Market Update
Central Bank Actions In U.S, UK, Europe and Japan Dominate European Market Sentiment
Bridgette Randall
18 Sep, 2023
Frankfurt
Rate anxieties dragged market indexes down in Monday's trading and investors awaited central bank decisions this week.
The yields trended higher ahead of the rate decisions from the Bank of England and the U.S. Federal Reserve later in the week.
The Bank of England is scheduled to lift its rate by 24 basis points and the Bank of Japan is also scheduled to announce its rate decision on Thursday.
Central banks of Sweden, Norway and Switzerland are also set to announce their rate decisions this week.
The U.S. Federal Reserve is likely to pause rate hike on Wednesday but investors are worried that higher rates are likely to stay longer as inflation shows no sign of abating.
Despite multiple rate hikes by the central bank in the UK, inflation in the UK has stayed above 7%.
The yield on the UK bonds have been on the rise in anticipation of rate hikes, and led other sovereign bond yields in the European Union, surpassing even Italy which generally
Europe Indexes & Yields
The DAX index decreased 0.6% to 15,798.56, the CAC-40 index declined 1.1% to 7,299.54 and the FTSE 100 index inched down 0.3% to 7,689.19.
In the previous week, the DAX increased 0.7%, the CAC 40 advanced 1.6% and the FTSE 100 jumped 3.4%.
The yield on 10-year German bonds increased to 2.69%, French bonds traded higher to 3.24%, the UK gilts edged up to 4.38% and Italian bonds rose to 4.49%.
The euro edged lower to a three-month low to $1.066, the British pound to $1.239 and the U.S. dollar fetched 89.61 Swiss cents.
Brent crude increased $0.74 to $94.66 a barrel and the Dutch TTF natural gas decreased €0.75 to €35.74 per MWh.
Europe Stock Movers
Societe Generale SA plunged 11% to €23.58 after the recently appointed chief executive announced a plan to cut costs and lift stagnant sales by 2026.
However, investors sold stock after the revenue and earnings outlook fell short of investors' expectations.
Nordic Semiconductor ASA dropped 13.5% to €9.25 after the Norwegian chipmaker lowered its third quarter revenue outlook amid ongoing slump.
U.S. Movers: Automakers, Adobe, Arm Holdings, Nucor, Unity Software
Scott Peters
15 Sep, 2023
New York City
Adobe Inc declined 3.5% to $533 after the graphic design software developer reported fiscal third quarter results that matched investor expectations.
Nucor Corporation declined 2.1% to $162.05 after the specialty steelmaker forecasted third quarter earnings to decline primarily because of lower prices and falling volumes.
Nucor expects third quarter earnings per share to be in the range of $4.10 to $4.20 per diluted share, second quarter net earning was $5.81 and $6.50 in the third quarter of 2022.
Arm Holdings increased 3.6% to $65.89 and extended gains for the second day in a row after the advanced chip design company priced its initial public offer at $51 a share and raised $4.9 billion.
Unity Software Inc increased 2.2% to $36.54 after Bank of America upgraded stock to "buy" on the earnings growth expectations in 2024 and 2025.
General Motors, Ford Motor Company and Stellantis NV were in focus after 12,700 United Auto Workers decided to strike at three key assembly plants asking for higher wages and other benefits.
The union workers decided to strike at General Motors midsize truck manufacturing plan and full-size van production facility in Wentzville, Missouri.
Workers also walked out at Jeep manufacturing plant in Toledo, Ohio and Ford Ranger midsize pickup and Bronco SUV manufacturing plant in Wayne, Michigan.
Workers also went on strike at Ford Ranger midsize pickup and Ford Bronco SUV plant in Wayne, Michigan and the Jeep assembly plant in Toledo, Ohio.
S&P 500 and Nasdaq Trim Weekly Gains, Crude Oil at 2023 High
Barry Adams
15 Sep, 2023
New York City
Stocks on Wall Street traded down on final day of the week but popular indexes are set to close higher.
Volatile and popular tech and energy stocks dominated trading on Friday and investors assessed the latest economic data and future rate path.
Crude oil is set to close higher for the third week in a row on supply worries and immediate month delivery future price hovered near $90 a barrel.
Tech stocks trimmed weekly gains after Arm Holdings jumped higher for the second day in a row after the company completed its initial public offering and raised $4.9 billion.
Adobe Inc edged slightly lower after the company reported quarterly results that matched some analysts' expectations.
Automakers stocks were also in focus after United Auto Workers decided to strike at three key assembly plants in Michigan,
For the week, the S&P 500 and the Nasdaq indexes are set to close higher 1.1% and 1.2% after falling 1.5% and 2.0% in the previous week respectively.
U.S. Indexes & Yields
The S&P 500 index inched up 0.4% to 4,483.21 and the Nasdaq Composite added 0.2% to 13,834.97.
The yield on 2-year Treasury notes hovered near 5.03%, 10-year Treasury notes inched slightly higher to 4.31% and 30-year Treasury bonds edged up to 4.40%.
Crude oil increased $1.13 to $89.73 a barrel and natural gas prices decreased 3 cents to $2.63 a thermal unit.
The dollar index edged higher to 105.22, the level last seen in March but higher than the low of 99.85 on July 13.
U.S. Stock Movers
Adobe Inc declined 3.5% to $533 after the graphic design software developer reported fiscal third quarter results that matched investor expectations.
Nucor Corporation declined 2.1% to $162.05 after the specialty steelmaker forecasted third quarter earnings to decline primarily because of lower prices and falling volumes.
