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Receding Inflation Expectations Drive U.S. Indexes to Record Highs for Fifth Consecutive Day

Barry Adams
14 Jun, 2024
Mumbai

Market indexes on Wall Street edged lower, but they are set to close higher for the week after inflation eased and investors held out for at least one rate cut in the year.

The S&P 500 index and the Nasdaq Composite declined more than 0.2% in Friday's trading as investors reassessed the inflation and interest rate outlook.

Despite Friday's market jitters, two benchmark indexes are set to close higher after a busy week of economic releases and monetary decisions from the Federal Reserve.

Investors are hoping that the recent weakening in inflationary pressures may drive overall inflation towards the 2% target rate set by the Fed's policymakers.

Consumer price inflation peaked in June 2022 and fell sharply to over 3% in June 2023, following the eleven interest rate hikes in 2022 and 2023.

However, since last June, progress on inflation has stalled and stayed above 3% for eleven months, despite the Fed's hawkish comments and talks of restrictive interest rates.

Moreover, home prices across the nation have doubled over the last four years, and food, energy, and automobile prices are also up between 100% and 300%, despite the Fed's tough talk and persistent drumbeat of price stability.

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.3% to 5,416.70, and the Nasdaq Composite fell 0.3% to 17,623.82.

The yield on 2-year Treasury notes edged lower to 4.69%, 10-year Treasury notes decreased to 4.22%, and 30-year Treasury bonds edged higher to 4.36%.

WTI crude oil increased $0.14 to $78.76 a barrel, and natural gas prices fell 5 cents to $2.91 a thermal unit.

Gold increased by $27.23 to $2,329.79 an ounce, and silver rose 30 cents to $29.22.

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.64.

U.S. Stock Movers

RH declined 14.4% to $237.02 after the high-end furniture retailer reported a larger loss in its latest quarter.

Adobe Inc. soared 14.5% to $525.34 after the software company reported better-than-expected quarterly results and lifted its annual outlook.

Europe Movers: Casino Guicahrd, Crest Nicholson, French Banks, Tesco

Inga Muller
14 Jun, 2024
Frankfurt

European markets extended weekly losses to between 2% and 4% after France's political realignment, which could change the balance of power after the snap election in two weeks.

The spread between the French and German bond yields soared to a multi-year high.

The DAX index decreased by 1.2% to 18,043.91; the CAC-40 index fell by 2.3% to 7,531.21; and the FTSE 100 index declined by 0.5% to 8,124.45.

For the week, the CAC - 40 declined 4.3%, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.

The yield on 10-year German bonds edged lower to 2.36%. French bonds inched lower to 3.17%; the UK gilts edged lower to 4.05%; and Italian bonds decreased to 3.96%.

French banks and insurance service providers declined for the third day in a row, amid the rising possibility of extreme parties on the right and left gaining a larger share of seats in parliament.

Societe Generale declined 5.3% to €21.76, Credit Agricole dropped 4.5% to €12.83, and BNP Paribas fell €57.60.

Casino Guicahrd dropped 3.3% to €3.30 after the retailer said it entered into exclusive negotiations with Auchan Retail France and Rocca regarding the sale of its Corsican subsidiary, Codim 2.

Crest Nicholson Holdings soared 11.5% to 237.40 pence after the homebuilder rejected the second all-cash offer from its larger competitor, Bellway.

Tesco plc increased 2.7% to 310.50 pence after the company reported a rise in its retail grocery sales operation.

Revenue in retail operations increased by 3.4% on a comparable basis to £15.3 billion in the first three months of the fiscal year.

The global retail sales increase was driven by a better-than-expected sales increase of 4.4% in Ireland to £731 million and a UK sales increase of 4.6% to £11.3 billion.

Sales at the company's wholesale division, Booker, declined 1.3% to £2.23 billion, due to the weakness in tobacco sales and the tough comparison from the previous year.

The retailer reiterated its annual adjusted operating profit outlook to £2.8 billion and free cash flow range between £1.4 billion and £1.8 billion.

