Market Update
U.S. Movers: Casella Waste Systems, General Mills, Intuitive Machines
Scott Peters
18 Sep, 2024
New York City
Casella Waste Systems declined 4.5% to $101.50 after the recycling company announced its plans to raise $400 million in an equity offering of Class A common stock.
General Mills declined 0.8% to $73.90 after the food product maker reported that higher input costs negatively impacted its margins.
Net revenue in the fiscal first quarter ending on August 25 decreased 1% to $4.8 billion from $4.9 billion, net income dropped 14% to $579.9 million from $673.5 million, and diluted earnings per share fell 10% to $1.03 from $1.14 a year ago.
The company reaffirmed its fiscal year estimates and said adjusted diluted earnings per share are expected to range between a decrease of 2% and flat in constant currency.
Intuitive Machines soared 47% to $7.91 after the company was awarded a contract by NASA that could be worth up to $4.8 billion.
Why Fed's Rate-cut Could Keep Inflation Higher For Longer?
Barry Adams
18 Sep, 2024
New York City
Stock market indexes traded in a tight range, and the yield on 10-year Treasury notes edged higher ahead of the Fed's rate decisions later today.
The S&P 500 index and the Nasdaq Composite edged slightly lower in early trading as investors awaited the Fed's monetary policy decisions and economic projections at the end of its 2-day meeting.
The Federal Reserve is set to announce its decisions at 2:00 p.m. ET, and investors are widely anticipating a rate cut of at least 25 basis points.
Despite the widespread enthusiasm for a possible rate cut, inflation is still strong and deeply entrenched in the economy.
Moreover, the Fed's eleven rate cuts over the last two years have moderated the inflation, thanks largely to the decline in crude oil prices.
Overall inflation is driven by the increases in prices in fuel, goods, services, and housing.
The Fed's rate-increase campaign has failed to stop the ongoing rise in home prices and elevated service inflation.
The overall inflation has moderated largely because of the decline in prices of crude oil, and more production has shifted to Asia to take advantage of cheaper labor and operating costs.
The Fed's rate hikes have little influence on the goods and fuel economy, which are largely driven by demand and supply forces and technological advances.
The U.S. inflation is likely to stay elevated because of the surge in money supply by the Federal Reserve during the pandemic era, and policymakers are still reluctant to withdraw the outsized stimulus.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.03% to 5,633.31, the Nasdaq Composite rose 0.1% to 17,646.66, and the Russell 2000 index advanced 0.2% to 2,209.49.
The yield on 2-year Treasury notes edged higher to 3.64%, 10-year Treasury notes inched up to 3.68%, and 30-year Treasury bonds inched lower to 3.99%.
WTI crude oil decreased $0.65 to $70.54 a barrel, and natural gas prices edged up 4 cents to $2.36 a thermal unit.
Gold fell by $0.79 to $2,574.91 an ounce, and silver increased by $0.11 to $30.59.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.85.
U.S. Stock Movers
Casella Waste Systems declined 4.5% to $101.50 after the recycling company announced its plans to raise $400 million in an equity offering of Class A common stock.
General Mills declined 0.8% to $73.90 after the food product maker reported that higher input costs negatively impacted its margins.
Net revenue in the fiscal first quarter ending on August 25 decreased 1% to $4.8 billion from $4.9 billion, net income dropped 14% to $579.9 million from $673.5 million, and diluted earnings per share fell 10% to $1.03 from $1.14 a year ago.
The company reaffirmed its fiscal year estimates and said adjusted diluted earnings per share are expected to range between a decrease of 2% and flat in constant currency.
Intuitive Machines soared 47% to $7.91 after the company was awarded a contract by NASA that could be worth up to $4.8 billion.
Europe Movers: Campari, Legal & General, Nordex, Reckitt & Benckiser, Ubisoft
Inga Muller
18 Sep, 2024
Frankfurt
European markets struggled to advance and traded in a tight range ahead of rate decisions from major central banks.
Consumer price inflation in the eurozone was confirmed, and in the UK it held steady at 2.2%.
The DAX index decreased by 0.1% to 18,703.22; the CAC-40 index fell by 0.5% to 7,453.22; and the FTSE 100 index declined by 0.6% to 8,257.25.
The yield on 10-year German bonds edged lower to 2.16%, French bonds inched lower to 2.89%, the UK gilts edged up to 3.84%, and Italian bonds increased to 3.54%.
Davide Campari Milano NV declined 5.3% to €7.16 after the Italian spirit maker's chief executive, Matteo Fantacchiotti, resigned after being in the office only five months.
