Market Update
European Markets Advanced, U.S. Dollar Drifted to 5-week Low
Bridgette Randall
11 Apr, 2023
New York City
European markets traded higher after investors returned from a 4-day holiday period.
Benchmark indexes in the region opened higher and stayed in the positive territory after retail sales fell as expected in February.
Market gains were tight as tensions simmered in the Taiwan Strait and developments in Asian markets were also in focus.
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.
In the Euro Area trading, mining and resource stocks led the gainers and investors looked ahead to the start of corporate earnings season this week.
Euro Area Retail Sales Drop In February
Euro Area retail sales declined 0.8% February after rising 0.8% in January, Eurostat reported on Tuesday.
The decline in retail sales offered another signal to policymakers of the continued weakening domestic demand in the currency block as consumers battle high inflation and retrench in the face of looming economic slowdown.
Retail sales fell 3.0% in February from a year ago following a 1.8% decline in January.
Food drinks and tobacco sales decreased 0.6% and non-food sales eased 0.7%.
Indexes & Yields
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.
The yield on 10-year German Bunds traded at 2.27%, French bonds at 2.79%, the UK gilts at 3.52% and Italian bonds at 4.12%.
The euro inched higher to $1.09, the British pound edged up to $1.24 and the Swiss franc traded at 90.75 cents.
Brent crude oil eased 38 cents to $83.79 a barrel and the Dutch TTF natural gas inched up 43 cents to Є43.56 per MWh.
Europe Stock Movers
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.
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.
Stocks Meander On Wall Street, Yen Jumped 1% On Rate Path Worries
Barry Adams
10 Apr, 2023
New York City
Stocks lacked direction on the first day of trading this week as investors await corporate earnings and inflation data this week.
Market sentiment reverted to recession worries after three months rebound.
Labor market conditions suggest that the U.S. economy is likely to add more than 2 million net new jobs in 2023, if the current sentiment carries through the second-half.
The labor market health is also associated with wage growth, which feeds to inflation, but wage increases have been lagging the overall inflation and is not the key driver of inflation.
The current inflation is driven by corporations raising prices to cover rising input costs and the desire to maintain or expand profit margins.
Last week, four separate reports on the labor market showed that the U.S. economy is still creating new jobs but at a slower pace and labor market conditions are tight.
Investors are hoping that the Federal Reserve will be able to carry out the delicate job of keeping the economy humming at just the right pace while managing to cool inflation to lower levels.
While inflation has been cooling in the last four months, investors are hoping that the Federal Reserve will slow its future rate hikes or even pause after the next rate increase in May.
After a long weekend in today's session investors worried that slowing labor market expansion may forecast a rolling recession and despite the moderating price increases overall inflation is still significantly higher than the Fed's target rate.
Investors are also awaiting the release of earnings from banks later in the week and JP Morgan Chase, Wells Fargo and Citigroup are scheduled to report earnings on Friday.
In addition, investors are looking forward to the release of consumer price inflation data on Wednesday followed by the release of wholesale price inflation on Thursday.
In overseas trading, the yen jumped as much as 10% after the new Bank of Japan governor Kazuo Ueda stressed the importance of keeping the current monetary policy.
Ueda in his inaugural speech after taking over the leadership role at the central bank also noted that monetary policy changes should not be delayed until it is too late.
Japan has been pursuing ultra loose monetary policy of near zero percent interest rate since 2013 under the former governor Haruhiko Kuroda, but inflation failed to rise above 2% after briefly crossing the level in 2014.
For nearly a decade, Japanese corporations and investors have been chasing yields abroad and investing in government securities issued by the U.S, Holland and Brazil.
But Japanese investors suffered massive losses in the U.S. Treasury securities in 2022 after the U.S. Federal Reserve lifted rates seven times in the year.
About $11 trillion invested abroad by Japanese investors may be impacted if the Bank of Japan ends its ultra loose monetary policy, causing sharp swings in international bond markets.
