Market Update
Euro Area Sentiment Improved After Trade Deficit Narrowed and Industrial Output Rebounded
Bridgette Randall
13 Jan, 2023
Frankfurt
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
Movers: Bank of America, Citigroup, Delta, Goldman Sachs, JPMorgan, UnitedHealth, Wells Fargo, Wipro
Scott Peters
13 Jan, 2023
New York City
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.
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.
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.
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.
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 ?23,200 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.
Delta Air Lines, Inc dropped 4.5% to $37.98 despite the airline reporting better-than-expected quarterly results.
December quarter revenue increased 17% to $13.4 billion but net income decreased 25% to $828 million from $1.1 billion and diluted earnings per share fell to $1.29 from $1.71 a year ago.
The weak revenue guidance in the first quarter disappointed some investors.
The airline estimated first quarter 2023 revenue to increase between 14% and 17% of the corresponding period in 2019, operating margin between 4% and 6% and earnings per share between 15 cents and 40 cents.
Goldman Sachs increased 0.8% to $372.90 after the financial services provider said in a regulatory filing it plans to reorganize its operations to three business units focused on banking and financial markets, asset and wealth management and consumer services.
The company also said its recent push in consumer financial services has cost more than $3 billion between 2021 and September 2022.
UnitedHealth Group Inc increased 0.2% to $496.85 after the health insurance company said fourth quarter 2022 revenue increased to $82.8 billion from $73.7 billion a year ago.
Net income increased to $4.7 billion from $4.1 billion and diluted earnings per share rose to $5.03 from $4.26 a year ago.
The medical care ratio at 82.0% for full year 2022 and 82.8% for the fourth quarter was consistent with the company
China Property Stimulus Lifts Hopes, Japan Bond Yields at 6-year High
Arjun Pandit
13 Jan, 2023
New York City
Asian markets traded mixed after the yen and the Japanese government bond yields rose.
Markets in the region reacted to local economic news and government actions and crude oil prices advanced on the hopes of a demand recovery in China.
Yen and JGB Yields Advance
Japan's benchmark indexes traded lower on the worries that the rising yen may negatively impact exporting companies.
Taiwan-based TSMC said that the company is considering expanding its chip production operation in Japan if "demand from customers and the level of government support makes sense."
The Nikkei 225 average declined 1.3% to 26,119.52 and the yen rose to a seven-month high after Japanese government bond yields rose to a seven-year high to 0.545%.
Hong Kong Stocks Rebound on Property Market Stimulus
Hong Kong stocks surged after the government's task force said it plans to provide US$67 billion in liquidity to a select list of 30 developers and support the property market, according to a report from the state-controlled news agency Xinhua.
About 50 Chinese property developers have defaulted on $100 billion in loans to international investors in the last two years, according to an estimate by JPMorgan.
People's Bank of China to Pursue Flexible Yuan Policy
Mainland China stocks also gained after the People's Bank of China showed more willingness to pursue "flexible yuan" to support domestic price stability and growth as advanced economies adjust.
The Shanghai Composite index increased 1% to 3,195.31 and the Hang Seng index advanced 1% to 21,738.66.
India Stocks Rebound On Moderating Inflation
Market indexes in Mumbai rebounded after consumer price inflation in December fell for the third month in a row and the index stayed below the Reserve Bank of India's target range between 2% and 6%.
Industrial production also rebounded in November and gold imports plunged almost 80% in December, raising the prospect of stronger rupee and better earnings in the December quarter.
The Sensex index in Mumbai rebounded 0.5% to 60,261.18 and the Indian rupee recovered to one-month high to 81.20 against the U.S. dollar.
Stocks On Pause After Mixed Earnings from Major Banks and Recession Worries
Barry Adams
13 Jan, 2023
New York City
Benchmark indexes struggled in morning trading and bank earnings weighed on market sentiment.
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.
U.S. Indexes
Benchmark indexes are set to close higher for the week and the Nasdaq index is up 3.5% and the S&P 500 index 1.5% so far.
The S&P 500 index fell 0.1% to 3,979.10 and the Nasdaq Composite index increased 7.94 points to 11,009.04.
Energy markets lacked direction but optimism prevailed on the hopes of higher global demand after Chinese business activities picked up and travel season gained momentum ahead of the Lunar New Year.
