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Japan Indexes Struggled Ahead of Earnings and National Election Uncertainty

Akira Ito
21 Oct, 2024
Tokyo

Investors turned cautious in Monday's trading in Tokyo ahead of the national election this weekend.

The Nikkei 225 stock average and broader Topix index declined a fraction as investors hoped that the ruling LDP party would return to power amid widespread dissatisfaction with the government.

Investors also reviewed the People's Bank of China's decision to lower loan prime rates by 25 basis points over the weekend.

The move is widely expected to support local residential property market transactions, but the latest monetary measure did not go far enough to bolster market sentiment.

Market indexes in China extended weekly losses as investors looked forward to a meeting of the parliament committee later this month, where lawmakers are expected to increase the government's borrowing limits.

Closer to home, market indexes in Tokyo extended weekly gains in cautious trading ahead of the national election this week.

Prime Minister Shigeru is facing widespread voter discontent following a political fund-raising scandal where lawmakers of the ruling LDP party failed to make appropriate disclosures.

On the economic front, Japan is expected to announce its manufacturing and service sector surveys and Tokyo-area inflation data later in the week.

Gold traded at a new high of $2,727.70 an ounce in international trading as the People's Bank of China continued to increase its exposure to the yellow metal.

Moreover, steady retail demand from India, China, and the Middle East also supported the precious metal's advance in recent weeks.

Moreover, investors looked forward to the release of quarterly results from at least 30 leading corporations this week.

Japan Movers

The Nikkei 225 Stock Average decreased 0.1% to 38,954.60, and the broader Topix index declined 0.3% to 2,679.91.

The yen edged slightly higher to 149.35 against the U.S. dollar, keeping the stock market advance in check.

Mitsubishi UFJ Financial declined 1.9% to ¥1,613.0, Sumitomo Mitsui Financial decreased 1.9% to ¥3,202.0, and Mizuho Financial fell 0.8% to ¥3,180.0.

Semiconductor equipment stocks advanced following a rise in advanced chip companies in Friday's New York trading.

Tokyo Electron increased 0.9% to ¥23,720.0, and Advantest Corp. rose 2.6% to ¥8,181.0. and Disco Corp. jumped 3.2% to ¥39,540.0.

Toyota Motor decreased 0.4% to ¥2,541.50, Honda Motor Co declined 0.5% to ¥1,525.50, and Nissan Motor Co added 0.9% to ¥399.10.

Nippon Yusen KK jumped 1.9% to ¥5,238.0, Mitsui O.S.K. Lines added 1.2% to ¥5,055.0, and Kawasaki Kisen Kaisha Ltd. added 3.9% to ¥2,161.0.

Panasonic Holdings jumped 0.4% to ¥1,276.0, Nidec Corp advanced 0.7% to ¥2,889.0, and Fanuc Corp decreased 0.6% to ¥3,958.0.

Seven & I increased 1.2% to ¥2,237.50, Fast Retailing decreased 0.8% to ¥53,120.0, and Isetan Mitsukoshi decreased 3.9% to ¥2,215.50.

PBoC Lowers Loan Prime Rates, Hang Seng Index Extends Weekly Losses

Li Chen
21 Oct, 2024
Hong Kong

Stock market indexes in Hong Kong and China traded down amid growing worry that fiscal stimulus measures are likely to fall short of market expectations.

The Hang Seng index dropped 1.5% and the CSI 300 index advanced 0.3% in volatile trading after the central bank lowered its key lending rates over the weekend.

The People's Bank of China lowered its loan prime rate for one year and five years by 25 basis points to 3.1% and 3.6%, respectively.

The move was widely anticipated, but the latest monetary step is going to provide little fillip to the property market.

Investors shifted their focus to a meeting of the National People's Congress later in the week.

The docile parliament is widely expected to approve the increase in government spending and borrowing limit as China's finance ministry and the central bank prepare to inject more money into the economy through the banking system.

The China market rally since mid-September has been losing steam as investors dial down their expectations of additional fiscal stimulus to revive the property market and consumer confidence.

Investors are also eyeing the release of earnings from leading insurance and technology companies this week, including results from Ping An Insurance, Hong Kong Stock Exchanges and Clearing, and Sands China.

China Stock Movers

The Hang Seng index decreased 1.5% to 20,492.13, and the CSI 300 index advanced 0.5% to 20,492.13.

Ping An declined 1.9% to HK $49.0, Sands China Ltd. decreased 3.4% to HK $18.14, and Galaxy Entertainment dropped 3.4% to HK $33.80.

Tencent Holdings decreased 2.5% to HK $419.80, Alibaba Group fell 3.4% to HK $96.95, and JD.com Inc. dropped 2.8% to HK $154.30.

India Movers: HDFC Bank, Kotak Mahindra, MCX, Oberoi Realty, RBL Bank, Tata Consumer Products, UCO Bank

Arun Goswami
21 Oct, 2024
Mumbai

In cautious trading, market indexes in Mumbai traded higher as investors reviewed the latest earnings from leading banks.

