Market Update
Bear Market Rally On Wall Street Meets Earnings Reality
Barry Adams
17 Jan, 2023
New York City
U.S. stocks lacked direction in early trading investors focused on corporate earnings and the international news dominated news cycle.
Goldman Sachs said fourth quarter earnings plunged but Morgan Stanley earnings declined but were ahead of expectations.
Investors also digested the latest report from the OPEC indicating a demand recovery of oil 2023.
Moreover, China reported a sharp slowdown in economic growth in the fourth quarter and in 2022 on the account of zero-covid policy.
The economic growth fell to the lowest level in nearly five decades after retail sales and industrial production declined
Three years of lockdowns in China has devasted small businesses and several medium sized businesses in retail, construction and manufacturing are struggling to survive.
U.S. Indexes Lack Direction
Benchmark indexes on Wall Street struggled to get traction ahead of the pick up in earnings season.
The S&P 500 index declined 3.85 points to 3,995.19 and the Nasdaq Composite index fell 5.01 points to 11,074.15.
Demand Recovery Hope Lifts Oil Price
Crude oil prices advanced to the highest level since early December after OPEC said oil demand is expected to rise 2.2% to 22.2 million barrels a day on the hopes of economic recovery in advanced economies and rising demand from China.
"US crude imports followed seasonal trends, falling to an eight-month low of 6.2 mb/d in December.
US crude exports remained above 4 mb/d for the third-consecutive month.
US product flows were broadly steady, despite a cold wave that shut-in US refineries and disrupted travel," noted the report.
Crude oil price increased $1.75 to $80.73 a barrel and natural gas immediate month futures contract price rose 9 cents to $3.76 a thermal unit.
Treasury Yields Hover Near 4-month Low
The yield on 2-year Treasury notes increased to 4.22%, 10-year Treasury notes inched higher to 3.54% and 30-year Treasury bonds inched up to 3.67%.
U.S. Stock Movers
Goldman Sachs fell 2.4% to $365.11 after the financial services provider reported a sharp decline in revenues and earnings.
Goldman Sachs said fourth quarter revenue fell 16% from a year ago to $10.6 billion and net income plunged to $1.2 billion from $3.8 billion or diluted EPS fell to $3.32 from $10.81 from a year ago.
Morgan Stanley rose 5.4% to $96.37 after the financial services provider reported better-than-expected quarterly results.
Fourth quarter revenue fell to $12.7 billion from $14.5 billion a year ago and diluted earnings per share dropped to $2.2 billion from $3.7 billion or $1.26 from $2.01 a year ago.
Whirlpool Sells Europe Business
Whirlpool Corporation increased 2.2% to $157.70 after the household equipment maker said it plans to sell its Europe, Middle East and Africa business and form a partnership with Turkey-based Arcelik AS.
Whirlpool will contribute its European domestic appliance business, and Arcelik will contribute its domestic appliance, consumer electronics, air conditioning, and small domestic appliance businesses into the newly formed entity.
Whirlpool will own 25% and Arcelik 75% of the newly formed company and Arcelik will retain full-ownership of its Turkish business.
European Indexes Near 11-month Highs
European markets edged lower but hovered near 11-month highs after oil, gas and mining stocks advanced following the hopes of demand recovery in advanced economies and in China.
The DAX index fell 9.4 points to 15,124.66, the CAC-40 index was nearly unchanged at 7,043.77 and the FTSE 100 index fell 0.1% to 7,850.83.
The euro traded higher at $1.085, the British pound edged higher to $1.227 and the Swiss franc inched lower to 91.96 U.S. cents.
Energy Prices Trade Higher In Europe
Energy prices rose in Europe following the optimistic report from the OPEC.
"Preliminary figures show crude imports into OECD Europe remaining at healthy levels through the end of the year, despite imports of Russian crude falling to near zero excluding flows to Turkey.
OECD Europe product imports are also seen to be higher in anticipation of the impending February sanctions on Russian oil product imports," the report from the OPEC highlighted.
Brent crude oil rose $1.94 to $86.32 a barrel and the Dutch TTF natural gas futures price rose 5% to €58.63 per MWh.
The yield on 10-year German Bunds traded lower to 2.16%, French bonds declined to 2.63%, UK Gilts to 3.40% and Italian bonds inched higher to 4.002%.
