Market Update
European Markets Fall After Italy imposed Windfall Tax On Banks
Bridgette Randall
08 Aug, 2023
Frankfurt
European markets turned lower following worries of global economic growth and windfall tax on banks in Italy.
Market indexes in Frankfurt, Paris, London and Milan declined after Italy imposed windfall tax on excess earnings this year and finance tax cuts and financial support for first time home buyers.
The decision surprised markets and banks in the region dropped as much as 3% in Germany, France and Spain.
In other economic news, China reported exports declined for the third month in a row and trade surplus also fell after imports also fell in July.
Exports declined 14.5% to $281.7 billion and imports fell 12.4% to $201.1 billion resulting in a trade surplus of $80.6 billion from $102.7 billion a year ago.
Politically sensitive exports to the U.S. fell 23.1%, ASEAN countries 21.4% and to the EU declined 20.6%.
Exports of rare earth materials, critical for electric batteries. in July soared 49% from a year earlier to 5,426 metric tons, supported by strong international demand for battery powered vehicles and wind power systems.
The sharp fall in imports was noticed by commodities market and copper and other base metal prices came under pressure and weak exports also highlighted the slowing global demand for Chinese products and reorienting of global supply chains away from China.
Europe Indexes & Yields
The DAX index decreased 0.9% to 15,813.56, the CAC-40 index fell 0.8% to 7,263.27 and the FTSE 100 index dropped 0.6% to 7,507.44.
The yield on 10-year German bonds decreased to 2.43%, 8rench bonds traded lower to 3.00%, the UK gilts edged up to 4.35% and Italian bonds decreased to 4.14%.
The euro edged lower to $1.095, the British pound to $1.271 and the U.S. dollar fetched 87.67 Swiss cents.
Brent crude decreased $1.20 to $84.20 a barrel and the Dutch TTF natural gas increased €0.44 to €30.05 per MWh.
Europe Stock Movers
Italian banks dropped after Italy placed 40% windfall tax on banks to finance tax cuts and financial support to first time mortgage holders.
UniCredit SpA declined 6.9% to €21.06 and Intesa Sanpaolo SpA dropped 8.5% to €2.34.
Banks in the region declined following the windfall tax announcement.
Commerzbank, Dresdner Bank, Banco Santander and BNP Paribas dropped between 2% and 3%.
Bayer AG declined 1.9% to €51.40 after the German chemical company reported a net loss of €1.9 billion in the second quarter.
Mining companies traded down after Glencore reported profit nearly halved from a year ago and China's exports and imports declined in July.
Glencore dropped 4.2% to 437.80 pence after the company reported half-year profit plunged 50% from a year ago.
Anglo American and Antofagasta declined between 1.5% and 2.0%.
Abrdn Plc dropped 8.4% to 200.20 pence after the asset management company reported a decline in its assets under management.
After a Week of Losses Stocks Look Higher, Crude Oil at 4-month High
Barry Adams
07 Aug, 2023
New York City
Market averages attempted a rebound after global markets dropped 2% in the previous week and energy stocks led gainers but tech stocks lagged market gains.
Investors reviewed more earnings and awaited consumer and wholesale inflation later in the week.
Investors look for clues to future rate path direction amid growing consensus that the Federal Reserve is more likely to engineer a soft landing, meaning keep interest rates elevated and avoid sinking the economy into a recession.
Market averages rebounded on the first day of a new week and Treasury yields edged slightly higher ahead of inflation reports.
Tech stocks traded mixed and Microsoft, Amazon and Meta Platforms advanced 0.5% but Apple Inc declined 1.7%.
Chevron, Exxon, Valero, Hess, EQT, Sunoco, Occidental Petroleum and Marathon Oil were in focus after crude oil traded at a new 4-month high on tighter supply conditions.
On the merger front Campbell Soup Company declined 1.8% after the food products maker agreed to acquire pasta sauce maker Sovos Brands Inc for $2.33 billion.