Crude oil increased $1.11 to $79.51 a barrel and natural gas fell 9 cents to $3.60 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 4.16%, 10-year Treasury notes rose to 3.53% and 30-year Treasury bonds edged lower to 3.57%.
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 Highs
European market indexes closed at 9-month highs and investors searched for bargains among beaten down stocks.
The DAX index increased 0.4% to 15,114.08, the CAC-40 index rose 0.8% to 7,030.58 and the FTSE 100 index advanced 0.8% to 7,852.90.
The region's currencies continued to advance on the hopes that the U.S. rate hikes may slow.
The Federal Reserve is likely to raise rates by 25 basis points at the next policy meeting after raising rates by 75 basis points in a row followed by the last 50 basis points rate increase.
The euro edged higher to $1.082, the British pound inched higher to $1.2206 and the Swiss franc advanced to 92.65 U.S. cents.
The yield on 10-year German Bunds declined to 2.13%, French bonds fell to 2.60%, UK Gilts to 3.33% and Italian bonds to 3.96%.
Energy prices continued to decline in the region amid mild weather conditions and elevated natural gas storage.
Brent crude oil rose 86 cents to $84.89 a barrel and Dutch TTF natural futures contract price edged lower 2.9% to
World Stocks Extended Weekly Rally After U.S. Inflation Cooled
Barry Adams
12 Jan, 2023
New York City
Benchmark indexes traded higher after inflation moderated in December raising hopes of yet another trim in rate hike at the next meeting at the end of the month.
Consumer prices rose at a slower pace in December, the slowest in fifteen months, after gasoline inflation cooled at the fastest pace in the year.
Rising transportation costs and elevated housing costs, fueled the inflation in December.
Weakening inflation extended gains in tech stocks for the fifth session in a row and the Nasdaq Composite advanced 4.1% in the week so far.
Moreover, weekly jobless claims fell 1,000 to 205,000 for the week ending on January 7, the Department of Labor reported Thursday.
The initial jobless claims dropped to a one-month low highlighting the labor market strength despite seven rate hikes in 2022.
U.S. December Inflation Moderated
The Consumer Price Index inflation fell 0.1% in December from November and eased to 6.5% on an annual basis, the BLS reported Thursday.
The inflation index declined for the first time since May 2020 and seems to have peaked at 9.1% in June 2020.
Energy prices rose 7.3% and food prices advanced 10.4% from a year ago and price increases for both categories were smaller than the rise in November.
Core inflation accelerated to 0.3% from November and eased to 5.7% from a year ago.
Cost of shelter stayed elevated and increased 0.8% on a monthly basis and jumped 7.5% from a year ago.
Despite the easing of inflation, price increases are still significantly ahead of the Federal Reserve's target of 2%.
U.S. Indexes In Review
Benchmark indexes struggled in early trading after consumer price inflation was in line with expectations.
The S&P 500 index increased 0.3% to 3,983.17 and the Nasdaq Composite index increased 0.6% to 11,001.10.
Crude oil rose 93 cents to $78.34 a barrel and natural gas increased 1 cent to $3.69 a thermal unit.
The yield on 2-year Treasury notes eased to 4.13%, 10-year Treasury notes edged lower to 3.42% and 30-year Treasury bonds inched lower to 3.56%.
U.S. Stock Movers
American Airlines Group Inc jumped 5.2% to $16.13 after the airline raised its fourth quarter revenue outlook on higher demand stronger-than-estimated prices.
The company estimated fourth quarter total revenue to rise between 16% and 17% from the comparable quarter in 2019, higher than its prior guidance of up 11% to 13%.
The airline also lifted its adjusted earnings per share outlook range between $1.12 and $1.17 from 50 cents to 70 cents.
The company said it has achieved more than half of its goal to reduce total debt by $15 billion by the end of 2025, with total debt down more than $7.5 billion in the first 18 months of the program.
Delta Air, United Airlines and Southwest rose between 2% and 3%.
Bed Bath & Beyond added 15.5% to $4.02 extended rally to the second day after meme-stocks gained and speculators bid up stock of the struggling retailer.
Bed Bath & Beyond stock has soared more 170% in the last five trading days.
Cleveland-Cliffs Inc jumped 4.4% to $20.09 after Morgan Stanley lifted its stock rating to "overweight" from an "equal-weight."
Morgan Stanley analyst lifted its stock price target to $26 from $13.60.