Japan Awaits Rate Decision
Stocks in Japan rebounded, after two days of heavy losses, ahead of the Bank of Japan's decision tomorrow after the conclusion of a two-day policy meeting.
The Nikkei 225 average advanced 1.2% to 26,138.68 and the yen traded near 128.70 against the U.S. dollar after the Japanese government bond yields rose above the upper limit set by the Bank of Japan for the third day in a row.
China's GDP Growth Slows to Near 5-decade Low
Stocks in Shanghai traded nearly unchanged after the statistics bureau reported weakest economic growth in about 45 years.
China's GDP growth in the fourth quarter 2022 slowed to 2.9% from 3.9% in the third quarter.
For the full-year 2022, the economy expanded at 3%, the slowest pace since 1976 excluding 2.2% advance in 2020 during the onset of the coronavirus pandemic.
Retail sales declined 1.8% from a year ago in December and fell 0.2% in full-year 2022.
Industrial production increased 3.6% in full-year 2022 and advanced 1.3%.
The Shanghai Composite index decreased 0.1% to 3,224.24 and the Hang Seng index fell 0.8% to 21,577.64.
Chinese government said deaths outnumbered births in 2022, marking the beginning of the long forecasted ageing and the decline of Chinese population.
Total number of births declined to 9.56 million in 2022 from 10.62 million in 2021 and deaths increased to 10.41 in 2022 from 10.1 million in 2021, the National Bureau of Statistics said in a report Tuesday.
Total births declined for the sixth year in a row.
China's elderly population, those 60 years of age and older, expanded by 13 million to 280 million or one fifth of its 1.4 billion population.
India Stocks Rebound After Two Days of Losses
The Sensex index advanced 0.9% to 60,655.72 and the rupee held at 81.57 against the U.S. dollar in international trading.
Investors bid up stocks focused on the domestic economy in cautious trading after the international price of crude oil advanced, stoking fears of higher inflation.
Japan Awaits Rate Decision, China's Economic Growth Slowed to a 5-decade Low
Arjun Pandit
17 Jan, 2023
Mumbai
Asian markets closed mixed after China reported better-than-expected economic data and investors awaited rate decision from the Bank of Japan on Wednesday.
Stocks in Japan rebounded, after two days of heavy losses, ahead of the Bank of Japan's decision tomorrow after the conclusion of a two-day policy meeting.
The Nikkei 225 average advanced 1.2% to 26,138.68 and the yen traded near 128.70 against the U.S. dollar after the Japanese government bond yields rose above the upper limit set by the Bank of Japan for the third day in a row.
China's GDP Growth Slows to Near 5-decade Low
Stocks in Shanghai traded nearly unchanged after the statistics bureau reported weakest economic growth in about 45 years.
The China's GDP growth in the fourth quarter 2022 slowed to 2.9% from 3.9% in the third quarter.
For the full-year 2022, the economy expanded at 3%, the slowest pace since 1976 excluding 2.2% advance in 2020 during the onset of the coronavirus pandemic.
Retail sales declined 1.8% from a year ago in December and fell 0.2% in full-year 2022.
Industrial production increased 3.6% in full-year 2022 and advanced 1.3%.
The Shanghai Composite index decreased 0.1% to 3,224.24 and the Hang Seng index fell 0.8% to 21,577.64.
Chinese government said deaths outnumbered births in 2022, marking the beginning of the long forecasted ageing and the decline of Chinese population.
Total number of births declined to 9.56 million in 2022 from 10.62 million in 2021 and deaths increased to 10.41 in 2022 from 10.1 million in 2021, the National Bureau of Statistics said in a report Tuesday.
Total births declined for the sixth year in a row.
China's elderly population, those 60 years of age and older, expanded by 13 million to 280 million or one fifth of its 1.4 billion population.
India Stocks Rebound After Two Days of Losses
The Sensex index advanced 0.9% to 60,655.72 and the rupee held at 81.57 against the U.S. dollar in international trading.
Investors bid up stocks focused on the domestic economy in cautious trading after the international price of crude oil advanced, stoking fears of higher inflation.