U.S. Indexes & Yields
The S&P 500 index decreased 0.1% to 4,100.60 and the Nasdaq Composite index declined 0.2% to 12,066.21.
The yield on 2-year Treasury notes inched up to 4.01%, 10-year Treasury notes advanced to 3.41% and 30-year Treasury bonds decreased to 3.63%.
Crude oil edged down 95 cents to $79.71 a barrel and natural gas futures jumped 14 cents to $2.15 a thermal unit.
Gold price fell $19.15 to $1,988.82 an ounce and silver fell 19 cents to $24.81 an ounce.
U.S. Stock Movers
Semiconductor stocks were in focus after Samsung said it plans to halt memory chip production in the near term after the weakness in demand for electronic and computing devices.
Taiwan Semiconductor Mfg Co Ltd declined 1.8% to $88.60 after the company reported a decline in March sales.
Revenue in March declined 10.9% from the previous month and plunged 15% fr.4om a year ago to NT$145.4 billion.
Sales in the March quarter increased 3.6% to NT$508.6 billion.
Micron Technology jumped 4.7% to $61.35 but Qualcomm Inc declined 1.2% to $121.50.
Tesla Inc dropped 4% to $177.53 after the company said plans to cut vehicle prices again in China and build another factory to produce electric vehicle batteries.
Capital One Financial Corp decreased 1.7% to $93.28 after the financial services company said in a regulatory filing that Walmart Inc is suing the company to end its partnership agreement.
Natural gas stocks were in focus after natural gas price soared nearly 10%.
Excelerate Energy Inc increased 1.1% to $23.13 and EQT Corp gained 4.6% to $33.61 and Southwestern Energy Co added 4.4% to $5.24.
Movers: Apple, Capital One Financial, First Republic Bank, Micron Tech, Regional Banks, Taiwan Semi, Tesla
Scott Peters
10 Apr, 2023
New York City
Semiconductor stocks were in focus after Samsung said it plans to halt memory chip production in the near term after the weakness in demand for electronic and computing devices.
Taiwan Semiconductor Mfg Co Ltd declined 1.8% to $88.60 after the company reported a decline in March sales.
Revenue in March declined 10.9% from the previous month and plunged 15% fr.4om a year ago to NT$145.4 billion.
Sales in the March quarter increased 3.6% to NT$508.6 billion.
Micron Technology jumped 4.7% to $61.35 but Qualcomm Inc declined 1.2% to $121.50.
Tesla Inc dropped 4% to $177.53 after the company said plans to cut vehicle prices again in China and build another factory to produce electric vehicle batteries.
Capital One Financial Corp decreased 1.7% to $93.28 after the financial services company said in a regulatory filing that Walmart Inc is suing the company to end its partnership agreement.
First Republic Bank declined 0.8% to $13.92 after the embattled regional bank disclosed in a regulatory filing that it suspended dividend on its preferred stock.
"As a measure of prudent oversight, the Board of Directors determined to suspend payment of the quarterly cash dividend on each series of the bank’s outstanding noncumulative perpetual preferred stock," said the company in a filing with the SEC.
Apple Inc declined 2.1% to $161.29 after International Data Corporation said global PC shipments fell 30% in the first quarter and Mac shipments dropped 40% in the three-month period.
Regional banks were in focus after the latest data from the Federal Reserve showed deposit withdrawals slowed in the previous week.
For the week ending March 29, seasonally adjusted deposits at all banks declined $64.7 billion or 0.37% compared to $172.1 billion or nearly 1% in the previous week.
PacWest Bancorp increased 1.6%, Zions Bancorporation added 0.6%, East West Bancorp gained 0.4% and Western Alliance Bancorporation advanced 0.9%.
U.S. Stocks Turn Lower On Earnings Recession Worries
Barry Adams
10 Apr, 2023
New York City
Stocks on Wall Street opened lower after recession worries resurfaced after a week of choppy trading.
Last week, four separate reports on the labor market showed that the U.S. economy is still creating new jobs but at a slower pace and labor market conditions are tight.