Revenue in the third quarter ending in September declined to $5.7 billion from $6.0 billion a year ago. Net income fell to $165 million or 29 cents from $1.3 billion or $2.33 a diluted earnings per share.
Cognizant Technology Solutions Corp soared 8.1% to $66.44 after the company appointed former Infosys president Ravi Kumar as chief executive and a member of the board.
The company also raised its estimate for the fourth quarter to $4.8 billion from the previous range between $4.72 billion and $4.77 billion.
The company also estimated full-year 2022 adjusted earnings per share between $4.38 and $4.40 from the previous guidance between $4.43 and $4.46.
Walt Disney Co increased 3.4% to $99.30 after the company elected independent director Mark Parker as chairman of the board and geared up for a proxy battle with activist investor Nelson Peltz.
Infosys Ltd ADR increased 0.6% to $18.23 after the India-based tech services provider reported December quarter revenue increased 9.6% to $4.66 billion.
Net income in the quarter increased to $800 million from $774 million and diluted earnings per share rose to 19 cents from 18 cents a year ago.
The company also said it has initiated the purchase of its stock on December 7 and as of today acquired 31.3 million or $600 million worth of its stock.
The company has acquired 51.5% of total authorization of ?9,300 crore (about $1.15 billion) at an average price of ?1,531 per share (or $18.80), compared to maximum buyback price of ?1,850 per share (or $22.70).
KB Home declined 3.4% to $34.71 after the home-builder reported slightly weaker-than-expected quarterly results.
Revenue in the fourth quarter 16% to $1.94 billion and homes delivered increased 3% to 3,786 and average selling price rose 13% to $510,400.
Net income increased to $216.4 million from $174.2 million and diluted earnings per share increased to $2.47 from $1.96 a year ago.
The home-builder estimated revenue in the fiscal first quarter to range between $125 billion and $1.4 billion and average home price to range between $490,000 and $500,000.
Logitech International SA plunged 17.1% to $56.35 after the computing devices maker lowered its sales outlook.
Logitech said preliminary revenue in the fiscal third quarter ending In December between $1.26 billion and $1.27 billion, a decline between 22% and 23% in the U.S. dollars.
Preliminary GAAP operating income is estimated to range between $171 million and $176 million, down between 33% and 35%, compared to $263 million in the same quarter a year ago.
European Markets Advance to 9-month Highs
European markets extended gains to 9-month highs on the expectations of moderating inflation worldwide and ahead of the U.S. inflation report later today.
The indexes accelerated gains after the U.S. inflation eased to 6.5% in December on the sharp decline in gasoline prices and declined 0.1% from the previous month, the Bureau of Labor Statistics reported Thursday.
Europe Indexes In Review
The DAX index increased 0.7% to 15,058.30, the CAC-40 index advanced 0.7% to 6,975.68 and the FTSE 100 index traded higher 0.9% to 7,794.04.
Brent crude oil closed up $1.56 to $84.23 a barrel and the Dutch natural gas futures contract price rose 2.2% to
Europe Movers: Centrica, M&S, Persimmon, Porsche, Roche, Tesco, Suedzucker, Vodafone
Bridgette Randall
12 Jan, 2023
Frankfurt
Suedzucker AG rose as much as 2% before turning lower 3% to
European Markets Extended Gains, Yield Eased, Pound, Euro and Swiss Franc Edge Higher
Bridgette Randall
12 Jan, 2023
Frankfurt
European markets extended gains to 9-month highs on the expectations of moderating inflation worldwide and ahead of the U.S. inflation report later today.
The indexes accelerated gains after the U.S. inflation eased to 6.5% in December on the sharp decline in gasoline prices and declined 0.1% from the previous month, the Bureau of Labor Statistics reported Thursday.
Europe Indexes In Review
The DAX index increased 0.7% to 15,058.30, the CAC-40 index advanced 0.7% to 6,975.68 and the FTSE 100 index traded higher 0.9% to 7,794.04.
Brent crude oil closed up $1.56 to $84.23 a barrel and the Dutch natural gas futures contract price rose 2.2% to
Falling Gasoline Price Slowed Inflation In December, Housing Inflation Stays Elevated
Brian Turner
12 Jan, 2023
New York City
The Consumer Price Index inflation fell 0.1% in December from November and eased to 6.5% on an annual basis, the Bureau of Labor Statistics reported Thursday.