Nucor expects third quarter earnings per share to be in the range of $4.10 to $4.20 per diluted share, second quarter net earning was $5.81 and $6.50 in the third quarter of 2022.
Arm Holdings increased 3.6% to $65.89 and extended gains for the second day in a row after the advanced chip design company priced its initial public offer at $51 a share and raised $4.9 billion.
Unity Software Inc increased 2.2% to $36.54 after Bank of America upgraded stock to "buy" on the earnings growth expectations in 2024 and 2025.
General Motors, Ford Motor Company and Stellantis NV after 12,700 United Auto Workers decided to strike at three key assembly plants asking for higher wages and other benefits.
The union workers decided to strike at General Motors midsize truck manufacturing plan and full-size van production facility in Wentzville, Missouri.
Workers also walked out at Jeep manufacturing plant in Toledo, Ohio and Ford Ranger midsize pickup and Bronco SUV manufacturing plant in Wayne, Michigan.
Workers also went on strike at Ford Ranger midsize pickup and Ford Bronco SUV plant in Wayne, Michigan and the Jeep assembly plant in Toledo, Ohio.
Europe Movers: Automakers, Bayer, H&M, Luxury Stocks, Power Metal Resources, Vinci
Inga Muller
15 Sep, 2023
Frankfurt
The DAX index decreased 1.0% to 15,961.63, the CAC-40 index increased 1.6% to 7,425.67 and the FTSE 100 index inched up 0.9% to 7,738.88.
For the week, the DAX increased 0.7%, the CAC 40 advanced 1.6% and the FTSE 100 jumped 3.4%.
Luxury stocks advanced after China reported improving retail sales and industrial output data in August.
LVMH, Kering SA, Hermes International SCA and Richemont SA jumped between 2% and 5%.
H & M Hennes & Mauritz AB declined 4.3% to kr 164.16 after the Swedish retailer reported third quarter net sales below expectations.
Automakers traded higher on the hopes that EU tariffs on the imported Chinese electric cars could help the regional companies.
Renault, Mercedes, BMW and VW gained around 1%.
Stellantis NV advanced 1.5% and the company's U.S. operations Chrysler is facing strike at some of its plants.
Bayer AG increased 1.9% to €49.81 on news that the company is looking to cut management jobs and restructure its operations.
Vinci SA increased 1.2% to €107.52 after the French company's subsidiary Vinci Construction Grands Projets won an order of €160 million contract to design and build a 180,000 m3 liquefied natural gas tank in The Netherlands.
Power Metal Resources PLC increased 4.2% to 85 pence after the company said there may be two significant gold deposits at its Tati mine in Botswana.
Games Workshop Group Plc jumped 11.5% to 11,590.0 pence after the maker of the miniature Warhammer game said sales in its latest quarter were ahead of estimates.
Rate Pause Hopes Pushed Higher European Indexes Second Day
Bridgette Randall
15 Sep, 2023
Frankfurt
European markets rallied for the second day in a row on hopes that interest rates may be nearing peaks in the region.
The European Central Bank lifted its three key lending rates for the tenth time on Thursday but revised higher its estimate of inflation for 2023 and 2024.
Investors focused on the policy makers' assessment of the economy and hoped that the central bank is more likely to pause at its next policy meeting in November and review the cumulative impact of 450 basis points increase in interest rates since June 2022.
Euro Area Wage Growth Slowed In Second Quarter
Wages and salaries in the Euro Are rose 4.6% in the second quarter from an upwardly revised 4.9% in the first quarter, Eurostat reported Friday.
Rising wages showed persistent inflationary pressures in the economy, but wages rose at a slower pace than 6.2% inflation rate, suggesting real income declined.
Manufacturing wages rose at a slower pace of 3.9% in the second quarter compared to 4.8% in the first quarter construction wages stalled at 4.0% and the information and communication wage growth eased to 4.6% from 5.0% and financial and insurance activities wage growth slowed to 4.0% from 4.8%.
Italy Swung to Trade Surplus In July
Italy swung to a trade surplus of €6.4 billion in July from a deficit of 0.5 billion a year ago, the National Institute of Statistics or ISTAT reported Friday.
Exports declined 7.7% to €53.5 billion driven by a 57.8% fall in energy, 11.4% decrease in intermediate goods and 6.7% decline in consumer goods.
Imports dropped 19.4% to €47.1 billion, primarily because of a 58% plunge in energy imports and intermediate goods decreased 18.1% and 4.1% decrease in consumer goods.
Europe Indexes & Yields
The DAX index decreased 1.0% to 15,961.63, the CAC-40 index increased 1.6% to 7,425.67 and the FTSE 100 index inched up 0.9% to 7,738.88.
For the week, the DAX increased 0.7%, the CAC 40 advanced 1.6% and the FTSE 100 jumped 3.4%.
The yield on 10-year German bonds increased to 2.65%, French bonds traded higher to 3.19%, the UK gilts edged up to 4.34% and Italian bonds rose to 4.41%.
The euro edged lower to a three-month low to $1.065, the British pound to $1.241 and the U.S. dollar fetched 89.62 Swiss cents.
Brent crude increased $0.46 to $94.16 a barrel and the Dutch TTF natural gas decreased €0.57 to €34.96 per MWh.
Europe Stock Movers
Luxury stocks advanced after China reported improving retail sales and industrial output data in August.
LVMH, Kering SA, Hermes International SCA and Richemont SA jumped between 2% and 5%.
H & M Hennes & Mauritz AB declined 4.3% to kr 164.16 after the Swedish retailer reported third quarter net sales below expectations.
