000.
In the goods-producing sector, construction added 27,000 jobs, but natural resources and mining shed 8,000 and manufacturing cut 5,000 jobs, respectively.
"Job growth has been solid but not broad-based. Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month," said Nela Richardson, chief economist at ADP.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.5% to 5,537.62, and the Nasdaq Composite rose 0.9% to 18,184.90.
The yield on 2-year Treasury notes edged lower to 4.70%, 10-year Treasury notes decreased to 4.35%, and 30-year Treasury bonds edged higher to 4.52%.
WTI crude oil increased $0.13 to $82.93 a barrel, and natural gas prices fell 0.1 cents to $2.43 a thermal unit.
Gold decreased by $15.81 to $2,345.98 an ounce, and silver rose 71 cents to $30.28.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.62.
U.S. Stock Movers
Constellation Brands gained 2.8% to $266.24, and the alcoholic beverage distributor reported better-than-expected quarterly results.
Tesla Inc. advanced 2.4% to $236.02 and extended the previous session's gain of 10%.
On Tuesday, Tesla said it sold 443,956 vehicles in the June quarter, 4.8% lower than a year ago, which helped with incentives and price cuts.
Paramount Global jumped 13.5% to $12.13 after media reports suggested that Skydance Media had reached a preliminary agreement to acquire the controlling shareholder, National Amusements.
The news of the deal was first reported by The New York Times and the Wall Street Journal.
European Markets Rebound. Eurozone Producer Price Deflation Extends to 13th Month
European markets rebounded, the euro held firm, and bond yields in the currency union edged higher as focus shifted to elections.
Benchmark indexes in Paris soared 1.5%, in London advanced 0.6%, and in Frankfurt gained 1% as investors debated the future rate path and awaited the release of corporate earnings.
The Labour Party is likely to win as many as 484 seats in the parliamentary election scheduled for July 4, according to the latest poll released by Survation.
The Conservative Party is estimated to garner only 64 seats, barely reaching the minimum seats needed to be an official opposition party.
In France, President Emmanuel's coalition struck a deal with the newly formed Popular Front to prevent the National Rally Party from winning majority seats in the second round of parliamentary elections on July 7.
About 200 candidates withdrew after the far-left party and President Macron's Renaissance party united.
On the economic front, producer prices in the eurozone declined 4.2% from a year ago in May, Eurostat, the statistical agency of the currency union, reported Wednesday.
Producer prices declined, slowed from the 5.7% fall in April, and marked the 13th consecutive month of annual deflation.
Energy prices declined 11.4% from a year ago, and intermediate goods fell 2.9%.
Excluding energy, producer prices fell 0.4%, less than a 0.9% decline in April.
On a monthly basis, producer prices in the eurozone fell 0.2% following the 1% decline in April and extended the decline for the seventh month in a row.
Europe Indexes and Yields
The DAX index increased by 1.2% to 18,374.53; the CAC-40 index rose by 1.2% to 7,632.08; and the FTSE 100 index rose by 0.6% to 8,171.12.
The yield on 10-year German bonds edged lower to 2.59%; French bonds inched lower to 3.24%; the UK gilts inched lower to 4.23%; and Italian bonds decreased to 4.03%.
The euro edged lower to $1.07; the British pound inched higher to $1.27; and the U.S. dollar weakened to 90.28 Swiss cents.
Brent crude increased $0.32 to $86.55 a barrel, and the Dutch TTF natural gas fell by €0.27 to €32.14 per MWh.
Europe Stock Movers
Skanska AB increased by 0.7% to SEK 187.20 after the Swedish company won a $97 million construction order.
Bpost SA decreased 6.4% to €2.94 after the Belgian postal company's annual profit outlook fell short of market expectations.
Topps Tiles decreased 2.8% to 39.60 pence after the retailer said sales declined in the fiscal third quarter.
Johnson Matthey rose 3.2% to 1,628.0 pence after the engineering and specialty chemical company launched a stock buyback plan.
Airbus SE rose 2.6% to €135.34 after the French aerospace company received an order from the discount air carrier Cebu Air.
The order for up to 152 A321 Neo aircraft is estimated to total $24 billion based on the list price of the plane.
Higher copper prices lifted resource stocks in London trading.
Glencore PLC jumped 1.8% to 474.45 pence, Antofagasta advanced 2% to 2,125.0 pence, and Anglo American gained 0.1% to 2,397.0 pence.
Nikkei Extended Rally to Fourth Day, Japan's Service Sector Contracted
Investors bid up stocks in Tokyo and overlooked the latest update on the service sector.
The Nikkei 225 and the Topix indexes jumped following the gains in overnight trading in New York that pushed the S&P 500 index and the Nasdaq Composite to new record highs.
