Market Update
U.S. Wholesale Inflation Rebound Reignites Rate Path Worries, Global Markets Power Ahead
Barry Adams
16 Feb, 2023
New York City
Rate path worries resurfaced in the final hour of trading and market indexes accelerated declines after comments from a Federal Reserve official.
Stocks were under pressure in early trading after a measure of wholesale inflation jumped to a 7-month high.
The sharp increase in goods inflation overshadowed session's trading despite a mixed bag of earnings from corporations.
Market selloff intensified after comments from St Louis Federal Reserve President James Bullard.
Bullard said he supported a 50 basis points rate increase in the previous meeting and he will consider a similar rate hike at the next meeting in March.
Home builders were in focus after housing starts fell more than expected.
Despite the interest rate path worries, investors focused on the resilient consumer and tight labor market conditions but strongly worded comments from Bullard put financial markets on alert.
Housing Starts Declined 21% In January
Seasonally adjusted housing starts fell 4.5% from a month earlier to an annualized rate of 1.309 million, the lowest since June 2020.
Housing starts fell 21.4% from a year ago level of 1.66 million.
Building permits in January were at a seasonally adjusted annual rate of 1,339,000, 0.1% above the revised December rate of 1.33 million, but 27.3% below the January 2022 rate of 1.8 million.
Housing completions in January were at a seasonally adjusted annual rate of 1.4 million. 1.0% above the revised December estimate of 1.39 million and 12.8% up from a year ago.
U.S. Weekly Jobless Claims Eased
Weekly jobless claims fell to 194,000 in the week ending February 11, down from the, down from the previous week's revised level of 195,000, the U.S. Department of Labor said Thursday.
Wholesale Price Inflation Jumped to 7-month High
The producer price index, a measure of wholesale prices, in the U.S. rose more than expected in January, the U.S. Bureau of Labor Statistics said Thursday.
The Producer Price Index for final demand increased 0.7% in January from the previous month and advanced 6.0% in a year, the most in seven months.
Prices for final demand goods advanced 1.2%, and index for final demand services rose 0.4%.
Nearly one-third of the January advance in the index for final demand goods can be traced to prices for gasoline, which increased 6.2%.
U.S. Markets
The S&P 500 index fell 1.4% to 4,090.41 and the Nasdaq Composite index declined 1.8% to 11,855.83.
The yield on 2-year Treasury notes increased to 4.64%, 10-year Treasury notes to 3.87% and 30-year Treasury bonds to 3.92%.
Crude oil declined 58 cents to $77.96 a barrel and natural gas futures declined 4 cents to $2.40 a thermal unit.
European Markets Extended One-year Highs
European markets traded higher despite the inflation headwinds and investors reacted to domestic earnings.
Positive earnings in France, UK and Germany reiterated the Euro Area region's economic strength and investors overlooked the U.S. inflation worries.
Italy's Trade Balance In Surplus In December, Deficit In 2022
Italy's international trade balance swung to a surplus in December reversing the deficit in the month a year ago.
Trade balance swung to Є1.1 billion in December from Є1.5 billion in the month a year ago and declined from a surplus of Є1.4 billion in November, the data from Italian Statistics Office Istat showed Thursday.
In the year 2022, exports increased 19.9% (19.7% for EU countries and 20.2% for non-EU countries) and imports increased 36.5% (22.8% for EU countries and 54.4% for non-EU countries).
In the year 2022, the trade balance registered a deficit of Є31,0 billion compared to the surplus of Є40.3 billion the year earlier.
Excluding energy, the surplus was Є80.3 billion compared to Є88.7 billion in 2021.
Spain's Inflation Accelerated In January
Spain's inflation accelerated in January in the final estimate released by the statistics Office INE Wednesday.
Consumer price index increase was revised higher to 5.9% from the previous estimate of 5.8% and faster than 5.7% in December.
Higher Energy Prices Expands Spain's Trade Deficit In 2022
Spain's foreign trade deficit rose in December from November but fell from the corresponding month a year ago, the Economy Ministry data showed Thursday.
Trade deficit in December to Є4.51 billion from Є5.34 billion a year ago but rose from Є3.3 billion in November.
In 2022, total trade deficit surged to Є68.1 billion, sharply higher from Є26.2 billion in 2021.