In a busy week of earnings, investors are looking forward to quarterly results from about 400 companies this week.

The Sensex index decreased by 0.2% to 81,069.10, and the Nifty index fell by 0.4% to 24,759.35.

On the Mumbai stock exchange, 124 stocks traded at their 52-week highs, and 28 stocks traded at their 52-week lows.

HDFC Bank increased 2% to ₹1,715.0 after the company reported its September quarterly results.

Net interest income in the fiscal second quarter rose 9.9% to ₹30,107.90 crore, and net income advanced 5.3% to ₹16,821 crore from a year ago.

Gross NPA (non-performing assets) increased to 1.3%, and net NPA advanced to 0.41%.

The company said it plans to raise as much as ₹10,000 crore through the sale of a stake in a public offering of HDFC Financial Services.

Kotak Mahindra declined 2.7% to ₹1,819.95, and the financial service company reported weaker-than-expected quarterly results.

Net interest income in the September quarter increased 11.5% to 7,019.6 crore, and net income rose 4.8% to 3,343.7 crore.

Gross NPA increased to 1.49%, and net NPA advanced to 0.43%.

RBL Bank decreased 0.6% to ₹193.0 after the financial services company reported weaker-than-expected quarterly results.

Net interest income in the September quarter increased 9% to ₹1,615 crore from ₹1.475 crore and net income dropped 24% to ₹223 crore from ₹294.1 crore a year ago.

Gross NPA increased to 2.88%, and net NPA advanced to 0.79%.

UCO Bank advanced 4.5% to ₹4₹7.75 after the financial service company reported strong gains in revenue and earnings in the September quarter.

Net interest income in the fiscal second quarter increased 20% to₹2,300.4 crore from ₹1,916.5 crore, and net income soared 50% to ₹602.7 crore from ₹401.7 crore a year ago.

The bank's net interest margin, or NIM, in the quarter improved to 3.10% from 2.84% a year ago and rose in the first half to 3.09% from 2.92% a year ago.

MCX increased 0.7% to ₹6,630.0 after the commodity exchange operator reported quarterly results.

Revenue in the September quarter increased to ₹310.8 crore from ₹180.0 crore, net income swung to a profit of ₹153 crore from a loss of ₹19 crore, and diluted earnings per share improved to ₹30.12 from a loss of ₹3.74 a year ago.

Tata Consumer Products dropped 9.9% to ₹988.25 after the food product maker reported weak quarterly results.

Revenue in the fiscal second quarter increased 13% from a year ago to ₹4,215 crore and net income advanced 1% to ₹367 crore.

Oberoi Realty Ltd. increased 2.7% to ₹1,979.50 after the residential real estate developer reported better-than-expected quarterly results.

Revenue in the September quarter increased 8.4% to ₹1.320 crore from ₹1,217 crore and net income advanced 29% to ₹589 crore from ₹457 crore a year ago.

U.S. Movers: American Express, CVS Healthcare, Netflix, Procter & Gamble

Scott Peters
18 Oct, 2024
New York City

Procter & Gamble declined 1.8% to $168.53 after the consumer products company reported quarterly results.

Revenue in the fiscal first quarter ending in September declined 1% to $21.7 billion from $21.9 billion, net income decreased 12% to $3.9 billion from $4.5 billion, and diluted earnings per share dropped 12% to $1.81 from $1.61 from $1.83 a year ago.

The company reiterated its full-year revenue growth to range between 2% and 4% and diluted earnings per share to increase between 10% and 12% from $6.02 in 2024, or between $6.91 and $7.05.

Netflix increased 10.2% to $759.70 after the streaming services provider reported better-than-expected quarterly results.

Revenue in the third quarter increased 15% to $9.8 billion from $8.5 billion, net income rose 26% to $2.3 billion from $1.7 billion, and diluted earnings per share advanced 45% to $5.40 from $3.73 a year ago.

Global streaming paid net members increased 14.4% to 282.7 million, and the company added 5.07 million new net paid members.

CVS Healthcare declined 7.5% to $58.90 after the drugstore chain announced preliminary third quarter earnings and replaced its chief executive.

The company estimated diluted earnings per share to range between 3 cents and 8 cents and adjusted earnings per share between $1.05 and $1.10.

The company appointed longtime executive David Joyner as the new chief executive and president, replacing Karen Lynch effective October 17.

The drug retailer said it plans to take a restructuring charge of $1.2 billion in the third quarter, related to incremental store closure costs and previously disclosed cost reduction actions.

American Express declined 5% to $271.68 after the financial service company reported weaker-than-expected quarterly results.

Total revenue net of interest expenses in the third quarter increased 8% to $16.6 billion from $15.4 billion, net income advanced 2% to $2.50 from $2.45 billion, and diluted earnings per share rose 6% to $3.49 from $3.30 a year ago.