Europe Movers: Ashmore Group, Centamin, Fraport, Sika, Temenos
Bridgette Randall
16 Jan, 2023
Frankfurt
Fraport AG increased 1.1% to €47.74 after the operator of Frankfurt airport reported a strong rebound in December and 2022 traffic.
In December, Frankfurt airport processed 4 million passengers, an increase of 46.2% from a year ago.
For 2022, the total number of passengers processed soared 97.2% to 48.9 million.
Cargo throughput, in contrast, fell 19% to about 159,671 metric tons in December 2022, reflecting the overall economic slowdown and the impact of airspace restrictions related to the Ukraine war.
All airports managed by Fraport reported a sharp jump in 2022 traffic.
Passenger arrivals at 14 Greek regional airports soared 79% to 31.2 million, Antalya Airport Turkish Riviera soared 41.8% to 31.1 million and two Brazilian airports at Fortaleza and Porto Alegre recorded passenger gains of 41% to 12.4 million combined.
The Bulgarian coastal airports of Burgas and Varna saw combined traffic in 2022 advanced 59.2% to 3.1 million passengers.
Temenos AG increased 8.9% to Sfr 62.0 after chief executive Max Chuard resigned under pressure from activist investors.
Sika AG increased 3.5% to Sfr 255.10 after the specialty chemical company signed a deal to sell select concrete additives business to the UK-based INEOS and meet regulatory requirements and complete the purchase of MBCC.
Ashmore Group Plc was nearly unchanged at 271.40 pence and the UK-based asset management group reported a 2% rise in assets under management.
Assets under management increased 2% to $57.2 billion at the end of December 2022 from $56.0 billion at the end of September 2022.
Fixed income under management increased 3% to $49.9 billion, equity funds assets rose 2% to $6.0 billion and alternative assets under management rose 2% to $1.3 billion.
Centamin Plc declined 3.5% to 119.35 pence after the gold mining company said that the Egyptian Supreme Court has reversed the lower court ruling challenging the Sukari gold mining concession between the government and the subsidiary of the company.
European Markets Extend 2023 Rally After Natural Gas Price Plunge 15%
Bridgette Randall
16 Jan, 2023
Frankfurt
European markets advanced and extended 9-month highs after positive sentiment prevailed.
European market indexes traded higher after the reopening of China raised hopes of easing pressures on global supply chain and easing of inflation in the U.S. also raised the hopes of smaller rate hikes.
The positive sentiment was also supported by the continued easing of natural gas prices on the rising supply in the region after China's full-storage shifted cargo deliveries to the region.
Germany's Wholesale Prices Eased In December
Germany's wholesale inflation index eased to 12.8in December from 14.9% in November, Destatis or the Federal Statistics Office said in a report Monday.
From the previous month, wholesale prices eased 1.6% in December.
In 2022, wholesale prices rose 18.8% after energy prices soared 50.1%.
European Markets Extend 9-month Highs
European markets opened higher on mild optimism on China reopening optimism and expectations of falling inflation in the region.
The DAX index increased 0.3% to 15,124.45, the CAC-40 index advanced 0.4% to 7,049.94 and the FTSE 100 index rose 0.2% to 7,860.46.
The euro inched higher to $1.082, the British pound increased to $1.2205 and the Swiss franc held steady at 92.62 U.S. cents.
Natural Gas Prices Plunge Amid Warmer Climate and Elevated Storage
Natural gas prices continue to drop after more cargo ships are expected to arrive in the region as China storage remains full.
Natural gas prices peaked on August 26 just under €340 per MWh amid warmer weather conditions and near full-storage at locations in the region.
Natural gas prices dropped 15% and extended this year's loss to 40% €54.15 per MWh.
Brent crude oil eased 92 cents to €82.36 a barrel.
Europe Stock Movers
Fraport AG increased 1.1% to €47.74 after the operator of Frankfurt airport reported a strong rebound in December and 2022 traffic.
In December, Frankfurt airport processed 4 million passengers, an increase of 46.2% from a year ago.
For 2022, the total number of passengers processed soared 97.2% to 48.9 million.
Cargo throughput, in contrast, fell 19% to about 159,671 metric tons in December 2022, reflecting the overall economic slowdown and the impact of airspace restrictions related to the Ukraine war.
All airports managed by Fraport reported a sharp jump in 2022 traffic.