European automakers traded higher on the hopes that EU tariffs on the imported Chinese electric cars could help the regional companies.
Renault, Mercedes, BMW and VW gained around 1%.
Stellantis NV advanced 1.5% and the company's U.S. operations Chrysler is facing strike at some of its plants.
Bayer AG increased 1.9% to €49.81 on news that the company is looking to cut management jobs and restructure its operations.
Vinci SA increased 1.2% to €107.52 after the French company's subsidiary Vinci Construction Grands Projets won an order of €160 million contract to design and build a 180,000 m3 liquefied natural gas tank in The Netherlands.
Power Metal Resources PLC increased 4.2% to 85 pence after the company said there may be two significant gold deposits at its Tati mine in Botswana.
Games Workshop Group Plc jumped 11.5% to 11,590.0 pence after the maker of the miniature Warhammer game said sales in its latest quarter were ahead of estimates.
Arm IPO Lifted SoftBank, China Retail Sales and Industrial Output Improved but Property Prices Fell
Arjun Pandit
15 Sep, 2023
Mumbai
Market indexes in Asia traded higher and China's economic data showed improving monthly data.
China's retail sales and industrial output rose more than expected in August, but the economy is struggling to find its traction.
New home prices in 70 large and medium cities in China declined 0.3% in August from the previous month, following a 0.2% decline in July, the National Bureau of Statistics showed Friday.
Price increases were seen only 18 cities in August, compared to 20 in August.
The People's Bank of China on Thursday that it plans to cut reserve requirement ratio for all banks by 25 basis points from Friday for all banks, except banks that have lowered the reserve ratio to 5%.
But despite the supporting measures by the government and the central bank, the property market slump is likely to persist for another year on weak sentiment among buyers.
SoftBank Group Corp increased 2% to ¥6,718.0 after the company successfully completed initial public offering of Arm in New York and raised $4.9 billion.
Arm sold 95.5 million shares at $51 a share, near the top end of its pricing range, and the stock closed up 25% to $61.
China Retail Sales and Industrial Output Expanded
China's retail sales and industrial output expanded at a faster pace after the government stepped up stimulus measures.
China's retail sales growth accelerated in August to a 3-month high of 4.6% from a year ago after increasing at a 2.5% in the previous month, the National Bureau of Statistics reported Friday.
Industrial production rose 4.5% in August following the 3.7% rise in July, the government statistics agency reported Friday in a separate report.
The European Central Bank lifted its key lending rates for the 10th time in a row in over a year and the central bank said inflation is still too high and for too long.
But the statement released by the central bank also noted that policymakers may be nearing its aggressive rate hike campaign and are reviewing the cumulative impact of 425 basis points rate hikes.
Main deposit facility rate was revised higher by 25 basis points to record high 4.0% from -0.5% in June 2022,
Main refinancing operation and marginal lending facility rates were revised higher by 25 basis points to 4.5% and 4.75% respectively.
Asia Market Indexes
In Friday's trading, the Nikkei index increased 1.1% to 33,533.09, the Shanghai SSE Composite index decreased 0.3% to 3,117.34, the Hang Seng index added 1% to 18,226.58 and the KOSPI index increased 1.1% to 2,601.28.
Despite the tough talks from the finance ministry officials, the Japanese yen continued to drift lower and traded at 147.70 against the U.S. dollar in Tokyo.
Investors bid up stocks in Mumbai and bond yield edged lower after the release of inflation reports this week.
Popular market indexes edged higher to new records following the easing of wholesale price consumer price inflation, but rising oil prices in international markets kept gains in check.
Market sentiment was positive and the Sensex and the Nifty indexes extended gains for the third week in a row after falling in previous six weeks in a row.
For the week, the Nikkei index jumped 2.8%, the SSE Composite index edged lower 0.06%, the Hang Seng index added 1.6% and the KOSPI index added 2.1%.
In August, the Nikkei index fell 0.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.
Broad Rally On Wall Street Lifted Market Indexes, Arm IPO Raised $4.9 B
Barry Adams
14 Sep, 2023
New York City
Broad rally on Wall Street gathered steam after Arm successfully priced its initial public offering and investors digested news on the economy.
The UK-based chip design company Arm priced its initial public offering at the top end of its pricing range between $47 and $51.
Arm sold 95.5 million shares and raised $4.9 billion at $51 billion market capitalization.
August retail sales rose suggesting that consumer spending is resilient despite higher prices and higher rates and wholesale prices accelerated but not fast enough so that economy slows too fast.
Investors have been divided over the future direction and terminal level of interest rate as economy keeps sending mixed signals.
Despite elevated prices and borrowing costs, consumer spending is resilient and housing market continues to report transactions levels that are above Covid-19 levels.
The Federal Reserve is expected pause rate hike after it policy meeting next week, but the European Central Bank lifted its policy rates to record levels after hiking rates by 25 basis points.
However, the ECB noted that inflation is easing and policymakers may be ready to pause rates after lifting rates for ten times in a row.
Retail Sales Inched Higher In August
Retail sales increased 0.6% from the previous month in August, faster increase than the downwardly revised 0.5% rise in July.
Retail sales are adjusted for seasonal factors but not for prices.
Despite higher prices and rising costs, consumer spending continues to rise supported by higher wages.
Sales at gasoline stations increased 6.2% after gasoline prices rose 10%.
Retail sales excluding fuel, food services, automobiles and building materials, increased 0.1% in August.
On a yearly basis, retail sales to 2.47% in August, slower than 2.67% in the previous month.
