Market Update
Stocks Advanced On Wall Street as Debt Deal Moves to Congress
Barry Adams
30 May, 2023
New York City
Stocks advanced after a three-day weekend and tech stocks led the gainers on Wall Street.
Market sentiment was positive after the White House and Republican lawmakers worked out a deal to avert government default, restrain government spending and expand permitting process for energy projects.
The deal still faces hurdles and lawmakers in the House are expected to vote on the agreement as early as Wednesday followed by a vote in the Senate.
Last week, Treasury Secretary Janet Yellen reiterated that the federal government is likely to run out of cash to pay for expenses as early as June 5.
The U.S. is expected to default on its debt obligation if lawmakers fail to approve the bipartisan deal and the government may have to prioritize its expenses including social security, federal employee salaries and military spending.
U.S. Indexes & Yields
The S&P 500 index increased 0.5% to 4,225.40 and the Nasdaq Composite rose 1.3% to 13,149.68.
The yield on 2-year Treasury notes decreased to 4.53%, 10-year Treasury notes edged down to 3.73% and 30-year Treasury bonds held at 3.93%.
Crude oil rose $1.72 to $71.28 a barrel and natural gas prices held at $2.35 a thermal unit.
U.S. Stock Movers
Semiconductor chip makers led the gainers on the hopes of revenue growth led by the expected surge in demand for AI-chips.
Nvidia Corp jumped 5.5% to $411.43, AMD gained 0.3% to $127.11 and Qualcomm Inc increased 4.4% to $115.11.
Nvidia crossed $1 trillion mark capitalization after the stock extended this year's gain to 190%.
Toyota Motor Corp decreased 1.3% to $138.55 after the Japan-based vehicle maker and Germany-based Daimler Truck Holding agreed to merge their Japanese operations.
Daimler Truck Holding AG increased 1.1% to €28.83 in Frankfurt trading.
Tesla Inc increased 5.1% to $202.50 after the electric vehicle maker's chief officer Elon Musk met with China's foreign minister and signaled his readiness to expand Shanghai operations.
China has been facing a steady exodus of manufacturing companies to Vietnam, India and Mexico as companies seek to diversify its manufacturing base.
Europe Movers: Bunzl, Unilever, Nestle, Hunting Plc
Bridgette Randall
30 May, 2023
Frankfurt
Bunzl Plc declined 1.0% to 3,161.0 pence after the international agricultural products distributor agreed to acquire a safety business based in Brazil and Spain.
In May, the company agreed to acquire Brazil-based Leal Equipamentos de Proteção, a specialized safety distributor generating revenue of 216 million real or £34 million.
In April, Bunzl agreed to acquire Spain-based Irudek, a distributor of safety and personal protective equipment, specializing in fall protection equipment in Spain generating revenue of €17 million or £15 million.
Unilever Plc declined 2.4% to 4,071.0 pence after the company said its chief financial officer Graeme Pitkethly would leave the company by the end of May 2024.
Nestle SA dropped 2.5% to CHF 109.18 after the company said chief financial officer François-Xavier Roger will step down.
Anna Manz, current chief financial officer of the London Stock Exchange Group will assume the position and also join the Nestle board.
Hunting Plc soared 14.9% to 231.50 pence after the company won a $91 million contract from Cairn Oil and Gas and Vedanta Limited for its operations in Rajasthan, India.
The contract is for an estimated 100 wells and covers operations over three years.
The company said its order backlog increased to $575 million and revised higher its 2023 operating earnings outlook to a range between $92 million and $94 million.
Swiss GDP Rebounded, Spain's Inflation Eased, Italy's Producer Price Inflation Turned Negative
Bridgette Randall
30 May, 2023
Frankfurt
European stock indexes traded mixed and bond yields retreated following the easing of U.S. debt default worries.
Benchmark indexes in Frankfurt and Paris hovered near record highs and in London traded lower following the decline in energy and commodities prices.
On the economic front, Spain's inflation eased in May and Italy's producer prices declined in April, reflecting a sharp downturn in energy prices.
The Swiss GDP expanded in the first quarter after manufacturing activities picked up following nine months of weakness.
In international news, U.S. lawmakers are scheduled to vote as early as Wednesday on the recent debt ceiling deal between the White House and Republican leaders.
The deal is expected to face its first big test in the House where far-right Republicans are likely to oppose the agreement.
Spain's Inflation Eased to 2-year Low
Spain's consumer price inflation slowed to 3.2% in May from 4.1% in April, the National Statistics Institute or INE said Tuesday.
On a monthly basis, overall inflation declined 0.1%.
The inflation rate was the lowest since July 2021 but still above the target level set by the European Central Bank.
Core inflation from a year ago, which excludes food and energy, slowed to 6.1% in May from 6.6% in April. On a monthly basis, core inflation rose 0.2%.
Italy's Producer Price Index Declined 1.5%
Italy's industrial producer price index declined 1.5% in April, the National Institute of Statistics or ISTAT reported Tuesday.
The measure of wholesale prices peaked at 41.7% in September 2022 and since then has steadily declined every month except in November and December 2022.
The decline in large part was driven by an 18.1% fall in energy prices but prices of consumer goods rose 7.8%, capital goods 5.2% and intermediate goods 0.5%.
Swiss Economic Activities Picked Up In First Quarter
The Swiss economy expanded 0.5% in the first quarter of 2023 from the final quarter of 2022, the Secretariat of Economic Affairs reported Tuesday.
