Market Update
March PPI Unexpectedly Declined
Brian Turner
13 Apr, 2023
New York City
The producer price index in March fell 0.5% from the previous month, the U.S. Bureau of Labor Statistics reported Thursday.
Core wholesale prices paid by companies decreased 0.1% on a monthly basis after rising 0.2% in February.
Wholesale prices rose 2.7% on an annual basis in March and core prices, excluding food and energy, increased 3.4%.
Annual increase in March, was the smallest since January 2021, followed by 4.9% in February.
Lower cost of energy and higher base also impacted the overall inflation reading. Two-thirds of the decline can be attributable to 1.0% decrease in final demand for goods, namely gasoline or energy materials.
Eighty percent of the March decline in the index for final demand goods can be traced to an 11.7% decline in prices for gasoline.
The prices of diesel fuel, residential natural gas, jet fuel, electric power, and fresh and dry vegetables also fell.
Stocks Rebound After Wholesale Inflation Cooled In March
Barry Adams
13 Apr, 2023
New York City
Stocks looked up on Wall Street after wholesale inflation cooled more than expected in March, a second inflation report confirming the slowing inflation trend.
The measure of wholesale prices eased in March largely because of a significant decline in energy prices and higher base effect.
The second inflation report in as many days confirmed that the inflation path is downward but prices are still rising and at faster rates than preferred by the Federal Reserve.
Moreover, real interest rates are still negative and not restrictive and labor market conditions are still tight, supporting the case for higher interest rates.
Despite the cooling of inflation, policymakers are likely to lift rates higher by 25 basis points in early May, because stubborn inflation pressures are well anchored in the economy.
March Wholesale Price Index Eased
The producer price index in March fell 0.5% from the previous month, the U.S. Bureau of Labor Statistics reported Thursday. Core wholesale prices paid by companies decreased 0.1% on a monthly basis after rising 0.2% in February.
Wholesale prices rose 2.7% on an annual basis in March and core prices, excluding food and energy, increased 3.4%.
Lower cost of energy and higher base also impacted the overall inflation reading. Two-thirds of the decline can be attributable to 1.0% decrease in final demand for goods, namely gasoline or energy materials.
U.S. Indexes & Yields
The S&P 500 index increased 0.3% to 4,103.01 and the Nasdaq Composite index added 0.8% to 12,030.04.
The yield on 2-year Treasury notes decreased to 3.93%, 10-year Treasury notes declined to 3.39% and 30-year Treasury bonds to 3.63%.
Crude oil edged lower 2 cents to $83.24 a barrel and natural gas futures for immediate month delivery fell 2 cents to $2.06 a thermal unit.
U.S. Stock Movers
Delta Air Lines, Inc increased 0..2% to $33.87 after the company forecasted June quarter earnings per share between $2.0 and $2.25 and full-year earnings per share between $5.0 and $6.0 and free cash flow of $2.0 billion.
"With record advance bookings for the summer, we expect June quarter revenue to be 15% to 17% higher on capacity growth of 17% year over year," said Glen Hauenstein, Delta's president.
Delta said March quarter operating revenue rose 36% to $12.8 billion and net loss shrank 61% to $363 million from $940 million and diluted loss per share fell to 57 cents from $1.48 a year ago.
Delta's strong summer booking lifted United Airlines Holdings by 1.4% and American Airlines Group by 0.6%.
Infosys Ltd declined 8.2% to %15.69 after the India-based global tech services provider reported weaker-than-expected quarterly results.
Revenue in the March quarter increased 6.4% to $4.6 billion and net income declined to $744 million from $752 million and diluted earnings per share held at 18 cents.
For the fiscal year 2023, revenue increased 11.7% to $18.2 billion and net income was stable at $2.9 billion and diluted earnings per share was 71 cents compared to 70 cents a year ago.
The company guided fiscal year 2024 revenue to rise between 4% and 7% in constant currency and operating margin between 20% and 22%.
