Market Update
Positive Bias Lifts DAX and CAC-40 to New Intra-day Highs, Euro Area Inflation Eases
Bridgette Randall
18 Mar, 2024
Frankfurt
European markets advanced in Monday's trading as investors awaited monetary policy decisions from major central banks.
Investors pared expectations of a rate cut in the U.S. after consumer and producer price inflation in February stayed ahead of expectations.
The Federal Reserve may keep interest rates unrevised for the next several months because of the resilient U.S. economy and healthy labor market conditions.
Market participants may have to adjust their rate expectations if the Federal Reserve's economic growth projection and interest rate outlook call for higher rates for at least two months or longer.
Benchmark indexes in Frankfurt and Paris gained about 0.2%, and they traded near record highs as investors reviewed the latest eurozone inflation data.
Euro Area Inflation Eases In February
Euro Area inflation eased to 2.6% in February from 2.8% in January and fell from 8.5% in the corresponding month a year ago, Eurostat reported Monday.
A year earlier, the rate was 8.5%.
The steady decline in energy prices supported the easing of inflation from the previous month and from a year ago; services inflation was 1.73%; food, drink, and tobacco inflation decreased to 0.8%; and energy inflation turned negative to 0.4%.
Europe Indexes and Yields
The DAX index increased by 0.3% to 17,993.25, the CAC-40 index rose by 0.1% to 8,171.82, and the FTSE 100 index inched higher by 0.102% to 7,738.82.
Last week, the DAX index gained 1.7%, the CAC-40 index advanced 2.4%, and the FTSE 100 index inched up 1.3%.
The yield on 10-year German bonds edged up to 2.46%; French bonds inched higher to 2.90%; the UK gilts edged higher to 4.14%; and Italian bonds inched lower to 3.70%.
The euro edged higher to $1.089, the British pound inched higher to $1.273, and the U.S. dollar held steady at 88.34 Swiss cents.
Brent crude increased $0.60 to $85.95 a barrel, and the Dutch TTF natural gas advanced by €1.33 to €28.63 per MWh.
Europe Stock Movers
Hannover Re increased 1.1% to €247.30 after the German reinsurance company reported an increase in full-year net income, and the company estimated improved results in the fiscal year 2024.
Logitech International decreased 7.4% to CHF 77.98 after the company announced the departure of its chief financial officer, Charles Boynton.
Julius Baer declined 1.1% to CHF 49.57 after the Swiss financial services firm announced its targets for the next two years.
Metals and mining companies declined after China reported construction industry investment shrank by more than 9% in the two months to February.
Antofagasta and Anglo American declined by 1%, but Glencore increased by 1.2%.
Marshalls declined 7% to 270.0 pence after the UK-based building materials group reported a decline in annual revenue and pre-tax earnings.
Currys gained 2.5% to 58.25 pence after the UK-based electronics retailer raised its profit outlook.
British American Tobacco increased 1.1% to 2,369.0 pence after the company launched its stock buyback program after selling part of its stake in ITC for £1.6 billion.
ProsiebenSat Media decreased 0.2% to €6.32, and the company's major shareholder, MFE-MediatorEurope, stepped up its pressure on the German broadcaster to separate its e-commerce operations from its core television services.
British Land Company advanced 2.8% to 378.90 pence after the company announced a 50:50 joint venture with Royal London Asset Management.
China Stocks Rebound On Economic Optimism, Japan Stocks Jump Ahead of Rate Decisions
Arjun Pandit
18 Mar, 2024
Mumbai
Asian stock markets advanced after China reported better-than-expected retail sales, fixed investment, and industrial output in two-month period to February.
Benchmark indexes in Tokyo advanced ahead of the monetary policy announcements by the Bank of Japan at the end of its two-day meeting on Tuesday.
The Nikkei 225 Stock Average gained 2.5% to 39,665.98, and the Topix index added 1.9% to 2,720.33.
Investors are hoping that the Bank of Japan will announce its plans to end the negative interest rate regime and adjust the yield curve to arrest the widening rate gap with the U.S.
Moreover, strong wage increases for the second year in a row agreed upon by large corporations during the annual negotiations with the labor unions also raised hopes that the Bank of Japan may be nearing the end of its ultra-loose monetary policy.
The yen eased against the U.S. dollar to 149.16 ahead of the rate decision on Tuesday.
Tech stocks led the gainers in Tokyo trading, and Advantest, Tokyo Electron, Screen Holdings, and Disco Corp. jumped between 2% and 4%.
Vehicle makers were also among the leading gainers, and Toyota Moto, Honda Motor, and Nissan Motor advanced between 1% and 2%.
Banks also participated in the market rally in the hope of a rise in interest rates and a change in yield curve management policy.
Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial advanced between 1.4% and 2.5%.
China Stocks Rebound
Market indexes in Shanghai and Hong Kong advanced following better-than-expected economic data in January and February.
China releases key economic data for two months combined to smooth out the calendar shift because of the Lunar Holidays.