U.S. Indexes & Yields
The S&P 500 index traded up 0.7% to 4,508.69 and the Nasdaq Composite rose 0.4% to 13,956.76.
The yield on 2-year Treasury notes decreased to 4.77%, 10-year Treasury notes inched lower to 4.08% and 30-year Treasury bonds edged down to 4.25%.
Crude oil decreased $0.66 to $82.13 a barrel and natural gas prices increased 15 cents to $2.76 a thermal unit.
U.S. Stock Movers
Berkshire Hathaway Inc Class A jumped 3% to a record high of $550,000 after the diversified conglomerate said its operating earnings jumped 6.6% to $10.04 billion or $6,928.40 per Class A share.
Revenue in the second quarter jumped to $92.5 billion from $76.2 billion, largely driven by the recent acquisition of Pilot Travel Centers which generated $14.75 billion in revenue in the period.
The company's cash hoard soared to $147.4 billion, from $130.6 billion in the first quarter and higher interest rates also helped the company to generate more cash.
Berkshire repurchased $1.4 billion of its own stock, significantly lower than the $4.4 billion repurchase in the first quarter.
Tesla Inc declined 3.2% to $245.70 after the company announced the departure of Zachary Kirkhorn as chief financial officer after 13 years at the company and spending last four years and six months in the position.
In the second quarter, Tesla announced earnings per share of 91 cents and better-than-expected operating margins despite company incentives that lowered net sale price of vehicles.
Sovos Brands soared 25% to $22.52 after the pasta sauce maker agreed to be acquired by Campbell Soup for $2.33 billion or $23 a share.
Including the debt, the purchase price is $2.7 billion and Campbell said it plans to finance part of the deal with the help of new debt.
Separately, Sovos reported organic sales in its latest quarter jumped 16.3% from a year ago.
Three months ago, Campbell Soup agreed to sell Emerald Nuts for an undisclosed amount to Flagstone Foods.
European Markets Hovered Near Flatline
European markets struggled and market indexes retained downward bias after the release of German industrial production and UK home sales data.
Market averages declined on the first day of a new following losses in the previous week after bond yields rose and the euro dropped to a one-year low.
German industrial production declined more than expected in June on weak auto production.
Industrial output declined 1.5% from the previous month and fell 1.7% from a year ago in June, the Federal Statistics Office or Destatis reported Monday.
In other news, the UK home prices fell for the third month in a row in July on rising borrowing costs and elevated home prices.
The Halifax home price index declined 2.4% in July after falling 2.6% in June and average home price eased to £285,044, lower than the peak of £293,992 reached last August.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline.
And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels,” said Kim Kinnaird, Director, Halifax Mortgages.
Europe Indexes & Yields
The DAX index decreased 0.01% to 15,950.76, the CAC-40 index rose 0.06% to 7,319.76 and the FTSE 100 index dropped 0.1% to 7,554.49.
In the previous week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds decreased to 2.58%, 8rench bonds traded lower to 3.15%, the UK gilts edged up to 4.45% and Italian bonds decreased to 4.28%.
The euro edged lower to $1.097, the British pound to $1.271 and the U.S. dollar fetched 87.69 Swiss cents.
Brent crude decreased $0.48 to $85.75 a barrel and the Dutch TTF natural gas increased €1.73 to €30.49 per MWh.
Europe Stock Movers
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
U.S. Stocks Attempt a Rebound After a Week of Losses
Barry Adams
07 Aug, 2023
New York City
Market averages attempted a rebound after global markets dropped 2% in the previous week.
Investors reviewed more earnings and awaited consumer and wholesale inflation later in the week.
Market averages rebounded on the first day of a new week and Treasury yields eased ahead of inflation reports.
Tech stocks traded mixed and Microsoft, Amazon and Meta Platforms advanced 0.5% but Apple Inc declined 2%.
On the merger front Campbell Soup Company declined 1.8% after the food products maker agreed to acquire pasta sauce maker Sovos Brands Inc for $2.33 billion.