Passenger arrivals at 14 Greek regional airports soared 79% to 31.2 million, Antalya Airport Turkish Riviera soared 41.8% to 31.1 million and two Brazilian airports at Fortaleza and Porto Alegre recorded passenger gains of 41% to 12.4 million combined.
The Bulgarian coastal airports of Burgas and Varna saw combined traffic in 2022 advanced 59.2% to 3.1 million passengers.
Temenos AG increased 8.9% to Sfr 62.0 after chief executive Max Chuard resigned under pressure from activist investors.
Sika AG increased 3.5% to Sfr 255.10 after the specialty chemical company signed a deal to sell select concrete additives business to the UK-based INEOS and meet regulatory requirements and complete the purchase of MBCC.
Ashmore Group Plc was nearly unchanged at 271.40 pence and the UK-based asset management group reported a 2% rise in assets under management.
Assets under management increased 2% to $57.2 billion at the end of December 2022 from $56.0 billion at the end of September 2022.
Fixed income under management increased 3% to $49.9 billion, equity funds assets rose 2% to $6.0 billion and alternative assets under management rose 2% to $1.3 billion.
Centamin Plc declined 3.5% to 119.35 pence after the gold mining company said that the Egyptian Supreme Court has reversed the lower court ruling challenging the Sukari gold mining concession between the government and the subsidiary of the company.
Wall Street Advanced After China Reopening to Ease Supply Inflation
Barry Adams
16 Jan, 2023
New York City
Stocks extended rally on the first day of new week and investors focused on the reopening in China and easing of bond yields in the U.S.
Tech stocks rally supported the market advance on the hopes that the Federal Reserve may slow future rate hikes and may even consider pausing rates earlier than previously expected.
The ending of zero-covid policy in China has raised hopes of smoother functioning of the supply chain and weakened inflation pressure as more medium and small businesses reopen after three years of stringent lockdowns.
China's three largest cities, Beijing, Shanghai and Shenzhen, are estimated to have achieved herd immunity at above 80% infection rates.
But virus infections are expected to flare-up in rural areas in the next few weeks as more than 250 million migrants return home ahead of the Lunar New Year.
Tech Stocks Extend U.S. Market Rally
Benchmark indexes extended recent gains on the hopes of rate increase slowdown and easing of supply chain pressures.
The S&P 500 index increased 0.4% to 3,999.09 and the Nasdaq Composite index added 0.7% to 11,079.16.
Crude oil advanced on the hopes of rising demand from China but natural prices struggled amid warmer-than-usual weather in the U.S. and Northern Europe.
Crude oil decreased 74 cents to $79.12 a barrel and natural gas futures rose 20 cents to $3.62 a thermal unit.
The U.S. Treasury yields retained a slight upward bias after two weeks of decline but the bond market adjusted to slowing inflation scenario in the U.S. and the Euro Area.
The yield on 2-year Treasury notes inched higher to 4.24%, 10-year notes rose to 3.51% and 30-year Treasury notes advanced to 3.62%.
European Markets Rise On Weakening Inflation
European markets advanced and extended 9-month highs after positive sentiment prevailed.
Germany's wholesale inflation index eased to 12.8in December from 14.9% in November, Destatis or the Federal Statistics Office said in a report Monday.
From the previous month, wholesale prices eased 1.6% in December.
In 2022, wholesale prices rose 18.8% after energy prices soared 50.1%.
The DAX index increased 0.3% to 15,124.45, the CAC-40 index advanced 0.4% to 7,049.94 and the FTSE 100 index rose 0.2% to 7,860.46.
The euro inched higher to $1.082, the British pound increased to $1.2205 and the Swiss franc held steady at 92.62 U.S. cents.
Natural gas prices dropped 15% and extended this year's loss to 40% €54.15 per MWh.
Brent crude oil eased 92 cents to €82.36 a barrel.
Japan's Ultra Low Rates Policy Under Pressure
Tokyo stocks were under pressure after wholesale prices accelerated in December and investors awaited the rate increase on Wednesday from the Bank of Japan after the two-day meeting.
Wholesale prices accelerated in Japan in December, the Bank of Japan reported today.
The Corporate Goods Price Index increased 10.2% in December after rising at a revised annual pace of 9.7% in November.