Producer Prices Index Accelerated In August
Producer price index in August rose 0.7% from the previous month, faster than 0.4% in July, the U.S. Bureau of Labor Statistics reported Thursday.
Goods prices increased 2%, driven by a 10.5% rise in energy costs and prices for services edged up 0.2%, largely because of rising transportation and warehousing costs by 1.4%.
Core wholesale inflation, which excludes energy and food, rose 0.2%, following a rise of 0.4% in July.
From a year ago, producer price index increased a four-month high of 1.6% and core index rose 2.2%, the weakest level since January 2021.
U.S. Indexes & Yields
The S&P 500 index inched up 0.4% to 4,483.21 and the Nasdaq Composite added 0.2% to 13,834.97.
The yield on 2-year Treasury notes hovered near 5.01%, 10-year Treasury notes inched slightly higher to 4.28% and 30-year Treasury bonds edged up to 4.38%.
Crude oil increased $1.13 to $89.65 a barrel and natural gas prices increased 10 cents to $2.78 a thermal unit.
The dollar index edged higher to 105.22, the level last seen in March but higher than the low of 99.85 on July 13.
Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
U.S. Stock Movers
AMC Entertainment Holdings Inc gained 3.3% to $8.52 after the company said it completed said it completed secondary stock offering announced few weeks ago.
AMC raised $325.5 million through the sale of 40 million shares at an average price of $8.14.
Yum China Holdings Inc 5.2% to $56.0 after the company forecasted 20,000 restaurants in China by 2026 at a gathering of investors.
Semtech Corp jumped 4.6% to $23.90 after the company reported better-than-expected quarterly results and current quarter forecast.
The company estimated fiscal third quarter revenue in the range between $190 million and $210 million and loss per share between 9 cents and 22 cents.
Energy stocks traded higher after crude oil traded at a 2023 high on supply worries after Saudi Arabia and Russia announced to extend voluntary production cuts till the end of 2023.
West Texas Intermediate crude oil price jumped to $89.98 and Brent crude advanced to $93.27 a barrel.
Chevron, ExxonMobil, Murphy Oil, Occidental Petroleum rose between 1% and 2%.
Delta Air Lines, Inc decreased 0.8% to $39.22 after the company joined other airlines and lowered its profit estimate citing higher operating and fuel costs.
The airline said third quarter adjusted earnings per share to fall between $1.86 and $2.05 compared to the previous estimate between $2.20 and $2.50.
The airline however raised its revenue growth estimate to be closer to its upper end of the range between 11% and 14%, because of the strong demand for transatlantic travel.
The company also reiterated its full-year adjusted earnings per share to fall between $6 and $7.
ECB Lifted Rates to Record High and Signaled May Pause
European markets traded sideways ahead of the rate decisions and inflation data.
The European Central Bank raised rates by 25 basis points for its three key lending services as widely expected.
The central bank policymakers lifted rates for the 10th time in a row and added inflation is likely to stay too high for too long.
After the increase, the ECB's main refinancing rate rose to a 22-year high to 4.5% and deposit rate to a new record high of 4.0%. Marginal lending facility rate was revised higher by the same amount to 4.75%.
Despite multiple rate hikes by the central bank inflation has hovered near 5% and significantly ahead of the central bank's target rate of 2%.
The ECB has raised rates at the end of every policy meeting held since July and cumulatively increased 450 basis points since July 2022.
The ECB also revised higher its 2023 inflation projection to 5.6% and 3.2% for 2024, reflecting a rebound in energy prices.
The central bank also revised down its estimate of annual core inflation in 2023 to 5.1%, in 2024 to 2.9% and in 2025 to 2.2%.
The central bank also confirmed that its asset purchase program portfolio is declining at a "measured and predictable pace" and the bank is no longer reinvesting principal payments from maturing securities.
Europe Indexes & Yields
The DAX index increased 1.0% to 15,805.29, the CAC-40 index increased 1.2% to 7,308.67 and the FTSE 100 index inched up 1.85% to 7,673.08.
The yield on 10-year German bonds increased to 2.64%, French bonds traded higher to 3.19%, the UK gilts edged up to 4.33% and Italian bonds rose to 4.44%.
The euro edged lower to a three-month low to $1.076, the British pound to $1.246 and the U.S. dollar fetched 89.34 Swiss cents.
Brent crude decreased $1.76 to $93.64 a barrel and the Dutch TTF natural gas decreased €1.35 to €35.62 per MWh.
Europe Stock Movers
Air Liquide SA declined 0.4% to €163.66 and the company announced to invest €400 million to build 200 MW Normad'Hy electrolyzer.
Trainline Plc soared 11.2% to 275.40 pence after the online rail ticketing service provider announced a £50 million stock repurchase plan after reporting better-than-expected first-half results.
IG Group Holdings plc inched higher 1.4% to 677.0 pence after the online trading platform reported a marginal increase in its fiscal first quarter revenue.
LondonMetric Property plc decreased 0.9% to 173.60 pence after the company announced the sale of a portfolio of industrial estates to Hines for £40.5 million.
Nordex SE jumped 4.8% to €11.92 after the wind turbine maker won orders in Spain to supply and install 24 N163 turbines to the renewable energy company BayWa r.e.
Automakers across Europe declined after Beijing blasted the European Commission's investigation into Chinese subsidies to electric vehicle makers.
BMW, Renault, Volkswagen and Mercedes Benz declined between 2% and 3% on the worries of a Chinese retaliation against the European automakers.
ThyssenKrupp AG decreased 2.3% to €7.0 after the company said it plans to reorganize its businesses around key technologies that promote decarbonization.