Reckitt Benckiser increased 1.3% to 4,671.0 after media reports suggested that the company is looking to sell its homecare business.
Legal & General Group decreased 2.5% to 222.70 pence, and the UK-based financial services company agreed to sell home builder Cala Group for £1.35 billion to private equity groups.
Nordex SE gained 1.9% to €15.18, and the German wind turbine maker said it won an order for 10 turbines from the wind and solar park developer Umweltgerechte Kraftanlagen GmbH & Co. KG.
The company did not disclose the size of the order.
Ubisoft Entertainment advanced 5.3% to €12.54 after BMO Capital Markets raised its rating on the stock to "outperform" from "market perform."
The brokerage firm said that the company is trading at a cheap valuation of 2.7 times its operating earnings, compared to a 10-year average multiple of 10.5.
The company is also on track to complete its Є200 million cost savings, of which Є150 million has already been achieved.
BMO lowered its price target to Є22 from Є27, and despite the tart price adjustment, the brokerage firm said that the stock is still trading at a substantial discount to its historic average.
European Markets Lacked Direction, UK Inflation Held Steady at 2.2%
Bridgette Randall
18 Sep, 2024
London
European markets traded in a tight range as investors reviewed the latest inflation updates and awaited monetary policy decisions in the U.S., the U.K., Norway, and Japan.
Benchmark indexes in Paris, London, and Frankfurt hovered around the flatline with a downward bias, and investors debated the growth outlook in the currency union amid weak consumer sentiment.
The Euro Area inflation was confirmed at 2.2% in August, lower than 2.6% in July, Eurostat confirmed in a report released on Wednesday.
In addition, the U.K. consumer price inflation held steady at 2.2% in August, matching the rate in the previous month, the Office for National Statistics announced on Wednesday.
However, service inflation accelerated to 5.6% from 5.2% in the previous month, driven in part by a surge in airfares.
On a monthly basis, consumer price inflation rose 0.3% following a decline of 0.2% in the previous month.
The Federal Reserve is scheduled to announce its rate decisions and economic projections later in the day, and investors are hoping that the central bank will announce its first rate of at least 25 basis points in over four years.
The Bank of England and the Norges Bank are set to hold rates stead at the end of their policy meetings on Thursday.
Europe Indexes and Yields
The DAX index decreased by 0.1% to 18,703.22; the CAC-40 index fell by 0.5% to 7,453.22; and the FTSE 100 index declined by 0.6% to 8,257.25.
The yield on 10-year German bonds edged lower to 2.16%, French bonds inched lower to 2.89%, the UK gilts edged up to 3.84%, and Italian bonds increased to 3.54%.
The euro edged up to $1.11; the British pound inched higher to $1.32; and the U.S. dollar weakened to 84.30 Swiss cents.
Brent crude decreased $0.22 to $72.52 a barrel, and the Dutch TTF natural gas fell by €0.37 to €35.21 per MWh.
Europe Stock Movers
Davide Campari Milano NV declined 5.3% to €7.16 after the Italian spirit maker's chief executive, Matteo Fantacchiotti, resigned after being in the office only five months.
Reckitt Benckiser increased 1.3% to 4,671.0 after media reports suggested that the company is looking to sell its homecare business.
Legal & General Group decreased 2.5% to 222.70 pence, and the UK-based financial services company agreed to sell home builder Cala Group for £1.35 billion.
Nordex SE gained 1.9% to €15.18, and the German wind turbine maker said it won an order for 10 turbines from the wind and solar park developer Umweltgerechte Kraftanlagen GmbH & Co. KG.
The company did not disclose the size of the order.
Ubisoft Entertainment advanced 5.3% to €12.54 after BMO Capital Markets raised its rating on the stock to "outperform" from "market perform."
The brokerage firm said that the company is trading at a cheap valuation of 2.7 times its operating earnings, compared to a 10-year average multiple of 10.5.
The company is also on track to complete its Є200 million cost savings, of which Є150 million has already been achieved.
BMO lowered its price target to Є22 from Є27, and despite the tart price adjustment, the brokerage firm said that the stock is still trading at a substantial discount to its historic average.
Tokyo Stocks Lose Early Momentum, Japan's Trade Deficit Shrank In August
Akira Ito
18 Sep, 2024
Tokyo
Benchmark indexes in Tokyo lacked direction and lost early morning momentum after Japan's exports and import growth fell short of market expectations.
The Nikkei 225 average edged up a fraction, and the wider Topix index traded around the flatline amid weak market sentiment.
