Market Update
European Indexes Close Lower After Retail Sales, Business Activities Data
Bridgette Randall
05 Dec, 2022
Frankfurt
Stocks in Europe turned lower on the ongoing economic slowdown and rate path worries after the release of the latest batch of economic data.
In the region's economic news, the eurozone business activities declined for the fifth month in a row in November and retail sales in October unexpectedly declined from the previous month.
Eurozone Retail Sales Fall
Eurozone retail sales declined 1.8% from the previous month in October and 2.7% from a year ago, extending five months of weakness, Eurostat said Monday.
Eurozone Business Activities Fall
S&P Global confirmed its estimate of a slow down in business activities in November in the eurozone.
The final composite Purchasing Managers' Index inched higher to 47.8 in November from 47.3 in October, when it was at a 23-month low.
Russia Oil Sanction Kicked In
Over the weekend, the European Union agreed to impose a price cap on Russian oil shipped using tanker companies based in the region beginning Monday.
The move is expected to cut into Russia's finances by limiting the price it can charge for the sale of energy, adding an incentive for the resource-rich nation to unwind its military operations in Ukraine.
Analysts are divided over the effectiveness of the Russian sanctions and Russia has other ways to profit from its sale of energy products in international markets.
The European Union agreed to cap the price for Russia's seaborne oil to $60 a barrel in an effort to punish President Vladimir Putin for invading Ukraine.
OPEC+ Confirmed Production Cut
OPEC+, a group of 23 oil producing nations, confirmed to cut December production by 2 million barrels a day at its monthly meeting on Sunday.
Despite the resumption of activities in China, investors remained skeptical of the rise in global demand for crude oil.
Brent crude oil declined $2.55 to $83.01 a barrel and Dutch TTF natural gas eased 0.6% to 134.70 euros MWh.
In a boost to Germany's efforts in diversifying its energy supply base, Qatar agreed to provide natural gas to Germany on a long term contract basis, but the supplies are not expected to arrive till 2026.
Qatar signed a 15-year contract to deliver 2 million tons a year of LNG to Germany through ConocoPhillips beginning 2026, supplying 3% of Germany's needs.
Bond Yields Slightly Edge Up
The yield of 10-year German Bunds inched up to 1.89%, French bonds rose to 2.33%, the UK Gilts fell to 3.05% and Italian bonds edged up to 3.75%.
Market Indexes
Stock indexes across the eurozone traded lower on the worries that the region's economy may be heading for a mild recession, after business activities slumped for the fifth month in a row.
The DAX index declined 0.6% to 14,447.61, the CAC-40 index fell 0.7% to 6,696.96 and the FTSE 100 index increased 0.1% to 7,567.54.
Europe Stock Movers
Nestle SA declined 1.3% to 111.30 Swiss francs after the consumer products company said it plans to restrict its marketing of food products in high sugar content to children under the age of 16.
Vodafone Plc increased 0.5% but closed nearly unchanged at 91.13 pence after the telecom group said its chief executive Nick Read will step down after four years in the position.
Glencore Plc increased 1.4% to 566.18 pence after the company settled a corruption inquiry for $180 million with Democratic Republic of Congo.
National Grid plc inched up 0.6% to 1,025.98 pence after the UK-based power distribution company completed the sales of its 60% equity stake in gas transmission business to a consortium of investors for
Movers: Activision Blizzard, Alibaba, Melco, SAIC, Tesla, VF Corp, Wynn
Scott Peters
05 Dec, 2022
New York City
Tesla Inc dropped 5.7% to $183.11 on the reports that the company is looking to cut Model Y production by more than 20% in its Shanghai factory this month. The news was first reported by Bloomberg.
China-linked stocks opened higher but gave up early gains on the hopes that China's relaxation of Zero-covid policy may revive travel and business activities.
Alibaba soared 9% and Baidu gained 4.5%.
China-based casino operators soared and Melco Resorts & Entertainment and Wynn Macau soared between 5% and 13%.
Marriott International declined 1.4% to $163.28 after the company announced its plan to sell $500million convertible senior notes due in 2027 in a private offering.
VF Corp declined 10.4% to $29.77 after the company said its chief executive plans to retire. Steve Rendle retired immediately from the positions of Chairman, President and Chief Executive Officer.
The apparel maker also lowered its sales growth outlook to between 3% and 4% in the second-half from the previous estimate of between 5% and 6% increase.
The company blamed the weakness on a higher-than-expected promotional environment in the U.S. and ongoing weakness in China and higher inflation impacting retail sales in Europe.