The company reiterated its full-year revenue growth at around 9% and lifted its annual earnings per share outlook to between $13.75 and $14.05 from the previous range between $13.30 and $13.80.

S&P 500 and Nasdaq Extend Rally to Sixth Week, Netflix Pops 10%

Barry Adams
18 Oct, 2024
New York City

Stock market indexes extended gains for the sixth week in a row amid positive earnings and a stable macroeconomic backdrop.

The S&P 500 index increased 0.2% and the Nasdaq Composite advanced 0.6%, and they are likely to close higher by more than 0.5% for the week.

Market sentiment was positive after investors reviewed the latest earnings from American Express, Procter & Gamble, and Travelers.

CVS Healthcare plunged more than 10% after the company announced a change in leadership and reported weaker-than-expected third quarter preliminary earnings per share.

On the economic front, housing starts decreased 0.5% from the previous month in September to 1.354 million, and building permits fell 2.9% to 1.428 million, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Housing completions declined 5.7% from the revised estimate in August to an annual rate of 1.68 million.

In the overseas market, China reported a raft of economic data confirming slowdown and persistent weakness in the housing market.

GDP in the third quarter expanded at an annual pace of 4.6%, slower than the 4.7% rate in the second quarter, and new home prices plunged 6.1% across 70 mainland cities in September.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,853.0, the Nasdaq Composite rose 0.6% to 18,490.27, and the Russell 2000 index advanced 0.1% to 2,284.36.

The yield on 2-year Treasury notes edged lower to 3.96%, 10-year Treasury notes inched up to 4.08%, and 30-year Treasury bonds inched higher to 4.39%.

WTI crude oil decreased $0.32 to $70.35 a barrel, and natural gas prices edged up 1 cent to $2.34 a thermal unit.

Gold rose by $17.11 to $2,711.20 an ounce, and silver increased by $0.46 to $32.24.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.53.

U.S. Stock Movers

Procter & Gamble declined 1.8% to $168.53 after the consumer products company reported quarterly results.

Revenue in the fiscal first quarter ending in September declined 1% to $21.7 billion from $21.9 billion, net income decreased 12% to $3.9 billion from $4.5 billion, and diluted earnings per share dropped 12% to $1.81 from $1.61 from $1.83 a year ago.

The company reiterated its full-year revenue growth to range between 2% and 4% and diluted earnings per share to increase between 10% and 12% from $6.02 in 2024, or between $6.91 and $7.05.

Netflix increased 10.2% to $759.70 after the streaming services provider reported better-than-expected quarterly results.

Revenue in the third quarter increased 15% to $9.8 billion from $8.5 billion, net income rose 26% to $2.3 billion from $1.7 billion, and diluted earnings per share advanced 45% to $5.40 from $3.73 a year ago.

Global streaming paid net members increased 14.4% to 282.7 million, and the company added 5.07 million new net paid members.

CVS Healthcare declined 7.5% to $58.90 after the drugstore chain announced preliminary third quarter earnings and replaced its chief executive.

The company estimated diluted earnings per share to range between 3 cents and 8 cents and adjusted earnings per share between $1.05 and $1.10.

The company appointed longtime executive David Joyner as the new chief executive and president, replacing Karen Lynch effective October 17.

The drug retailer said it plans to take a restructuring charge of $1.2 billion in the third quarter, related to incremental store closure costs and previously disclosed cost reduction actions.

Europe Movers: ASML, Brunello Cucinelli, EssilorLuxottica, Luxury Stocks, Oil Stocks

Inga Muller
18 Oct, 2024
Frankfurt

European markets advanced about 1% in the week after the ECB lowered its key lending rates for the third time in 2024 and signaled possible rate cuts in the future.

The DAX index increased by 0.1% to 19,609.65; the CAC-40 index rose by 0.5% to 7,621.52; and the FTSE 100 index decreased by 0.3% to 8,363.31.

The yield on 10-year German bonds edged lower to 2.19%, French bonds inched lower to 2.91%, the UK gilts edged up to 4.09%, and Italian bonds decreased to 3.37%.

EssilorLuxottica SA declined 0.1% to €215.70 after the eyewear company reported slightly weaker-than-expected quarterly results.

Revenue in the third quarter increased 2.3% to €6.4 billion from €6.3 billion, driven by 1.6% increase in North America and 5.6% rise in Europe and Middle East region.

Weakening macroeconomic conditions in Greater China weighed on sales growth in Asia Pacific region, and sales growth slowed down to 5% from 11.7% in the period a year ago.

Brunello Cucinelli jumped 4.8% to €97.75 after the fashion company reported a 12% increase in sales in its latest nine-month period.

Luxury goods makers advanced after the Cucinelli's results, and Kering SA gained 5% to €242.80, Hermes International jumped 2% to €2,110.0, and LVMH gained 3% to €627.40.

Oil exploration companies traded lower after crude oil prices hovered near a two-week low.