European Markets Extend Weekly Losses, French Bond Risk Premium Soares to a 4-year High

Bridgette Randall
14 Jun, 2024
Frankfurt

Rising political uncertainty in France weighed on bonds and stocks in the eurozone for the fifth day in a row.

Benchmark indexes in Paris plunged more than 2% and led the decliners in the region, followed by a 1% loss in Frankfurt and a 0.5% decline in London.

Political realignment and negotiation rose to a dizzying pace in Paris, and a once unthinkable alliance among far-left parties knocked another blow to President Emmanuel Macron's prospect of keeping the lower house of parliament divided.

The Socialists, the far-left La France Insoumise, the Greens, and the Communists agreed on a common election platform and a distribution of seats, which is likely to enhance their share of votes at the upcoming election on June 30.

Conservative and far-right parties are still divided, and they are likely to run their campaigns as independent parties, which could reduce their chances of winning a larger share of votes.

All parties are required to submit their candidate lists by June 16.

Market anxieties were visible in the spread between the French and German bond yields, which rose to 81 basis points from 48 points last week after the credit rating agency S&P Global indicated that it may review the French government bond's long-term credit rating if far-right parties win control of the legislative chamber.

Prior to the European Union elections on June 9, S&P Global lowered its debt rating for France down to AA from AA, indicating that the government's debt is likely to stay above 3% of gross domestic product in 2027.

After the downgrade, France's debt rating was on par with the ratings for the Czech Republic and Estonia.

Eurozone Trade Balance Swings to Surplus in April

The eurozone trade surplus rose to a surplus of €15 billion in April from a gap of €11 billion in the same month a year ago, Eurostat reported Friday.

Exports increased 14% from a year ago to 247.6 billion, and imports advanced 1.8% to €232.5 billion.

In January to April, the Euro Area trade surplus was €72.8 billion, compared to a deficit of €20.5 billion, after imports of chemicals and energy declined but exports of machinery and vehicles, food and drinks, and specialty chemicals advanced.

Europe Indexes and Yields

The DAX index decreased by 1.2% to 18,043.91; the CAC-40 index fell by 2.3% to 7,531.21; and the FTSE 100 index declined by 0.5% to 8,124.45.

For the week, the CAC - 40 declined 4.3%, the DAX index dropped 2.4%, and the FTSE 100 index decreased 1.0%.

The yield on 10-year German bonds edged lower to 2.36%. French bonds inched lower to 3.17%; the UK gilts edged lower to 4.05%; and Italian bonds decreased to 3.96%.

The euro edged lower to $1.069; the British pound inched higher to $1.273; and the U.S. dollar weakened to 89.32 Swiss cents.

Brent crude increased $0.12 to $82.87 a barrel, and the Dutch TTF natural gas rose by €0.24 to €35.57 per MWh.

Europe Stock Movers

French banks and insurance service providers declined for the third day in a row, amid the rising possibility of extreme parties on the right and left gaining a larger share of seats in parliament.

Societe Generale declined 5.3% to €21.76, Credit Agricole dropped 4.5% to €12.83, and BNP Paribas fell €57.60.

Casino Guicahrd dropped 3.3% to €3.30 after the retailer said it entered into exclusive negotiations with Auchan Retail France and Rocca regarding the sale of its Corsican subsidiary, Codim 2.

Crest Nicholson Holdings soared 11.5% to 237.40 pence after the homebuilder rejected the second all-cash offer from its larger competitor, Bellway.

Tesco plc increased 2.7% to 310.50 pence after the company reported a rise in its retail grocery sales operation.

Revenue in retail operations increased by 3.4% on a comparable basis to £15.3 billion in the first three months of the fiscal year.

The global retail sales increase was driven by a better-than-expected sales increase of 4.4% in Ireland to £731 million and a UK sales increase of 4.6% to £11.3 billion.

Sales at the company's wholesale division, Booker, declined 1.3% to £2.23 billion, due to the weakness in tobacco sales and the tough comparison from the previous year.