Exports rose 22.9% and imports surged 33.4% in the full-year 2022.
European Markets
The DAX index index increased 0.2% to 15,533.64, the CAC-40 index rose 0.9% to 7,366.16 and the FTSE 100 index advanced 0.2% to 8,012.53.
The euro edged lower to $1.06, the British pound declined to $1.193 and the Swiss franc eased to 92.56 U.S. cents.
The yield on 10-year German Bunds increased to 2.49%, French bonds rose to 2.93%, the UK Gilts to 3.50% and Italian bonds to 4.32%.
Brent crude oil closed down 61 cents to $84.77 a barrel and the Dutch TTF Spot Price fell 5% to Є52.01 per MWh.
Europe Movers
Orange SA increased 6.2% to €10.62 after the mobile telephone service provider reported better-than-expected financial results.
Revenue in the fourth quarter increased 1.8% to €11.3 billion and in 2022 rose 2.2% to €43.4 billion. Consolidated net income totaled €2,6 billion from €778 million in 2021.
The company proposed a dividend of 70 euro cents a share and the board of directors will decide on the payment on May 23.
Kering SA increased 3.7% and extended gains for the second day to €596.70 after the luxury goods company reported higher earnings in 2022.
Commerzbank AG increased 11.6% to €11.50 after the German bank forecasted higher profit in the current year supported by rising rates.
Net interest income in fiscal year 2022 increased 33% to €6.46 billion and total revenue increased 12.0% to €9.4 billion from €8.5 billion a year ago.
Net income increased more than three-fold to €1.44 billion from €430 million a year ago.
The company also estimated net interest income in 2023 to rise above €6.5 billion.
The company said it plans to distribute €250 million or 20 euro cents a share to common shareholders after the annual meeting at the end of May.
Centrica PLC increased 5% to 103.45 pence after the electric utility services provider reported better-than-anticipated results.
Revenue in 2022 increased to £23.7 billion from £14.7 billion a year ago.
The company swung to a loss of £636 million compared to a profit of £1.2 billion a year ago.
The company proposed a final dividend of 2 pence per share in addition to interim dividend of 1 pence a share.
The company said adjusted earnings increased to £2.0 billion from £162 million or 34.2 pence from 2.80 pence a year ago.
Asian Markets Advanced After Investors Set Aside Rate Worries
Stocks traded higher in Asia following positive sentiment in international markets and the yen extended its two-week slide.
Stocks in Tokyo closed higher on the global optimism and following the new one-year highs in European markets and hopes of faster rebound in China.
Japan Record Trade Deficit In January
Japan's January trade deficit widened to a record high of ¥3,496.6 billion from ¥2,199.4 billion in the same month a year earlier.
Imports increased 17.8% ¥10,047.8 billion, the 21st monthly double-digit increase but rose at the slowest pace in 21 months.
Exports rose at a much slower pace of 3.5% ¥6,551.2 billion, the 23rd straight month of growth and the slowest pace since February 2021
Japan reported a trade deficit of ¥19,971.3 billion, the second straight annual shortfall and the largest since 1979 after the price of imported energy soared.
The yen drifted lower for the second week in a row after the release of record trade deficit data and on the uncertainties about the Bank of Japan's yield curve control policy and investors debated the need to exit from the ultra-loose monetary policy.
Japan's Trade Unions Look to Revive Wages from Three Decades of Stagnation
Trade unions and businesses kicked off their annual wage hike talks in Tokyo with the union representative looking for wages to rise as much as 5% in 2023.
The Japanese Trade Union Confederation or Rengo's President Tomoko Yoshino proposed a 3% base pay increase and additional 2% increase based on seniority.
Masakazu Tokura, chairman of the Japan Business Federation, showed an open attitude towards negotiating higher wages.
Real wages in Japan have stagnated for three decades and rose only 4.8% since 1991, lagging the 85% jump in South Korea and about 30% in Germany and France and 50% in the U.S. and U.K., according to the data available from the Organization for Economic Cooperation and Development or OECD based in Paris, France.
The Nikkei index increased 0.7% to 27,696.44 and the Yen edged lower to 133.83 against the yen.