U.S. Movers: AMC Entertainment, Delta Air Lines, Energy Stocks, Semtech, Yum China
Scott Peters
14 Sep, 2023
New York City
AMC Entertainment Holdings Inc gained 3.3% to $8.52 after the company said it completed secondary stock offering announced few weeks ago.
AMC raised $325.5 million through the sale of 40 million shares at an average price of $8.14.
Yum China Holdings Inc 5.2% to $56.0 after the company forecasted 20,000 restaurants in China by 2026 at a gathering of investors.
Semtech Corp jumped 4.6% to $23.90 after the company reported better-than-expected quarterly results and current quarter forecast.
The company estimated fiscal third quarter revenue in the range between $190 million and $210 million and loss per share between 9 cents and 22 cents.
Energy stocks traded higher after crude oil traded at a 2023 high on supply worries after Saudi Arabia and Russia announced to extend voluntary production cuts till the end of 2023.
West Texas Intermediate crude oil price jumped to $89.98 and Brent crude advanced to $93.27 a barrel.
Chevron, ExxonMobil, Murphy Oil, Occidental Petroleum rose between 1% and 2%.
Delta Air Lines, Inc decreased 0.8% to $39.22 after the company joined other airlines and lowered its profit estimate citing higher operating and fuel costs.
The airline said third quarter adjusted earnings per share to fall between $1.86 and $2.05 compared to the previous estimate between $2.20 and $2.50.
The airline however raised its revenue growth estimate to be closer to its upper end of the range between 11% and 14%, because of the strong demand for transatlantic travel.
The company also reiterated its full-year adjusted earnings per share to fall between $6 and $7.
Market Averages Rebounded After Resilient Consumer Spending Data
Barry Adams
14 Sep, 2023
New York City
Market indexes on Wall Street rebounded after weak trading for three days in a row and investors reviewed retail sales and wholesale inflation data.
Investors have been divided over the future direction and terminal level of interest rate as economy keeps sending mixed signals.
Despite elevated prices and borrowing costs, consumer spending is resilient and housing market continues to report transactions levels that are above Covid-19 levels.
The Federal Reserve is expected pause rate hike after it policy meeting next week, but the European Central Bank lifted its policy rates to record levels after hiking rates by 25 basis points.
However, the ECB noted that inflation is easing and policymakers may be ready to pause rates after lifting rates for ten times in a row.
Retail Sales Inched Higher In August
Retail sales increased 0.6% from the previous month in August, faster increase than the downwardly revised 0.5% rise in July.
Retail sales are adjusted for seasonal factors but not for prices.
Despite higher prices and rising costs, consumer spending continue to rise supported by higher wages.
Sales at gasoline stations increased 6.2% after gasoline prices rose 10%.
Retail sales excluding fuel, food services, automobiles and building materials, increased 0.1% in August.
On a yearly basis, retail sales to 2.47% in August, slower than 2.67% in the previous month.
Producer Prices Index Accelerated In August
Producer price index in August rose 0.7% from the previous month, faster than 0.4% in July, the U.S. Bureau of Labor Statistics reported Thursday.
Goods prices increased 2%, driven by a 10.5% rise in energy costs and prices for services edged up 0.2%, largely because of rising transportation and warehousing costs by 1.4%.
Core wholesale inflation, which excludes energy and food, rose 0.2%, following a rise of 0.4% in July.
From a year ago, producer price index increased a four-month high of 1.6% and core index rose 2.2%, the weakest level since January 2021.
U.S. Indexes & Yields
The S&P 500 index inched up 0.4% to 4,483.21 and the Nasdaq Composite added 0.2% to 13,834.97.
The yield on 2-year Treasury notes hovered near 5.01%, 10-year Treasury notes inched slightly higher to 4.28% and 30-year Treasury bonds edged up to 4.38%.
Crude oil increased $1.13 to $89.65 a barrel and natural gas prices increased 10 cents to $2.78 a thermal unit.
The dollar index edged higher to 105.22, the level last seen in March but higher than the low of 99.85 on July 13.
Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
U.S. Stock Movers
AMC Entertainment Holdings Inc gained 3.3% to $8.52 after the company said it completed said it completed secondary stock offering announced few weeks ago.
AMC raised $325.5 million through the sale of 40 million shares at an average price of $8.14.
Yum China Holdings Inc 5.2% to $56.0 after the company forecasted 20,000 restaurants in China by 2026 at a gathering of investors.
Semtech Corp jumped 4.6% to $23.90 after the company reported better-than-expected quarterly results and current quarter forecast.
The company estimated fiscal third quarter revenue in the range between $190 million and $210 million and loss per share between 9 cents and 22 cents.
Energy stocks traded higher after crude oil traded at a 2023 high on supply worries after Saudi Arabia and Russia announced to extend voluntary production cuts till the end of 2023.
West Texas Intermediate crude oil price jumped to $89.98 and Brent crude advanced to $93.27 a barrel.
Chevron, ExxonMobil, Murphy Oil, Occidental Petroleum rose between 1% and 2%.
Delta Air Lines, Inc decreased 0.8% to $39.22 after the company joined other airlines and lowered its profit estimate citing higher operating and fuel costs.
The airline said third quarter adjusted earnings per share to fall between $1.86 and $2.05 compared to the previous estimate between $2.20 and $2.50.
The airline however raised its revenue growth estimate to be closer to its upper end of the range between 11% and 14%, because of the strong demand for transatlantic travel.
The company also reiterated its full-year adjusted earnings per share to fall between $6 and $7.