After a long weekend in today's session investors worried that slowing labor market expansion may forecast a rolling recession and despite the moderating price increases overall inflation is still significantly higher than the Fed's target rate.
Investors are also awaiting the release of earnings from banks later in the week and JP Morgan Chase, Wells Fargo and Citigroup are scheduled to report earnings on Friday.
In addition, investors are looking forward to the release of consumer price inflation data on Wednesday followed by the release of wholesale price inflation on Thursday.
U.S. Indexes & Yields
The S&P 500 index decreased 0.6% to 4,80.60 and the Nasdaq Composite index declined 1.2% to 11,940.88.
The yield on 2-year Treasury notes inched up to 3.96%, 10-year Treasury notes advanced to 3.38% and 30-year Treasury bonds decreased to 3.58%.
Crude oil edged down 31 cents to $80.36 a barrel and natural gas futures jumped 16 cents to $2.16 a thermal unit.
U.S. Stock Movers
Semiconductor stocks were in focus after Samsung said it plans to halt memory chip production in the near term after the weakness in demand for electronic and computing devices.
Taiwan Semiconductor Mfg Co Ltd declined 1.8% to $88.60 after the company reported a decline in March sales.
Revenue in March declined 10.9% from the previous month and plunged 15% fr.4om a year ago to NT$145.4 billion.
Sales in the March quarter increased 3.6% to NT$508.6 billion.
Micron Technology jumped 4.7% to $61.35 but Qualcomm Inc declined 1.2% to $121.50.
Tesla Inc dropped 4% to $177.53 after the company said plans to cut vehicle prices again in China and build another factory to produce electric vehicle batteries.
Capital One Financial Corp decreased 1.7% to $93.28 after the financial services company said in a regulatory filing that Walmart Inc is suing the company to end its partnership agreement.
Slower Job Growth, Flat Jobless Rate and Weaker Wage Gains In March
Brian Turner
07 Apr, 2023
New York City
March nonfarm payroll employment report provided another confirmation of cooling but tight labor market conditions.
U.S. economy added jobs at a slower pace in March, but still above the long-term monthly average of 190,000, suggesting the jobs market is growing at a healthy pace.
Nonfarm payroll employment report offered another signal to policymakers after two private surveys on private sector job additions and job cuts announcements showed similar cooling trends in the labor market.
Earlier in the week, another report from the government showed available jobs declined to a 2-year low.
The U.S. economy created 236,000 net new jobs as employers slow hiring amid rising costs and interest rates, the U.S. Bureau of Labor Statistics reported Friday.
The unemployment rate declined to 3.5% from 3.6% in February.
The unusually mild weather and seasonal factors drove hiring in the first two months but job market growth has been slowing after the surge in January and February.
Both the unemployment rate, at 3.5%, and the number of unemployed persons, at 5.8 million, changed little in March.
These measures have shown little net movement since early 2022.
U.S. economy added downwardly revised 472,000 new jobs in January and upwardly revised 326,000 in February, significantly higher than the long-term monthly average of less than 190,000.
The recent trends of job additions linked to travel and hospitality and health care sectors were visible in March.
Leisure and hospitality added 72,000 jobs, government expanded payrolls 47,000, professional and business services increased 39,000 and health care added 34,000.
However, retail trade shrank the labor force by 15,000.
Average hourly earnings rose 0.3% in March to $33.18 and increased 4.2% on an annual basis but the increase dropped to the lowest level since June 2021.
The labor force participation rate inched higher to 62.6% and employment to population ratio rose to 60.4% in March but stayed below the pre-pandemic February 2020 level of 63.3% and 61.1% respectively.
The total nonfarm payroll employment for January was downwardly revised by 32,000, from 504,000 to 472,000, and the February employment was revised up by 15,000, from 311,000 to 326,000.
After these revisions, employment in January and February combined is 17,000 lower than previously estimated.
Slower Job Additions In March Confirm Cooling but Tight Labor Market
Barry Adams
07 Apr, 2023
New York City
Futures of benchmark indexes and Treasury yields advanced after the latest jobs report provided another confirmation of cooling but tight labor market conditions.