The retailer reiterated its annual adjusted operating profit outlook to £2.8 billion and free cash flow range between £1.4 billion and £1.8 billion.

BOJ Holds Short Term Rates Steady and Signals Plans to Discuss Cutting JGB Purchases

Akira Ito
14 Jun, 2024
Tokyo

Stocks in Japan edged higher, the yen raced towards its 34-year low, and Japanese government bond yields remained steady after the Bank of Japan announced its monetary decisions.

The Bank of Japan held its short-term policy rate range steady between zero and 0.1%, as widely anticipated, after lifting the rate for the first time in March and ending the negative rate regime since 2007.

The central bank also said it plans to reduce the purchase of Japanese government bonds after the July meeting, but policymakers continue to stick to the plan to purchase 6 trillion yen worth of bonds a month.

The move is a reflection of the plan announced by Governor Kazuo Ueda to let the market dictate long-term rates after controlling the yield curve for more than two decades.

The central bank's move is likely to increase long-term rates in the future, but it may not arrest a downward slide in the yen.

The interest rate gap between the U.S. and Japan is not likely to narrow in the near future.

On Wednesday, the U.S. Federal Reserve held its interest rate steady and indicated it anticipates only one rate cut in the year from the earlier projection of three rate cuts in March. signaling higher rates are likely to stay longer.

The Japanese yen declined to 158.02 and approached the 34-year low of 160 yen against the U.S. dollar on the persistent yield differential between the U.S. and Japanese bond yields.

Currency traders are anticipating the Japanese yen to test new lows between 165 and 170 over the next six months of trading.

The yield on a 10-year Japanese government bond held firm near 0.94%.

Japan Stock Movers

The Nikkei 225 Stock Average rose 0.4% to 38,875.24, and the Topix index advanced 0.5% to 2,746.23.

In Friday's trading, technology, banking, and automobile makers were in focus.

Tokyo Electron, Advantest, Screen Holdings, and Lasertec declined between 0.2% and 0.4%.

Softbank jumped 3.5% to ¥10,110.0.

Sumitomo Mitsui Financial decreased by 0.3% to ¥10,000.0, Mitsubishi UFJ declined by 1.6% to ¥1,580.0, and Mizhuo Financial Group eased by 0.1% to ¥3,063.0.

Sumco declined 1.9% to ¥2,417.0, Panasonic Holdings rose 0.4% to ¥1,302.50, and Canon jumped 0.5% to ¥4,447.0.

Ocean freight lines were among the actively traded stocks, and Kawasaki Kisen gained 4% to ¥2,321.50, Mitsui OSK Lines jumped 4.4% to ¥4,964.0, and Nippon Yusen K.K. advanced 3% to ¥4,777.0.

China Indexes Extended Weekly Losses Ahead of the Release of Key Economic Data

Li Chen
14 Jun, 2024
Hong Kong

Investors turned cautious ahead of the release of key economic data on Monday amid simmering trade tensions with the European Union.

The CSI 300 index and the Hang Seng index extended weekly losses to more than 2% as investors worried that markets may have risen more than economic fundamentals justify.

Despite the flurry of announcements from Chinese central and local authorities, little has changed in the troubled property market, one of the key drivers of the Chinese economy.

Benchmark indexes in Shanghai and Hong Kong soared as much as 20% from the low in late January to mid-May after the People's Bank of China relaxed mortgage rules and local authorities in Shenzhen and Shanghai eased conditions to buy residential property.

However, consumers have restricted purchases to basic necessities amid job market uncertainty, salary cuts, lengthened payment cycles, an uneven policy response, and falling but elevated property prices.

Market sentiment was cautious ahead of the release of retail sales, fixed investment, and industrial production data on Monday.

The People's Bank of China is set to announce its official lending rates next week and new lending and aggregate lending data on Monday.

China Stock Movers

The CSI 300 index decreased 0.4% to 3,512.03 and the Hang Seng index fell 0.7% to 17,991.04.