BP plc jumped 0.9% to 403.65 pence, Shell PLC edged up 0.1% to 2,554.50 pence, and TotalEnergies SE gained 0.9% to €60.27.

European Markets Rest After Mixed Earnings and Lackluster China Data

Bridgette Randall
18 Oct, 2024
London

European markets traded mixed a day after the European Central Bank lowered its key lending rates for the third time in 2024.

Benchmark indexes in Paris, London, and Frankfurt traded around the flatline, and crude oil prices hovered near a two-week low.

For the week, market indexes in London edged up 1.3%, in Paris rose 0.7%, and in Frankfurt advanced 0.9%.

Investors were cautious after China reported lackluster economic data and persistent weakness in the housing market.

China's third-quarter GDP expanded at an annual pace of 4.6%, faster than estimated, but economists warned that the world's second-largest economy is still likely to miss its annual growth target rate of 5%.

China's GDP growth slowed from 4.7% in the second quarter after consumer spending growth eased, according to the statistical agency.

New home prices in September declined 6.1% from a year ago across 70 mainland cities, a larger than 5.7% fall in August.

Home prices fell at the fastest pace since May 2015 and extended losses to the 16th consecutive month, according to the statistics bureau.

Existing home prices fell on average 1.2% in September across the top-tier cities, faster than the 0.3% monthly decline in August.

Meanwhile, geopolitical tensions persist in the Middle East after Hamas leader Yahya Sinwar was killed by the Israeli army during an operation in Gaza.

The killing of Sinwar is likely to escalate tensions in the region as Israel conducts its offensive in Lebanon and Gaza and prepares for a significant assault targeting Iranian oil infrastructure.

Israel is widely expected to strike before November 5, ahead of the U.S. presidential election, despite the White House's attempts to prevent a wider war in the Middle East.

Europe Indexes and Yields

The DAX index increased by 0.1% to 19,609.65; the CAC-40 index rose by 0.5% to 7,621.52; and the FTSE 100 index decreased by 0.3% to 8,363.31.

The yield on 10-year German bonds edged lower to 2.19%, French bonds inched lower to 2.91%, the UK gilts edged up to 4.09%, and Italian bonds decreased to 3.37%.

The euro edged lower to $1.08; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 86.61 Swiss cents.

Brent crude decreased $0.42 to $74.02 a barrel, and the Dutch TTF natural gas fell by €0.35 to €39.21 per MWh.

Europe Stock Movers

EssilorLuxottica SA declined 0.1% to €215.70 after the eyewear company reported slightly weaker-than-expected quarterly results.

Brunello Cucinelli jumped 4.8% to €97.75 after the fashion company reported a 12% increase in sales in its latest nine-month period.

Luxury goods makers advanced after the Cucinelli's results, and Kering SA gained 5% to €242.80, Hermes International jumped 2% to €2,110.0, and LVMH gained 3% to €627.40.

Oil exploration companies traded lower after crude oil prices hovered near a two-week low.

BP plc jumped 0.9% to 403.65 pence, Shell PLC edged up 0.1% to 2,554.50 pence, and TotalEnergies SE gained 0.9% to €60.27.

Japan's Inflation Slows to Five-Month Low, Nikkei 225 Extends Weekly Loss to 1.4%

Akira Ito
18 Oct, 2024
Tokyo

Stocks in Tokyo advanced and halted a two-day slide after fears of hawkish monetary policy eased following the release of inflation data.

The Nikkei 225 stock average increased 0.2%, and the broader Topix index edged slightly higher in lackluster trading.

The yen drifted lower and traded at a six-week low of 150.06 against the dollar after the interest rate worry receded following the release of the inflation report.

Investors have been on edge despite a growing campaign by central bank officials that rates are not likely to be raised in the immediate future and policymakers are looking for a gradual increase in interest rates.

Earlier in the week, Bank of Japan board member Seiji Adachi said that the central bank must raise rates at a "very moderate" pace, signaling the gradual approach amid elevated global geopolitical uncertainties.

Consumer price inflation in September eased to an annual pace of 2.5% from 3.0% in August, said the Ministry of Internal Affairs and Communications on Friday.

Core consumer price inflation, which excludes food prices but not energy prices, declined to an annual pace of 2.4% amid weakening inflation in energy and transportation prices.

The overall and core consumer price inflation dropped to a five-month low as the electricity prices increased at the slowest pace after the removal of government subsidies.

Japan Stock Movers

The Nikkei 225 Stock Average rose 0.2% to 38,981.75 and the broader Topix index advanced 0.04% to 2,688.98.

Tokyo Electron decreased 0.1% to ¥23,500.0, Advantest Corp. fell 0.4% to ¥7,968.0, Lasertec Corporation eased 0.8% to ¥21,345.0, and Disco Corp. jumped 7.7% to ¥38,310.0.

Mitsubishi UFJ Financial Group added 1.5% to ¥1,644.0, Sumitomo Mitsui Financial Group added 0.7% to ¥3,263.0, and Mizuho Financial Group advanced 1% to ¥3,204.0.