Europe Movers: Automakers, Air Liquide, IG Group, LondonMetric Property, Nordex, Trainline, ThyssenKrupp
Inga Muller
14 Sep, 2023
Frankfurt
European markets lacked direction and the European Central Bank lifted three key lending rates by 25 basis points, 10th rate increase in a row.
The DAX index decreased 0.06% to 15,646.76, the CAC-40 index increased 0.07% to 7,227.50 and the FTSE 100 index inched up 0.7% to 7,575.60.
Air Liquide SA declined 0.4% to €163.66 and the company announced to invest €400 million to build 200 MW Normad'Hy electrolyzer.
Trainline Plc soared 11.2% to 275.40 pence after the online rail ticketing service provider announced a £50 million stock repurchase plan after reporting better-than-expected first-half results.
IG Group Holdings plc inched higher 1.4% to 677.0 pence after the online trading platform reported a marginal increase in its fiscal first quarter revenue.
LondonMetric Property plc decreased 0.9% to 173.60 pence after the company announced the sale of a portfolio of industrial estates to Hines for £40.5 million.
Nordex SE jumped 4.8% to €11.92 after the wind turbine maker won orders in Spain to supply and install 24 N163 turbines to the renewable energy company BayWa r.e.
Automakers across Europe declined after Beijing blasted the European Commission's investigation into Chinese subsidies to electric vehicle makers.
BMW, Renault, Volkswagen and Mercedes Benz declined between 2% and 3% on the worries of a Chinese retaliation against the European automakers.
ThyssenKrupp AG decreased 2.3% to €7.0 after the company said it plans to reorganize its businesses around key technologies that promote decarbonization.
ECB Lifts Rates to Record Levels Citing Persistent High Inflation
Bridgette Randall
14 Sep, 2023
New York City
European markets traded sideways ahead of the rate decisions and inflation data.
The European Central Bank raised rates by 25 basis points for its three key lending services as widely expected.
The central bank policymakers lifted rates for the 10th time in a row and added inflation is likely to stay too high for too long.
After the increase, the ECB's main refinancing rate rose to a 22-year high to 4.5% and deposit rate to a new record high of 4.0%. Marginal lending facility rate was revised higher by the same amount to 4.75%.
Despite multiple rate hikes by the central bank inflation has hovered near 5% and significantly ahead of the central bank's target rate of 2%.
The ECB has raised rates at the end of every policy meeting held since July and cumulatively increased 375 basis points since July 2022.
The ECB also revised higher its 2023 inflation projection to 5.6% and 3.2% for 2024, reflecting a rebound in energy prices.
The central bank also revised down its estimate of annual core inflation in 2023 to 5.1%, in 2024 to 2.9% and in 2025 to 2.2%.
The central bank also confirmed that its asset purchase program portfolio is declining at a "measured and predictable pace" and the bank is no longer reinvesting principal payments from maturing securities.
Europe Indexes & Yields
The DAX index decreased 0.06% to 15,646.76, the CAC-40 index increased 0.07% to 7,227.50 and the FTSE 100 index inched up 0.7% to 7,575.60.
The yield on 10-year German bonds increased to 2.64%, French bonds traded higher to 3.19%, the UK gilts edged up to 4.33% and Italian bonds rose to 4.44%.
The euro edged lower to a three-month low to $1.076, the British pound to $1.246 and the U.S. dollar fetched 89.34 Swiss cents.
Brent crude decreased $1.21 to $93.07 a barrel and the Dutch TTF natural gas decreased €0.85 to €35.97 per MWh.
Europe Stock Movers
Air Liquide SA declined 0.4% to €163.66 and the company announced to invest €400 million to build 200 MW Normad'Hy electrolyzer.
Trainline Plc soared 11.2% to 275.40 pence after the online rail ticketing service provider announced a £50 million stock repurchase plan after reporting better-than-expected first-half results.
IG Group Holdings plc inched higher 1.4% to 677.0 pence after the online trading platform reported a marginal increase in its fiscal first quarter revenue.
LondonMetric Property plc decreased 0.9% to 173.60 pence after the company announced the sale of a portfolio of industrial estates to Hines for £40.5 million.
Nordex SE jumped 4.8% to €11.92 after the wind turbine maker won orders in Spain to supply and install 24 N163 turbines to the renewable energy company BayWa r.e.
Automakers across Europe declined after Beijing blasted the European Commission's investigation into Chinese subsidies to electric vehicle makers.
BMW, Renault, Volkswagen and Mercedes Benz declined between 2% and 3% on the worries of a Chinese retaliation against the European automakers.
ThyssenKrupp AG decreased 2.3% to €7.0 after the company said it plans to reorganize its businesses around key technologies that promote decarbonization.
Global Markets: U.S Markets Advanced, Europe On Hold, Japan and India Indexes Hovered Near Record Highs
Barry Adams
13 Sep, 2023
New York City
Market indexes on Wall Street traded higher after investors reviewed the latest inflation report.
Investors overlooked mixed signals from the August month inflation report after price rose at a faster pace month because of a surge in gasoline prices but prices for other products and services rose at a slower pace.
Attention on Wall Street now shifted to the wholesale inflation report Thursday and and retail sales data on Friday.
Housing stocks were in focus after weekly mortgage activities indicated weakening demand for mortgage refinancing and elevated mortgage rates put buyers and sellers on hold.
European markets were in holding pattern ahead of rate decisions on Thursday and markets in Japan and India advanced but in China remained under pressure for the second week in a row.