Chinese electric vehicle makers declined for the second day in a row after the European Union imposed additional tariffs on Chinese passenger cars.

BYD declined 1.9% to HK$228.20, Li Auto dropped 0.5% to HK$74.0, and Geely Automobile decreased 1.6% to HK$8.90.

Chinese authorities signaled that they are likely to announce their restrictive tariffs on agriculture, cattle meat, and dairy products imported from the European Union.

Chow Tai Fook tumbled 9% to HK$8.61 after the jewelry retailer announced a smaller-than-expected dividend and confirmed weak sales growth in the last two months.

Revenue in the fiscal year ending in March rose 14.8% to HK108.7 billion, net profit advanced 20% to HK$6.6 billion from HK$5.5 billion, and earnings per share increased 21% to 65 HK cents.

The company declared a full-year dividend of 55 HK cents, an 84.6% payout ratio.

The company announced a final dividend of 30 HK cents payable on August 20 to shareholders on record on August 2.

Cloud Factory Technology Holdings declined as much as 10% before recovering to HK$3.90 after the company priced its initial public offering at HK$4.0 per share.

Kweichow Moutai dropped as much as 2% before recovering to a decline of 0.6% to HK¥1,545.36 on reports that some of its expensive distilled liquor products were selling at a discount in mainland China amid cooling demand.

India Movers: Dr. Reddy's, Havells, Nitco, Puravakaran, Vodafone Idea

Arun Goswami
14 Jun, 2024
Mumbai

Investors added exposure to stocks in Friday's trading and extended weekly gains in the hopes that the central government would accelerate infrastructure spending and announce new initiatives to support manufacturing.

The Sensex index increased by 0.1% to 76,912.43, and the Nifty index rose by 0.3% to 23,464.95.

On the Mumbai stock exchange, 166 stocks traded at their 52-week highs, and 7 stocks traded at their 52-week lows.

Vodafone Idea jumped 0.5% to ₹16.16 after the troubled wireless company's board approved the allocation of equity holdings in the company to two telecom equipment makers, Nokia and Ericsson, in a bid to lower its outstanding debts.

The company's board approved the allocation of 1,027 million (or 102.7 crore) shares to Nokia and 633.7 million (or 63.37 crore) shares to Ericsson in exchange for prior debt.

Dr. Reddy's Laboratories decreased 0.7% to ₹6,054.15, and Life Insurance Corporation of India said it increased its stake in the company to 5.01% from 4.95% through stock purchases in the open market at an average price of 6,059.82 per share.

Puravankara Ltd. jumped 1% to ₹440.0 after the company's board approved the plans to raise as much as ₹1,000 crore through an institutional offering.

Havells India edged up 0.3% to ₹1,842.95, and the maker of consumer goods said it plans to expand its air conditioner production capacity to 15 lakh units at two facilities located in Ghiloth, Rajasthan, and Sricity, Andhra Pradesh.

The company said it plans to invest between 50 and 60 cores and complete its expansion plans before March 2025.

Nitco jumped 5% to ₹80.28, and the company signed an agreement to sell its land in Kanjurmarg, Mumbai, to Runwal Construction Private Limited.

Markets Hover Near Record Highs as Inflation Cools

Alexander Garcia
13 Jun, 2024
Miami

Market indexes lost early morning momentum as investors reviewed the second inflation report in as many days, indicating price pressures may be waning.

The S&P 500 index and the Nasdaq Composite hovered around the flatline after producer price inflation eased more than expected, a day after consumer price inflation unexpectedly cooled in May.

Producer price inflation slowed to an annual pace of 2.2% in May from 2.3% in April, the U.S. Bureau of Labor Statistics reported Thursday.

Core producer prices, which exclude food, energy, and trade services, rose at an annual pace of 3.2%, matching the rate in April.

On a monthly basis, producer prices declined 0.2% after rising 0.5% in April, and most of the decline in inflation in May could be traced to a 7.1% fall in gasoline prices.

The latest update on factory-gate inflation follows the Federal Reserve's decision to hold its target rate range between 5.25% and 5.50%.