Tech stocks led the gainers amid optimism about earnings, and mega-cap stocks in the sector led the market's advance.
The yen drifted to a new 38-year low of 161.85 against the U.S. dollar as the Bank of Japan's policymakers struggled to devise a plan to shrink the yield gap between the U.S. and Japan.
The au Jibun Bank Japan Services PMI for June was revised down to 49.4 from the preliminary estimate of 49.8, S&P Global reported Wednesday.
The service sector activity contracted for the first time since August 2022, after all sub-sectors excluding information and communication shrank in the month.
The index reversed from 53.8 in May.
The input costs in the service sector rose to a 10-month high, but the prices charged to customers rose at the slowest pace since November 2023.
Market indexes in Tokyo have faced selling pressure in the second quarter as foreign investors lighten positions and look elsewhere in the region to China and India.
Despite the gains in the Nikkei 225 index over the last four days, investors are cautious because of the lack of progress on corporate governance reform and interest rate uncertainty.
Moreover, the Bank of Japan is set to reduce its Japanese government bond buying as early as next month.
Japan Stock Movers
The Nikkei 225 stock average increased 1.2% to 40,567.79, and the Topix index added 0.4% to 2,868.18.
Retail stocks were in focus after the yen hovered at a 38-year low, and the upsurge in foreign tourists from China, the U.S., and South Korea is expected to boost revenue this summer.
The number of U.S. tourists visiting Japan by air rose 17.4% to 900,000 in the first five months to May 2024, according to the data released by the International Trade Administration.
The U.S. arrivals soared 35.5% from the previous pre-pandemic peak in 2019, after Japan ended its travel restrictions and dropped to a multi-decade low.
Fast Retailing jumped 1.8% to ¥42,120.0, J. Front Retailing gained 0.4% to ¥1,910.50, Takashimaya declined 0.3% to ¥2,943.50, and Seven & I Holdings advanced 0.2% to ¥1,977.50.
Tech stocks were among the leading gainers following the rise in the sector in overnight trading in New York.
Tokyo Electron, Advantest, Screen Holdings, and Disco Corp. advanced between 1.5% and 3.0%.
Exporters fell despite the yen's weakness.
Panasonic, Canon, and Sony declined more than 1%, but Mitsubishi Electric advanced 1%.
TDK, Chugai Pharma, IHI, Murata Manufacturing, and Mitsubishi Heavy Industries gained between 3% and 5%.
However, NTT Data, Yokohama Rubber, and Chiba Bank declined more than 3%.
Hong Kong Rally Extends to Third Day, China Service Growth Drops
Investors battled mixed emotions, and market indexes diverged in Hong Kong and Shanghai.
Benchmark indexes in Hong Kong gained for the third consecutive day in a row as mainland investors added exposure to dividend-paying stocks.
Tech stocks led the market gainers after Alibaba said it completed its $5 billion stock repurchase plan in the last quarter.
Market enthusiasm was capped after the service sector growth rate dropped to an 8-month low.
The Caixin China service purchasing managers' index eased to 51.2 in June from 54.0 in May, S&P Global reported Wednesday.
China's services sector is one of the few bright spots in the economy, as the manufacturing sector struggles amid weak domestic demand and the construction sector continues to shrink after weak consumer confidence.
China Stock Movers
The Hang Seng index increased 1.4% to 17,978.52, and the CSI 300 index decreased 0.3% to 3,466.80.
Alibaba Group jumped 2.9% to HK $72.50, Meituan added 2.4% to HK $115.50, and Baidu jumped 3.2% to HK $86.55.
Electric vehicle makers were focused on the expectation that domestic and export sales would continue to advance despite the rising tensions with the US and the European Union.
On Tuesday, Tesla said it sold 443,956 vehicles in the June quarter, 4.8% lower than a year ago, which helped with incentives and price cuts.
BYD increased 0.5% to HK $229.40, Li Auto soared 5% to HK $77.55, and Xpeng gained 2% to HK $30.45.
Three new companies listed their shares on the stock exchanges in Hong Kong and Shanghai.
Shanghai Ananda Drive Techniques soared to 44.20 yuan after the driving equipment maker priced its initial public offering at 20.56 per share and raised 596 million yuan.
Zhonggan Communication Group plunged 37% to 79 HK cents, and the company priced its initial public offering price at HK 1.25 per share.
Xi'an Kingfar Property Services dropped 15% to HK $6.45, and the company priced its initial public offering at HK $7.50 per share and raised HK $125 million.
U.S. Movers: Constellation Brands, Ford Motor, Paramount Global, Southwest Airlines
Scott Peters
03 Jul, 2024
New York City
The S&P 500 index and the Nasdaq Composite held near the record highs reached in the previous session.