Automakers led the gainers and Mitsubishi Motors Co Ltd and Nissan Motor Co Ltd gained 4.1% and Mazda Motor advanced 37%.
China Smartphone Sales Revival In January Lifts Hopes for 2023 Sales
Stocks in Mainland China and Hong Kong diverged after officials promised more stimulus.
Tech companies were in focus after domestic smartphone sales in China soared in January, lifting hopes that the industry may finally rebound after five years of declining sales.
Weekly sales of smartphones in China increased to 6.7 million units in January, 40% higher than in December but flat from the similar period in 2022, a report by Counterpoint Research showed the weekly trend.
Weekly smartphone sales in China averaged 5.5 million and dropped 13.5% to 285.5 million units in 2022, according to IDC.
In 2022, smartphone sales in China fell below 300 million units for the first time in a decade.
China is the largest market for smartphones in the world.
The Shanghai Composite index declined 1% to 3,249.03 and the Hang Seng index increased 0.9% to 20,987.67.
The Chinese yuan held steady with a downward bias to 6.895 against the U.S. dollar.
Hong Kong’s seasonally adjusted jobless rate declined to 3.4% in the three months ending January 2023, the lowest since the fourth quarter 2019 and from 3.5% in the previous three-month period ending in December.
India's Goods Trade Deficit and Services Surplus Expanded In January
Stocks in Mumbai opened higher but drifted lower after spending the day in the positive territory.
Tech services and real estate companies led gainers for the second day in a row.
The Sensex index increased 44.42 points to 61,319.51 and the Nifty index rose 20 points to 18,035.85.
The Indian rupee edged lower to 82.71 against the U.S. dollar after the U.S. dollar traded higher in the region.
On the economic front, India's exports declined in January to $32.9 billion from $35.2 billion a year and the goods trade deficit increased to $17.7 billion from $17.2 billion a year ago.
Overall goods and services exports increased to $65.1 billion from $56.8 billion and imports rose to $66.4 billion from $65.80 a year ago.
Overall international trade deficit shrank to $1.2 billion from $8.9 billion a year ago in January.
Europe Movers: Centrica, Commerzbank, Orange
Bridgette Randall
16 Feb, 2023
Frankfurt
Orange SA increased 6.2% to €10.62 after the mobile telephone service provider reported better-than-expected financial results.
Revenue in the fourth quarter increased 1.8% to €11.3 billion and in 2022 rose 2.2% to €43.4 billion. Consolidated net income totaled €2,6 billion from €778 million in 2021.
The company proposed a dividend of 70 euro cents a share and the board of directors will decide on the payment on May 23.
Kering SA increased 3.7% and extended gains for the second day to €596.70 after the luxury goods company reported higher earnings in 2022.
Commerzbank AG increased 11.6% to €11.50 after the German bank forecasted higher profit in the current year supported by rising rates.
Net interest income in fiscal year 2022 increased 33% to €6.46 billion and total revenue increased 12.0% to €9.4 billion from €8.5 billion a year ago.
Net income increased more than three-fold to €1.44 billion from €430 million a year ago.
The company also estimated net interest income in 2023 to rise above €6.5 billion.
The company said it plans to distribute €250 million or 20 euro cents a share to common shareholders after the annual meeting at the end of May.
Centrica PLC increased 5% to 103.45 pence after the electric utility services provider reported better-than-anticipated results.
Revenue in 2022 increased to £23.7 billion from £14.7 billion a year ago.
The company swung to a loss of £636 million compared to a profit of £1.2 billion a year ago.
The company proposed a final dividend of 2 pence per share in addition to interim dividend of 1 pence a share.
The company said adjusted earnings increased to £2.0 billion from £162 million or 34.2 pence from 2.80 pence a year ago.
Spain and Italy Report Large Trade Deficits, European Markets Advanced
Bridgette Randall
16 Feb, 2023
Frankfurt
European markets traded higher despite the inflation headwinds and investors reacted to domestic earnings.
Positive earnings in France, UK and Germany reiterated the Euro Area region's economic strength and investors overlooked the U.S. inflation worries.
The producer price index, a measure of wholesale prices, in the U.S. rose more than expected in January, the U.S. Bureau of Labor Statistics said Thursday.
