Market Update
Rate Anxieties and Recession Worries Dominate Market Sentiment
Barry Adams
04 Jan, 2023
New York City
Stocks struggled on the second day of trading this week and investors weighed the labor market strength against the Fed-induced economic slowdown worries.
Tech stocks continued to drift lower on the worries that the rising rates will negatively impact future earnings and energy stocks traded lower after crude oil prices slumped towards a one-year low.
Investors lowered goods inflation expectations after the crude oil and natural gas prices eased for the second week in a row but the labor market strength also raised concerns that inflation in wages and salaries may not subside soon.
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 0.45% to 3,841.49 and the Nasdaq Composite index increased 0.3% to 10,420.01.
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 4% or $3.08 to $73.88 a barrel and natural gas rose 1.8% or 6 cents to $4.05 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 4.37% and 10-year Treasury notes fell to 3.70% and 30-year Treasury bonds dropped to 3.81%.
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
Nikkei In Japan Drops, China Indexes Rise On Peak Virus Hopes
Arjun Pandit
04 Jan, 2023
Mumbai
The Nikkei index in Tokyo plunged 1.45% to 25,716.86 after investors returned from a long holiday weekend and reacted cautiously to the upcoming release of the U.S. Federal Reserve's minutes of meeting later in the day.
Oil exploration companies led the decliners after crude oil continued its slide towards the one-year low. Shipping companies also were among the leading losers on the worries of falling international trade.
Nippon Yusen dropped 6.5% to
European Markets Advance for Second Day, German Inflation Eased
Bridgette Randall
03 Jan, 2023
Frankfurt
European markets opened higher and extended previous session's gains on the earnings optimism.
Investors welcomed the easing of inflation in Germany and the expectations of inflation peaking in France and a steady job market in Germany.
German Inflation Edged Lower, Jobless Rate Held Steady
Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday.
November's seasonally adjusted jobless rate held steady at 3.0% in Germany according to the official data released by the agency.
The number of people out of work fell by 6,500 from the previous month to 1.32 million.
The seasonally adjusted number of persons in employment rose 45,000 in November from October when the labor market expanded by 32,000.
From a year ago, the seasonally adjusted jobs increased 1.0% or 472,000, matching the 1.1% rate or the gain of 476,000 in October.
French Inflation Expected to Peak In Early 2023
Inflation in France is expected to peak in the early 2023 before retreating, said French Prime Minister Elisabeth Borne to a local radio station.
China Worries Persist
Despite the positive mood in trading, investors were cautious on the rapidly spreading Covid-virus in China.
Moreover, investors took note of the falling manufacturing activities in China.
The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus.
The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics.
A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.
Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades.
U.S. Coronavirus Infections Rise
The number of hospitalized patients with Covid continues to rise in the United States.
The latest survey data released by the New York Times showed that 15% of patients subjected to Covid tests are diagnosed with coronavirus in the last two week and the highest in several months.
U.S. hospitals reported an 8% increase in the number of patients with Covid and 11% rise in the number patients admitted to intensive care units.
U.S. Construction Activities Expand
U.S. construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday.
Indexes In Review
The DAX index increased 0.8% to 14,181.67, the CAC-40 index rose 0.4% to 6,623.89 and the FTSE 100 index advanced 1.4% to 7,554.09.
Brent crude oil prices declined $3.53 to $82.47 a barrel and Dutch TTF natural gas futures dropped 6.1% to $72.31 a thermal unit.
The yield on 10-year German Bunds edged lower to 2.37%, French bonds dropped to 2.92%, UK Gilts to 3.65% and Italian bonds fell to 4.50%.
European Stock Movers
Energy companies were in focus after crude oil jumped higher in the early trading.
BP Plc gained 4.4% and Shell advanced 4.1% despite the ongoing global demand worries and slow rebound in activities in China.
Brenntag SE increased 6.4% to
Movers: Apple, Las Vegas Sands, Lucid Group, MGM, Rivian, Tesla, Traeger, Wynn Resorts
Scott Peters
03 Jan, 2023
New York City
Apple Inc declined 3.3% to $125.03 on the worries that iPhone sales may fall more than 20% in the latest quarter on the ongoing demand weakness in China and at home in the U.S.
Apple stock declined 18% in 2022 and investors worried that a slowing global economy may dampen the appetite for expensive electronic gadgets.
China-linked casino operators traded higher on the hopes of a rebound in social mobility.
MGM Resorts International declined 0.5% to $33.36, Las Vegas Sands Corp advanced 2.2% to $49.27 and Wynn Resorts increased 3.1% to $85.08.
Newmont Mining jumped 4.9% to $49.52 after gold jumped 1% to $1,837.93 an ounce.
Barrick Gold added 3.70% to $17.82 and Agnico Eagle Mines jumped 3.1% to $53.60.