French Index Hits New High, German Index Extends 2023 Gain
Bridgette Randall
13 Apr, 2023
Frankfurt
European market indexes traded at one-month high as investors looked beyond the recent banking crisis and scaled new peaks in Germany and France.
The German benchmark index traded above 15,700 and extended this year's gain to 11.7% and the French index traded at a new high and extended 2023's gain to 13.3%.
Investors have been bidding up stocks after months of inflation and economic slowdown worries. The elevated inflation and economic slowdown are not preventing large corporations from reporting rising sales and profits.
LVMH, the largest luxury products maker in the world reported a surge in first quarter sales and the British grocery store Tesco forecasted flat profit in the new fiscal year.
German Inflation In March Weakened but Stayed Elevated
German inflation rate weakened in March but stayed elevated, the latest data from Destatis showed Thursday.
Consumer price index in March rose at a slower annual pace of 7.4%, after rising at 8.4% in February and January.
On a monthly basis, the inflation index rose 0.8%.
On a harmonized basis, the inflation index increased 7.8% from a year ago and 1.1% from the previous month.
"The inflation rate has weakened, but remains at a high level," says Ruth Brand, President of the Federal Statistical Office.
Food price increase accelerated to 22.3% in March, following 21.8% in February and 20.2% in January.
Inflation in March excluding energy prices was 7.8% and excluding food and energy prices was 5.8%.
UK Economy Stagnates After Strikes Dip Service Output
The UK economy stagnated in February and January's growth was upwardly revised to 0.4%, the Office for National Statistics reported Thursday.
Growth in January was revised up from the previous estimate of 0.3% increase.
GDP increased 0.1%% in the three months to February and ahead by 0.3% to the pre-coronavirus levels.
Industrial production declined 0.2% in February after falling 0.5% in January but services output fell 0.1% following strikes in education and public sector following the rise of 0.7% in January respectively.
On a yearly basis, GDP accelerated 0.5% in February after rising at 0.4% in January.
Europe Indexes & Yields
The DAX index decreased 12.69 points to 15,690.25, the CAC-40 index added 0.9% to 7,465.47 and the FTSE 100 index gained 0.91 points to 7,825.75.
The yield on 10-year German Bunds held at 2.36%, French bonds at 2.88%, the UK gilts at 3.57% and Italian bonds at 4.22%.
The euro inched higher to $1.10, the British pound edged higher to $1.25 and the Swiss franc edged up to 89.08 cents.
Brent crude oil fell 64 cents to $86.68 a barrel and the Dutch TTF natural gas fell 88 cents to Є42.0 per MWh.
Europe Movers
Oxford Instruments Plc increased 3.9% to 2,540.0 pence after the maker of advanced technology products for industrial companies said sales are ahead of expectations in the current fiscal year.
LVMH Moet Hennessy Louis Vuitton SE increased 4.4% to €873.30 after the luxury products maker said first quarter sales increased 17% from a year ago partly driven by the surge in China demand and the rebound in international travel.
Imperial Brands Plc decreased 1.4% to 1,851.50 pence after the cigarette maker forecasted a decline in first-half revenue following its exit from Russia.
Tesco Plc increased 1.7% to 272.0 pence after the UK-based grocer reported a rise in annual sales. The company also forecasted flat profit in the new fiscal year.
Revenue in the fiscal year 2023 ending in February rose to £65.8 billion from £61.3 billion and after-tax net income declined to £744 million from £1.48 billion and diluted earnings per share fell to 10.08 pence from 19.64 pence a year ago.
"We expect to be able to deliver a broadly flat level of retail adjusted operating profit in 2023-24 and retail free cash flow within our target range of £1.4 billion to £1.8 billion," said the company in the earnings statement released Thursday.
Europe Movers: LVMH, Mercedes Benz, Petrofac, Resource Stocks, Volvo
Bridgette Randall
12 Apr, 2023
Frankfurt
Resource companies led the gainers for the second day this week after the dollar eased and commodities prices advanced.
Antofagasta and Glencore advanced between 1% and 2% and BP Plc and Shell Plc advanced between 0.5% and 0.7%.