The yen traded at 141.55 against the U.S. dollar in Tokyo as investors awaited the rate decisions from the U.S. Federal Reserve later in the day.
Japan's exports in August increased 5.6% to 8.4 trillion yen, or $59.2 billion, and slowed sharply from a 10.2% increase in the previous month, the Ministry of Finance reported Wednesday.
The exports struggled to increase after several automakers shut down manufacturing plants ahead of the typhoon, denting overall exports because of weather-related issues.
Exports to the U.S. decreased for the first time in three years after the shipment of automobiles, pharmaceuticals, and construction machinery struggled to advance.
However, shipment of semiconductor equipment soared 40% from a year ago.
Shipments to Europe fell 8.1%, but exports to mainland China, Hong Kong, and Taiwan increased 5.2%, 27.3%, and 21.6%, respectively.
Exports to India soared 26.6% and to Russia advanced 17.9%.
Japan's imports in August increased 2.3% to 9.1 trillion yen, widening its trade deficit to 695.3 billion yen, or $4.9 billion.
Japan recorded a trade deficit for the second month in a row, but the overall deficit shrank 26% from a year ago, supported by the rise in shipment of chip-making equipment, electronic components, and semiconductors.
In other economic news, Japan's core machinery orders, which exclude volatile and large-ticket ships and electric power plants, decreased 0.1% from the previous month in July to 874.9 billion yen.
On an annual basis, private sector core orders increased 8.7% after falling 1.7% in June, according to a report released by the Cabinet Office on Wednesday.
Japan Stock Movers
The Nikkei 225 Stock Average increased 0.2% to 36,287.98, and the Topix index decreased 0.1% to 2,553.98.
Tech stocks were volatile after market indexes lost early gains and turned negative.
Tokyo Electron increased 0.1% to¥22,465.0, Advantest Corp. gained 1.1% to ¥6,125.0, and Screen Holdings added 1.8% to ¥9,746.0.
Retailers traded mixed after the yen hovered near its 2024 high.
Seven & I decreased 0.3% to ¥2,151.50, Fast Retailing increased 1.4% to ¥44,820.0, and Isetan Mitsukoshi fell 3.2% to ¥2,125.0.
Financial services providers edged higher ahead of the Bank of Japan's rate decisions on Friday.
Mitsubishi UFJ Financial decreased 0.1% to ¥1,417.50, Sumitomo Mitsui Financial gained 0.5% to ¥8,795.0, and Mizuho Financial increased 0.6% to ¥2,764.50.
China Indexes Hover at Five-Year Low After Investors Return from Mid-Autumn Holidays
Li Chen
18 Sep, 2024
Hong Kong
Stocks in Shanghai and Shenzhen struggled to regain their footings after investors returned from a 4-day weekend.
Market sentiment was cautious ahead of the Federal Reserve's monetary policy decisions later in the day, and investors are hoping that the central bank will deliver a widely expected rate cut of at least 25 basis points.
China's investors reassessed the latest batch of mixed economic data released over the weekend.
Retail sales, fixed investment, and industrial output fell short of market expectations, and the property market deepened as prices for new and existing home sales declined in August.
Moreover, investors are worried that the elevated urban jobless rate will contribute to consumer confidence weakness in the months ahead.
The CSI 300 index tested the lows reached in January 2019, as investor confidence remained weak after the latest economic data signaled weak earnings growth in the second half.
Stock market indexes are likely to test the lows reached in February 2016, as investors stay on the sidelines amid weakening consumer confidence and sharply decelerating earnings growth.
China Stock Movers
Mainland-focused CSI 300 index added 0.2% to 3,164.82 and traded near a five-year low, and financial markets in Hong Kong are closed for a holiday.
The rebound in crude oil prices lifted stocks of energy producers and coal miners.
Shaanxi Coal Industry increased 2.7% to ¥22.87, CNOOC added 0.2% to ¥26.24, and PetroChina added 0.4% to ¥7.94.
Consumer-focused stocks struggled to advance in Wednesday's trading.
Midea Group added 2.3% to ¥64.97, Kweichow Moutai dropped 2.4% to ¥1,272.01, and Wens Foodstuff Group fell 3.1% to ¥15.28.
India Movers: DCM Shriram, Hindalco, Jupiter Wagons, NTPC, REC, Spicejet, Torrent Power
Arun Goswami
18 Sep, 2024
Mumbai
India's goods trade deficit widened amid a surge in imports and a decline in exports.
Wholesale price inflation softened for the fourth month in a row after food price inflation edged slightly lower.