The CSI 300 index gained 0.7% to 3,595.09, and the Hang Seng index advanced 0.2% to 16,751.31.
Property developers extended losses from the previous week after construction investment declined in the two-month period.
Longfor Group, China Resources Land, China Vanke, and Sun Hung Kai Properties fell between 2% and 4%.
China's Industrial Output, Retail Sales and Fixed Investment Data Ahead of Expectations
China's fixed investment, retail sales, and industrial output gathered speed in the first two months of 2024, driven in part by the economic stimulus provided in October.
China's industrial output increased 7.0% for the two-month period ending in February from a year ago, faster than 5.8% in December, the National Bureau of Statistics reported Monday.
Manufacturing accelerated to 7.7% growth from 7.1% in December, utility output increased at a faster pace of 7.9% from 7.7%, while production at mines slowed to an increase of 2.3% from 4.7% a year ago.
China is struggling to revive its industrial output amid a fragile economic recovery from the coronavirus pandemic.
Fixed asset investment increased 4.2% from the previous year in the two-month period to February, despite the sharp decline in real estate investments.
Real estate investment contracted by 9.4% in the period compared to a 9.6% decline in the corresponding period a year ago.
But investment in electricity, gas, water, and heat jumped 25.4%, and in the mining sector, it advanced 14.4%.
China's consumer demand recovery has also been slower than anticipated by a wide margin because of the protracted weakness in the property market and economic uncertainties.
Retail sales increased 5.5% in the period, slower than the 7.4% rebound in December. largely reflecting a higher base last year after consumer spending surged following the ending of the coronavirus lockdown.
China's jobless rate increased to a 7-month high of 5.3% in February from 5.2% in January, the National Bureau of Statistics reported Monday.
The jobless rate in 31 large cities and towns was estimated at 5.1%.
The statistical bureau said youth unemployment data for February will be released later in the week, and January's modified jobless rate stood at 14.6% in the 16–24 age group.
China's economic data is generally viewed with skepticism by most international observers for its lack of transparency and widespread practice of generating data to satisfy goals set by political leaders.
India's Overall Trade Deficit Plunged
Stocks in Mumbai lacked direction in early trading as investors awaited rate decisions from major central banks this week.
The Sensex and the Nifty indexes traded around the flatline, and investors turned cautious in Monday's trading after volatile sessions in two consecutive weeks in a row.
Moreover, investors reviewed the international trade balance data for February, released late Friday by the Ministry of Commerce and Industry.
Overall exports in the month increased 14.2% from a year ago to $73.55 billion, while imports jumped 10.1% to $75.50 billion, driving the overall trade deficit down 53% to $1.95 billion from $4.15 billion.
Goods exports rose 11.9% to $41.4 billion from $37.01 billion, and imports jumped 12.1% to $60.1 billion from $53.6 billion, widening the trade deficit by 6.8% to $18.7 billion from $17.5 billion.
Gold imports surged 133% from a year ago to $6.2 billion amid rising demand ahead of the wedding season.
The Sensex index decreased 0.1% to 72,556.30, and the Nifty index edged down 0.2% to 21,973.40.
On the Mumbai stock exchange, 60 stocks traded at their 52-week highs and 29 stocks traded at their 52-week lows.
India Movers: Hindustan Aeronautics, IRCON, KPI Green Energy, Railtel, SJVN, Torrent Power, Zydus Lifesciences
Arun Goswami
18 Mar, 2024
Mumbai
Stocks in Mumbai traded down in Monday's trading after crude oil prices advanced for the fourth week in a row amid rising tensions in the Middle East.
India's overall trade deficit plunged after exports rose at a faster pace than imports.
The Sensex index decreased 0.1% to 72,556.30, and the Nifty index edged down 0.2% to 21,973.40.
On the Mumbai stock exchange, 60 stocks traded at their 52-week highs and 29 stocks traded at their 52-week lows.
SJVN Ltd. soared 7.1% to ₹127.10 after the company received an order for a 200 MW solar project from Gujarat Urja Vikas Nigam.
Railtel Corporation of India increased 4.1% to ₹352.85, and the company won an order worth ₹482 crore.
IRCON International gained 2.4% to ₹222.0, and the railway and transportation contractor said it won an order worth ₹630 crore from the National Highways and Infrastructure Development Corporation.
Zydus Lifesciences gained 0.6% to ₹989.65, and the generic drug company said it received final approval from the U.S. drug regulator to sell its generic therapy for the treatment of benign prostatic hyperplasia, a noncancerous enlargement of the prostate gland.
Torrent Power gained 5.5% to ₹1,217.90, and the independent electric power company said it won a 300 MW solar and wind power project with a tariff of ₹3.65 per kWh.
KPI Green Energy jumped the daily limit of 5% to ₹1,525.35 after the company won a bid to deliver a 100 MWA solar power project for Maharashtra State Power Generation Company.