U.S. Indexes & Yields
The S&P 500 index traded up 0.4% to 4,495.84 and the Nasdaq Composite fell 0.3% to 13,877.90.
The yield on 2-year Treasury notes decreased to 4.77%, 10-year Treasury notes inched lower to 4.08% and 30-year Treasury bonds edged down to 4.25%.
Crude oil decreased $1.09 to $81.73 a barrel and natural gas prices increased 13 cents to $2.71 a thermal unit.
U.S. Stock Movers
Berkshire Hathaway Inc Class A jumped 3% to a record high of $550,000 after the diversified conglomerate said its operating earnings jumped 6.6% to $10.04 billion or $6,928.40 per Class A share.
Revenue in the second quarter jumped to $92.5 billion from $76.2 billion, largely driven by the recent acquisition of Pilot Travel Centers which generated $14.75 billion in revenue in the period.
The company's cash hoard soared to $147.4 billion, from $130.6 billion in the first quarter and higher interest rates also helped the company to generate more cash.
Berkshire repurchased $1.4 billion of its own stock, significantly lower than the $4.4 billion repurchase in the first quarter.
Tesla Inc declined 3.2% to $245.70 after the company announced the departure of Zachary Kirkhorn as chief financial officer after 13 years at the company and spending last four years and six months in the position.
In the second quarter, Tesla announced earnings per share of 91 cents and better-than-expected operating margins despite company incentives that lowered net sale price of vehicles.
Sovos Brands soared 25% to $22.52 after the pasta sauce maker agreed to be acquired by Campbell Soup for $2.33 billion or $23 a share.
Including the debt, the purchase price is $2.7 billion and Campbell said it plans to finance part of the deal with the help of new debt.
Separately, Sovos reported organic sales in its latest quarter jumped 16.3% from a year ago.
Three months ago, Campbell Soup agreed to sell Emerald Nuts for an undisclosed amount to Flagstone Foods.
Europe Movers: Aurubis, Clarkson, LSL Property, UK Home Builders, Siemens Energy, UNITE Group
Inga Muller
07 Aug, 2023
Frankfurt
European markets attempted a rebound after a sell-off in the previous week and investors reacted to the latest corporate earnings.
The DAX index decreased 0.4% to 15,891.68, the CAC-40 index fell 0.2% to 7,303.29 and the FTSE 100 index dropped 0.5% to 7,524.96.
In the last week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
German Industrial Output Dropped, Third Monthly Decline In UK Home Prices
Bridgette Randall
07 Aug, 2023
Frankfurt
European markets struggled and market indexes retained downward bias after the release of German industrial production and UK home sales data.
Market averages declined on the first day of a new following losses in the previous week after bond yields rose and the euro dropped to a one-year low.
German industrial production declined more than expected in June on weak auto production.
Industrial output declined 1.5% from the previous month and fell 1.7% from a year ago in June, the Federal Statistics Office or Destatis reported Monday.
In other news, the UK home prices fell for the third month in a row in July on rising borrowing costs and elevated home prices.
The Halifax home price index declined 2.4% in July after falling 2.6% in June and average home price eased to £285,044, lower than the peak of £293,992 reached last August.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline.
And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels,” said Kim Kinnaird, Director, Halifax Mortgages.
Europe Indexes & Yields
The DAX index decreased 0.4% to 15,891.68, the CAC-40 index fell 0.2% to 7,303.29 and the FTSE 100 index dropped 0.5% to 7,524.96.
In the last week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds decreased to 2.58%, 8rench bonds traded lower to 3.15%, the UK gilts edged up to 4.45% and Italian bonds decreased to 4.28%.
The euro edged lower to $1.097, the British pound to $1.271 and the U.S. dollar fetched 87.69 Swiss cents.
Brent crude decreased $0.74 to $85.49 a barrel and the Dutch TTF natural gas increased €0.81 to €29.72 per MWh.
Europe Stock Movers
UK home builders declined after the release of the Halifax housing report.