The S&P 500 index and the Nasdaq Composite closed at new record highs for two consecutive days after consumer price inflation rose less than expected, and producer price inflation updates today showed price pressures may finally weaken to the Fed's target rate of 2%.

Consumer price inflation peaked just above 9% in June 2022, and over the next year, price increases slowed to 3%.

However, since then, inflation has failed to weaken, despite the Fed's eleven rate hikes in 2022 and 2023.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,430.37, and the Nasdaq Composite advanced 0.7% to 17,737.21.

The yield on 2-year Treasury notes edged higher to 4.72%, 10-year Treasury notes decreased to 4.27%, and 30-year Treasury bonds edged higher to 4.47%.

WTI crude oil increased $0.17 to $78.67 a barrel, and natural gas prices fell 7 cents to $3.01 a thermal unit.

Gold increased by $6.34 to $2,314.35 an ounce, and silver fell 29 cents to $29.25.

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.91.

U.S. Stock Movers

Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.

Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.

Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.

European Markets Turn Lower Amid Rising Trade Tensions with China

European markets faced headwinds amid interest rate path uncertainty and rising trade tensions with China.

Benchmark indexes in Paris, London, and Frankfurt fell around 1% after the European Commission imposed additional tariffs on electric vehicles imported from China.

After seven months of investigation, the European Union imposed smaller-than-expected tariffs between 17.4% and 38% on Chinese automakers.

Beijing is likely to retaliate with its own tariffs on agriculture, meat, and dairy imports from the European Union.

Despite the additional tariffs imposed by the European Union, Chinese electric vehicle makers are likely to grow their market share in Europe amid rising demand for longer-range batteries and shorter battery recharge times.

On the economic front, Germany's wholesale price index fell at a slower pace in May, and the eurozone's industrial output shrank in April.

Eurozone Industrial Output Shrank in April

Industrial output in the eurozone rose 3% from a year ago in April, after a revised 1.2% decline in the previous month, Eurostat said in its monthly update.

On a monthly basis, industrial output fell 0.1%, reversing a downwardly revised 0.5% increase in the previous month.

Production of capital goods rose at a slower pace of 0.7% compared to 0.9% in March, and industrial output declined, deepening to 0.4% from 0.2%.

However, energy equipment production rebounded to 0.4% from a decline of 0.1%, durable goods to 0.3% from a fall of 0.6%, and non-durable goods to 3.4% from a fall of 2.7%.

Germany's Wholesale Prices Decline Slowed in May

Germany's wholesale prices in May declined 0.7% from a year ago, following a 1.8% decline in the previous month, Destatis reported Thursday.

Wholesale prices declined for the 13th month in a row but fell at the slowest pace in the period due to the 13.9% decline in chemical product prices.

Prices for iron, steel, and ferrous semi-finished metal products dropped 12.1%, and compared to April, these prices fell by 0.5%.

Grain, raw tobacco, seeds, and animal feed declined 5.1% from a year ago but rose 3.4% from the previous month; milk, milk products, eggs, edible oils, and dietary fat prices eased 5.1% from a year ago.

However, prices for fruits, vegetables, and potatoes increased by 6.4%; tobacco products increased by 5.4%; and sugar, confectionary, and baked products advanced by 7.2%.

Europe Indexes and Yields

The DAX index decreased by 1.2% to 18,417.31; the CAC-40 index fell by 1.4% to 7,757.89; and the FTSE 100 index declined by 0.5% to 8,174.73.

The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.18%; the UK gilts edged lower to 4.18%; and Italian bonds decreased to 3.97%.

The euro edged higher to $1.079; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.65 Swiss cents.

Brent crude decreased $0.47 to $82.12 a barrel, and the Dutch TTF natural gas rose by €1.33 to €36.29 per MWh.

Europe Stock Movers

Automakers in Germany, France, and Italy declined after the EU imposed additional tariffs on Chinese electric vehicles.