Seven & I declined 0.2% to ¥2,212.0, Fast Retailing Company increased 1% to ¥53,570.0, and Isetan Mitsukoshi declined 2.8% to ¥2,306.0.

Toyota Motor increased 0.1% to ¥2,552.50, Honda Motor decreased 0.1% to ¥1,533.0, and Nissan Motor declined 0.5% to ¥395.50.

Nippon Yusen KK rose 0.5% to ¥5,142.0, Kawasaki Kisen Kaisha added 1% to ¥2,082.00, and Mitsui O.S.K. Lines added 0.8% to ¥4,994.0.

China Q3 GDP Growth Slowed to 4.6%, New Home Prices Extend Decline to 16th Consecutive Month

Li Chen
18 Oct, 2024
Hong Kong

Stock market indexes in Hong Kong and mainland China soared on renewed calls for additional fiscal stimulus following the latest batch of economic data.

The Hang Seng index and CSI 300 index jumped as much as 3% after investors reviewed updates on retail sales, new home prices, and third quarter GDP growth.

China's property market, once the main driver of the economy, has now become a drag as home prices continue to fall.

China's retail sales advanced 3.2% and industrial output rose 5.4% in September, according to separate reports released by the National Bureau of Statistics.

In addition, China's third quarter GDP expanded at an annual pace of 4.6%, faster than estimated, but economists warned that the world's second-largest economy is still likely to miss its annual growth target rate of 5%.

China's GDP growth slowed from 4.7% in the second quarter after consumer spending growth eased, according to the statistical agency.

New home prices in September declined 6.1% from a year ago across 70 mainland cities, a larger than 5.7% fall in August.

Prices fell at the fastest pace since May 2015 and extended losses to the 16th consecutive month, according to the statistics bureau.

Existing home prices fell on average 1.2% in September across the top-tier cities, faster than the 0.3% monthly decline in August.

Market sentiment was further bolstered after PBoC Governor Pan Gongsheng suggested that the central bank is ready to act if economic conditions warrant such a move.

Governor Gongsheng said at a financial forum that the central bank is prepared to lower the cash reserve ratio requirement and other policy rates by the end of the year, depending on the liquidity condition.

China Stock Movers

The Hang Seng index rose 2.8% to 20,639.04, and the CSI 300 index rose 3.2% to 3,907.37.

China Vanke increased 4.6% to HK $6.91, China Resources Land jumped 3.8% to HK $26.15, and Longfor Group added 2.2% to HK $12.22.

Alibaba Group Holding increased 1% to HK $99.50, JD.com rose 1.6% to HK $157.10, and Tencent Holdings advanced 3.9% to HK $428.60.

India Movers: Axis Bank, Hyundai Motor, Mazagon Dock, Polcycab, Zomato

Arun Goswami
18 Oct, 2024
Mumbai

The Sensex and Nifty indexes extended weekly losses to more than 1% after a week of choppy trading as investors reviewed a mixed batch of earnings.

Crude oil prices extended two-week losses to over 10%, and the rupee hovered near a record low.

The Sensex index decreased by 0.4% to 80,651.83, and the Nifty index fell by 0.3% to 24,667.65.

On the Mumbai stock exchange, 93 stocks traded at their 52-week highs, and 44 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 6.77%, and the Indian rupee eased to 84.04 against the U.S. dollar.

Hyundai Motor India's initial public offering was oversubscribed amid strong participation from institutional investors.

The mega-issue was oversubscribed by 2.37 times at the conclusion of the three-day subscription period on October 17.

The ₹27,870 crore public offering of 9.97 crore shares attracted bids totaling 23.6 crore, driven by a strong demand from institutional investors.

Total institutional tranche attracted bids totaling nearly 7 times the offering size, and retail investor portion received bids for 50% of the allocated shares, according to the data available on the NSE website.

The South Korea-based Hyundai Motor Company is the sole seller in the offering, and the company is not issuing new shares.

Zomato fell 0.7% to ₹269.25 after the delivery company said its board at a meeting on October 22 plans to consider raising additional funds through an institutional offering.

The company is also scheduled to release its quarterly results on the same day.

Infosys declined 2.9% to ₹1,910.75 after the company reported weaker-than-expected revenue and earnings growth in the September quarter.

Operating revenue increased 5.1% to ₹40,986 crore from ₹38,994 crore, and net income advanced 4.7% to ₹6,506 crore from ₹6,212 crore a year ago.

The technology services provider lifted its full-year revenue growth range to between 3.75% and 4.5% from the previous estimate between 3% and 4%.

Mazagon Dock Shipbuilders rose 2.2% to ₹4,334.55 as the company reported strong quarterly results.

Operating revenue in the September quarter increased 8.5% to ₹2,357 crore from ₹2,172.6 crore, and net income advanced 121% to ₹696 crore from ₹314.3 crore a year ago.

Axis Bank increased 3.9% to ₹1,176.10 after the financial service company reported better-than-expected quarterly results.