Barratt Developments PLC decreased 0.4% to 456.40 pence, Taylor Wimpey plc declined 0.8% to 118.0 pence and Persimmon Plc fell 0.6%.
Weak base metal prices weighed on mining stocks on the market jitters ahead of the inflation and international trade balance data from China later this week.
Anglo America, Antofagasta and Glencore fell between 1% and 3%.
Clarkson Plc declined 2.7% to 2,795.0 pence after the shipping services provider reported price and volume softening trends in some sectors.
UNITE Group Plc fell 2.2% to 941.50 pence after the student housing provider's debt rating was downgraded by a rating agency.
LSL Property Services Plc dropped 10.6% to 252.50 pence after the mortgage and valuation services provider issues a profit warning citing mortgage market weakness in refinancing and new mortgage sale.
Revenue in the first-half declined to £104 million from £160.9 million and operating profit plunged to £3.5 million from £14.2 million.
Siemens Energy AG dropped 6.7% to €14.51 after the company reported a wider loss in the latest quarter and lowered its full-year outlook.
Aurubis AG plunged 10.5% to €75.98 after the company reported weaker-than-expected results in the nine months of fiscal 2023.
Airbnb New Active Listings Accelerated, Frist GAPP Quarterly Profit
Scott Peters
04 Aug, 2023
New York City
Airbnb Inc was nearly unchanged at $141.0 after the online short-term stay booking platform reported revenues and booking rose at a slower-than-expected pace in the quarter.
Second quarter revenue increased 18% to $2.5 billion from $2.1 billion and net income soared 72% to $650 million from $379 million and diluted earnings per share advanced to 98 cents from 56 cents a year ago.
The company reported the most profitable second quarter on GAAP basis.
The company generated $909 million of operating cash flow and free cash flow jumped 13% from a year ago and 644% from four years ago to $900 million.
Gross booking value rose 13% from a year ago to $19.1 billion and nights and experiences booked increased 11% driven by growth in all regions to 115.1 million.
Active listings increased 19% to 7 million, and the booking platform added record net active listings in any quarter, and active listings have accelerated in every quarter in the last ten quarters.
Average daily rate declined 1% from a year ago in North America but rose 8% in the Europe, Middle East and Africa but overall daily rate increased 1% to $166.
In the second quarter, guests traveling more than 3,000 miles increased 20% compared to a year ago and cross-border represented 45% of total gross nights booked, up from 43% in the second quarter of 2022, but still below 50% in the corresponding period in 2019.
The company forecasted third quarter revenue between $3.3 billion and $3.4 billion and estimated upward pressure in average daily room rate and "a modest sequential increase in the annual growth rate" of nights and experiences booked from the second quarter.
Starbucks U.S. Comparable Sales Jumped 7%, China Sales Rebounded
Scott Peters
06 Aug, 2023
New York City
Starbucks Corp increased 0.8% to $102.03 after the coffee chain operator reported higher-than-expected sales in the fiscal third quarter on a sales rebound in China.
Sales at stores open at least 13 months in China soared 46% from a year ago, after Covid-restrictions ended.
Global comparable store sales increased 10% and the U.S. and North American comparable store sales increased 7% from a year ago.
Revenue in the quarter ending on July 2 rose 12% to $9.2 billion and the company opened 588 net new stores in the quarter, increasing the worldwide total to 37,000.
Net earnings attributable to shareholders increased to $1.1 billion from $913 million and diluted earnings per share rose to 99 cents from 79 cents a year ago.
China is expected to drive future sales growth as the company pushes to open more stores in smaller cities of the nation with 1.4 billion people with a preferred hot beverage tea over coffee.
At the end of the third quarter, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively.
Movers: Airbnb, Amazon, Apple, Block, Booking Holdings, Paramount, Tupperware
Scott Peters
04 Aug, 2023
New York City
Market averages rebounded after the U.S. economy added below average 187,000 net new jobs in July and big tech earnings drove market sentiment.