Hindustan Aeronautics jumped 2.1% to ₹3,167.0 after the company received a ₹2,890 crore order from the Ministry of Defense to upgrade 25 Dornier aircraft for the Indian Navy.
U.S. Movers: Adobe, McDonald's, Ulta Beauty, Weight Watchers
Scott Peters
15 Mar, 2024
New York City
The S&P 500 index decreased 0.5% to 5,127.12, and the Nasdaq Composite fell 0.6% to 16,033.73.
The yield on 2-year Treasury notes increased to 4.72%, 10-year Treasury notes inched up to 4.32%, and 30-year Treasury bonds edged down to 4.43%.
Adobe declined 12.2% to $502.07 after the software developer reported mixed quarterly results and issued a weak outlook for the current quarter.
Ulta Beauty dropped 7.6% to $522.0 after the cosmetic retailer estimated a lower-than-expected full-year sales outlook.
Net sales in the fourth quarter ending on February 3 increased 10.2% to $3.6 billion from $3.2 billion, net income advanced to $394.4 million from $340.7 million, and diluted earnings per share rose to $8.08 from $6.68 a year ago.
The fourth quarter included one extra week compared to a year ago because of the calendar shift.
Calendar-adjusted comparable store sales in the quarter slowed sharply to 2.5% from 15.6% in the period a year ago.
During the fourth quarter, the retailer repurchased 352,005 shares of its common stock at a cost of $159.5 million, and in fiscal 2023, the company repurchased 2.2 million shares of its common stock at a cost of $1.0 billion.
As of February 3, 2024, $99.9 million remained available under the $2 billion share repurchase program announced in March 2022.
On March 12, 2024, the company’s board of directors approved a new share repurchase authorization of $2 billion, replacing the current program in place since March 2022.
The company estimated fiscal 2024 sales to range between $11.7 billion and $11.8 billion, an annual increase between 4% and 5%.
The retailer estimated diluted earnings per share in the fiscal year 2024 to fall between $26.20 and $27.0, based on opening net new stores between 60 and 65 and operating margins between 14.0% and 14.3%.
McDonald's Corp. decreased 0.1% to $282.05 after the fast food chain operator faced a global technology outage, forcing some restaurants to temporarily suspend operations in Japan, Australia, and the U.K.
WW International soared 10.7% to $2.07 and rebounded from the 52-week low after the Weight Watchers' parent company's ongoing concerns and core weight loss business.
S&P500 and Nasdaq Extend Weekly Losses After Inflation Worries Resurface
Barry Adams
15 Mar, 2024
New York City
Stocks on Wall Street declined in Friday's trading amid heightened volatility because of the expiration of index options, futures, and individual stock options.
The S&P 500 index and the Nasdaq Composite inched 0.5% lower, and the benchmark indexes are likely to extend losses from the previous week on the worry of resurgent inflation.
At the close of the previous week, the S&P 500 index declined 0.2% and the Nasdaq Composite dropped 1.0%.
Investors pared back rate-cut expectations following the June policy meeting after consumer price inflation and producer price inflation stayed significantly above the Fed's target rate of 2%.
Despite the multiple rate hikes over the last eighteen months, inflation is well anchored in the economy and continues to broaden to the services sector.
Consumer price inflation has steadily declined after peaking at 9.1% in June 2022 to around 3%, but that decline was largely driven by the fall in energy prices and not because of the Fed's policy actions.
Moreover, volatile energy prices have also been on the upward trend for the last three months, amid elevated tensions in the Middle East and a faster-than-expected decline in crude oil inventories in the U.S., the largest consumer of fossil fuels.
U.S. Indexes and Yields
The S&P 500 index decreased 0.5% to 5,127.12, and the Nasdaq Composite fell 0.6% to 16,033.73.
The yield on 2-year Treasury notes increased to 4.72%, 10-year Treasury notes inched up to 4.32%, and 30-year Treasury bonds edged down to 4.43%.
WTI crude oil increased $0.17 to $81.09 a barrel, and natural gas prices decreased 1 cent to $1.73 a thermal unit.
Gold decreased by $0.95 to $2,161.95 an ounce, and silver rose 6 cents to $24.91.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.
U.S. Stock Movers
Adobe declined 12.2% to $502.07 after the software developer reported mixed quarterly results and issued a weak outlook for the current quarter.
Ulta Beauty dropped 7.6% to $522.0 after the cosmetic retailer estimated a lower-than-expected full-year sales outlook.
McDonald's Corp. decreased 0.1% to $282.05 after the fast food chain operator faced a global technology outage, forcing some restaurants to temporarily suspend operations in Japan, Australia, and the U.K.
WW International soared 10.7% to $2.07 and rebounded from the 52-week low after the Weight Watchers' parent company's ongoing concerns and core weight loss business.
Europe Movers: Berkeley Group, Bodycote, HelloFresh, Salzgitter, Vodafone, Vonovia
Inga Muller
15 Mar, 2024
Frankfurt
European stock market indexes traded at new intra-day highs and the German benchmark index gained for the fifth week in a row.
