Market Update
China Stocks Extend Rally After PBOC Promised More Support, Yen Edged Lower
Arjun Pandit
05 Jan, 2023
Mumbai
Japan's market indexes closed higher following the weakness in the yen and China optimism lifted indexes in Shanghai and Hong Kong.
The Nikkei 225 average gained 0.4% to 25,820.80 after the yen edged lower to 132.78 against the U.S. dollar.
Tech stocks and exporters led the gainers in Tokyo trading today. Nippon Sheet Glass led the gainers with a rise of 7.5%.
Softbank Group, Sony, Advantest and Tokyo Electron gained between 2% and 4%.
Toyota Motor, Honda Motor and Nissan Motor fluctuated between a gain and a loss of 1% on the hopes that the revival in economic growth may lift global sales.
The Chinese government said it will reopen its border with Hong Kong on January 8, nearly three years after halting travel between the mainland and the island to contain the spread of Covid virus.
Hong Kong extended three week gains to 12% and 4% in the year so far after the People's Bank of China said it plans to provide more financial support to the struggling property sector after its annual work conference.
Alibaba.com led the gainers after the company accelerated its restructuring of Ant Financial Services Group after the banking regulators permitted the company to increase its capital to 18.5 billion yuan from 8 billion yuan.
The move will also allow the payment processor and financial services provider to expand its consumer base and potentially revive the listing of Ant Financial in Hong Kong.
The Shanghai Composite index soared 1.1% to 3,155.22 and the Hang Seng index advanced 1.3% to 21,052.17.
Market indexes in China rebounded despite the service sector activities contracted for the fourth month in a row in December, though the pace of decline fell.
The Caixin/S&P Global PMI Services Index increased to 48 in December from 46.7% in November.
Stocks Struggle to Advance With Higher Rates Ahead
Barry Adams
04 Jan, 2023
New York City
Benchmark indexes spent the session in the positive zone but lacked direction in volatile trading.
Investors are struggling to determine the future direction of interest rates, inflation and corporate earnings amid mixed signals from the economy.
The latest jobs survey showed the labor market remained strong and the December Fed's minutes of meeting failed to provide any additional insights in the inner workings of the economy.
Fed policy committee members generally supported higher rates and raised their estimates of interest rates in 2023 but policymakers also reinforced the need to increase rates until they are restrictive for the economy.
At the last meeting in December, the Federal Reserve raised its key lending rate range to between 4.25% and 4.50%, the highest level in 15 years.
The economic projections provided along with the rate decision also suggested rates are likely to rise as high as 5.1% in 2023 from the previous estimate of 4.6%.
"Participants generally observed that maintaining a restrictive policy stance for a sustained period until inflation is clearly on a path toward 2 percent is appropriate from a risk-management perspective," noted the December minutes of meeting.
Overseas, inflation continued to drift lower in France, Germany, Spain and Switzerland but business and consumer spending continued to remain weak in China, fueling the prospect of slower or no economic growth worldwide.
Indexes In Review
Two popular benchmark indexes struggled to get traction after latest job data indicated strong labor market conditions but mortgage applications dropped to the lowest level since 1996.
The S&P 500 index rose 0.75% to 3,852.97 and the Nasdaq Composite index increased 0.7% to 10,458.76.
Crude Oil and Natural Gas Fall
Crude oil prices fell for the second week in a row amid the rising supply and falling demand growth.
Brent crude dropped near the one-year of $75.60 a barrel low last seen on December 9th on warmer than expected weather in Europe.
WTI crude future for the immediate month delivery also fell near the one-year low $70.30 a barrel reached on December 9.
WTI crude oil declined 5% or $3.78 to $73.11 a barrel and natural gas rose 4.2% or 16 cents to $4.15 a thermal unit.
Treasury Yields Eased Again
The yields on U.S. treasury bonds continued to drift lower as investors piled into government securities on the expectations that the Federal Reserve Bank will gradually slow its future rate hikes.