The S&P 500 index futures traded up 0.2% to 4,511.4.34 and the Nasdaq Composite futures rose 0.3% to 13,971.63.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.20% and 30-year Treasury bonds edged down to 4.29%.
Apple Inc declined 2.5% to $186.50 after the company reported sales declined 1% from a year ago and earnings per share of $1.29 on the weakness in computing devices and smart phones.
Amazon.com, Inc soared 8.8% to $140.27 after the e-commerce company reported better-than-expected sales in its latest quarter of $134.4 billion and earnings of 65 cents per share.
Airbnb Inc was nearly unchanged at $141.0 after the online short-term stay booking platform reported revenues and booking rose at a slower-than-expected pace in the quarter.
Block Inc declined 6.6% to $68.80 after the company reported second quarter earnings per share of 39 cents and revenue of $5.53 billion.
The company reported earnings and sales ahead of market expectations.
Paramount Global declined 1.6% to $18.08 on multiple reports that the company is in talks with private equity firm KKR to sell its publishing division Simon & Schuster.
Booking Holdings Inc rose 12.1% to $3,185.0 after the online travel booking company reported second quarter revenue of $5.46 billion and adjusted earnings per share of $37.62.
Tupperware Brands Corp soared 60.1% to $5.64 after the company said it finalized its debt restructuring deal that could reclassify as much as $121 million in interest expenses and fees.
U.S. Averages Gain as Traders Review Big Tech Earnings and Jobs Report
Barry Adams
04 Aug, 2023
New York City
Stocks on Wall Street traded sideways on the final day of the week as investors review the latest non-farm payrolls report and another batch of corporate earnings.
Amazon delivered higher-than-expected earnings after the company's cost cutting efforts paid off but Apple struggled with revenues on the ongoing weakness in smartphone sales in Asia.
Non-farm payrolls increased 187,000 in July, higher than the downwardly revised 185,000 in June, the U.S. Bureau of Labor Statistics reported Friday.
Economists polled by Ticker.com were anticipating payrolls to increase as much as 210,000 in the month.
Monthly job gains were driven by increases in healthcare, social services, financial services and wholesale trade.
Job gains were below the 312,000 monthly averages over the last twelve months but significantly above the 70,000 needed to meet the demand from the rising working age population.
The average hourly earnings for all employees on US private nonfarm payrolls rose by 14 cents, or 0.4% to $33.74 in July, matching the pace of increase in the prior month.
Over the past 12 months, average hourly earnings have increased by 4.4% in July, matching the annual pace in the previous month.
The change in total nonfarm payroll employment for May was revised down by 25,000 to 281,000, and for June was revised down by 24,000 to 185,000.
Jobless rate declined to 3.5% and the number of unemployed changed little at 5.8 million in July and the jobless rate has ranged between 3.4% and 3.7% since March 2022.
After the release of non-farm payrolls, the yield on 10-yearTreasury notes inched higher and traded above 4.20%, the level not seen since November.
U.S. Indexes & Yields
The S&P 500 index futures traded up 0.2% to 4,511.4.34 and the Nasdaq Composite futures rose 0.3% to 13,971.63.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.20% and 30-year Treasury bonds edged down to 4.29%.
Crude oil increased $0.22 to $81.77 a barrel and natural gas prices decreased 2 cents to $2.54 a thermal unit.
U.S. Stock Movers
Apple Inc declined 2.5% to $186.50 after the company reported sales declined 1% from a year ago and earnings per share of $1.29 on the weakness in computing devices and smart phones.
Amazon.com, Inc soared 8.8% to $140.27 after the e-commerce company reported better-than-expected sales in its latest quarter of $134.4 billion and earnings of 65 cents per share.
Airbnb Inc was nearly unchanged at $141.0 after the online short-term stay booking platform reported revenues and booking rose at a slower-than-expected pace in the quarter.
Block Inc declined 6.6% to $68.80 after the company reported second quarter earnings per share of 39 cents and revenue of $5.53 billion.
The company reported earnings and sales ahead of market expectations.