Total income in the September quarter increased to ₹37,142 crore from ₹31,660 crore and net income advanced 18% to ₹6,918 crore from ₹5,864 crore a year ago.

Net interest income increased 9% and net interest margin was 3.99%, and the bank added gross non-performing loans advanced by 29% to 1.44% and net non-performing loans eased 2 basis points to 0.34%.

Polycab India decreased 3.2% to ₹6,888.20 after the wire and cable company said strong competition hurt its operating margins in the September quarter.

Operating revenue in the quarter increased 30.4% to ₹5,498 crore from ₹4,217 crore and total comprehensive income advanced 3.7% to ₹445 crore from ₹429 crore a year ago.

World Markets Hover Near Record Highs, ECB Cuts Rates and China Housing Stimulus Lacks Punch

Alexander Garcia
17 Oct, 2024
Miami

Tech rally on Wall Street powered a rise in broader indexes as investors reviewed latest economic updates.

The S&P 500 index increased 0.4%, and the S&P 500 index edged up 0.6% as investors bid up tech stocks.

Chip stocks led the gainers after Taiwan Semiconductor reported strong third-quarter results and boosted its sales outlook for the current year.

Taiwan Semi's quarterly results boosted other chip stocks, and Nvidia jumped 2.2%, AMD advanced 1.5%, and Broadcom gained 2.7%.

Investors reacted positively to the latest updates on retail sales and weekly jobless claims.

Retail and food services sales increased at an annual rate of 1.7% in September, but the pace of increase was the slowest in eight months, according to the U.S. Census Bureau.

Sales are adjusted for seasonal factors but not adjusted for inflation.

Preliminary retail and food services sales increased 0.4% from the previous month to $714.4 billion.

Sales at food services and drinking places increased 1% from the previous month; miscellaneous stores advanced 4%, but declined 3.3% at electronic and appliance stores and fell 1.6% at gasoline stations.

Sales at auto dealers were flat.

However, sales excluding food services, auto dealers, building materials stores, and gasoline stations, which are used to calculate gross domestic product, jumped 0.7%.

Weekly initial jobless claims declined 19,000 to 241,000 in the week ending October 12, the U.S. Department of Labor reported Thursday.

The jobless claims eased from the previous week after disruptions from Hurricanes Milton and Helena spiked filings.

Despite the decline in the last week, claims are still running higher than the average earlier in the year, highlighting softening labor market conditions since its post-pandemic peak.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.4% to 5,863.52, the Nasdaq Composite rose 0.6% to 18,473.97, and the Russell 2000 index fell 0.4% to 2,287.77.

The yield on 2-year Treasury notes edged higher to 3.99%, 10-year Treasury notes inched up to 4.08%, and 30-year Treasury bonds inched higher to 4.36%.

WTI crude oil increased $0.21 to $70.71 a barrel, and natural gas prices edged up 2 cents to $2.38 a thermal unit.

Gold rose by $16.61 to $2,690.51 an ounce, and silver increased by $0.18 to $31.57.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.81.

U.S. Stock Movers

Taiwan Semiconductor Manufacturing Company increased 12% to $210.36 after the company reported sharply higher sales and earnings in the third quarter.

Revenue increased 36% to $23.5 billion, and gross margin expanded to 57.8% from 54.3% a year ago.

Net income in the quarter jumped to NT 325.08 billion, or $10.05 billion, from NT 210.8 billion a year ago.

Gross margin for the quarter was 57.8%, operating margin was 47.5%, and net profit margin was 42.8%.

In the third quarter, shipments of 3-nanometer accounted for 20% of total wafer revenue; 5-nanometer accounted for 32%; 7-nanometer accounted for 17%.

Advanced technologies, defined as 7-nanometer and smaller chip technologies, accounted for 69% of total wafer revenue.

The company guided fourth-quarter revenue to fall between $26.1 billion and $26.9 billion.

Lucid Group dropped 14.9% to $2.80 after the electric vehicle company announced a stock offering to sell 262.5 million.

The company also said its major stockholder, Ayar Third Investment, and an affiliate of the Saudi Arabia-controlled sovereign wealth fund have agreed to purchase 374.7 million shares in a concurrent private placement.

European Markets Advanced After the ECB Lowered Rates Third Time In 2024

European markets advanced as investors reacted rate decisions from the European Central Bank.

Benchmark indexes in Paris, London, and Frankfurt rose between 0.5% and 1.2% as investors reviewed the latest update on the Euro Area inflation.

Consumer price inflation was lowered to an annual rate of 1.7% in September from the previous estimate of 1.8% and fell from 2.2% in August.

The annual core rate of inflation, which excludes prices of food and energy, eased to 2.7% from 2.8% in August, according to a report by the Eurozone statistical agency, Eurostat.

As widely expected, the European Central Bank lowered its benchmark rates by 25 basis points, the second time in a row and the third time this year, as policymakers looked for ways to arrest the rapidly deteriorating economic conditions.