While the import price index eased to 22.8% in December from 28.0% in November, domestic good prices are still rising at elevated levels.
In 2022, wholesale prices rose at a faster pace of 9.7% after rising at 4.6% in November, the fastest pace since record keeping began in 1981.
The Nikkei index declined 1.1% to 25,822.32 and the yen traded up to 128 level against the U.S. dollar, the strongest level in seven months on the rising government bond yields.
China's Home Price Weakness Persists
Housing market weakness persisted for the sixteenth month in a row in December, the National Bureau of Statistics reported Monday.
New home prices eased 0.25% in December and existing home prices declined 0.5%
Of the 70 urban markets tracked by the government agency, the number of cities reporting new home price decline increased to 55 in December from 51 and existing home price decline increased to 63 cities from 62 in November.
China's reopening is expected to increase transaction volume and improve market confidence and the announced government measures are also likely to support completions of unfinished projects.
The Shanghai Composite index increased 1.0% to 3,227.59 and the Hang Seng index added 8.06 points to 21,746.72.
India Wholesale Inflation Eased In December
The Sensex index fell 0.3% to 60,092.97 after wholesale inflation dropped to the lowest level since February 2021.
Wholesale inflation eased to 4.95% from a year ago in Dec from 5.85% in Nov, the lowest level since February 2021.
On a monthly basis contraction deepened to 1.1% from 0.5% in the previous month.
The Indian rupee held steady at 81.62 against the U.S. dollar.
Japan's Inflation Acceleration Lifts Yields, China's Home Price Decline Extended In December
Arjun Pandit
16 Jan, 2023
Mumbai
Tokyo stocks were under pressure after wholesale prices accelerated in December and investors awaited the rate increase on Wednesday from the Bank of Japan after the two-day meeting.
Wholesale prices accelerated in Japan in December, the Bank of Japan reported today.
The Corporate Goods Price Index increased 10.2% in December after rising at a revised annual pace of 9.7% in November.
While the import price index eased to 22.8% in December from 28.0% in November, domestic good prices are still rising at elevated levels.
In 2022, wholesale prices rose at a faster pace of 9.7% after rising at 4.6% in November, the fastest pace since record keeping began in 1981.
After the release of the inflation data, the yield on 10-year Japanese government bonds increased to 0.52%, the highest level since 2015.
The Nikkei index declined 1.1% to 25,822.32 and the yen traded up to 128 level against the U.S. dollar, the strongest level in seven months on the rising government bond yields.
Housing market weakness persisted for the sixteenth month in a row in December, the National Bureau of Statistics reported Monday.
New home prices eased 0.25% in December and existing home prices declined 0.5%
Of the 70 urban markets tracked by the government agency, the number of cities reporting new home price decline increased to 55 in December from 51 and existing home price decline increased to 63 cities from 62 in November.
China's reopening is expected to increase transaction volume and improve market confidence and the announced government measures are also likely to support completions of unfinished projects.
The Shanghai Composite index increased 1.0% to 3,227.59 and the Hang Seng index added 8.06 points to 21,746.72.
The Sensex index fell 0.3% to 60,092.97 after wholesale inflation dropped to the lowest level since February 2021.
Wholesale inflation eased to 4.95% from a year ago in Dec from 5.85% in Nov, the lowest level since February 2021.
On a monthly basis contraction deepened to 1.1% from 0.5% in the previous month.
The Indian rupee held steady at 81.62 against the U.S. dollar.
With Easing Recession Worries and Earnings Optimism, Wall Street Extended Weekly Gains
Barry Adams
13 Jan, 2023
New York City
Benchmark indexes struggled in morning trading and bank earnings weighed on market sentiment but indexes rebounded in afternoon and extended weekly advance.
Popular indexes traded lower after Citigroup and Wells Fargo increased loan loss provisions and JPMorgan Chase and Bank of America forecasted mild recession.
Market sentiment recovered slightly after two hours of trading and investors shrugged aside the recession worries and tech stocks advanced.
The US consumer sentiment index tracked by the University of Michigan rose to 64.6 in January 2023 from 59.7 in December 2022, the highest since April.
The forward looking annual inflation expectation in January receded to 4.0% from 4.4% in December.