The DAX index increased by 0.3% to 17,991.01, the CAC-40 index rose by 0.3% to 8,188.55, and the FTSE 100 index inched higher by 0.102% to 7,745.08.
For the week, the DAX index gained 1.7%, the CAC-40 index advanced 2.4%, and the FTSE 100 index inched up 1.3%.
Vodafone Group jumped 4.2% to 68.81 pence after the UK-based multinational telecom company agreed to sell Vodafone Italy to Swisscom for an enterprise value of €8 billion.
Berkeley Group PLC gained 0.2% to 4,686.0 pence after the UK-based home builder reiterated its annual pre-tax profit outlook.
Scottish Mortgage Investment Trust jumped 3.2% to 806.75 pence after the company's board approved the stock buyback program of £1 billion over the next two years.
Bodycote PLC jumped 4.8% to 661.50 pence after the thermal processing company reported an increase in profit and launched a £60 million stock repurchase plan.
Salzgitter AG decreased 1.9% to €23.30 after the German specialty steel company reported a decline in its annual profit because of lower steel prices and challenging macroeconomic conditions.
HelloFresh soared 10.2% to €7.43 after the meal-kit delivery company reported a less-than-expected 6.6% decline in its active customer base in the fourth quarter.
Last week, the company issued its second profit warning in six months.
Vonovia SE declined 6.2% to €25.15 after the German real estate company reported a record annual loss in 2023.
European Markets Extend Weekly Gains as Indexes Inched In Record Territory
Bridgette Randall
15 Mar, 2024
Frankfurt
European market indexes advanced and extended weekly gains as investors looked beyond rate uncertainties and shifted their focus to corporate announcements.
Benchmark indexes in Frankfurt advanced for the eighth week in a row, and in Paris, the CAC-40 index traded near record highs as investors pared expectations of the U.S. rate cut in June.
Investors were hoping that the European Central Bank may follow the U.S. Federal Reserve in lowering its key lending rates, but those expectations were put on hold after the U.S. wholesale inflation accelerated in February.
Moreover, global energy prices rebounded in March from the previous month, stoking worries about inflation staying above the central bank's target rate.
In other economic news, France's consumer price inflation eased at a slower than previously anticipated pace of 3.0% in February, the statistical agency INSEE reported Friday.
The preliminary estimate showed inflation eased to 2.9% from 3.1% in December; however, inflation in February dropped to the lowest level since December 2021.
Investors are also looking forward to monetary policy announcements next week from the central banks of the U.S., U.K., and Japan.
Investors are hoping that the Bank of Japan may announce its timetable to end its negative interest rate policy following the recent pick-up in inflation and solid wage hike announcements.
Japanese corporations agreed to wage increase requests of 5% from labor unions, the largest increase in more than three decades, amid worker shortages and stable demand for Japanese products in overseas markets.
Europe Indexes and Yields
The DAX index increased by 0.3% to 17,991.01, the CAC-40 index rose by 0.3% to 8,188.55, and the FTSE 100 index inched higher by 0.102% to 7,745.08.
For the week, the DAX index gained 1.7%, the CAC-40 index advanced 2.4%, and the FTSE 100 index inched up 1.3%.
The yield on 10-year German bonds edged up to 2.43%; French bonds inched higher to 2.87%; the UK gilts edged higher to 4.13%; and Italian bonds inched lower to 3.69%.
The euro edged higher to $1.08, the British pound inched higher to $1.275, and the U.S. dollar held steady at 88.35 Swiss cents.
Brent crude increased $0.63 to $84.75 a barrel, and the Dutch TTF natural gas advanced by €0.28 to €26.62 per MWh.
Europe Stock Movers
Vodafone Group jumped 4.2% to 68.81 pence after the UK-based multinational telecom company agreed to sell Vodafone Italy to Swisscom for an enterprise value of €8 billion.
Berkeley Group PLC gained 0.2% to 4,686.0 pence after the UK-based home builder reiterated its annual pre-tax profit outlook.
Scottish Mortgage Investment Trust jumped 3.2% to 806.75 pence after the company's board approved the stock buyback program of £1 billion over the next two years.
Bodycote PLC jumped 4.8% to 661.50 pence after the thermal processing company reported an increase in profit and launched a £60 million stock repurchase plan.
Salzgitter AG decreased 1.9% to €23.30 after the German specialty steel company reported a decline in its annual profit because of lower steel prices and challenging macroeconomic conditions.
HelloFresh soared 10.2% to €7.43 after the meal-kit delivery company reported a less-than-expected 6.6% decline in its active customer base in the fourth quarter.
Last week, the company issued its second profit warning in six months.
Vonovia SE declined 6.2% to €25.15 after the German real estate company reported a record annual loss in 2023.
New Home Price Decline In China Extends to 9th Month, Japan's Rate Decision In Focus
Arjun Pandit
15 Mar, 2024
Sydney
Markets in Asia closed down after choppy trading in the week amid persistent interest rate uncertainties in Japan, a fragile economic recovery in China, and valuation worries in India.