Tesla Inc plunged 13.1% to $106.93 after the automobile maker's fourth quarter deliveries disappointed investors.
In the fourth quarter, Tesla produced 439,701 vehicles and delivered 405,278 vehicles.
In 2022, the company sold 1.31 million vehicles, 40% higher than a year ago.
In the 2021 fourth quarter Tesla delivered 308,600 vehicles and in full-year delivered 936,172 vehicles.
The company has been struggling to sell luxury vehicles in China after zero-Covid policy restricted mobility in the first ten weeks of the last quarter.
The weakness in Tesla deliveries spilled over to other electric vehicles stocks.
Rivian Automotive Inc dropped 6.3% to $17.27 and Lucid Group dropped 9.3% to $6.20.
Both luxury automotive companies are struggling with weak cash flows.
Traeger Inc declined 7.6% to $2.61 after RBC downgraded the stock to "sector perform" from sector outperform."
Stocks, Bond Yields and Commodities Fall On Global Slowdown Worries
Barry Adams
03 Jan, 2023
New York City
Stocks drifted lower, commodities eased and bond yields rose as three markets reacted differently to the ongoing rate path and economic slowdown worries.
Stock market focused on the Federal Reserve's aggressive rate hike stance, commodities focused on the slowing worldwide demand and the bond market drew liquidity from investors looking for safe haven.
Ongoing concerns of rate path worries and economic slowdown were compounded by the worries of slowdown in China and in the European Union.
The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus.
The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics.
A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.
Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades.
Investors were also cautious ahead of a slew of economic reports in the U.S. this week. Minutes of the Federal Reserve's latest minutes of meeting are scheduled on Wednesday and December jobs report on Friday.
Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday.
Construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday.
Indexes In Review
Benchmark indexes opened higher but failed to hold onto early gains.
Popular indexes accelerated the decline after crude oil prices dropped more than 4% on weak demand outlook and natural gas prices plunged 12% on rising supply.
The S&P 500 index declined 0.8% to 3,809.37 and the Nasdaq Composite index dropped 1.1% to 10,356.85.
Crude oil prices dropped $3.04 to $77.97 a barrel and natural gas fell 11.3% to $3.96 a thermal unit.
The bond yields eased on speculation that the Federal Reserve will slow its aggressive rate hike stance to avoid dipping the economy into a recession.
The yield on 2-year Treasury notes inched higher to 4.41%, 10-year notes fell to 3.78% and 30-year Treasury bonds declined to 3.87%.
U.S. Stock Movers
Tesla Inc plunged 13.1% to $106.93 after the automobile maker's fourth quarter deliveries disappointed investors.
In the fourth quarter, Tesla produced 439,701 vehicles and delivered 405,278 vehicles.
In 2022, the company sold 1.31 million vehicles, 40% higher than a year ago.
In the 2021 fourth quarter Tesla delivered 308,600 vehicles and in full-year delivered 936,172 vehicles.
The company has been struggling to sell luxury vehicles in China after zero-Covid policy restricted mobility in the first ten weeks of the last quarter.
Apple Inc declined 3.3% to $125.03 on the worries that iPhone sales may fall more than 20% in the latest quarter on the ongoing demand weakness in China and at home in the U.S.
Apple stock declined 18% in 2022 and investors worried that a slowing global economy may dampen the appetite for expensive electronic gadgets.
The Nikkei index posted its first annual loss in four years and closed down 11% in 2022.
30 Dec, 2022
Double Digit Losses on Wall Street In 2022, Omicron Variant Rapidly Spreads In U.S.
Barry Adams
30 Dec, 2022
New York City
Benchmark indexes declined on the final trading day of 2022 and indexes posted the worst annual losses since 2008.
The Federal Reserve dominated market sentiment in 2022 and seven rate hikes in the year crushed growth stocks, dragged down indexes and halted three year advances.
The pace of rate hikes and the nature of economic slowdown are expected to dominate market sentiment in the first quarter of 2023.
Moreover, investors are worried that the current market valuations do not reflect higher rates and weakening earnings trends.
Stocks are not expected to rebound until the Fed pivots or a recession arrives and supply chain disruptions ease.
Worries of China virus flare-up are added to the growing list of headwinds faced by global markets.
U.S. scientists and Center for Disease Control and Prevention are also closely watching the rapidly spreading mutation omicron XBB.1.5.
Viruses in the XBB omicron family are highly immune evasive and strains with multiple variants have potential to render Covid-19 vaccine and omicron booster less effective and bind better to cells.
China Virus Flare-up Worries
Caution prevailed in trading on the global economic slowdown worries and the rapid spread of Covid-virous in China.
Covid infections are rapidly spreading in China and in the next two weeks the pace of spread is expected to accelerate as people begin to travel back to the countryside ahead of the Lunar New Year.
At least 250 million or 25 crore people are expected to travel from fifty largest cities to reunite with their families in villages.