The Sensex index decreased by 0.1% to 83,133.99, and the Nifty index edged up by 0.1% to 25,432.10.
On the Mumbai stock exchange, 149 stocks traded at their 52-week highs, and 15 stocks traded at their 52-week lows.
Oil marketing companies were in focus after the central government withdrew windfall tax following the easing of crude oil prices.
REC Limited decreased 2.7% to ₹545.50, and the company said it has signed non-binding agreements worth ₹1.1 lakh crore for the development of renewable energy projects.
Hindalco Industries decreased 0.5% to ₹682.05, and the aluminum company is planning to launch a solar module component manufacturing plant in Mundra, Gujarat.
NTPC Ltd. increased 1.2% to ₹416.0, and the company's joint venture with Nuclear Power Corporation to set up a 700 MW power plant in Rajasthan was approved by the government.
Jupiter Wagons declined 2.2% to ₹534.0, and the company is planning to increase its forged wheel production capacity to 100,000 wheelsets from 20,000 wheelsets by 2027.
The company plans to invest ₹2,500 crore to build a new production facility in Odisha.
Torrent Power increased 3.3% to ₹1,840.0, and the company received a letter of intent to build hydropower storage from Maharashtra State Electricity Distribution Co.
The 1,500 MW pumped hydro project will be designed to supply power storage for 40 years.
Spicejet decreased 3.2% to ₹71.49, and the struggling airline set ₹64,79 per share for its institutional offering.
The company plans to use proceeds to repay outstanding taxes and contributions to provident funds totaling ₹3,500 crore.
DCM Shriram Ltd increased 0.2% to ₹1,082.70, and Life Insurance Corporation said it lowered its stake in the sugar and alcohol maker to 4.66% from 6.68%.
LIC sold shares at an average price of ₹1,100.72 per share.
August Retail Sales Highlighted Resilient Consumer Spending
Brian Turner
17 Sep, 2024
Washington, D.C.
Retail and food services sales increased 0.1% from the previous month in August as consumers showed resilience despite growing anxieties about the economic slowdown.
The sales data adjusted for seasonal and calendar effects but not for inflation.
The monthly growth slowed sharply from the revised 1.1% increase in the previous month.
On an annual basis, retail sales growth eased to 2.1%, a slowdown in growth for the third month in a row, the U.S. Commerce Department reported Tuesday.
Retail trade sales were up 0.1% from July and up 2.0% from last year, and nonstore retail sales were up 7.8%, while sales at food services and drinking places were up 2.7%, respectively.
Sales at gasoline stores decreased 1.2% following the fall in gasoline prices, and electronics and appliance store sales eased 0.7%.
Meanwhile, retail sales excluding food services, auto dealers, building materials stores, and gas stations, which are used to calculate GDP, were up 0.3%, following an upwardly revised 0.4% rise in July.
The Fed's lowering of inflation will only stoke inflationary forces in the months ahead, sending another ripple of higher prices.
Cautious Optimism Drives S&P 500 Index to New Intraday High, Global Markets Trade Sideways
Alexander Garcia
17 Sep, 2024
Miami
Benchmark indexes on Wall Street lacked direction, and retail sales were ahead of expectations.
The S&P 500 index and the Nasdaq Composite traded in a tight range as investors reviewed the latest update on retail sales in August.
The S&P 500 index edged lower after creating a new intraday high of 5,670.81.
Investors are anticipating the Federal Reserve to lower rates by at least 25 basis points, and many on Wall Street are hoping for the Fed to take a bold stance and cut rates by 50 basis points.
Despite eleven rate increases over 2022 and 2023, prices are still rising faster than the Fed's 2% target rate.
Moreover, inflation is seeping deeper into the economy, and service sector inflation is well above 3%.
In addition, even though the pace of price increases has slowed from a year ago, prices are rising from a higher base, hitting the consumers who are living on relatively fixed income.
The decline in overall inflation is largely driven by the fall in goods inflation and a decline in energy prices, and very little of this could be credited to the Fed's policy and measures.
August Retail Sales Surpassed Market Expectations
Retail and food services sales increased 0.1% from the previous month in August as consumers showed resilience despite growing anxieties about the economic slowdown.
The sales data adjusted for seasonal and calendar effects but not for inflation.
The monthly growth slowed sharply from the revised 1.1% increase in the previous month.
On an annual basis, retail sales growth eased to 2.1%, a slowdown in growth for the third month in a row, the U.S. Commerce Department reported Tuesday.
Retail trade sales were up 0.1% from July and up 2.0% from last year, and nonstore retail sales were up 7.8%, while sales at food services and drinking places were up 2.7%, respectively.