The Producer Price Index for final demand increased 0.7% in January from the previous month and advanced 6.0% in a year, the most in seven months.
Prices for final demand goods advanced 1.2%, and index for final demand services rose 0.4%.
Italy's Trade Balance In Surplus In December, Deficit In 2022
Italy's international trade balance swung to a surplus in December reversing the deficit in the month a year ago.
Trade balance swung to Є1.1 billion in December from Є1.5 billion in the month a year ago and declined from a surplus of Є1.4 billion in November, the data from Italian Statistics Office Istat showed Thursday.
In the year 2022, exports increased 19.9% (19.7% for EU countries and 20.2% for non-EU countries) and imports increased 36.5% (22.8% for EU countries and 54.4% for non-EU countries).
In the year 2022, the trade balance registered a deficit of Є31,0 billion compared to the surplus of Є40.3 billion the year earlier.
Excluding energy, the surplus was Є80.3 billion compared to Є88.7 billion in 2021.
Spain's Inflation Accelerated In January
Spain's inflation accelerated in January in the final estimate released by the statistics Office INE Wednesday.
Consumer price index increase was revised higher to 5.9% from the previous estimate of 5.8% and faster than 5.7% in December.
Higher Energy Prices Expands Spain's Trade Deficit In 2022
Spain's foreign trade deficit rose in December from November but fell from the corresponding month a year ago, the Economy Ministry data showed Thursday.
Trade deficit in December to Є4.51 billion from Є5.34 billion a year ago but rose from Є3.3 billion in November.
In 2022, total trade deficit surged to Є68.1 billion, sharply higher from Є26.2 billion in 2021.
Exports rose 22.9% and imports surged 33.4% in the full-year 2022.
European Markets
The DAX index index increased 0.2% to 15,533.64, the CAC-40 index rose 0.9% to 7,366.16 and the FTSE 100 index advanced 0.2% to 8,012.53.
The euro edged lower to $1.06, the British pound declined to $1.193 and the Swiss franc eased to 92.56 U.S. cents.
The yield on 10-year German Bunds increased to 2.49%, French bonds rose to 2.93%, the UK Gilts to 3.50% and Italian bonds to 4.32%.
Brent crude oil closed down 61 cents to $84.77 a barrel and the Dutch TTF Spot Price fell 5% to Є52.01 per MWh.
Europe Movers
Orange SA increased 6.2% to €10.62 after the mobile telephone service provider reported better-than-expected financial results.
Revenue in the fourth quarter increased 1.8% to €11.3 billion and in 2022 rose 2.2% to €43.4 billion. Consolidated net income totaled €2,6 billion from €778 million in 2021.
The company proposed a dividend of 70 euro cents a share and the board of directors will decide on the payment on May 23.
Kering SA increased 3.7% and extended gains for the second day to €596.70 after the luxury goods company reported higher earnings in 2022.
Commerzbank AG increased 11.6% to €11.50 after the German bank forecasted higher profit in the current year supported by rising rates.
Net interest income in fiscal year 2022 increased 33% to €6.46 billion and total revenue increased 12.0% to €9.4 billion from €8.5 billion a year ago.
Net income increased more than three-fold to €1.44 billion from €430 million a year ago.
The company also estimated net interest income in 2023 to rise above €6.5 billion.
The company said it plans to distribute €250 million or 20 euro cents a share to common shareholders after the annual meeting at the end of May.
Centrica PLC increased 5% to 103.45 pence after the electric utility services provider reported better-than-anticipated results.
Revenue in 2022 increased to £23.7 billion from £14.7 billion a year ago.
The company swung to a loss of £636 million compared to a profit of £1.2 billion a year ago.
The company proposed a final dividend of 2 pence per share in addition to interim dividend of 1 pence a share.
The company said adjusted earnings increased to £2.0 billion from £162 million or 34.2 pence from 2.80 pence a year ago.
Japan's Trade Deficit Soared to Record In January, China Smartphone Sales Rebounded
Arjun Pandit
16 Feb, 2023
Mumbai
Stocks traded higher in Asia following positive sentiment in international markets and the yen extended its two-week slide.
Stocks in Tokyo closed higher on the global optimism and following the new one-year highs in European markets and hopes of faster rebound in China.