The inflation index declined for the first time since May 2020 and seems to have peaked at 9.1% in June 2020.
Energy prices rose 7.3% and food prices advanced 10.4% from a year ago and price increases for both categories were smaller than the rise in November.
Used vehicle prices declined 8.8% in December after falling at 3.3% in November and fell 2.5% from the previous month.
Gasoline prices at the pump stations in December declined 9.4% from the previous month and fell 1.5% from a year ago and fuel prices have declined in the last five of the last six months after reaching a peak in June 2022.
Core inflation, which excludes energy and food, accelerated to 0.3% from November and eased to 5.7% from a year ago.
Cost of shelter stayed elevated and increased 0.8% on a monthly basis and jumped 7.5% from a year ago.
Despite the easing of inflation, price increases are still significantly ahead of the Federal Reserve's target of 2%.
Movers: American Airlines, Cleveland-Cliffs, Cognizant, Disney, Infosys, KB Home, Logitech
Scott Peters
12 Jan, 2023
New York City
American Airlines Group Inc jumped 5.2% to $16.13 after the airline raised its fourth quarter revenue outlook on higher demand stronger-than-estimated prices.
The company estimated fourth quarter total revenue to rise between 16% and 17% from the comparable quarter in 2019, higher than its prior guidance of up 11% to 13%.
The airline also lifted its adjusted earnings per share outlook range between $1.12 and $1.17 from 50 cents to 70 cents.
The company said it has achieved more than half of its goal to reduce total debt by $15 billion by the end of 2025, with total debt down more than $7.5 billion in the first 18 months of the program.
Delta Air, United Airlines and Southwest rose between 2% and 3%.
Bed Bath & Beyond added 15.5% to $4.02 extended rally to the second day after meme-stocks gained and speculators bid up stock of the struggling retailer.
Bed Bath & Beyond stock has soared more 170% in the last five trading days.
Cleveland-Cliffs Inc jumped 4.4% to $20.09 after Morgan Stanley lifted its stock rating to "overweight" from an "equal-weight."
Morgan Stanley analyst lifted its stock price target to $26 from $13.60.
Revenue in the third quarter ending in September declined to $5.7 billion from $6.0 billion a year ago. Net income fell to $165 million or 29 cents from $1.3 billion or $2.33 a diluted earnings per share.
Cognizant Technology Solutions Corp soared 8.1% to $66.44 after the company appointed former Infosys president Ravi Kumar as chief executive and a member of the board.
The company also raised its estimate for the fourth quarter to $4.8 billion from the previous range between $4.72 billion and $4.77 billion.
The company also estimated full-year 2022 adjusted earnings per share between $4.38 and $4.40 from the previous guidance between $4.43 and $4.46.
Walt Disney Co increased 3.4% to $99.30 after the company elected independent director Mark Parker as chairman of the board and geared up for a proxy battle with activist investor Nelson Peltz.
Infosys Ltd ADR increased 0.6% to $18.23 after the India-based tech services provider reported December quarter revenue increased 9.6% to $4.66 billion.
Net income in the quarter increased to $800 million from $774 million and diluted earnings per share rose to 19 cents from 18 cents a year ago.
The company also said it has initiated the purchase of its stock on December 7 and as of today acquired 31.3 million or $600 million worth of its stock.
The company has acquired 51.5% of total authorization of ?9,300 crore (about $1.15 billion) at an average price of ?1,531 per share (or $18.80), compared to maximum buyback price of ?1,850 per share (or $22.70).
KB Home declined 3.4% to $34.71 after the home-builder reported slightly weaker-than-expected quarterly results.
Revenue in the fourth quarter 16% to $1.94 billion and homes delivered increased 3% to 3,786 and average selling price rose 13% to $510,400.
Net income increased to $216.4 million from $174.2 million and diluted earnings per share increased to $2.47 from $1.96 a year ago.
The home-builder estimated revenue in the fiscal first quarter to range between $125 billion and $1.4 billion and average home price to range between $490,000 and $500,000.
Logitech International SA plunged 17.1% to $56.35 after the computing devices maker lowered its sales outlook.
Logitech said preliminary revenue in the fiscal third quarter ending In December between $1.26 billion and $1.27 billion, a decline between 22% and 23% in the U.S. dollars.
Preliminary GAAP operating income is estimated to range between $171 million and $176 million, down between 33% and 35%, compared to $263 million in the same quarter a year ago.