Private sector payrolls in June expanded at a slower-than-expected pace, and initial jobless claims rose more than estimated in the previous week.
The U.S. goods and service trade deficit in May widened after exports decreased more than imports.
The S&P 500 index increased 0.1% to 5,513.95, and the Nasdaq Composite rose 0.1% to 18,041.26.
The yield on 2-year Treasury notes edged higher to 4.78%, 10-year Treasury notes increased to 4.43%, and 30-year Treasury bonds edged higher to 4.60%.
Constellation Brands gained 2.8% to $266.24, and the alcoholic beverage distributor reported better-than-expected quarterly results.
Tesla Inc. advanced 2.4% to $236.02 and extended the previous session's gain of 10%.
On Tuesday, Tesla said it sold 443,956 vehicles in the June quarter, 4.8% lower than a year ago, which helped with incentives and price cuts.
Paramount Global jumped 13.5% to $12.13 after media reports suggested that Skydance Media had reached a preliminary agreement to acquire the controlling shareholder, National Amusements.
The news of the deal was first reported by The New York Times and the Wall Street Journal.
Southwest Airlines increased 0.6% to $28.43, and the company adopted a shareholder rights plan, also known as a poison pill after, activist investor Elliott Management acquired an 11% stake in the company.
Under the so-called poison pill plan, existing shareholders will have the right to purchase additional shares in the company at a 50% discount.
Elliott Management said in a regulatory filing that it has acquired an 11% stake in the regional airline for $1.9 billion.
Ford Motor Company gained 0.1% to $12.89, and the company said total vehicle sales in the second quarter increased 1% from a year ago.
Total truck sales, including pickups and vans, increased 5% to 308,920, representing the best second-quarter truck sales since 2019.
Sales of Ford electric vehicles soared 61% to 23957 units, and the company said the Mustang Mach E and F-150 Lighting are drawing new customers to the company.
S&P 500 and Nasdaq Hold Near Record Highs, Private Payrolls Growth Slowed In June
Barry Adams
03 Jul, 2024
New York City
Benchmark indexes flatlined a day after the S&P 500 index and the Nasdaq Composite advanced to new record highs.
Two widely followed market indexes hovered near record highs as investors bid up mega-cap tech stocks fueled by the artificial intelligence craze.
Market participants are worried that the nine-weeklong market gain is based on a narrow list of stocks.
Moreover, investors are also concerned that high valuations may not be sustainable in the second half if corporate earnings fail to meet investor expectations.
Initial jobless claims in the previous week rose more than expected, from 4,000 to 238,000, and continuing claims increased by 26,000 to 1.858 million in the earlier week, the U.S. Department of Labor said in its weekly update on Wednesday.
Stock market trading volume is likely to be light, and the New York Stock Exchange is set to close early at 1:00 p.m. ET.
The NYSE and other financial markets will be closed on Thursday to celebrate Independence Day.
Private Payroll Growth Slows in June
Private payrolls expanded by 150,000 in June, lower than market expectations and the lowest since January, a report by ADP showed on Wednesday.
The payroll increase slowed from the upwardly revised 157,000 in May.
The service sector added 136,000 jobs, and the goods-producing sector created 14,000 jobs.
The leisure and hospitality sector added 63,000, professional and business services 25,000, trade, transportation, and utilities 15,000, and financial services 11,000.
Meanwhile, information services providers cut jobs by 3,000.
In the goods-producing sector, construction added 27,000 jobs, but natural resources and mining shed 8,000 and manufacturing cut 5,000 jobs, respectively.
"Job growth has been solid but not broad-based. Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month," said Nela Richardson, chief economist at ADP.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.1% to 5,513.95, and the Nasdaq Composite rose 0.1% to 18,041.26.
The yield on 2-year Treasury notes edged higher to 4.78%, 10-year Treasury notes increased to 4.43%, and 30-year Treasury bonds edged higher to 4.60%.
WTI crude oil increased $0.13 to $82.93 a barrel, and natural gas prices fell 0.1 cents to $2.43 a thermal unit.
Gold decreased by $15.81 to $2,345.98 an ounce, and silver rose 71 cents to $30.28.
The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.62.
U.S. Stock Movers
Constellation Brands gained 2.8% to $266.24, and the alcoholic beverage distributor reported better-than-expected quarterly results.
Tesla Inc. advanced 2.4% to $236.02 and extended the previous session's gain of 10%.
On Tuesday, Tesla said it sold 443,956 vehicles in the June quarter, 4.8% lower than a year ago, which helped with incentives and price cuts.
Paramount Global jumped 13.5% to $12.13 after media reports suggested that Skydance Media had reached a preliminary agreement to acquire the controlling shareholder, National Amusements.