Mercedes-Benz Group fell 1.9% to €63.55, Volkswagen Group plunged 3.7% to €105.55, and Stellantis eased 2.0% to €19.82.

Wise PLC tumbled 11.5% to 745.0 pence after the international money transfer service provider targeted lower underlying income growth in the current year.

Revenue in the fiscal year 2024 ending in March soared to £1.05 billion from £846.1 million, and pre-tax profit surged 229% to £481 million.

The company estimated organic earnings growth in the current fiscal year to range between 15% and 20%.

Crest Nicholson dropped 11.4% to 213.40 pence after the UK-based home builder swung to a net loss in the first half and lowered its annual earnings outlook again.

Revenue in the first half fell to £257.5 million from £282.7 million, reflecting fewer new home bookings at the beginning of 2024.

Net income in the first half ending on April 30 swung to a pre-tax loss of £30.9 million compared to a pre-tax profit of £28.4 million a year ago.

The home builder lowered its 2024 pre-tax profit outlook to between £22 million and £29 million, from the previous range between £45 million and £50 million released in November.

The company completed 788 homes in the first half, compared to 894 homes a year ago.

The board declared an interim dividend of 1.0 pence per share, compared to a dividend of 5.5 pence per share a year ago.

Yen Drifts Near Recent 35-year Low, Japan's Business Sentiment Decline Softens

In mixed trading, market indexes lacked direction in Tokyo ahead of the Bank of Japan's monetary policy decisions on Friday.

The Nikkei 2225 and the broader Topix index meandered around the flatline ahead of the widely anticipated Bank of Japan's decision to hold rates steady.

In addition, investors are looking forward to Governor Kazuo Ueda's comments about the central bank's plan to purchase government bonds.

The Japanese yen weakened to 157.07 against the U.S. dollar, and the yield on 10-year Japanese government bonds hovered near 0.976%.

The Bank of Japan is expected to hold interest rates steady, despite the recent acceleration in producer price inflation and rising inflationary pressures for consumers.

The central bank's dovish stance is likely to weigh heavily on the yen, and the Japanese currency is expected to weaken to between 165 and 170 over the next six months.

The Bank of Japan policymakers believe that a steady decline in the yen is the best possible outcome for the Japanese economy, supporting the price competitiveness of Japanese manufacturing products exported.

The business survey index of large manufacturing companies fell less than expected, and forward-looking expectations rebounded, according to the survey results released by the Cabinet Office.

The business climate index among large manufacturers declined by 1% in the second quarter after falling 6.7% in the first quarter.

The mood improved after manufacturing companies reported solid earnings in the first quarter and ramped up domestic capital spending.

Manufacturers anticipate business conditions to improve by 9.2% in the third quarter and 10.7% in the fourth quarter.

Japan Stock Movers

The Nikkei 225 Stock Average decreased 0.2% to 38,812.40, and the Topix Index fell 0.6% to 2,739.37.

In the tech sector, Advantest, Tokyo Electron, Disco Corp., and Screen Holdings declined between 0.8% and 3.5%.

Banks also participated in the downturn, and Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui fell more than 1%.

Among the leading gainers, Renaissance Electronics soared 4.9% to ¥3,101.0, Taio Yuen advanced 4.3% to ¥3,793.0, and Recruit Holdings jumped 2.5% to ¥7,910.0.

On the downside, Tokyo Electric Power, Chubu Electric Power, and Kansai Electric Power declined between 2% and 4%.

Konica Minolta, T&D Holdings, Eisai, and Denka fell around 3%.

China Markets Attempt to Rebound, EV Makers Surge Brushing Off EU Tariffs

Benchmark indexes in Shanghai and Hong Kong rebounded amid hopes of additional market-supportive measures from the Chinese government.

The CSI 300 and the Hang Seng index inched higher from the one-month level reached in Wednesday's trading as investors pinned their hopes on new market-supportive measures from the People's Bank of China and local Chinese governments.

The three-monthlong market rally peaked in late May, and the benchmark indexes have lost as much as 9% in the last three weeks of trading.