August CPI Report Sends Mixed Signals
Overall inflation accelerated for the second month in August to 3.7% from 3.2% in July, the U.S. Bureau of Labor Statistics reported Wednesday.
The inflation picked up following the increase in oil prices in the last two months and weaker comparison from the previous year and cost of transportation services picked up in the month.
Core inflation, which excludes energy and food, slowed for the fifth month in a row to 4.3% from a year ago and rose 0.3% from the previous month.
The inflation data measured by the government understates the price increases faced my most urban families with children. The government data vastly understates housing price inflation and cost of shelter in most urban cities across the nation.
Overall inflation faced my most families, when including home price inflation, could run into upper double digits.
The yield on U.S. Treasury bonds and notes were nearly unchanged after the release of consumer price inflation data and focus shifted to wholesale price inflation data scheduled to be released on Thursday.
Despite multiple interest rate hikes over the last sixteen months, inflation has cooled largely because of base effect and rate of price increases has stayed above the Fed's preferred target range of 2%.
Mortgage Applications Drop to 25-year Low
Mortgage applications decreased 0.8% in the week ending September 8, 2023, following a 2.9% drop in the previous week, and reaching a new low since December 1996, the Mortgage Bankers Association data showed.
Mortgage refinance applications decreased 5.4% while for a new home purchase rose 1.3%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less edged up 6 basis points to 7.27%, the level not seen since December 2000.
"Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate,” said Joel Kan, MBA's Vice President and Deputy Chief Economist.
U.S. Indexes & Yields
The S&P 500 index inched up 0.2% to 4,472.03 and the Nasdaq Composite added 0.3% to 13,809.52.
The yield on 2-year Treasury notes hovered near 5.01%, 10-year Treasury notes inched slightly higher to 4.28% and 30-year Treasury bonds edged down to 4.37%.
Crude oil increased $0.29 to $89.12 a barrel and natural gas prices increased 0.05 cent to $2.69 a thermal unit.
The dollar index edged lower to 104.62 mark and hovered near the 105 mark reached last week but higher than the low of 99.85 on July 13.
Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates.
U.S. Stock Movers
American Airlines Group Inc declined 4.5% to $13.42 after the international carrier said higher crude oil prices are expected to hurt quarterly profit.
The airline estimated third quarter adjusted earnings per share between 20 cents and 30 cents, citing higher fuel prices and a new compensation terms with pilot unions.
Spirit Airlines Inc dropped 3.3% to $16.70 after the discount carrier lowered its third quarter revenue estimate and operating margin of as much as -15.5% from the previous estimate of between -5.5% and -7.5%.
Moderna Inc increased 5.1% to $110.82 after the Center for Disease Control and Prevention recommended new Covid 19 vaccine for all Americans older than 6 months and older.
European Markets Hold Ahead of Rate Decisions
Stock markets in Europe traded down after weak regional economic data added to investor anxieties ahead of interest rate decisions on Thursday.
Popular indexes in Frankfurt, London and Paris eased lower and the euro dropped to a three-month low ahead of the widely anticipated 25 basis points rate hike by the European Central Bank.
Euro Area Industrial Production Declined In July
Industrial output in the Euro Are declined 1.1% from the previous month in July, Eurostat reported Wednesday.
The weakness in durable goods production overshadowed the increase in energy production and the rebound in intermediate goods and non-durable goods output.
Industrial production declined 2.2% in July, and fell for the fifth month in a row and fell six months in the last nine months.
UK GDP Shrank In July
The U.K. economy shrank at the fastest pace in seven months in July, the Office for National Statistics reported Wednesday.
Weakness in the service sector of 0.5% was the main contributor to the decline in overall activities, driving the weakness in healthcare and computer programming related activities.
GDP decreased 0.5% from the previous month reversing the gain of 0.5% in June.
For the three months to July, GDP expanded 0.2%.
Europe Indexes & Yields
The DAX index decreased 0.5% to 15,663.17, the CAC-40 index eased 0.1% to 7,269.66 and the FTSE 100 index inched down 0.02% to 7,525.99.
The yield on 10-year German bonds increased to 2.68%, French bonds traded higher to 3.22%, the UK gilts edged up to 4.41% and Italian bonds rose to 4.47%.
The euro edged lower to a three-month low to $1.071, the British pound to $1.243 and the U.S. dollar fetched 89.25 Swiss cents.
Brent crude decreased $0.24 to $92.36 a barrel and the Dutch TTF natural gas decreased €2.48 to €37.18 per MWh.
Europe Stock Movers
Inditex SA decreased 2.4% to €35.05 despite the parent of Zara reporting a 40% jump in profit in the first-half.
BP Plc decreased 1.2% to 516.30 pence and chief executive Bernard Looney resigned over personal relationships with colleagues.
Renault SA advanced 1.9% to €37.43 and the European Commission launched an investigation into subsidies received by electric vehicle makers in China.
Europe is "Open to competition but not for a race to the bottom," said European Commission President Ursula von der Leyen.
Hunting Plc jumped 4.4% to 270.50 pence after the engineering company reiterated its fiscal 2023 and 2024 outlook and forecasted growth for the rest of the decade.
Aviva Plc rose 2.9% to 387.20 pence after the British insurance company said it plans to exit from its Singlife joint venture.
Aviva plans to sell its 25.9% stake in Singapore Life Holdings and two debt securities to Japan based Sumitomo Life for £800 million.
Nikkei Extended 4-day Rally, China Indexes Struggled
Stocks in Asia traded mixed after the benchmark index in Tokyo advanced nearly 1% and in India traded hear record highs.