Petrofac Limited declined 13% to 63.05 pence after the oilfield services provider estimated full-year 2022 operating loss between $150 million and $170 million driven by an operating loss between $240 million and $260 million in its engineering and construction division.
Volvo AB Class B share increased 7.4% to kr208.65 after the vehicle and industrial equipment company reported record first-half profit on higher revenue and margins.
LVMH Moet Hennessy Louis Vuitton SE decreased 0.4% to €836.60 after the luxury products maker said revenue in the first quarter increased 17% to €21 billion.
Fashion and leather goods sales advanced 18% to €10.7 billion and the Selective Retailing group, which includes Sephora and DFS shops at airports, surged 30% to €3.9 billion.
"Europe and Japan, which enjoyed strong growth momentum, benefited from robust demand from local customers and international travelers; the United States, a market which continues to grow, had a steady performance. Asia experienced a significant rebound following the lifting of health restrictions," said the company in its quarterly statement released Wednesday.
Mercedes Benz AG increased 0.7% to €69.34 after the luxury automaker reported moderate increase in sales.
Mercedes Benz car sales increased 3% in the first quarter to 503,500 units driven by an 89% jump in battery electric vehicles to 51,600 units.
Battery electric vehicle sales reached 10% of overall sales compared to 6% in the year ago quarter.
Resource and Luxury Stocks Lead European Markets Higher
Bridgette Randall
13 Apr, 2023
Frankfurt
European markets advanced after the U.S. dollar inched lower and commodities prices traded up.
The U.S. dollar extended its 5-week slump and crude oil and base metal prices edged higher.
The euro, the British pound and the Swiss franc continued to gain.
Inflation in the eurozone is at a risk of getting entrenched at a higher rate than 2% preferred by the central banks and the core inflation trajectory and the future rate path direction in the next few months will determine the outcome in the long term, Bank of France Governor Francois Villeroy de Galha said Tuesday.
Investors focused on how policymakers tackle the balancing of economic growth and curb inflation and maintain stability of the financial system.
The IMF lowered its annual global growth forecast to 2.8% from the previous estimate of 2.9% and inflation to 7.0% from 8.7% estimated in January.
The economic slowdown is largely concentrated in the advanced economies and the Euro Area growth was revised to 0.8% from 1.4% and in the UK to -0.3% from 1.0% from the previous estimate.
The inflation is still stubbornly high and the core rate of inflation is accelerating, said the IMF Director of Research Pierre-Olivier Gourinchas.
“We expect year-end to year-end core inflation will slow to 5.1% this year, a sizable upward revision of 0.6 percentage points from our January update, and well above target”, said Director of Research Gourinchas.
Europe Indexes & Yields
The DAX index increased 0.3% or 48.4 points to 15,703.60, the CAC-40 index advanced 6.6 points to 7,396.94 and the FTSE 100 index jumped 0.5% or 39.12 points to 7,396.94.
The yield on 10-year German Bunds rose to 2.37%, French bonds inched up to 2.88%, the UK gilts to 3.57% and Italian bonds to 4.21%.
The euro inched higher to $1.09, the British pound to $1.24 and the Swiss franc to 89.55 cents.
Brent crude oil increased $1.81 to $87.41 a barrel and the Dutch TTF natural gas fell 79 cents to Є42.90 per MWh.
Europe Stock Movers
Resource companies led the gainers for the second day this week after the dollar eased and commodities prices advanced.
Antofagasta and Glencore advanced between 1% and 2% and BP Plc and Shell Plc advanced between 0.5% and 0.7%.
Petrofac Limited declined 13% to 63.05 pence after the oilfield services provider estimated full-year 2022 operating loss between $150 million and $170 million driven by an operating loss between $240 million and $260 million in its engineering and construction division.
Volvo AB Class B share increased 7.4% to kr208.65 after the vehicle and industrial equipment company reported record first-half profit on higher revenue and margins.
LVMH Moet Hennessy Louis Vuitton SE decreased 0.4% to €836.60 after the luxury products maker said revenue in the first quarter increased 17% to €21 billion.