The news of the deal was first reported by The New York Times and the Wall Street Journal.
Europe Movers: Airbus, Bpost, Johnson Matthey, Topps Tiles, Skanska
Inga Muller
03 Jul, 2024
Frankfurt
The UK parliamentary elections are likely to hand power to the Labour Party, but the country's economic woes and cost of living crisis are likely to worsen in the months ahead.
The DAX index increased by 1.0% to 18,336.78; the CAC-40 index rose by 1.5% to 7,650.72; and the FTSE 100 index rose by 0.6% to 8,167.37.
The yield on 10-year German bonds edged lower to 2.59%; French bonds inched lower to 3.24%; the UK gilts inched lower to 4.23%; and Italian bonds decreased to 4.03%.
Skanska AB increased by 0.7% to SEK 187.20 after the Swedish company won a $97 million construction order.
Bpost SA decreased 6.4% to €2.94 after the Belgian postal company's annual profit outlook fell short of market expectations.
Topps Tiles decreased 2.8% to 39.60 pence after the retailer said sales declined in the fiscal third quarter.
Johnson Matthey rose 3.2% to 1,628.0 pence after the engineering and specialty chemical company launched a stock buyback plan.
Airbus SE rose 2.6% to €135.34 after the French aerospace company received an order from the discount air carrier Cebu Air.
The order for up to 152 A321 Neo aircraft is estimated to total $24 billion based on the list price of the plane.
Higher copper prices lifted resource stocks in London trading.
Glencore PLC jumped 1.8% to 474.45 pence, Antofagasta advanced 2% to 2,125.0 pence, and Anglo American gained 0.1% to 2,397.0 pence.
European Markets Rebound. Eurozone Producer Price Deflation Extends to 13th Month
Bridgette Randall
03 Jul, 2024
Frankfurt
European markets rebounded, the euro held firm, and bond yields in the currency union edged higher as focus shifted to elections.
Benchmark indexes in Paris soared 1.5%, in London advanced 0.6%, and in Frankfurt gained 1% as investors debated the future rate path and awaited the release of corporate earnings.
The Labour Party is likely to win as many as 484 seats in the parliamentary election scheduled for July 4, according to the latest poll released by Survation.
The Conservative Party is estimated to garner only 64 seats, barely reaching the minimum seats needed to be an official opposition party.
In France, President Emmanuel's coalition struck a deal with the newly formed Popular Front to prevent the National Rally Party from winning majority seats in the second round of parliamentary elections on July 7.
About 200 candidates withdrew after the far-left party and President Macron's Renaissance party united.
On the economic front, producer prices in the eurozone declined 4.2% from a year ago in May, Eurostat, the statistical agency of the currency union, reported Wednesday.
Producer prices declined, slowed from the 5.7% fall in April, and marked the 13th consecutive month of annual deflation.
Energy prices declined 11.4% from a year ago, and intermediate goods fell 2.9%.
Excluding energy, producer prices fell 0.4%, less than a 0.9% decline in April.
On a monthly basis, producer prices in the eurozone fell 0.2% following the 1% decline in April and extended the decline for the seventh month in a row.
Europe Indexes and Yields
The DAX index increased by 1.0% to 18,336.78; the CAC-40 index rose by 1.5% to 7,650.72; and the FTSE 100 index rose by 0.6% to 8,167.37.
The yield on 10-year German bonds edged lower to 2.59%; French bonds inched lower to 3.24%; the UK gilts inched lower to 4.23%; and Italian bonds decreased to 4.03%.
The euro edged lower to $1.07; the British pound inched higher to $1.27; and the U.S. dollar weakened to 90.28 Swiss cents.
Brent crude increased $0.14 to $86.37 a barrel, and the Dutch TTF natural gas fell by €0.17 to €32.14 per MWh.
Europe Stock Movers
Skanska AB increased by 0.7% to SEK 187.20 after the Swedish company won a $97 million construction order.
Bpost SA decreased 6.4% to €2.94 after the Belgian postal company's annual profit outlook fell short of market expectations.
Topps Tiles decreased 2.8% to 39.60 pence after the retailer said sales declined in the fiscal third quarter.
Johnson Matthey rose 3.2% to 1,628.0 pence after the engineering and specialty chemical company launched a stock buyback plan.
Airbus SE rose 2.6% to €135.34 after the French aerospace company received an order from the discount air carrier Cebu Air.
The order for up to 152 A321 Neo aircraft is estimated to total $24 billion based on the list price of the plane.
Higher copper prices lifted resource stocks in London trading.
Glencore PLC jumped 1.8% to 474.45 pence, Antofagasta advanced 2% to 2,125.0 pence, and Anglo American gained 0.1% to 2,397.0 pence.