Bank of Japan's Rate Decision in Focus
Stock market indexes in Japan traded down, and investors turned cautious ahead of the Bank of Japan's policy meeting next week.
It is widely anticipated that the central bank will readjust its monetary policy, which could lead to an interest rate increase later in the year, the first since 2007.
The Bank of Japan is expected to end its negative interest rate in place since 2016 as inflation picks up, wages at large corporations rise, and a rate difference with the U.S. keeps the yen weak.
The expectations of a change in the direction of interest rates are running high after the end of the annual spring wage negotiations between large corporations and workers unions.
Japanese corporations agreed to wage increases between 5% and 12%, solid wage gains for the second year in a row as companies struggle with labor shortages.
However, wages may not rise more than 2% to 3% at small and midsized companies, which employ about 70% of Japan's labor force, making the Bank of Japan's job harder if wage gains fail to spread to the broader economy.
The Nikkei 225 Stock Average decreased 0.5% to 38,616.82, and the Topix index rose 0.2% to 2,666.62.
For the week, both benchmark indexes decreased by 0.5%.
Tech stocks led the decliners following the weakness in overnight trading in New York.
Softbank, Disco Corp., Tokyo Electron, Advantest, and Screen Holdings declined between 2% and 4%.
Tokyo Electric Power jumped 11.4% to ¥952.40 after Japan intensified efforts to restart the world's largest nuclear power plant after eleven years of closure, according to the Niigata Nippo newspaper.
The move will help the company reduce its operating costs and eliminate dependence on imported crude oil and natural gas to run power plants.
China New Home Prices Fall; PBoC Holds 1-Year Rate
Stocks in Shanghai and Hong Kong declined for the third day in a row after China held its lending rate steady and withdrew liquidity injected earlier in the year.
The People's Bank of China kept its one-year term facility rate at 2.5% and also drained cash of 94 billion yuan, or $13 billion, from the financial system.
Market mood also soured after new home prices in the 70 largest cities fell for the ninth month in a row in February by 1.4% from a year ago, the National Bureau of Statistics reported Friday.
The new home prices fell at the fastest pace despite several measures by Beijing to prop up the market amid weakening buyers's confidence.
On Monday, investors are looking ahead to the release of several key economic indicators, and at least 30 large companies are scheduled to release their earnings next week.
The CSI 300 index declined 0.5% to 3,543.41, and the Hang Seng Index dropped 2% to 16,607.26.
For the week, the CSI 300 index decreased 0.1%, but the Hang Seng index increased 1%.
China Vanke, China Resource Land, and Longfor Group declined between 3% and 6%.
Tech stocks also headed lower after hopes of an interest rate cut at the U.S. Federal Reserve's policy meeting next week were dashed following the acceleration of the producer price index.
Baidu, Alibaba Group, JD.com, and Tencent Holdings declined between 3% and 5%.
Small and Mid-caps Stocks In India Extend Losses
Stocks on Dalal Street traded down and extended two-day losses after investors turned cautious on stretched valuation worries.
The Sensex and the Nifty indexes edged lower by 0.2%, but several stocks in the small and midcap segments extended their two-day losses to more than 20%.
But more sharp market declines may be in the making after a rally in small and mid-cap stocks lifted 90 stocks above 100% in the last two years, according to data compiled by Niveshak.in.
The BSE Small Cap Index is down 11% from the record high, but the index is still trading at 28 times earnings and 3 times book value.
Investors have been directing new fund flows to small and mid-cap segments of the market after large-cap stocks are deemed trading ahead of business fundamentals.
But the steady flows in small and mid-cap stocks have created an even larger bubble, prompting the securities regulatory agency to direct mutual fund companies to halt new fund flows.
Individual investors have increased their share of small and mid-cap stocks in the Nifty 100 Smallcap 100 Index to 15.4% from 12.5%, according to Kotak Securities.
“Most mid- and small-cap stocks are still trading at full-to-lofty valuations and well above their fundamental value,” Sanjeev Prasad, co-head of institutional equities at Kotak Securities, noted in a research report to clients.
The Sensex index decreased 0.3% to 72,843.21, and the Nifty index edged down 0.3% to 22,083.10.
The Sensex and the Nifty indexes are set to close down 2% for the week and halt a seven-week rally.
But smaller cap-focused indexes are down for the third week in a row, with losses totaling more than 15%.
On the Mumbai stock exchange, 20 stocks traded at their 52-week highs and 14 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds increased to 7.04%, and the Indian rupee edged lower to ₹82.96 against the U.S. dollar.
Higher-for-Longer Rate Worries Resurface After U.S. Wholesale Inflation Accelerates
Barry Adams
14 Mar, 2024
New York City
Stocks on Wall Street turned lower, and tech stocks led the decliners as the early market gains evaporated on the worry of interest rates staying higher for longer.