Paramount Global declined 1.6% to $18.08 on multiple reports that the company is in talks with private equity firm KKR to sell its publishing division Simon & Schuster.
Booking Holdings Inc rose 12.1% to $3,185.0 after the online travel booking company reported second quarter revenue of $5.46 billion and adjusted earnings per share of $37.62.
Tupperware Brands Corp soared 60.1% to $5.64 after the company said it finalized its debt restructuring deal that could reclassify as much as $121 million in interest expenses and fees.
Europe Movers: BNP Paribas, Commerzbank, Credit Agricole, Deutsche Wohnen, Sika, WPP
Inga Muller
04 Aug, 2023
Frankfurt
European markets trimmed weekly losses and bond yields advanced on the final day of the week.
The DAX index increased 0.2% to 15,915.71, the CAC-40 index rose 0.5% to 7,297.59 and the FTSE 100 index edged higher 0.03% to 7,531.65.
For the week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds increased to 2.60%, 8rench bonds traded higher to 3.17%, the UK gilts edged up to 4.49% and Italian bonds increased to 4.29%.
Credit Agricole SA increased 6.4% to €11.90 after the French lender reported better-than-expected earnings in the second quarter, driven by consumer lending and insurance demand.
BNP Paribas SA jumped 1.5% to €59.18 after the French lender announced a stock buyback plan.
Sika AG decreased 0.5% to CHF 266.90 despite the Swiss chemical company revised higher 2023 sales outlook.
Deutsche Wohnen SE increased 0.6% to €22.42 after the company said it is reviewing the possibilities of selling its portfolio of nursing care properties.
Commerzbank AG declined 1.7% to €10.78 despite the German lender revising higher its net interest margin and 2023 earnings outlook.
WPP Plc declined 6.4% to 792.96 pence after the UK-based advertising group lowered its sales outlook for the year.
European Markets Trimmed Weekly Losses, Retail Sales Fell 8th Consecutive Month
Bridgette Randall
04 Aug, 2023
New York City
European markets attempted a rebound after three-day losses on economic worries.
Market averages in Paris, London and Frankfurt traded slightly higher in listless trading and investors reviewed retail sales data in the Euro Area and German factory orders.
Crude oil rebounded after Russia and Saudi Arabia extended voluntary production cuts by 1.3 million barrels a day in an effort to revive prices closer to $90 a barrel.
Germany Factory Orders Unexpectedly Accelerated In June
German factory orders unexpectedly rose 7% from the previous month in June, the Federal Statistics Office reported Friday.
New orders rose 3.0% from a year ago.
Orders rose for the third month in a row and increased at the fastest pace in the period, driven by large orders from the aerospace industry.
Factory orders in May were downwardly revised to an increase of 6.2%.
New orders for mechanical engineering advanced 5.1%, and orders for other vehicle construction jumped 89.2%, driven by the demand in the aerospace industry.
However, orders for motor vehicles and their parts declined 7.3% and orders for capital goods increased 9.9%, while orders for intermediate and consumer goods inched higher 2.0% and 7.7%, respectively.
Excluding large-scale orders, new orders declined 2.6%.
Meanwhile, foreign orders increased 13.5%, driven in part by orders from the Euro Area by 27.2% and orders from the rest of the world by 5.0%, but domestic orders declined 2%.
In the three-month period to June, factory orders rose only 0.2%.
Euro Area Retail Sales Declined In June
Euro area retail sales declined 0.3% from the previous month in June, Eurostat reported Friday.
Retail sales in May were revised to 0.6% in May.
On a yearly basis, seasonally adjusted retail sales declined 1.4% in June, slower than 2.4% in May and sales declined for the eighth month in a row.
Sales fell for food, drinks, tobacco 0.3% matching the rate in May, and non-food products decreased 0.2% compared to 0.6%.
However, sales for automotive fuel increased 1% from 0.5% and non-store sales by mail orders and internet increased 1.1% compared to a decrease of 1%.