Fashion and leather goods sales advanced 18% to €10.7 billion and the Selective Retailing group, which includes Sephora and DFS shops at airports, surged 30% to €3.9 billion.
"Europe and Japan, which enjoyed strong growth momentum, benefited from robust demand from local customers and international travelers; the United States, a market which continues to grow, had a steady performance. Asia experienced a significant rebound following the lifting of health restrictions," said the company in its quarterly statement released Wednesday.
Mercedes Benz AG increased 0.7% to €69.34 after the luxury automaker reported moderate increase in sales.
Mercedes Benz car sales increased 3% in the first quarter to 503,500 units driven by an 89% jump in battery electric vehicles to 51,600 units.
Battery electric vehicle sales reached 10% of overall sales compared to 6% in the year ago quarter.
Triton International Agreed to $13 Billion Deal from Brookfield Infrastructure
Scott Peters
12 Apr, 2023
New York City
Triton International Limited increased 32% to $83.05 after the company agreed to be acquired by a subsidiary of Brookfield Infrastructure.
The container leasing company agreed to a total consideration of $85.0 per common share, consisting of $68.50 in cash and $16.50 in BIPC class A share.
The deal values the company at $4.7 billion equity and for an enterprise valuation, which includes its total debt, of $13.3 billion.
The Brookfield offer provides a 35% premium to yesterday's closing price of $63.01.
Triton International revenue in 2022 increased 9.5% to $1.67 billion and adjusted net income attributable to common shareholders increased 14.4% to $702.8 million and diluted earnings per share rose 23.6% to $11.32.
In November 2015, Triton Container International Limited agreed to merge with TAL International Group in and create Triton International with 55% stake held by Triton and remaining controlled by TAL shareholders.
At the time of the merger, the two companies had a container portfolio of 2.4 million twenty-foot equivalent units each, which has since increased to a total of 7 million TEU.
Brookfield Infrastructure is a listed subsidiary of Brookfield Corporation, an alternative investment management company with $800 billion in assets under management.
The transaction is expected to close in the fourth quarter of 2023 and has been approved by the Board of Directors of Triton.
The transaction has also received all necessary approvals from Brookfield Infrastructure, is not subject to a financing condition, and does not require approval from Brookfield Infrastructure shareholders.
CPI Increase Slowed In March, Core Rate Advanced
Brian Turner
12 Apr, 2023
New York City
Consumer price index declined to an annual rate of 5% in March, according to the latest report released by the U.S. Bureau of Labor Statistics.
The March inflation on an annual basis was the smallest increase since May 2021 and the monthly rate of inflation fell to 0.1% from 0.4% in February.
Sharp decline in gasoline prices slowed the headline inflation but core inflation accelerated in the month to 5.6% from a year ago and rose 0.4% from the previous month on higher shelter costs.
Core rate of inflation increased for the first time in six months on the sustained increase in shelter prices.
Headline Inflation Cools but Stubborn Price Pressures Persist
Barry Adams
12 Apr, 2023
New York City
Benchmark indexes traded in a tight range after the consumer price index declined more than expected.
Consumer price index fell to 5.0% but the core rate of inflation increased, matching the expectations set by many economists.
The inflation index declined for the ninth month in a row but despite the cooling of inflation, prices are still growing at a faster pace than preferred by the Federal Reserve.
Consumer price Inflation Index Dropped In March
Consumer price index declined to an annual rate of 5% in March, according to the latest report released by the U.S. Bureau of Labor Statistics.
The March inflation on an annual basis was the smallest increase since May 2021 and the monthly rate of inflation fell to 0.1% from 0.4% in February.
Sharp decline in gasoline prices slowed the headline inflation but core inflation accelerated in the month to 5.6% from a year ago and rose 0.4% from the previous month on higher shelter costs.
Core rate of inflation increased for the first time in six months on the sustained increase in shelter prices.
U.S. Indexes & Yields
The S&P 500 index increased 0.2% to 4,115.49 and the Nasdaq Composite index eased 1.55 points to 12,028.12.