The Nikkei index in Tokyo advanced as investors piled into banks on the hopes that the Bank of Japan will soon shift its yield curve management and close yield gap with other advanced economies.
In Tuesday's trading. the yield on 20-year and 30-year Japanese Government Bonds rose as high as 1.47% and 1.725% respectively, highs not seen in nine years.
The yield on newly issued 10-year Japanese Government Bond rose to 0.72%, a level not seen since 2014 after the Bank of Japan Governor signaled tolerance for higher rates last week.
In economic news, Japan's producer price index, a measure of wholesale price inflation, declined for the eighth month in a row.
Producer price index in Japan rose 3.2% from a year ago in August, slowing from a downwardly revised 3.4% increase in July and dropping to the lowest level since March 2021.
Market indexes in China lacked direction after indexes declined for five days in a row in Hong Kong.
The Hang Seng index traded as high as 1% in earlier trading before reversing the direction on the hopes that the recent restriction of new public offering by the Chinese regulators may lift market indexes higher.
The number of new listings in September have fallen to 8 from 37 in July and 33 in June, according to data available from Post, Bloomberg and KPMG.
The new issue market in A-shares on Chinese exchanges raised about 30% less in the first half compared to last year, despite more companies completing public offering.
Asia Market Indexes
In Wednesday's trading, the Nikkei index increased 0.95% to 32,776.37, the Shanghai SSE Composite index jumped 0.2% to 3,137.06, the Hang Seng index declined 0.2% to 17,992.98 and the KOSPI index decreased 0.8% to 2,536.58
Stocks in Mumbai lacked direction and popular market indexes hovered near record highs.
Consumer price inflation in August eased to 6.83% in August from 7.44% in July, the MOSPI reported Wednesday.
The Sensex index decreased 18.16 points to 67,202.98 and the Nifty index fell 9.40 points to 19,986.30.
On the Mumbai stock exchange, 83 stocks traded at their 52-week highs and 14 traded at their 52-week lows.
In August, the Nikkei index fell 0.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.
WestRock and Smurfit Kappa Merger to Create Paper and Packaging Giant
Scott Peters
12 Sep, 2023
New York City
WestRock agreed to merge with Smurfit Kappa and form one of the largest packaging companies in the world.
Smurfit WestRock, the newly formed holding company will be headquartered in Dublin, Ireland and will be listed on the London Stock Exchange and the New York Stock Exchange.
WestRock stockholders will receive one Smurfit WestRock share and $5 cash and Smurfit Kappa shareholders will receive one share of the newly formed company.
Smurfit Kappa shareholders will own 50.4% of the newly merged company.
The combined packaging company will have about $34 billion in annual sales with about 65% of the revenue located in the Americas.
WestRock jumped 7.7% to $36.75 and Smurfit Kappa Group Plc declined 8.0% in London trading to 2,824.0 pence.
Smurfit Kappa has regional headquarters in Amsterdam, Holland and Miami, Florida.
August Inflation Report Shows Diverging Overall and Core Rates
Brian Turner
13 Sep, 2023
New York City
Overall inflation accelerated for the second month in August to 3.7% from 3.2% in July, the U.S. Bureau of Labor Statistics reported Wednesday.
The inflation picked up following the increase in oil prices in the last two months and weaker comparison from the previous year and cost of transportation services picked up in the month.
Core inflation, which excludes energy and food prices, slowed for the fifth month in a row to 4.3% from a year ago and rose 0.3% from the previous month.
Higher gas prices dominated the overall price increases but core inflation rate rose at the slowest pace in two years, but still faster than the Fed's target of 2%.
On a monthly basis, overall inflation rose 0.6%, the largest increase in more than a year after gasoline prices jumped 10.6% from the previous month.
Gasoline prices at pump stations have at least stabilized in the last two weeks and the AAA said gasoline prices averaged $3.84 on Tuesday, nearly unchanged from the previous month.
The inflation data measured by the government understates the price increases faced my most urban families with children. The government data vastly understates housing price inflation and cost of shelter in most urban cities across the nation.
Overall inflation faced my most families, when including home price inflation, could run into upper double digits.
The yield on U.S. Treasury bonds and notes were nearly unchanged after the release of consumer price inflation data and focus shifted to wholesale price inflation data scheduled to be released on Thursday.
Despite multiple interest rate hikes over the last sixteen months, inflation has cooled largely because of base effect and rate of price increases has stayed above the Fed's preferred target range of 2%.
U.S. Movers: American Airlines Group, Moderna, Spirit Airlines
Scott Peters
13 Sep, 2023
New York City
U.S. stocks and Treasury yields lacked direction after the consumer price inflation accelerated in August and core inflation eased on an annual basis.
The S&P 500 index inched up 0.2% to 4,472.03 and the Nasdaq Composite added 0.3% to 13,809.52.
American Airlines Group Inc declined 4.5% to $13.42 after the international carrier said higher crude oil prices are expected to hurt quarterly profit.
The airline estimated third quarter adjusted earnings per share between 20 cents and 30 cents, citing higher fuel prices and a new compensation terms with pilot unions.
Spirit Airlines Inc dropped 3.3% to $16.70 after the discount carrier lowered its third quarter operating margin of as much as -15.5% from the previous estimate of between -5.5% and -7.5%.
The discount airline lowered its third quarter revenue range between $1.245 billion and $1.255 billion from the previous estimate between $1.30 billion and $1.32 billion.
Moderna Inc increased 5.1% to $110.82 after the Center for Disease Control and Prevention recommended company's new Covid-19 vaccine for all Americans older than 6 months and older.