However, market sentiment recovered on the hopes that weakening inflation in the U.S. may support the case for at least one rate cut before the year's end.

Moreover, the Hong Kong Monetary Authority held its key lending rate unchanged at 5.75%, reflecting the U.S. Federal Reserve's decision to hold its target rate range steady.

The Hong Kong dollar is linked to the U.S. dollar, and the city's monetary authority revises rates following the rate announcements by the U.S. Federal Reserve to maintain the local currency's peg with the U.S. dollar.

China Stock Movers

The CSI 300 index declined 0.4% to 3,528.92, and the Hang Seng index rose 0.5% to 18,034.42.

Electric vehicle makers advanced after the European Union's size of tariffs was deemed not restrictive enough for most Chinese vehicle makers.

The European Union imposed between 17.4% and 38% tariffs on electric vehicles imported from China, according to a statement released by the European Commission.

Companies participating in the seven-month EU probe faced a lower tariff rate, as tariffs imposed on Geely were 20% and on BYD 17.4%, but SAIC, which did not participate in the EU's subsidy probe, faced 38.1% import duties.

The new tariffs will be in addition to the existing duty of 10%, effective July 4.

Including the latest tariffs, Chinese vehicle makers will lose their price advantage but are likely to compete on design and advanced features, but makers may suffer from poor reliability and shoddy engineering practices.

Geely Automobile Holdings, the largest vehicle exporter to the European Union, is likely to face fewer-than-expected hurdles in exporting cars to the region.

Li Auto jumped 2.2% to HK$74.55, and BYD surged 6.5% to HK$234.20.

QuantumPharm, a drug researcher using artificial intelligence technology, advanced more than 10% from its initial public offering price of HK$5.28 on the first day of trading in Hong Kong.

U.S. Movers: Broadcom, Dave & Buster's, Oxford Industries

Scott Peters
13 Jun, 2024
New York City

Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.

Revenue in the first quarter decreased 1.5% to $588.1 million from $597.3 million, net income fell to $41.4 million from $70.1 million, and diluted earnings per share declined to 90 cents from $1.45 a year ago.

Comparable sales declined by 5.6% compared to the same calendar period in 2023.

Year to date, the company has repurchased 1.0 million shares at a cost of $50.0 million, representing 2.4% of the company's outstanding shares as of the end of fiscal 2023.

The company has $150 million remaining on its share repurchase authorization.

Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.

Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.

Revenue in the fiscal first quarter ending on May 4 declined 5.2% to $398.2 million from $420.1 million, net income dropped to $38.3 million from $58.5 million, and diluted earnings per share fell to $2.42 from $3.64 a year ago.

For the second quarter of fiscal 2024, the apparel retailer expects net sales to range between $430 million and $450 million, compared to net sales of $420 million in the second quarter a year ago.

The company estimated earnings per share in a range of $2.82 to $3.02 in the second quarter, compared to $3.22 in the second quarter of fiscal 2023.

Adjusted EPS is expected to be between $2.95 and $3.15, compared to adjusted EPS of $3.45 in the second quarter of fiscal 2023.

For fiscal 2024 ending on February 1, 2025, the company revised its sales and earnings per share outlook.

The company now expects net sales in a range of $1.59 billion to $1.63 billion as compared to net sales of $1.57 billion in fiscal 2023.

In fiscal 2024, GAAP earnings per share are expected to be between $7.99 and $8.39, compared to $3.82 a year ago, and adjusted earnings per share are expected to be between $8.60 and $9.00, compared to $10.15 a year ago.

Waning Inflation Pressures Keep Alive Hopes for at least One Rate Cut in 2024

Barry Adams
13 Jun, 2024
New York City

Benchmark indexes are set to advance to a new record close for the third day in a row after the second report on inflation showed waning price pressures.

The S&P 500 index and the Nasdaq Composite hovered around the flatline after producer price inflation eased more than expected, a day after consumer price inflation unexpectedly cooled in May.