The central bank lowered its deposit facility rate to 3.25%, main refinancing rate to 3.4%, and marginal lending facility rate to 3.65%.

Crude oil prices continued to slide in international trading amid weakening demand growth expectations from China.

China's housing minister announced several key measures to revive demand for new homes, but those measures fell short of market expectations.

China plans to increase its "white list" of approved residential projects eligible for financing and increase lending to 4 trillion yen, or $562 billion.

Local Chinese authorities in key metropolitan areas relaxed home purchase restrictions, lowered down payments, and provided additional incentives for first-time home buyers.

Despite the raft of measures, property stocks sold off in Shanghai and Hong Kong on the worry that the proposed stimulus did not go far enough to revive consumer confidence.

Europe Indexes and Yields

The DAX index increased by 0.8% to 19,583.59; the CAC-40 index rose by 1.2% to 7,583.73; and the FTSE 100 index jumped by 0.7% to 8,385.13.

The yield on 10-year German bonds edged lower to 2.19%, French bonds inched lower to 2.94%, the UK gilts edged down to 4.07%, and Italian bonds decreased to 3.40%.

The euro edged lower to $1.08; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 86.34 Swiss cents.

Brent crude decreased $0.23 to $73.98 a barrel, and the Dutch TTF natural gas rose by €0.10 to €39.58 per MWh.

Europe Stock Movers

Nordea Bank increased 5.5% to €10.97 after the Helsinki-based bank raised its estimate of annual return on equity and announced a new stock buyback plan.

Pernod Ricard increased 1.9% to €125.80 despite the French wine and spirit maker reporting a decline in sales.

Sales in the fiscal first quarter declined 8.5% to €2.78 billion, and the negative impact of unfavorable foreign exchange rates was €103 million.

The company blamed the weakness on a sharp decrease in sales in China because of weak consumer sentiment, inventory adjustments in the U.S., and technical challenges in India.

Sales in the U.S. declined by 10%, in China plunged by 26%, in Europe fell by 3%, but rose in India by 2%.

Nokia Oyj declined 4.3% to €3.88 after the Finnish tech company reported a 9% increase in operating profit and reiterated its annual earnings outlook.

Net sales in the third quarter declined 7% to €4.3 billion from €4.7 billion, net income increased 32% to €175 million from €133 million, and diluted earnings per share rose to 3 cents from 2 cents a year ago.

The company reiterated its full-year operating earnings outlook to range between €2.3 billion and €2.9 billion and free cash flow conversion from operating profit to range between 30% and 60%.

Nestle SA increased 2.5% to CHF 86.02 despite the Swiss food product maker reporting weaker-than-expected sales.

Reported sales in the nine-month period declined 2.4% to CHF 67.1 billion from CHF 68.8 billion, driven by the 4.1% negative impact of foreign exchange rates and net divestures by 0.3%.

The company estimated full-year organic sales growth of 2%, underlying operating profit margin of around 17%, and underlying earnings per share growth in constant currency to be broadly flat.

China Indexes Extended Weekly Losses After Housing Secretary Conference Failed to Deliver New Measures

Stocks in Hong Kong and mainland China resumed their downward slide after a press briefing from the housing secretary fell short of market expectations.

Benchmark indexes opened higher but turned lower as the press briefing by the Minister of Housing Rural-Urban Development, Ni Hong, got underway.

Officials made several key announcements to relax property purchase restrictions, increase financing to local governments, and expedite the purchase of properties on the so-called preferred list of projects.

The housing minister said between January and September, about 1.5 million residential units were built or allocated, and about 4.5 million people are expected to move in by the year's end.

Minister Hong added that loans to preferred projects on the so-called white list have reached 2.3 trillion yen, or about $313 billion, with the target of 4 trillion yuan by the end of the year.

The officials from the central bank, the Ministry of Finance, the National Financial Regulatory Administration, and the housing secretary chaired the widely advertised press conference.

The government's relaxation of mortgage rates and additional measures to lower down payment requirements will support the demand for new homes but will not ease the financial strain on property developers in the near future.

The latest press briefing from the housing secretary follows the announcement from the finance minister a week ago, and government officials failed to provide clear fiscal measures to revive consumer confidence.

Market indexes in Hong Kong and mainland China surged more than 20% in the three-week period but have lost about one-third of the gains after the government officials failed to follow through with specific measures.

The Hang Seng index has lost more than 6% in the last three days as investors lower expectations of policy reforms to arrest falling property markets and revive consumer confidence.

China Stock Movers

The Hang Seng index decreased 1.2% to 20,039.69, and the CSI 300 index dropped 0.8% to 3,803.19.

Residential property developers fell sharply after the housing secretary failed to announce any new measures to ease the financial burden on the companies.

The announced measures are not expected to improve home buyers's confidence as the property market is likely to remain depressed in the foreseeable future.