Signals from international markets also supported the market advance after China's imports fell less than expected in December and the euro are industrial production rebounded.
Investors awaited earnings from 90 companies next week including Netflix, Procter & Gamble, Goldman Sachs and Morgan Stanley, American Airlines and United Air and at least 30 small and mid-sized banks.
S&P 500 and Nasdaq Extend Weekly Advance
Benchmark indexes struggled after the release of major bank earnings but sentiment improved after bond yields stayed muted and rate path worries and tech stocks rebounded.
The S&P 500 index increased 0.4% to 3,999.09 and the Nasdaq Composite index increased 0.7% to 11,079.16.
For the week, the S&P 500 index increased 4.8% and the Nasdaq Composite index rose 2.7%.
Energy markets lacked direction but optimism prevailed on the hopes of higher global demand after Chinese travel season gained momentum ahead of the Lunar New Year.
Chinese policymakers also proposed a $67 billion plan to resuscitate property market and focus on 30 leading property developers without identifying names.
Crude oil increased $1.53 to $79.93 a barrel and natural gas fell 21 cents to $3.48 a thermal unit.
U.S. Treasury bonds traded nearly unchanged and investors reviewed cautious comments from large banks.
The yield on 2-year Treasury notes increased to 4.24%, 10-year Treasury notes rose to 3.50% and 30-year Treasury bonds edged lower to 3.61%.
U.S. Stock Movers
Wells Fargo declined 1.9% to $42.07 after the bank reported a plunge in earnings and the bank set aside higher reserves for credit losses and higher settlement costs linked to mortgage loan practices.
Wells Fargo fourth quarter revenue declined 6% to $19.6 billion and net income plunged 57% to $2.8 billion from $5.7 billion and earnings per share fell to 67 cents from $1.38 a year ago.
Citigroup fell 0.6% to $48.81 after the bank increased reserves to cover loan losses.
Citigroup said fourth quarter revenue increased 6% to $18 billion and net income fell to $2.5 billion from $3.2 billion and earnings per share decreased to $1.16 from $1.46 a year ago.
Bank of America Corp declined 1.5% to $33.95 after the bank reported nearly flat earnings.
BofA said fourth quarter revenue rose 11% to $24.5 billion and net income edged up to $7.1 billion from $7.0 billion and diluted earnings per share increased to 85 cents from 82 cents a year ago.
JPMorgan Chase & Company increased 0.2% to $139.80 after the bank reported higher-than-expected revenue and earnings.
JPMorgan said fourth quarter revenue rose 18% to $34.5 billion and net income increased 6% to $11 billion or $3.57 a diluted share.
Wipro Ltd declined 2% to $4.76 after the tech services providers from India reported weaker-than-expected earnings.
Wipro Ltd said December quarter revenue rose 14.4% to 2?3,200 crore and net income increased 2.8% to ?3,050 crore or ?5.57 a share.
Attrition rate for the last twelve months fell to 21.2% in the December quarter from 23% in the previous quarter.
European Markets Close at 9-month High
European market indexes closed at 9-month highs and investors searched for bargains among beaten down stocks.
Market sentiment was upbeat after the U.S. inflation moderated in December and China's international trade in December was ahead of expectations.
Investors also turned positive after Chinese policymakers proposed a $67 billion 21-point action plan to help the leading 30 property developers and support the rebound in the moribund sector.
The Euro Area trade deficit soared in November from a year ago but dropped to a 9-month low after exports expanded and imports fell sharply.
Industrial production in the currency zone also rebounded 1.0% in November after contracting 1.9% in October and the production declined 2.0% from a year ago after falling at a faster pace of 3.4% in October.
Moreover, Germany's economic growth slowed in 2022 and the UK's economy unexpectedly expanded in November.
Euro Area Trade Deficit Expands
The Euro Area trade deficit in November surged after imports rose at a faster pace than exports, Eurostat said in its latest monthly report.
Exports rose 17.2% to
Euro Area Goods Trade Deficit Doubles In Eleven Months of 2022
Bridgette Randall
13 Jan, 2023
Frankfurt
The Euro Area trade deficit in November surged after imports rose at a faster pace than exports, Eurostat said in its latest monthly report.
Exports rose 17.2% to