Producer price inflation slowed to an annual pace of 2.2% in May from 2.3% in April, the U.S. Bureau of Labor Statistics reported Thursday.

Core producer prices, which exclude food, energy, and trade services, rose at an annual pace of 3.2%, matching the rate in April.

On a monthly basis, producer prices declined 0.2% after rising 0.5% in April, and most of the decline in inflation could be traced to a 7.1% fall in gasoline prices.

The latest update on factory-gate inflation follows the Federal Reserve's decision to hold its target rate range between 5.25% and 5.50%.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,430.37, and the Nasdaq Composite advanced 0.7% to 17,737.21.

The yield on 2-year Treasury notes edged higher to 4.72%, 10-year Treasury notes decreased to 4.27%, and 30-year Treasury bonds edged higher to 4.47%.

WTI crude oil increased $0.17 to $78.67 a barrel, and natural gas prices fell 7 cents to $3.01 a thermal unit.

Gold increased by $6.34 to $2,314.35 an ounce, and silver fell 29 cents to $29.25.

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.91.

U.S. Stock Movers

Dave & Buster's plunged 12.3% to $44.12, and the restaurant chain operator reported sharply lower-than-expected revenue in the first quarter.

Broadcom soared 11.3% to $1,671.99 after the company posted better-than-estimated fiscal second quarter revenue of $12.49 billion and adjusted earnings of $10.96 per share.

Oxford Industries declined 4.5% to $96.95 after the parent company of the apparel retailer Tommy Bahama reported less-than-expected revenue in the first quarter of $398.2 million and adjusted earnings per share of $2.66.

Europe Movers: Alstom, Automakers, Crest Nicholson, Halma, Wise

Inga Muller
13 Jun, 2024
Frankfurt

European markets turned lower amid rising political turmoil in France and growing trade tensions between the European Union and China.

France's Parti republicain expelled its chief, Eric Ciotti, after the leader appealed to form an alliance with the far-right National Rally Party.

The DAX index decreased by 1.2% to 18,417.31; the CAC-40 index fell by 1.4% to 7,757.89; and the FTSE 100 index declined by 0.5% to 8,174.73.

The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.18%; the UK gilts edged lower to 4.18%; and Italian bonds decreased to 3.97%.

Automakers in Germany, France, and Italy declined after the EU imposed additional tariffs on Chinese electric vehicles.

Mercedes-Benz Group fell 1.9% to €63.55, Volkswagen Group plunged 3.7% to €105.55, Stellantis eased 2.0% to €19.82, and Renault SA decreased 2.6% to €49.50.

Alstom SA decreased 2.5% to €16.36 after the railroad company said it completed raising €1 billion, the final step of its €2 billion deleveraging plan.

Halma plc jumped 12.2% to 2,637.0 pence after the health and safety device maker reported strong fiscal year results.

Wise PLC tumbled 11.5% to 745.0 pence after the international money transfer service provider targeted lower underlying income growth in the current year.

Revenue in the fiscal year 2024 ending in March soared to £1.05 billion from £846.1 million, and pre-tax profit surged 229% to £481 million.

The company estimated organic earnings growth in the current fiscal year to range between 15% and 20%.

Crest Nicholson dropped 11.4% to 213.40 pence after the UK-based home builder swung to a net loss in the first half and lowered its annual earnings outlook again.

Revenue in the first half fell to £257.5 million from £282.7 million, reflecting fewer new home bookings at the beginning of 2024.

Net income in the first half ending on April 30 swung to a pre-tax loss of £30.9 million compared to a pre-tax profit of £28.4 million a year ago.

The home builder lowered its 2024 pre-tax profit outlook to between £22 million and £29 million, from the previous range between £45 million and £50 million released in November.

The company completed 788 homes in the first half, compared to 894 homes a year ago.

The board declared an interim dividend of 1.0 pence per share, compared to a dividend of 5.5 pence per share a year ago.

European Markets Turn Lower Amid Rising Trade Tensions with China

Bridgette Randall
13 Jun, 2024
Frankfurt