Japan Record Trade Deficit In January
Japan's January trade deficit widened to a record high of ¥3,496.6 billion from ¥2,199.4 billion in the same month a year earlier.
Imports increased 17.8% ¥10,047.8 billion, the 21st monthly double-digit increase but rose at the slowest pace in 21 months.
Exports rose at a much slower pace of 3.5% ¥6,551.2 billion, the 23rd straight month of growth and the slowest pace since February 2021
Japan reported a trade deficit of ¥19,971.3 billion, the second straight annual shortfall and the largest since 1979 after the price of imported energy soared.
The yen drifted lower for the second week in a row after the release of record trade deficit data and on the uncertainties about the Bank of Japan's yield curve control policy and investors debated the need to exit from the ultra-loose monetary policy.
Japan's Trade Unions Look to Revive Wages from Three Decades of Stagnation
Trade unions and businesses kicked off their annual wage hike talks in Tokyo with the union representative looking for wages to rise as much as 5% in 2023.
The Japanese Trade Union Confederation or Rengo's President Tomoko Yoshino proposed a 3% base pay increase and additional 2% increase based on seniority.
Masakazu Tokura, chairman of the Japan Business Federation, showed an open attitude towards negotiating higher wages.
Real wages in Japan have stagnated for three decades and rose only 4.8% since 1991, lagging the 85% jump in South Korea and about 30% in Germany and France and 50% in the U.S. and U.K., according to the data available from the Organisation for Economic Cooperation and Development or OECD based in Paris, France.
The Nikkei index increased 0.7% to 27,696.44 and the Yen edged lower to 133.83 against the yen.
Automakers led the gainers and Mitsubishi Motors Co Ltd and Nissan Motor Co Ltd gained 4.1% and Mazda Motor advanced 37%.
China Smartphone Sales Revival In January Lifts Hopes for 2023 Sales
Stocks in Mainland China and Hong Kong diverged after officials promised more stimulus.
Tech companies were in focus after domestic smartphone sales in China soared in January, lifting hopes that the industry may finally rebound after five years of declining sales.
Weekly sales of smartphones in China increased to 6.7 million units in January, 40% higher than in December but flat from the similar period in 2022, a report by Counterpoint Research showed the weekly trend.
Weekly smartphone sales in China averaged 5.5 million and dropped 13.5% to 285.5 million units in 2022, according to IDC.
In 2022, smartphone sales in China fell below 300 million units for the first time in a decade.
China is the largest market for smartphones in the world.
The Shanghai Composite index declined 1% to 3,249.03 and the Hang Seng index increased 0.9% to 20,987.67.
The Chinese yuan held steady with a downward bias to 6.895 against the U.S. dollar.
Hong Kong’s seasonally adjusted jobless rate declined to 3.4% in the three months ending January 2023, the lowest since the fourth quarter 2019 and from 3.5% in the previous three-month period ending in December.
India's Services Surplus Expanded Faster Than Good Deficit In January
Stocks in Mumbai opened higher but drifted lower after spending the day in the positive territory.
Tech services and real estate companies led gainers for the second day in a row.
The Sensex index increased 44.42 points to 61,319.51 and the Nifty index rose 20 points to 18,035.85.
The Indian rupee edged lower to 82.71 against the U.S. dollar after the U.S. dollar traded higher in the region.
On the economic front, India's exports declined in January to $32.9 billion from $35.2 billion a year and the goods trade deficit increased to $17.7 billion from $17.2 billion a year ago.
Overall goods and services exports increased to $65.1 billion from $56.8 billion and imports rose to $66.4 billion from $65.80 a year ago.
Overall international trade deficit shrank to $1.2 billion from $8.9 billion a year ago in January.
Movers: Boston Beer, Chefs' Warehouse, Choice Hotels, Cisco, Copa, Shopify, Zillow
Scott Peters
16 Feb, 2023
New York City
Boston Beer Company Inc plunged 14.5% to $336.0 after the company said depletions in the distribution system declined to 3%.
Boston Beer said revenue in the fourth quarter increased 28.6% to $447.5 million and net loss in the quarter fell to $11.4 million from $51.7 million and diluted loss per share fell to 93 cents from $4.22 a year ago.