China Vanke plunged 16.6% to HK $6.61, China Resources Land dropped 5.2% to HK $25.20, and Longfor declined 13.5% to HK $11.92.

Alibaba Group fell 0.8% to HK $98.15, Tencent Holding decreased 1.1% to HK $411.20, and JD.com declined 0.5% to HK $154.70.

U.S. Movers: CSX, Discover Financial, Lucid Group, TSMC

Scott Peters
17 Oct, 2024
New York City

Taiwan Semiconductor Manufacturing Company increased 12% to $210.36 after the company reported sharply higher sales and earnings in the third quarter.

Revenue increased 36% to $23.5 billion, and gross margin expanded to 57.8% from 54.3% a year ago.

Net income in the quarter jumped to NT 325.08 billion, or $10.05 billion, from NT 210.8 billion a year ago.

Gross margin for the quarter was 57.8%, operating margin was 47.5%, and net profit margin was 42.8%.

In the third quarter, shipments of 3-nanometer accounted for 20% of total wafer revenue; 5-nanometer accounted for 32%; 7-nanometer accounted for 17%.

Advanced technologies, defined as 7-nanometer and smaller chip technologies, accounted for 69% of total wafer revenue.

The company guided fourth-quarter revenue to fall between $26.1 billion and $26.9 billion.

Lucid Group dropped 14.9% to $2.80 after the electric vehicle company announced a stock offering to sell 262.5 million.

The company also said its major stockholder, Ayar Third Investment, and an affiliate of the Saudi Arabia-controlled sovereign wealth fund have agreed to purchase 374.7 million shares in a concurrent private placement.

CSX Corp. declined 5% to $33.71 after the railroad transportation company reported weaker-than-expected quarterly results.

Revenue in the third quarter increased 1% to $3.62 billion from $3.57 billion, net income increased 8% to $894 million from $828 million, and diluted earnings per share rose to 46 cents from 41 cents a year ago.

Total volume of 1.59 million units for the quarter was 3% higher from a year ago, but lower fuel surcharges and a reduction in other revenue negatively impacted overall revenue.

Discover Financial Services increased 1.4% to $149.64 after the company reported higher-than-expected third quarter results.

Total revenue net of interest expense increased 10% to $4.5 billion from $4.0 billion, net income rose 41% to $965 million from $683 million, and diluted earnings per share advanced 42% to $3.69 from $2.59 a year ago.

The total net charge-off rate was 4.86%, up 134 basis points from a year ago and up 3 basis points from the previous quarter "reflecting continued seasoning of recent vintages and the student loan accounting classification change."

The credit card net charge-off rate was 5.28%, up 125 basis points from a year ago and down 27 basis points from the previous quarter.

Strong Retail Sales and Chip Stocks Rally Lifts S&P 500 to New Highs

Barry Adams
17 Oct, 2024
New York City

Market sentiment on Wall Street was positive after retail sales rose in September and artificial intelligence-linked stocks got another boost.

The S&P 500 index increased 0.2%, and the S&P 500 index edged up 0.3% as investors bid up tech stocks.

Chip stocks led the gainers after Taiwan Semiconductor reported strong third-quarter results and boosted its sales outlook for the current year.

Taiwan Semi's quarterly results boosted other chip stocks, and Nvidia jumped 2.2%, AMD advanced 1.5%, and Broadcom gained 2.7%.

Investors reacted positively to the latest updates on retail sales and weekly jobless claims.

Retail and food services sales increased at an annual rate of 1.7% in September, but the pace of increase was the slowest in eight months, according to the U.S. Census Bureau.

Sales are adjusted for seasonal factors but not adjusted for inflation.

Preliminary retail and food services sales increased 0.4% from the previous month to $714.4 billion.

Sales at food services and drinking places increased 1% from the previous month; miscellaneous stores advanced 4%, but declined 3.3% at electronic and appliance stores and fell 1.6% at gasoline stations.

Sales at auto dealers were flat.

However, sales excluding food services, auto dealers, building materials stores, and gasoline stations, which are used to calculate gross domestic product, jumped 0.7%.

Weekly initial jobless claims declined 19,000 to 241,000 in the week ending October 12, the U.S. Department of Labor reported Thursday.

The jobless claims eased from the previous week after disruptions from Hurricanes Milton and Helena spiked filings.

Despite the decline in the last week, claims are still running higher than the average earlier in the year, highlighting softening labor market conditions since its post-pandemic peak.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,855.0, the Nasdaq Composite rose 0.3% to 18,417.52, and the Russell 2000 index fell 0.1% to 2,285.49.

The yield on 2-year Treasury notes edged higher to 3.99%, 10-year Treasury notes inched up to 4.08%, and 30-year Treasury bonds inched higher to 4.36%.

WTI crude oil increased $0.21 to $70.71 a barrel, and natural gas prices edged up 2 cents to $2.38 a thermal unit.

Gold rose by $14.17 to $2,688.17 an ounce, and silver increased by $0.02 to $31.76.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.78.