U.S. economy added jobs at a slower pace in March, but still above the long-term monthly average of 190,000, suggesting the jobs market is growing at a healthy pace.
Nonfarm payroll employment report offered another signal to policymakers after two private surveys on private sector job additions and job cuts announcements showed similar cooling trends in the labor market.
Earlier in the week, another report from the government showed available jobs declined to a 2-year low.
Treasury yields rose after the release of the nonfarm employment report showed employers are expanding payrolls despite nine rate hikes over the last year.
Benchmark index futures traded higher on the hopes that the recent cooling trends in the labor market may convince policymakers to slow or even pause future rate hikes.
The New York Stock Exchange is closed for Good Friday and regular trading is scheduled to resume on Monday and the bond market close at 12:00 p.m. ET.
Futures market closed at 9:15 a.m. ET.
Job Growth Slowed In March
The U.S. economy created 236,000 net new jobs as the employers slow hiring amid rising costs and interest rates, the U.S. Bureau of Labor Statistics reported Friday.
The unemployment rate declined to 3.5% from 3.6% in February.
The unusually mild weather and seasonal factors drove hiring in the first two months but jobs market growth has been slowing after the surge in January and February.
Both the unemployment rate, at 3.5%, and the number of unemployed persons, at 5.8 million, changed little in March.
These measures have shown little net movement since early 2022.
The U.S. economy added 472,000 new jobs in January and 326,000 in February, significantly higher than the long-term monthly average of less than 190,000.
The recent trends of job additions linked to travel and hospitality and health care sectors were visible in March.
Leisure and hospitality added 72,000 jobs, government expanded payrolls 47,000, professional and business services increased 39,000 and health care added 34,000.
However, retail trade shrank the labor force by 15,000.
Average hourly earnings rose 0.3% in March and increased 4.2% on an annual basis and dropped to the lowest level since June 2021.
Indexes & Yields
The S&P 500 index futures advanced 0.2% and the Nasdaq Composite index added 0.1%.
The yield on 2-year Treasury notes advanced 12 basis points to 3.95%, 10-year notes increased 7 basis points to 3.35% and 30-year Treasury bonds to 3.58%.
Crude oil edged up 9 cents to $80.70 a barrel and natural gas declined 14 cents to $2.01 a thermal unit.
European Markets Extended Gains After Data Suggested Resilient Economic Activities
Bridgette Randall
06 Apr, 2023
New York City
European markets traded higher after investors focused on regional economic data and prepared for the start of earnings season next week.
German industrial output rose on a monthly basis in February driven by the sustained demand in the automotive sector, the leading contributor.
In addition, the UK home prices rose for the third month in a row, reflecting the resilient demand in the island nation.
Elsewhere, investors reviewed the two latest U.S. jobs reports showing weakening trends in the otherwise tight labor market conditions.
U.S. initial weekly jobless claims rose more than expected in the last week and the number of announced job cuts soared in March and in the first quarter.
Previously the U.S. government agency reported that the available jobs declined to below 10 million for the first time in two years.
Moreover, private employers slowed hiring in March, indicating that the multiple rate hikes over the last thirteen months may be finally having an impact on the labor market.
Stocks in the Euro Area advanced on encouraging German industrial production data supporting strong factory orders data released earlier in the week.
Stocks closed on a higher note ahead of Good Friday and Easter holidays.
German Industrial Output Increased in February
German industrial output expanded in February driven by the sustained activities in the automotive sector, the Federal Statistics Office or Destatis reported Thursday.
Output increase slowed to 2.0% on a monthly basis from 3.7% in January and on an annual basis industrial production increased 0.6% after falling 1.6% respectively.
Production of capital goods expanded 3.4%, intermediate goods increased 1.8% and consumer goods rose 1.4%, indicating all industrial sectors expanded.