The S&P 500 index and the Nasdaq Composite turned lower after rising as much as 0.4%, and Treasury yields edged slightly higher following worries that the Federal Reserve may keep higher rates for longer after wholesale inflation accelerated in February.
Moreover, the recent rise in crude oil prices suggests that overall inflation in March may be hotter than expected, and policymakers may wait longer than June before lowering interest rates.
Weaker U.S. Retail Sales Bounce In February
Seasonally adjusted retail and food services sales, but not adjusted for prices, increased 0.6% from the previous month and rose 1.5% from a year ago in February.
Despite elevated inflation and rising interest rates, consumer spending is holding up, but consumers are sticking to basic necessities and avoiding discretionary items.
Nonstore retail sales increased 6.4%, and food services and drinking place sales advanced 6.3% from a year ago.
Retail sales in February rose by 0.6% on a monthly basis, and January's monthly sales decline was lowered to 1.1% from the previous estimate of a 0.8% fall.
Total retail sales over the three-month period to February 2024, which covers the critical holiday period, rose 2.1% from the same period a year ago.
Producer Price Inflation Accelerates In February
The producer price index for the final demand increased by 0.6% from the previous month in February, the U.S. Bureau of Labor Statistics reported Thursday.
The annual measure of wholesale inflation accelerated to 1.6% in the month from 0.9% in January after high energy prices drove goods prices to increase at the fastest pace in six months.
Goods prices increased 1.2%, and the cost of services edged up 0.3%.
However, the core rate of inflation, which excludes volatile energy and food prices, rose at a slower pace of 0.3% after rising 0.5% in the previous month.
U.S. Indexes and Yields
The S&P 500 index decreased 0.4% to 5,147.67, and the Nasdaq Composite fell 0.2% to 16,142.55.
The yield on 2-year Treasury notes increased to 4.63%, 10-year Treasury notes inched up to 4.19%, and 30-year Treasury bonds edged down to 4.35%.
WTI crude oil increased $1.07 to $80.81 a barrel, and natural gas prices increased 1 cent to $1.65 a thermal unit.
Gold decreased by $16.64 to $2,157.14 an ounce, and silver fell 17 cents to $24.86.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.
U.S. Stock Movers
Robinhood Markets soared 12.4% to $19.30 after the online brokerage firm reported monthly operating statistics for February 2024 and said assets under custody increased 16% from the previous month.
SentinelOne dropped 8.4% to $25.39 despite the cybersecurity firm reporting better-than-expected fourth quarter revenue and earnings.
Dollar General rose 5.7% to $167.21 after the deep discount retailer reported better-than-expected holiday quarter sales and issued an annual earnings outlook ahead of expectations.
The retailer estimated 2024 earnings per share to fall between $6.80 and $7.55, on the back of sales growth between 6.0% and 6.7%.
DICK's Sporting Goods rose 4.9% to $197.0 after the athletic goods retailer posted record quarterly sales in the fiscal fourth quarter.
Net sales in the holiday quarter ending on February 3rd increased 7.85 to $3.9 billion from $3.6 billion, net income advanced 26% to $296 million from $236 million, and diluted earnings per share rose to $3.57 from $2.60 a year ago.
The company estimated fiscal 2024 earnings per share to range between $12.85 and $13.25 and estimated same-store sales to rise between 1% and 2%.
European Indexes Erase Early Gains After U.S. Inflation Report
European stock market indexes turned lower, crude oil prices jumped, and the euro held steady amid rising tensions in the Middle East.
Benchmark indexes in Paris and Frankfurt traded at new record intra-day highs but turned lower after wholesale inflation accelerated in February.
The European Central Bank policymakers are sending signals that an imminent interest rate cut is less likely, but there is a growing possibility of a rate cut later in the year.
"It's perhaps more probable in June, and we are very pragmatic, but that will depend on the data," Bank of France Governor Francois Villeroy de Galhau said on France Info radio.
The ECB's chief economist, Philip Lane, also stressed not to lower rates too soon in an interview with the financial news channel CNBC.
“We’ve been on hold since last September since a substantial hiking cycle; we do have to take our time to get that right, from holding to dialing back restrictions,” Lane told CNBC’s Steve Sedgwick.
The European Central Bank lifted its key lending rates ten times from near zero to above 4% between July 2022 and September 2023, but inflation is still above the target rate of 2%.
Consumer inflation in the eurozone has declined to 2.6% in February and has fallen over the last fifteen months after peaking at 10.6% in October 2022, but the decline is largely driven by the sharp fall in energy prices and by the actions of the central bank.
In other economic news, Spain's statistical agency confirmed the softening of inflation to a six-month low in February, to 2.8% from 3.4% in January.
The EU harmonized inflation also dropped to a six-month low of 2.9%, as estimated, and was down from 3.5% in January, the National Statistics Institute reported Thursday.
Europe Indexes and Yields
The DAX index decreased by 0.2% to 17,925.26, the CAC-40 index rose by 0.3% to 8,159.68, and the FTSE 100 index inched lower by 0.5% to 7,731.80.