In other economic news, France's industrial production fell 0.9% in June, following a revised 1.1% increase in May, France's statistical office INSEE reported Friday.
Europe Indexes & Yields
The DAX index increased 0.2% to 15,915.71, the CAC-40 index rose 0.5% to 7,297.59 and the FTSE 100 index edged higher 0.03% to 7,531.65.
For the week, the DAX index declined 3%, the CAC-40 fell 2.8% and the FTSE 100 index dropped 2.2%.
The yield on 10-year German bonds increased to 2.60%, 8rench bonds traded higher to 3.17%, the UK gilts edged up to 4.49% and Italian bonds increased to 4.29%.
The euro edged lower to $1.091, the British pound to $1.271 and the U.S. dollar fetched 87.75 Swiss cents.
Brent crude increased $0.41 to $85.56 a barrel and the Dutch TTF natural gas increased €1.47 to €29.01 per MWh.
Europe Stock Movers
Credit Agricole SA increased 6.4% to €11.90 after the French lender reported better-than-expected earnings in the second quarter, driven by consumer lending and insurance demand.
BNP Paribas SA jumped 1.5% to €59.18 after the French lender announced a stock buyback plan.
Sika AG decreased 0.5% to CHF 266.90 despite the Swiss chemical company revised higher 2023 sales outlook.
Deutsche Wohnen SE increased 0.6% to €22.42 after the company said it is reviewing the possibilities of selling its portfolio of nursing care properties.
Commerzbank AG declined 1.7% to €10.78 despite the German lender revising higher its net interest margin and 2023 earnings outlook.
WPP Plc declined 6.4% to 792.96 pence after the UK-based advertising group lowered its sales outlook for the year.
Market Averages Declined Second Day After U.S. Treasury Yields Jumped to 9-month Highs
Barry Adams
03 Aug, 2023
New York City
The pop in Treasury bond yields overshadowed sentiment in stock markets and investors reviewed a fresh batch of earnings.
Market indexes drifted lower for the second day following the U.S. long-term debt rating downgrade.
DoorDash, PayPal, Etsy, Shopify, Cummins and Qualcomm were among the leading companies reporting earnings and about 600 companies are expected to release earnings before the end of the week.
Stocks have been under pressure after Fitch Ratings cut the U.S. long term debt rating by one notch citing expected "fiscal deterioration" over the next three years as the U.S. government ramps up borrowing.
Treasury yields spiked to the levels last seen in November as bond traders worry that the Fed will struggle to bring down inflation below 3%.
In addition, the U.S. Treasury plans to borrow at an elevated pace for the next five months to finance the growing budget deficit.
The yield on 10-year U.S. bonds traded above 4% for the second day in a row and the yields are likely to cross 9-month high.
REITS and stocks in real estate sector and home builders fell more than 2% for the second day in a row, after yields rose.
U.S. Indexes & Yields
The S&P 500 index traded down 0.5% to 4,491.40 and the Nasdaq Composite declined 0.3% to 13,933.52.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.14% and 30-year Treasury bonds edged down to 4.29%.
Crude oil increased $0.40 to $79.88 a barrel and natural gas prices increased 4 cents to $2.51 a thermal unit.
U.S. Stock Movers
DoorDash Inc increased 0.6% to $86.50 after the delivery company reported better-than-expected revenue in its latest quarter.
Qualcomm Inc plunged 9.6% to $116.80 after the semiconductor chipmaker reported weaker-than-expected revenue in the fiscal third quarter and forecasted lighter-than-expected revenue in the current quarter.
Demand for smartphones in China has not rebounded to the projected levels and the China region accounts for about 61% of Qualcomm sales.
Qualcomm said overall smartphone shipments are expected to decline in high single-digit percentage rate in 2023.
PayPal Holdings declined 8.8% to $66.70 despite the company meeting earnings expectations set by some investors.
The payment processing company posted adjusted earnings in the second quarter of $1.16 a share and revenue of $7.29 billion.