The yield on 2-year Treasury notes decreased to 4.36% and 10-year Treasury notes fell to 3.68% and 30-year Treasury bonds dropped to 3.80%.
U.S. Stock Movers
China-linked stocks were in focus again today on the ongoing speculation on the rebound in business and travel activities after the abrupt ending of zero-covid restrictions.
Tesla rose 3.3% to $111.49 on the hopes that China sales will revive soon. The company also extended 10,000 yuan ($1,388) offered in the last two weeks for vehicles made in Shanghai till the end of January.
China's economic growth has dropped to its lowest pace in decades after the flare-up of Covid-infections and steep job losses in the tech sector.
Rivian Automotive fell 0.2% to $17.37 after the electric vehicle maker missed its production target.
Job Opening Eased In November
Job openings in the U.S. fell slightly in November, indicating the job market strength, according to the latest data released by the Bureau of Labor Statistics.
Job openings in November declined 54,000 to 10.5 million and have slowly eased after hitting 11.9million peak in March.
Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively.
Mortgage Applications Down to 26-year Low
Mortgage applications dropped 13.2% from two weeks earlier in the week ending in December according to the latest survey released by the Mortgage Bankers Association.
The Market Composite Index, a measure of mortgage loan application volume, decreased 13.2% on a seasonally adjusted basis from two weeks earlier.
On an unadjusted basis, the Index decreased 39.4 percent compared with the two weeks ago
European Markets Gained 3rd Day In Row After Inflation Pressures Eased
Bridgette Randall
04 Jan, 2023
Frankfurt
European markets closed higher for the third day in a row after inflation unexpectedly fell in France.
Market sentiment was positive after inflation in France declined matching the recent weakening of inflation in Spain and Germany. Though inflation eased the price pressure remained elevated.
Moreover, Germany's import inflation also eased, supporting further market advance in the session today.
France's December Inflation Eased
Harmonized inflation rate declined to 6.7% in December from 7.1% in November, France's statistical agency INSEE said Wednesday.
Inflation, when measured on the consumer price index, declined to 5.9% in December from 6.2% in November.
Spain's harmonized inflation declined to 5.6% in December from 6.6% in November and Germany's inflation dropped to 9.6% from 11.3% in the previous month.
Germany's Import Price Inflation Dropped In November
Germany's import price inflation declined in November to 14.5% from 23.5% in October, data from Destatis or Federal Statistics Office showed Wednesday.
Elevated energy prices drove the inflation in the month.
Energy import prices rose 37.9% in November and non-energy imports increased 9.7% from a year ago and rose 0.7% from the previous month.
Import prices declined for the third month in a row and prices fell 4.5% in November after dropping 1.2% in October.
Export price inflation also rose but at a slower pace in November and price increase slowed to 11.6% from 13.6% in October.
On a monthly basis, export prices decreased 0.5% after falling 1.9% in October.
Swiss Inflation Accelerated In 2022
Swiss Inflation surged in 2022 after energy prices and housing costs rebounded, according to the latest data from the Federal Statistics Office.
Average annual consumer price index inflation increased to 2.8% in 2022 from 0.6% in 2021 and rebounded from the decline of 0.6% in 2020.
in 2022, the price of goods produced domestically rose 1.6% and imported goods surged 6.7%.
Price inflation slowed in December to 2.8% from 3.0% rise in November.
The prices continued to rise in 2022 and peaked at 8.5% in August and December inflation dropped to the lowest level seen eight months ago.
European Market Indexes Advanced 3rd Day In a Row
The DAX index increased 2.2% to 14,490.78, the CAC-40 index jumped 2.3% to 6,776.43 and the FTSE 100 index added 0.4% to 7,585.19.
Brent crude oil decreased 5.1% or $4.10 to $77.93 a barrel and Dutch TTF natural gas futures plunged 10% to
Minutes: Fed Policy Committee Members Support Hawkish Stance
Brian Turner
04 Jan, 2023
New York City
Federal Reserve policymakers sent a strong signal that a slowdown in rate increase does not show the central bank's commitment from waking away from its commitment in bringing down inflation.