The yield on 10-year German bonds edged up to 2.36%; French bonds inched higher to 2.79%; the UK gilts edged higher to 4.02%; and Italian bonds inched lower to 3.56%.
The euro edged higher to $1.093, the British pound inched higher to $1.281, and the U.S. dollar held steady at 87.95 Swiss cents.
Brent crude increased $1.33 to $85.36 a barrel, and the Dutch TTF natural gas increased by €0.54 to €25.45 per MWh.
Europe Stock Movers
K&S AG increased 5.7% to €14.03 after the Germany-based Europe's largest manufacturer of potash and salt miner reported better-than-expected annual results and guidance for the current year.
Encavis AG soared 25% to €16.94 after the U.S.-based private equity firm KKR launched a 2.8 billion takeover offer for the German independent power generator.
The renewable power producer operates more than 300 solar parks and wind farms in 12 countries in Europe.
RWE AG gained 3.5% to €32.71 after the German power generator and trader reiterated its annual outlook.
Hapag-Lloyd fell 1.1% to €132.80 after the Germany-based container shipping company issued an earnings warning for the current year.
Lanxess AG plunged 8.6% to €23.89 after the specialty chemicals maker based in Germany reported a wider fourth-quarter loss.
EasyJet declined 2.2% to 525.20 pence after the discount airline completed the sale of a €850 million secured bond maturing in 2031 with an interest coupon of 3.75%.
The company plans to use part of the proceeds of the offering to repay its existing debt, which will mature in 18 months.
With the post-pandemic recovery, the company has repaid £1.6 billion and deleveraged its balance sheet.
EasyJet bonds are expected to be rated Baa2 (with a stable outlook) by Moody's and BBB (with a positive outlook) by Standard & Poor's, with over 200 investors participating in the issue.
Japan's Rate Jitters and China's Deflation Worries Dominate Asia Trading
Asian stock markets lacked momentum, and investors stayed cautious in China ahead of the release of earnings announcements from major companies next week.
Moreover, annual wage negotiations in Japan, known as Shunto, dominated market sentiment after several large corporations agreed to significant wage increases for the second year in a row, raising hopes of rate action by the Bank of Japan.
Spring Wage Negotiations Dominate Market Sentiment in Tokyo
Market indexes in Tokyo rebounded from morning losses driven by weakness in tech stocks following the decline in New York in overnight trading.
Stocks struggled to gain traction, and the yen traded around 147 against the U.S. dollar amid widespread speculation that the Bank of Japan is likely to end its negative interest rate policy next week.
Japan is the only developed country with negative interest rates after keeping rates near zero for more than two decades.
Investors also keenly awaited the details of annual wage negotiations between the large Japanese companies and unions after Toyota Motor agreed to increase wage demand by more than 5% for the second year in a row.
The Toyota agreement generally sets the tone for other automakers and leads Japanese companies to finalize their wage agreements.
Toyota agreed to the largest wage increase since 1999 and accepted the union's demand for a monthly increase between ¥7,940 ($54) and ¥28,440 ($194).
Nissan Motor also agreed to the monthly wage hike demand of ¥18,000, or $123.
Nippon Steel, JFE Steel, Kobe Steel, Honda Motor, Mazda, and Japan Airlines are some of the other leading companies meeting or exceeding workers' unions higher wage demands for the second year in a row.
Real wages in Japan have been stagnant for more than two decades, and companies are willing to provide nominal wage increases of as much as 12% amid labor shortages and rising inflation.
Toyota Motor closed nearly unchanged at ¥3,444.0, Honda Motor advanced 1.1% to ¥1,751.50, and Nissan Motor advanced 2.2% to ¥563.10.
The Nikkei 225 Stock Average gained 0.2% to 38,782.48, and the Topix index jumped 0.4% to 2,658.07.
Diversified conglomerates Marubeni, Itochu, Mitsubishi, and Mitsui & Company gained between 0.7% and 2.2%.
Semiconductor stocks led decliners, and Tokyo Electron, Advantest, Screen Holdings, and Disco Corp. fell between 1% and 3.5%.
Caution Prevailed In China Trading Ahead of Earnings Releases
Stocks in Shanghai and Hong Kong were under pressure for the second day in a row ahead of a string of earnings announcements next week and rising tensions between China and the U.S.
The CSI 300 index decreased 0.06%, and the Hang Seng index declined 0.5% to 16,984.44.
About 30 companies included in the widely followed Hang Seng index are scheduled to release earnings next week, and investors turned cautious amid economic uncertainties.
AIA Group decreased 4.4% to HK$62.0 after the insurance company's 2023 earnings met market expectations.
AIA said 2023 earnings increased 15% to $5.76 billion, or 32.68 cents, in a filing with the Hong Kong Stock Exchange.
AIA, one of the largest travel insurance providers, benefited last year after the Hong Kong government relaxed inbound travel restrictions following three years of border closures during the coronavirus pandemic.