The yield on 2-year Treasury notes decreased to 4.01%, 10-year Treasury yield edged lower to 3.43% and 30-year Treasury bonds traded unchanged to 3.66%.
Crude oil increased 99 cents to $82.54 a barrel and natural gas inched lower 7 cents to $2.10 a thermal unit.
U.S. Stock Movers
Triton International Limited increased 32% to $83.05 after the company agreed to be acquired by a subsidiary of Brookfield Infrastructure.
The container leasing company agreed to a total consideration of $85.0 per common share, consisting of $68.50 in cash and $16.50 in BIPC class A share.
The deal values the company at $4.7 billion equity and for an enterprise valuation, which includes its total debt, of $13.3 billion.
Movers: Apple, Berkshire Hathaway, CarMax, General Motors, Newmont Corp
Scott Peters
11 Apr, 2023
New York City
Stocks struggled to find direction after cautious investors avoided increasing exposure ahead of the release of consumer inflation report on Wednesday.
The S&P 500 index decreased 1.31 points to 4,107.80 and the Nasdaq Composite index 29.31 points or 0.3% to 12,055.03.
Apple Inc decreased 0.5% to $161.26 and the maker of popular mobile gadgets said it plans to open two new retail stores in India this month.
Apple has been diversifying away its manufacturing base from China and plans to accelerate its production and sale in India this year.
Apple is scheduled to open its first store in Mumbai on April 18 and in Delhi on April 20.
Berkshire Hathaway Inc Class A increased 0.5% to $478,539.0 and the company's co-founder and chairman Warren Buffett increased the company's stake in Japanese trading houses to 7.4%, according to CNBC.
Itochu Corp, Marubeni Corp, Sumitomo Corp, Mitsui Corp and Mitsubishi Corp gained between 2% and 3% in Tokyo trading, after Warren Buffett confirmed his plans to meet management in an interview with Nikkei News.
Over the last two years, Warren Buffett has been drumming up his long term belief in investing in the U.S. in media interviews.
But while publicly extolling the virtues of investing in the U.S., privately Buffett has been expanding his investments in China and Japan.
In the late nineties, Warren Buffett and Charlie Munger criticized unreliable estimation of assets in the ground of mining and energy companies, but only two decades later Buffett coughed up billions to acquire Occidental Petroleum.
Similarly, investing in technology companies and railroad companies that require huge capital expenditures made the list of public denials, only to be added in the investment portfolio at a later date.
CarMax, Inc soared 11.1% to $73.18 after the used car retailer reported better-than-expected earnings in its latest quarter.
Revenue in the fiscal fourth quarter ending in February increased 25.6% to $5.6 billion and net income plunged to $69.0 million from $1159.8 million and diluted earnings per share fell to 44 cents from 98 cents a year ago.
Combined retail and wholesale used vehicle unit sales were 290,214, 15.5% lower compared to the previous year.
Average selling price for used vehicles declined 9.3% to $26,598 from $29,312 a year ago.
Used vehicle sales unit sales at comparable stores declined 14.1% in the quarter on top of 6.5% fall in the previous year's period. Used vehicle revenue at comparable stores dropped 22.0% compared to 30.5% increase in the quarter a year ago.
During the quarter, the company did not repurchase any of its shares and the stock repurchase program still has $2.45 billion available for buyback.
General Motors Company decreased 0.8% to $35.47 and the automaker's venture arm said it will lead a $50 million investment round for Austin. Texas based EnergyX, the company focused on developing more advanced methods of extracting lithium from salt mines.
Newmont Corporation declined 0.5% to $50.83 after the gold miner lifted its bid to acquire the Australia based Newcrest Mining.
Newmont increased its original bid by 16% to $19.5 billion or $29.4 billion.
Under the reviser terms, Newcrest stockholders will receive 0.4 Newmont shares or A$32.87 equivalent value compared to the previous offer of 0.38 shares.
The deal is backed by the largest shareholders of Newcrest and Newmont will solidify its status as the largest gold producer in the world and extend its lead over its nearest rival Barrick Gold.