Activision Blizzard gained 0.9% to $76.44 on the news that Microsoft is ready to defend its $69 billion acquisition of the company against the U.S. antitrust ruling.
Science Applications International Corp increased 4.4% to $114.55 after the company reported quarterly results ahead of market expectations and the company lifted its estimate of sales and earnings for the full-year.
New Goods Orders In October Accelerate
Brian Turner
05 Dec, 2022
New York City
The new orders for manufactured goods in October, up twelve of the last thirteen months, increased 1.0% to $556.6 billion, the U.S. Census Bureau reported today.
This followed a 0.3% September increase.
New orders for manufactured durable goods in October, up seven of the last eight months, increased 1.1% to $277.4 billion, up from the previously published 1.0 percent increase.
This followed a 0.2% September increase.
Shipments increased 0.7% in October after rising 0.3% in September and unfilled orders, up twenty-six consecutive months, increased 0.6% to $1,144.0 billion.
Major Averages Drop On Rate-path Anxieties, New Orders Rise
Barry Adams
05 Dec, 2022
New York City
Rate path worries resurfaced on Wall Street and bond yields rose and crude oil traded volatile.
Investors feared that the Federal Reserve may hike rates at a slower pace but rates may peak at levels above 5.25% and the economy may dip into a recession.
New orders for goods in October were ahead of expectations and the service sector index rebounded in November, fueling worries that the economy is too strong for the Fed to ease from the aggressive rate hikes.
The on-again-off-again recession and rate path worries gripped the market sentiment in the morning trading, dragging market indexes lower.
Bond Yields Rise
The yield on 2-year U.S. Treasury notes increased to 4.36%, 10-year Treasury notes inched higher to 3.58% and 30-year Treasury bonds edged up to 3.61%.
Markets Overview
The S&P 500 index fell 1.2% to 4,021.32 and the Nasdaq Composite index dropped 1.3% to 4,021.32.
Volatile Crude Oil Rebounds
Crude oil traded volatile with an upward bias after more cities in China relaxed coronavirus linked mobility restrictions, raising hopes of a rebound in China's import.
In addition, premier Xi Jinping is scheduled to commence his travel to Saudi Arabia on Wednesday this week and hold a summit with Arab leaders in Riyadh on Friday.
Crude oil increased 7 cents to $80.04 a barrel and natural gas fell 50 cents to $5.75 a thermal unit.
U.S. New Orders for Goods Rise
The new orders for manufactured goods in October, up twelve of the last thirteen months, increased 1.0% to $556.6 billion, the U.S. Census Bureau reported today.
This followed a 0.3% September increase.
New orders for manufactured durable goods in October, up seven of the last eight months, increased 1.1% to $277.4 billion, up from the previously published 1.0 percent increase.
This followed a 0.2% September increase.
Shipments increased 0.7% in October after rising 0.3% in September and unfilled orders, up twenty-six consecutive months, increased 0.6% to $1,144.0 billion.
U.S. Service Sector Growth Rebounds
The ISM Services Purchasing Managers' Index unexpectedly jumped to 56.5 in November of 2022, rebounding from a more than two-year low of 54.4 reached in October.
Stock Movers
Tesla Inc dropped 5.7% to $183.11 on the reports that the company is looking to cut Model Y production by more than 20% in its Shanghai factory this month. The news was first reported by Bloomberg.
China-linked stocks opened higher but gave up early gains on the hopes that China's relaxation of Zero-covid policy may revive travel and business activities.
Alibaba soared 9% and Baidu gained 4.5%.
China-based casino operators soared and Melco Resorts & Entertainment and Wynn Macau soared between 5% and 13%.
Marriott International declined 1.4% to $163.28 after the company announced its plan to sell $500million convertible senior notes due in 2027 in a private offering.
VF Corp declined 10.4% to $29.77 after the company said its chief executive plans to retire. Steve Rendle retired immediately from the positions of Chairman, President and Chief Executive Officer.
The apparel maker also lowered its sales growth outlook to between 3% and 4% in the second-half from the previous estimate of between 5% and 6% increase.
The company blamed the weakness on a higher-than-expected promotional environment in the U.S. and ongoing weakness in China and higher inflation impacting retail sales in Europe.
Activision Blizzard gained 0.9% to $76.44 on the news that Microsoft is ready to defend its $69 billion acquisition of the company against the U.S. antitrust ruling.
Science Applications International Corp increased 4.4% to $114.55 after the company reported quarterly results ahead of market expectations and the company lifted its estimate of sales and earnings for the full-year.