The December minutes of meeting showed the support for the continuation of the policymakers' hawkish stance against elevated inflation and the need for the rates to rise to restrictive level.
The policy committee members supported to continue to increase its holdings of Treasury securities by at least $80 billion per month and agency MBS by at least $40 billion per month "until substantial further progress had been made toward the Committee's maximum employment and price stability goals."
Mortgage Applications Down to 26-year Low
Brian Turner
04 Jan, 2023
New York City
Mortgage applications dropped 13.2% from two weeks earlier in the week ending in December according to the latest survey released by the Mortgage Bankers Association.
The Market Composite Index, a measure of mortgage loan application volume, decreased 13.2% on a seasonally adjusted basis from two weeks earlier.
On an unadjusted basis, the Index decreased 39.4 percent compared with the two weeks ago
Job Openings Eased In November
Brian Turner
04 Jan, 2023
New York City
Job openings in the U.S. fell slightly in November, indicating the job market strength, according to the latest data released by the Bureau of Labor Statistics.
Job openings in November declined 54,000 to 10.5 million and have slowly eased after hitting 11.9million peak in March.
Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively.
Movers: Carnival Corp, General Electric, GE Healthcare, Microsoft, Rivian, Salesforce, Tesla
Scott Peters
04 Jan, 2023
New York City
China-linked stocks were in focus again today on the ongoing speculation on the rebound in business and travel activities after the abrupt ending of zero-covid restrictions.
Tesla Inc rose 3.3% to $111.49 on the hopes that China sales will revive soon. The company also extended 10,000 yuan ($1,388) offered in the last two weeks for vehicles made in Shanghai till the end of January.
China's economic growth has dropped to its lowest pace in decades after the flare-up of Covid-infections and steep job losses in the tech sector.
In the first 11 months to November, Tesla delivered 390,000 Model 3 and model Y vehicles, a 22% jump from full-year 2021 sales of 321,000 vehicles.
China also ended its cash subsidy from the beginning of 2023 as electric vehicle sales jumped to 6.4 million in 2022 from 2.99 million in 2021 according to the China Passenger Car Association.
Rivian Automotive fell 0.2% to $17.37 after the electric vehicle maker missed its production target.
Casino operators Las Vegas Sands Corp, MGM Resorts and Wynn Resorts Limited soared between 5% and 6% on the hopes of a rebound in travel in China.
Salesforce Inc increased 3.4% to $139.46 after the software company said it plans to eliminate 10% of its staff and also reduce office space as part of its restructuring plan.
The company plans to take a charge between $1.0 billion and $1.4 billion related to staff trimming and an additional charge between $450 million and $650 million related to office space reduction.
The cloud-based software developer employed about 79,000 people and let go of less than 1,000 people in November.
Carnival Cruise Corp increased 8.6% to $8.99 after the company said it plans to raise prices from April 1 following the price increase by Norwegian Cruise from Jan 1.
Microsoft Corp fell 4.9% to $227.21 after UBS lowered its stock rating to "neutral" from "buy" citing potential slowdown concerns in its Office and Azure business units.
General Electric gained 3.6% to $68.71 after the company spun off its healthcare unit today.
GE Healthcare Technologies jumped 3.4% to $58.10 on the first day of trading.
In 2021, General Electric announced its plan to spin off its energy unit in 2024 and healthcare unit in 2022 and focus on its aviation business.
Coinbase Global jumped 13.7% to $38.22 after the company entered into a settlement with the New York Department of Financial Services and agreed to pay a penalty of $50 million for prior compliance violations.
The cryptocurrency exchange also agreed to invest additional $50 million in additional compliance measures and improvements.
American Airlines, Delta Air and United Airlines increased between 5% and 6% after crude oil prices fell near one-year low.