Motor vehicles and parts manufacturing, the largest industrial sector, increased 7.6%
Excluding energy and construction, industrial production rose 2.4% in February from January after adjusting for seasonal and calendar factors.
UK Home Market Showed Resilience
UK home prices rose for the third month in a row, in March reflecting the sustained demand despite higher prices, Lloyds Bank subsidiary Halifax reported Thursday.
Home prices rose 0.8% on a monthly basis after rising for 1.2% in each of the previous two months in a row.
On an annual basis, home prices rose 1.6% from a year ago, slowing from 2.1% rise in February, the weakest rate of annual growth in nearly three-and-a-half years since October 2019, having fallen markedly since June 2022’s record rise of 12.5%.
Average home price in the UK increased to £287,880 from £285,660 in February and average home prices in London are up 0.1% from a year ago with the average property costing £537,250.
Indexes & Yields
The DAX index gained 0.5% to 15,597.89, the CAC-40 index added 0.1% to 7,324.75 and the FTSE 100 index advanced 1.03% to 7,741.56.
For the week, the DAX added 0.4%, the CAC-40 increased 0.7% and the FTSE 100 index increased 1.6%.
The yield on 10-year German Bunds closed at 2.18%, French bonds at 2.76%, the UK gilts at 3.43% and Italian bonds at 4.02%.
The euro inched higher to $1.09, the British pound to $1.24 and the Swiss franc to 90.40 cents.
Brent crude oil increased 13 cents to $85.12 a barrel and the Dutch TTF natural gas fell Є1.45 to Є43.13 per MWh.
Europe Movers
Shell Plc increased 1.8% after the London-listed energy company forecasted higher liquefied natural gas output in the first quarter.
Temenos AG advanced 1% on a news report that the company is seeking proposals from private equity groups.
Gerresheimer AG declined 3% despite the packaging maker for medical products and devices reporting higher quarterly earnings and reiterating its annual outlook.
Robert Walters dropped 8% after the company reported flat first quarter profit.
Movers: Bed Bath & Beyond, Barrick Gold, Costco, FedEx, Newmont Corp
Scott Peters
06 Apr, 2023
New York City
Bed Bath & Beyond Inc declined 7.4% to 31 cents after the company proposed a reverse stock split plan so the struggling retailer can raise more equity capital.
"We need to raise equity capital to have the necessary cash resources to fund operations and service obligations under our Credit Agreement,” the company said in a regulatory filing.
Costco Wholesale Corporation fell 2.4% to $484.90 after the specialty retailer reported a decline in comparable sales in March.
The retailer reported net sales of $21.71 billion in March, the five weeks ended April 2, 2023, an increase of 0.5% from $21.61 billion last year.
Comparable sales in the period declined 1.1% across all regions and dropped 1.5% in the U.S. and e-commerce sales decreased 12.7%.
Comparable sales excluding gasoline in the U.S. rose 0.9% and adjusted for foreign exchange increased 7.4% in Canada and 7.6% in international markets.
FedEx Corp increased 1.5% to $233.49 after the company announced its restructuring plan and a change in executive compensation program.
The parcel delivery company is looking to save $4 billion in costs by the fiscal year 2024 and realign its executive compensation packages that are more in line with shareholder interests.
Newmont Corporation closed unchanged at $52.08 and Barrick Gold Corp increased 0.3% to $19.73 after gold traded above $2,000 an ounce for the third day in a row.
Gold fell $12.02 to $2,008.33 but traded near the high it reached since October 2020 as investors fear recession after four jobs reports in two days shows weakening trends in the labor market.
Seasonally Adjusted Weekly Jobless Claims Declined Under New Methodology
Brian Turner
06 Apr, 2023
New York City
Initial jobless claims for the week ending on April 1 declined 18,000 to 228,000, the U.S. Department of Labor said in its weekly report Thursday.
Jobless claims for the previous week were sharply revised higher to 248,000 from the first estimate of 196,000, reflecting a change in the methodology of adjusting for seasonality.
The 4-week moving average was 237,750, a decrease of 4,250 from the previous week's revised average.