Etsy Inc declined 9.6% to $86.88 after the company reported second quarter earnings that met analysts' estimates but forecasted revenue in the third quarter below expectations.
European Markets Struggled Second Day On Economic Slowdown Worries
Market indexes retained negative bias for the third day in a row after investors reviewed economic data in the region and the Bank of England's rate decision.
Market averages in Frankfurt, Paris and London declined and tech sector stocks led decliners after investors focused on the latest earnings results.
Infineon, Lufthansa, Societe Generale, Rolls Royce, AXA, Adecco and BMW were in focus after the release of earnings.
Bank of England Lifted Rates by 25 Basis Points to 5.25%
The Bank of England lifted its key lending rate for the fourteenth time in a row by 26 basis points to 5.25%.
Interest rates in the U.K. are at a level last seen since 2008 and the central bank is expected to continue its rate hike campaign as inflation remains significantly above the target rate of 2%.
The Bank of England revised its inflation forecast to 5% by the end of 2023 and estimated inflation is likely to reach its 2% target by the second quarter of 2025.
German Trade Balance Expanded In June
German trade surplus expanded to €18.7 billion in June from an upwardly revised €14.6 billion in May, the Federal Statistics Office or DeStatis reported Wednesday.
Seasonally adjusted imports fell 3.4% from the previous month to €112.6 billion while exports edged 0.1% higher to €131.3 billion.
Exports to EU countries advanced 1.3%, and to the Euro Area increased 1.8% and imports from EU countries fell 3.1% and from the Euro Area declined 4.1%.
From a year ago, exports declined 1.9% and imports plunged 11.6%.
Wholesale Prices Dropped for 2nd Month
Producer prices in the Euro Area declined 3.4% in June following an upwardly revised fall of 1.6% in May, Eurostat reported Wednesday.
The ongoing decline in energy prices dragged down the measure of wholesale inflation for the second month in a row and the index fell to the lowest level since June 2020.
On a monthly basis, the index declined 0.4% in June and fell for the sixth consecutive month in a row.
In the month, energy prices fell 16.5% compared to a decline of 13.5% in May, intermediate goods prices fell 2.7% compared to 1.5%, but capital goods prices rose at a slower pace of5.2% from 5.6%, durable consumer goods prices slowed to 5.9% from 6.7% and non-durable consumer goods prices eased to 8.9% from 9.6% a year ago.
Europe Indexes & Yields
The DAX index decreased 0.8% to 15,893.38, the CAC-40 index fell 0.7% to 7,260.53 and the FTSE 100 index dropped 0.6% to 7,529.16.
The yield on 10-year German bonds increased to 2.53%, 8rench bonds traded higher to 3.10%, the UK gilts edged up to 4.42% and Italian bonds increased to 4.25%.
The euro edged lower to $1.091, the British pound to $1.266 and the U.S. dollar fetched 87.63 Swiss cents.
Brent crude increased $1.93 to $85.13 a barrel and the Dutch TTF natural gas increased €1.43 to €30.47 per MWh.
Europe Stock Movers
BMW declined 1.7% to €103.44 after the German luxury vehicle maker warned of simmering supply chain issues and higher inflation for the remainder of the year.
Infineon Technologies AG dropped 7.8% to €35.09 after the company reported a decline of 10% in its adjusted quarter earnings.
Adidas AG increased 2.2% after the German sportswear maker revised higher its 2023 sales outlook.
AXA SA declined 0.6% to €27.23 after the French insurance company reported first-half net income declined to €3.83 billion compared to €3.85 billion a year ago.
Rolls-Royce Holdings Plc increased 3% to 189.55 pence after the aviation and defense company reported higher first-half net profit after margins improved in its civil aviation business.
Societe Generale SA increased 2.9% to €24.69 after the company returned to profitability in the second quarter and resumed its stock repurchase plan of €440 million.
Volatile mining companies traded lower following the weak sentiment in the commodities markets.
Glencore, Anglo American and Antofagasta declined between 1% and 3%.