Europe Movers: Anglo American, BMW, BP PlC, Evotec, Harbour Energy
Bridgette Randall
11 Apr, 2023
Frankfurt
European markets opened sharply higher but trimmed early gains after cautious sentiment in New York.
The DAX index added 0.5% to 15,668.53, the CAC-40 index increased 0.9% to 7,391.03 and the FTSE 100 index advanced 0.3% to 7,391.03.
Resource stocks jumped on the hopes that China may provide additional stimulus to accelerate economic rebound.
Anglo American, Antofagasta and Glencore advanced between 2% and 3%.
BMW AG increased 1.7% to €100.32 after the global automobile manufacturer reported a rise in electric vehicle sales.
BMW Group worldwide sales in the first quarter declined 1.5% to 588,138 units but battery powered electric vehicles soared 83% to 64,647 units.
Vehicle sales in the U.S. increased 11.4% to 89,750 units.
The automaker confirmed strong sales in the U.S. but slow recovery in China and ban on sales in Russia impacted negatively overall sales in Europe.
BP Plc increased 0.3% to 533 pence and Harbour Energy PLC dropped 1.7% to 283 pence after the two companies agreed to jointly build and develop Viking transportation and storage project.
Evotec SE declined 6.4% to €18.84 after the German biodiscovery firm closed its data communication network following a cyber attack late last week.
Wall Street Stocks Lacked Direction Ahead of Inflation Reports
Barry Adams
11 Apr, 2023
New York City
Stocks lacked direction in early trading on Wall Street and investors awaited inflation data.
Consumer price index is scheduled to be released Wednesday and Producer price index on Thursday.
Investors are hoping that the recent trading in cooling inflation will be confirmed in the fresh inflation data.
Economists are anticipating consumer price inflation to cool to 5.2% on an annual basis from 6.0% in February but core inflation is expected to accelerate to 5.6% from 5.5% in the previous month.
Markets also worried that the simmering tensions in the Taiwan Strait may raise supply chain issues anew.
Just days earlier China had stepped its military exercise surrounding Taiwan and accelerated its cyberattack on Taiwan's utilities and telecom companies.
The U.S. and Philippines are holding their largest joint military exercises a day after China concluded its large-scale defense drills surrounding Taiwan.
Bank of Korea held its key lending rate as expected but China's inflation unexpectedly declined despite the pick up in economic activities.
China's annual inflation declined to 0.7% in March compared to 1.0% in February, according to a report from the National Bureau of Statistics of China.
Core inflation, which excludes food and energy prices, rose 0.7% from a year ago in March after a 0.6% increase in February.
The Japanese yen declined after the recently appointed governor Kazuo Ueda reiterated the central bank's commitment in maintaining its ultra-loose policy for now.
Indexes & Yields
The S&P 500 index decreased 1.31 points to 4,107.80 and the Nasdaq Composite index 29.31 points or 0.3% to 12,055.03.
The yield on 2-year Treasury notes inched higher to 4.02%, 10-year Treasury notes to 3.43% and 30-year Treasury bonds to 3.63%.
Crude oil inched higher to 52 cents to $80.27 a barrel and natural gas edged lower 3 cents to $2.13 a thermal unit.
Stock Movers
Apple Inc decreased 0.5% to $161.26 and the maker of popular mobile gadgets said it plans to open two new retail stores in India this month.
Apple has been diversifying away its manufacturing base from China and plans to accelerate its production and sale in India this year.
Apple is scheduled to open its first store in Mumbai on April 18 and in Delhi on April 20.
Berkshire Hathaway Inc Class A increased 0.5% to $478,539.0 and the company's co-founder and chairman Warren Buffett increased the company's stake in Japanese trading houses to 7.4%, according to CNBC.
Itochu Corp, Marubeni Corp, Sumitomo Corp, Mitsui Corp and Mitsubishi Corp gained between 2% and 3% in Tokyo trading, after Warren Buffett confirmed his plans to meet management in an interview with Nikkei News.