The economic growth estimate was adjusted for the sporting event, the football world cup.
The Swiss GDP expanded 0.3% in the first quarter not adjusted for the one-time sporting event and on a yearly basis expanded at 0.6%.
The growth in economic activities has been muted for the last six quarters in a row while the central bank carried out its aggressive rate hike campaign to arrest rising inflation.
Manufacturing sector picked up activities following three negative quarters of growth in a row after exports rebounded.
The increase in aggregate domestic demand led to a slight rebound in overall economic activities. Wholesale trade increased 2.1% but value added in retail trade fell 0.4%.
Europe Indexes & Yields
The DAX index increased 93.45 points to 16,046.18 and the CAC-40 index decreased 12.58 points to 7,291.23, and FTSE 100 index declined 0.4% to 7,598.60.
The yield on 10-year German Bunds inched lower to 2.39%, French bonds traded lower to 2.92%, the UK gilts held at 4.33% and Italian bonds decreased to 4.22%.
The euro edged lower to $1.072, the British pound to $1.241 and the Swiss franc to 90.19 cents.
Brent crude decreased $1.61 to $75.42 a barrel and the Dutch TTF natural gas decreased €0.45 to €25.05 per MWh.
Europe Stock Movers
Bunzl Plc declined 1.0% to 3,161.0 pence after the international agricultural products distributor agreed to acquire a safety business based in Brazil and Spain.
In May, the company agreed to acquire Brazil-based Leal Equipamentos de Proteção, a specialized safety distributor generating revenue of 216 million real or £34 million.
In April, Bunzl agreed to acquire Spain-based Irudek, a distributor of safety and personal protective equipment, specializing in fall protection equipment in Spain generating revenue of €17 million or £15 million.
Unilever Plc declined 2.4% to 4,071.0 pence after the company said its chief financial officer Graeme Pitkethly would leave the company by the end of May 2024.
Nestle SA dropped 2.5% to CHF 109.18 after the company said chief financial officer François-Xavier Roger will step down.
Anna Manz, current chief financial officer of the London Stock Exchange Group will assume the position and also join the Nestle board.
Hunting Plc soared 14.9% to 231.50 pence after the company won a $91 million contract from Cairn Oil and Gas and Vedanta Limited for its operations in Rajasthan, India.
The contract is for an estimated 100 wells and covers operations over three years.
The company said its order backlog increased to $575 million and revised higher its 2023 operating earnings outlook to a range between $92 million and $94 million.
European Markets Drifted Lower In Thin Trading, Erdogan Secured Third Term In Turkey
Bridgette Randall
29 May, 2023
Frankfurt
European markets traded higher in thin trading after the tentative U.S. debt deal raised hopes for the federal government averting fast approaching default.
Benchmark indexes in Frankfurt and Paris lacked direction and struggled to advance.
Market sentiment was mildly positive after the U.S. President Joe Biden and congressional leaders reached a tentative debt ceiling deal.
The debt deal is still facing a tough road ahead and needs approvals from the House and Senate where hard-right Republican lawmakers are likely to vote against the bipartisan agreement.
Turkish stock market jumped 3.2% after president Recep Tayyip Erdogan secured a third term in a runoff election held over the weekend.
Erdogan won 52% of votes and his rival Kemal Kilicdaroglu of the Republican People's Party attracted 47.86% of votes, according to Turkey's Supreme Election Council.
Turkish lira dropped to a record low of 20.07 against the U.S. dollar as investors awaited future government's plans to combat sky-high inflation.
Europe Indexes & Yields
The DAX index decreased a fraction to 15,983.08 and the CAC-40 index declined a fraction to 7,317.30, and financial markets in London were closed for a holiday.
The yield on 10-year German Bunds inched lower to 2.44%, French bonds traded lower to 3.01%, the UK gilts inched lower to 4.33% and Italian bonds decreased to 4.29%.
The euro edged lower to $1.074, the British pound to $1.235 and the Swiss franc to 90.37 cents.
Brent crude decreased 42 cents to $76.52 a barrel and the Dutch TTF natural gas decreased €0.82 to €25.32 per MWh.
Europe Stock Movers
Banks led the gainers in trading in Frankfurt and Paris in light trading.
UBS, Deutsche Bank, BNP Paribas and Commerzbank advanced between 1% and 1.4% in light trading.
German automakers BMW and Volkswagen gained 1%.
Richemont SA gained 2.5% in Zurich and LVMH Moet Hennessy Louis Vuitton SE edged up a fraction in Paris trading.
Mixed Trading In Asian Markets
The Nikkei index in Tokyo jumped 1.0% to 31,233.54 and reached a new 33-year high and the yen drifted to 140.26 against the U.S. dollar.
In Shanghai, the benchmark index traded higher 0.3% to 3,221.45 but the Hang Seng index declined 1.0% 18,551.11 and traded at a new low in 2023.
China's domestic tourism reached pre-Covid level during the May Day holiday period as demand for travel picked up but the overall domestic spending struggled to rebound.
The arrival of Chinese tourists in Thailand and Japan also picked up sharply during the holiday period, raising hopes that the broader economic revival will pick up in the months ahead.
China has lost about 30 million service jobs in the last three years of Covid-related business closures and many small businesses are struggling to stay afloat in the absence of direct financial support from the government.