Tech stocks were among the leading decliners after the U.S. House of Representatives approved a bill that could force China-based ByteDance to divest its stake in the popular short video sharing app TikTok.
The move follows after Chinese security agencies stepped up arbitrary enforcement of the recently expanded espionage rules on foreign companies operating in China.
Tencent Holdings, Alibaba.com Group, JD.com, and Baidu Inc. dropped between 0.5% and 1.2%.
Property companies were in focus in the hopes that China-controlled funds would step up investing in struggling real estate developers.
Moreover, Hangzhou city loosened its restrictions on the sale of existing homes, and Guangdong province capital Guangzhou approved a second list of 116 properties that are likely to receive financial help and support for the completion and sale of apartments.
Longfor Group, China Resources Land, and China Vanke jumped between 2% and 4% on the hopes of more financial measures from the government-controlled entities.
India Indexes Struggle Amid Stretched Valuation
India stocks traded down, and market indexes extended weekly losses amid worries of tighter regulatory scrutiny in small and mid-cap stocks.
The Sensex and the Nifty indexes declined and extended 2-day losses to more than 1.4%.
Sebi chairman Madhabi Puri Buch highlighted the need to crack down on market manipulation activities targeting small and mid-cap stocks.
Puri's comments sent market indexes down by more than 1% in Wednesday's trading.
Market sentiment was cautious for the second consecutive day amid ongoing global interest rate uncertainties, stretched domestic market valuations, and a lack of additional net flows from foreign investors.
Moreover, international companies have stepped up selling stakes in their Indian subsidiaries to take advantage of sky-high valuations.
British American Tobacco was the latest company to announce the sale of a stake in its Indian unit, ITC.
The Sensex index increased 0.5% to 73,097.28, and the Nifty index closed higher 0.7% to 22,146.65.
On the Mumbai stock exchange, 74 stocks traded at their 52-week highs and 173 stocks traded at their 52-week lows.
Reliance Industries declined 2.6% to ₹2,873.20, and the company agreed to acquire the remaining 13% stake held by the U.S.-based Paramount Global in Viacom18 Media Pvt Ltd. for ₹4,286 crore, or $517 million.
Tata Motors decreased 4.3% to ₹973.15, and the company signed a preliminary agreement with the Tamil Nadu government to invest 9,000 crore, or $1.1 billion, in a vehicle manufacturing facility.
Producer Price Inflation Accelerates In February
Brian Turner
14 Mar, 2024
New York City
The producer price index for the final demand increased by 0.6% from the previous month in February, the U.S. Bureau of Labor Statistics reported Thursday.
The annual measure of wholesale inflation accelerated to 1.6% in the month from 0.9% in January after high energy prices drove goods prices to increase at the fastest pace in six months.
Goods prices increased 1.2%, and the cost of services edged up 0.3%.
However, the core rate of inflation, which excludes volatile energy and food prices, rose at a slower pace of 0.3% after rising 0.5% in the previous month.
Weaker U.S. Retail Sales Bounce In February
Brian Turner
14 Mar, 2024
New York City
Seasonally adjusted retail and food services sales, but not adjusted for prices, increased 0.6% from the previous month and rose 1.5% from a year ago in February.
Despite elevated inflation and rising interest rates, consumer spending is holding up, but consumers are sticking to basic necessities and avoiding discretionary items.
Nonstore retail sales increased 6.4%, and food services and drinking place sales advanced 6.3% from a year ago.
Retail sales in February rose by 0.6% on a monthly basis, and January's monthly sales decline was lowered to 1.1% from the previous estimate of a 0.8% fall.
Total retail sales over the three-month period to February 2024, which covers the critical holiday period, rose 2.1% from the same period a year ago.
U.S. Movers: Dick's Sporing Goods, Dollar General, Robinhood Markets, SentinetOne
Scott Peters
14 Mar, 2024
New York City
Robinhood Markets soared 12.4% to $19.30 after the online brokerage firm reported monthly operating statistics for February 2024 and said assets under custody increased 16% from the previous month.
SentinelOne dropped 8.4% to $25.39 despite the cybersecurity firm reporting better-than-expected fourth quarter revenue and earnings.
Dollar General rose 5.7% to $167.21 after the deep discount retailer reported better-than-expected holiday quarter sales and issued an annual earnings outlook ahead of expectations.
The retailer estimated 2024 earnings per share to fall between $6.80 and $7.55, on the back of sales growth between 6.0% and 6.7%.
Dick's Sporting Goods rose 4.9% to $197.0 after the athletic goods retailer posted record quarterly sales in the fiscal fourth quarter.
Net sales in the holiday quarter ending on February 3rd increased 7.85 to $3.9 billion from $3.6 billion, net income advanced 26% to $296 million from $236 million, and diluted earnings per share rose to $3.57 from $2.60 a year ago.
The company estimated fiscal 2024 earnings per share to range between $12.85 and $13.25 and estimated same-store sales to rise between 1% and 2%.