In 2022, revenue increased 1.6% to $2.09 billion and net income rose to $67 million from $14.5 million or $5.44 from $1.17 a year ago.
Chef's Warehouse Inc declined 3.4% to $36.63 after the company reported a quarterly loss because of early debt repayment linked charges and variable interest rate on the new securities.
Chefs' Warehouse said revenue in the fourth quarter increased 41.8% to $791.3 million but net income plunged to $1.2 million from $8.4 million or diluted EPS declined to 3 cents from 22 cents a year ago.
In 2022, revenue increased to $2.6 billion from $1.7 billion and the food distributor swung to a net profit of $27.8 million from a loss of $4.9 million or 73 cents from (13 cents) a share.
Choice Hotels International Inc declined 3.3% to $125.50 after the company reported a decline in quarterly earnings.
Choice Hotels revenues increased 27% to $362 million but net income decreased 13% to $55.5 million from $64 million and diluted earnings per share fell to $1.04 from $1.14 a year ago.
In 2022, revenue increased 31% to $1.4 billion and net income increased 15% to $332 million from $288 million or $5.99 from $5.15 a share a year ago.
Revenue per available room increased 20.4% in the fourth quarter from the previous quarter, outperforming industry average by 700 basis points.
Cisco Systems Inc increased 6.1% to $51.37 after the networking gear maker reported better-than-expected revenue and earnings.
Cisco said revenue in the fiscal second quarter ending in January increased 7% to $13.6 billion and net income dropped 7% to $2.8 billion from $3.0 billion and diluted earnings per share declined to 67 cents from 71 cents a year ago.
The company increased quarterly dividend by 1 cent to 39 cents to be paid on April 26 to shareholders on record on April 5.
Copa Holdings, SA decreased 1.1% to $94.97 and the Panama based Caribbean and Central America focused airline reported a surge in passenger count and miles transported.
Copa Holdings said revenue in the fourth quarter rose 30.6% to $890.6 million from the corresponding period in 2019 and net income soared to $88.3 million from $2.7 million or basic EPS increased to $2.23 from 6 cents a share in the period.
In 2022, revenue increased 9.5% to $2.96 billion and net income rose 41% to $348 million or $8.58 from $5.81 a share in the 3-year period.
Passenger traffic, measured in terms of revenue passenger mile, increased 7.5% compared to the period in 2019, while capacity increased 5.9%.
As a result, load factors for the quarter increased by 1.4 percentage points to 86.6%.
Shopify Inc dropped 15.5% to $51.37 after the online e-commerce platform forecasted a weaker-than-expected outlook.
Shopify said revenue in the fourth quarter increased 25.3% to $1.7 billion and net loss increased to $672 million from $371 million and diluted loss per share rose to 49 cents from 30 cents a year ago.
In 2022, revenue increased to $5.6 billion and the online e-commerce platform swung to a net loss of $3.5 billion from a profit of $2.9 billion or ($2.73) from $2.29 a share a year ago.
The Canada-based company forecasted 2023 revenues to increase in "in the high-teen percentages," slower than 21% increase in 2022.
Upwork Inc declined 10.4% to $12.48 after the online platform for remote working said gross service volume growth decelerated for the sixth quarter in a row to 5% from 50% in the second quarter 2021.
Upwork said revenue in the fourth quarter increased 18% to $161.4 million and net loss declined to $16.5 million from $22.6 million and diluted loss per share fell to 13 cents from 18 cents a year ago.
In 2022, revenue increased to $618.3 million from $502.8 million and net loss expanded to $89.9 million from $56.2 million or 69 cents from 44 cents a share a year ago.
Zillow Group Inc increased 2.5% to $47.84 after the online real estate platform reported revenue ahead of expectations but held out for tough times ahead.
Zillow Group said revenue in the fourth quarter declined 19% to $435 million and net loss shrank to $72 million from $261 million and diluted loss per share was 31 cents from 2 cents a year ago.
In 2022, revenue declined to $1.95 billion from $2.1 billion and net loss fell to $101 million from $528 million or 36 cents from a profit of 39 cents a year ago.
Home sales declined 40% in the fourth quarter from a year ago after home prices continued to rise in double-digits across the nation for the third year in a row.