The previous week's average was revised up by 43,750 from 198,250 to 242,000.
The preliminary number of actual initial claims under state programs, unadjusted, totaled 206,931 in the week ending April 1, a decrease of 17,262 from 194,671 claims in the comparable week a year ago.
The advance unadjusted insured unemployment rate was 1.3% during the week ending March 25, unchanged from the prior week.
The advance unadjusted level of insured unemployment in state programs totaled 1,845,171, a decrease of 32,139 from the preceding week.
The total number of unadjusted continued weeks claimed for benefits in all programs for the week ending March 18 was 1,905,334, a decrease of 1,183 from the previous week.
There were 1,728,353 weekly claims filed for benefits in all programs in the comparable week in 2022.
Employers Accelerated Job Cuts In March and First Quarter
Brian Turner
06 Apr, 2023
New York City
U.S. based employers cut jobs for the third month in a row, according to a report released by Challenger, Gray & Christmas, Inc on Thursday.
Employers announced 89,703 job cuts in March, 15% higher than 77,770 in February and soared 319% from 21,387 a year ago.
The job cuts were higher from a year ago for the third month in a row.
Employers announced 270,416 cuts in the first quarter, a 396% increase from the 55,696 cuts announced a year ago and the highest first quarter total since 2020 when 346,683 were announced.
The sharp jump in job cuts in March and in the first quarter also comes after months of payroll expansions in 2021 and 2022 but businesses are now shifting gears and preparing for economic slowdown in the face of weakening consumer demands driven by rising interest rates and elevated inflation.
Hopeful Investors See Signs of Rate Pause In Two Latest Jobs Reports
Barry Adams
06 Apr, 2023
New York City
Stocks faced headwinds on the final trading day of the holiday-shortened week.
Investors were cautious and focus remained on labor markets as additional reports showed today gradual weakening trends in still tight labor market conditions.
Initial jobless claims for the week ending on April 1 declined 18,000 to 228,000, the U.S. Department of Labor said in its weekly report Thursday.
Jobless claims for the previous week were sharply revised higher to 248,000 from the first estimate of 196,000, reflecting a change in the methodology of adjusting for seasonality.
U.S. based employers cut jobs for the third month in a row, according to a report released by Challenger, Gray & Christmas, Inc on Thursday.
Employers announced 89,703 job cuts in March, 15% higher than 77,770 in February and soared 319% from 21,387 a year ago.
The job cuts were higher from a year ago for the third month in a row.
Employers announced 270,416 cuts in the first quarter, a 396% increase from the 55,696 cuts announced a year ago and the highest first quarter total since 2020 when 346,683 were announced.
The sharp jump in job cuts in March and in the first quarter also comes after months of payroll expansions in 2021 and 2022 but businesses are now shifting gears and preparing for economic slowdown in the face of weakening consumer demands driven by rising interest rates and elevated inflation.
Hopeful investors are looking for the Federal Reserve to interpret the latest signals from labor markers and pause rate hikes after the next policy meeting in early May.
Indexes & Yields
The S&P 500 index increased 0..3% to 4,101.13 and the Nasdaq Composite advanced 0.7% to 12,084.23.
The yield on 2-year Treasury notes inched lower to 3.76%, 10-year Treasury yield edged down to 3.27% and 30-year Treasury bonds to 3.54%.
Crude oil decreased 26 cents to $80.33 a barrel and natural gas fell 9 cents to $2.06 a thermal unit.
Stock Movers
FedEx Corp increased 1.5% to $233.49 after the company announced its restructuring plan and a change in executive compensation program.
The parcel delivery company is looking to save $4 billion in costs by the fiscal year 2024 and realign its executive compensation packages that are more in line with shareholder interests.
Bed Bath & Beyond Inc declined 7.4% to 31 cents after the company proposed a reverse stock split plan so the struggling retailer can raise more equity capital.
"We need to raise equity capital to have the necessary cash resources to fund operations and service obligations under our Credit Agreement,” the company said in a regulatory filing.