Moreover, Chinese citizens will be permitted to travel to foreign destinations in the next two weeks as well, stoking fears of worldwide spread of the virus and spawning new variants.
U.S. Indexes In Review
Benchmark indexes dropped after multiple rate hikes raised the prospect of economic slowdown and the indexes fell the most since 2008 when the S&P 500 fell 38.5%.
The S&P 500 index declined 0.3% to 3,839.50 and the Nasdaq Composite index dropped 0.1% to 10,466.48.
In 2022 the S&P 500 index fell 20% through Thursday and the Nasdaq Composite index dropped 33.9%.
Crude oil increased $2.18 to $80.58 a barrel and natural gas eased 12 cents to $4.48 a thermal unit.
For 2022, crude oil increased 7.6% and scaled back from the high above $119 a barrel on March 8 and dropped to the low of $71.18 on December 9.
The yield on 2-year Treasury notes increased to 4.48%, 10-year Treasury notes edged higher to 3.88% and 30-year Treasury bonds inched up to 3.97%.
European Markets Post Worst Losses Since 2018
European markets closed down on the final trading day of 2022 with lingering worries of economic slowdown and the negative impact of future rate hikes dominating market sentiment.
The rapid spread of Covid virus in China and the rising potential of global spread of the virus also hovered the market sentiment.
Energy crisis in the region and the European Central Bank actions dominated market sentiment in 2022.
With war in Ukraine far from over, energy prices soared multi-fold and natural gas prices surged to record highs and uncertainty about the supply chain are not likely to go away in 2023.
The DAX index fell 1.1% to 13,923.59, the CAC-40 index decreased 1.1% to 6,502.49 and the FTSE 100 index dropped 0.8% to 7,451.74.
In 2022, the DAX index declined 13.1%, the CAC-40 index fell 10%, the Swiss benchmark SMI index dropped 17.1% and the FTSE 100 index eased 0.7%.
The DAX index and the CAC-40 index posted their worst decline since 2018 and the SMI index fell the most since 2008.
Among the most active European bourse, Turkey index was the lone gainer with a surge of 185.9% after inflation hovered near 86%.
Most European markets posted double-digit losses in 2018 after political turmoil in the U.S. and the U.S.' imposition of tariff on China imports and central banks hiking rates.
In 2018, the U.S. Federal Reserve raised its key lending rate to 2.4% from 1.4% in four equal increments.
Asian Markets Closed Down In 2022
Asian market indexes closed higher on the final trading day of 2022.
The Nikkei index was nearly unchanged and closed at 26,094.50 and fell 11% in 2022. The Nikkei posted its first annual decline in four years.
The Shanghai Composite index increased 0.5% to close at 3,089.26 and dropped 15% in 2022. The index fell in 2022 after advancing in the previous two years.
The Hang Seng index advanced 0.2% to 19,781.41 and fell 15% in 2022 and extended annual losses for the third year in a row.
The Hang Seng index has fallen about 30% in the last three years.
European Markets Post Worst Losses Since 2018
Bridgette Randall
30 Dec, 2022
Frankfurt
European markets closed down on the final trading day of 2022 with lingering worries of economic slowdown and the negative impact of future rate hikes dominating market sentiment.
The rapid spread of Covid virus in China and the rising potential of global spread of the virus also hovered the market sentiment.
Energy crisis in the region and the European Central Bank actions dominated market sentiment in 2022.
With war in Ukraine far from over, energy prices soared multi-fold and natural gas prices surged to record highs and uncertainty about the supply chain are not likely to go away in 2023.
The DAX index fell 1.1% to 13,923.59, the CAC-40 index decreased 1.1% to 6,502.49 and the FTSE 100 index dropped 0.8% to 7,451.74.
In 2022, the DAX index declined 13.1%, the CAC-40 index fell 10%, the Swiss benchmark SMI index dropped 17.1% and the FTSE 100 index eased 0.7%.
The DAX index and the CAC-40 index posted their worst decline since 2018 and the SMI index fell the most since 2008.
Among the most active European bourse, Turkey index was the lone gainer with a surge of 185.9% after inflation hovered near 86%.
Most European markets posted double-digit losses in 2018 after political turmoil in the U.S. and the U.S.' imposition of tariff on China imports and central banks hiking rates.
In 2018, the U.S. Federal Reserve raised its key lending rate to 2.4% from 1.4% in four equal increments.
Spain's Consumer Price Index Eased In December
Consumer price index, a measure of inflation, eased to 5.8% in December from 6.8% in the previous month, according to the flash estimate released by the National Statistics Institute in Madrid on Friday.
The inflation measure on a monthly basis increased to 0.3% after falling 0.1% in the previous month.
The annual pace of core inflation, which excludes unprocessed food and energy, accelerated to 6.9% from 6.3% in the previous month.
On a monthly basis, the core rate of inflation accelerated to 0.8% in December from 0.7% in November.