Sales at gasoline stores decreased 1.2% following the fall in gasoline prices, and electronics and appliance store sales eased 0.7%.
Meanwhile, retail sales excluding food services, auto dealers, building materials stores, and gas stations, which are used to calculate GDP, were up 0.3%, following an upwardly revised 0.4% rise in July.
The Fed's lowering of inflation will only stoke inflationary forces in the months ahead, sending another ripple of higher prices.
U.S. Indexes and Treasury Yields
The S&P 500 index decreased 0.3% to 5,618.74, the Nasdaq Composite fell 0.1% to 17,578.0, and the Russell 2000 index advanced 1.3% to 2,216.95.
The yield on 2-year Treasury notes edged higher to 3.59%, 10-year Treasury notes inched down to 3.63%, and 30-year Treasury bonds inched lower to 4.0%.
WTI crude oil increased $1.73 to $71.81 a barrel, and natural gas prices edged up 3 cents to $2.41 a thermal unit.
Gold fell by $20.62 to $2,562.90 an ounce, and silver decreased by $0.11 to $30.63.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.75.
U.S. Stock Movers
Microsoft Corp. jumped 2.2% to $440.71 after the software developer announced a $60 billion stock buyback plan and increased its dividend by 10.7% to 83 cents per share.
Intel Corp. advanced 2.4% to $21.42, and the advanced chipmaker said it plans to create a new entity for its foundry business, allowing the unit to raise its own capital.
Hewlett Packard Enterprise jumped 5.5% to $18.17 after Bank of America upgraded the stock to "buy" from "neutral," citing several catalysts for the company's server demand.
European Markets Advanced, German Investor Morale Dropped to 11-Month Low
European markets advanced for the second consecutive day in a row and extended weekly gains ahead of key monetary policy decisions.
Benchmark indexes in London, Paris, and Frankfurt advanced ahead of rate decisions from the U.S. Federal Reserve Bank, the Bank of England, the Norges Bank, and the Bank of Japan.
Investors are hoping that the Federal Reserve will deliver a widely anticipated rate cut of at least 25 basis points, but the central banks of the U.K., Norway, and Japan are likely to hold rates steady.
Consumer price inflation in the U.S. has slowed over the last eighteen months, but that decline is largely reflecting lower energy prices.
Prices are still rising at a faster pace than the Fed's target rate of 2% and from a higher base, stretching consumer budgets for most families.
Moreover, the service sector inflation is still above 4%, and many small and medium-sized businesses are still looking to pass on higher operating costs to consumers, which is likely to keep inflation at an elevated pace for several more months.
Closer to home, the ZEW Indicator of Economic Sentiment for Germany plunged to 3.6 in September from 19.2 in August, the Center for European Economic Research announced Tuesday.
The investor morale indicator declined for the third month in a row and fell to the lowest level since October 2023.
Investors are widely discounting the hope for an economic rebound in Germany amid rising cost of living, elevated interest rates, and weakening labor market conditions.
Europe Indexes and Yields
The DAX index increased by 0.5% to 18,730.69; the CAC-40 index rose by 0.5% to 7,487.42; and the FTSE 100 index increased by 0.4% to 8,309.56.
The yield on 10-year German bonds edged lower to 2.10%, French bonds inched lower to 2.82%, the UK gilts edged down to 3.74%, and Italian bonds decreased to 3.44%.
The euro edged up to $1.11; the British pound inched higher to $1.32; and the U.S. dollar weakened to 84.46 Swiss cents.
Brent crude decreased $0.22 to $72.52 a barrel, and the Dutch TTF natural gas rose by €0.47 to €34.78 per MWh.
Europe Stock Movers
Kingfisher plc increased 7.7% to 310.90 pence after the UK-based home improvement retailer raised the lower end of its fiscal 2025 profit estimate.
Sales in the first half declined 1.8% to £6.7 billion from £6.9 billion, pre-tax income increased 2.3% to £324 million from £317 million, and earnings per share advanced 3.9% to 12.8 pence from 12.4 pence a year ago.
The company blamed the sales weakness to a decline in sales of large tickets and unusual weather conditions.
The retailer also lifted its annual profit-before-tax range to between £510 million and £550 million from the previous estimate between £490 million and £550 million.
Barry Callebaut increased 6.9% to CHF 1,557.0 after Barclays upgraded the stock to "overweight" from "underweight," citing a decline in cocoa prices and the company's focus on improving its operating costs.
The company has closed underperforming plants in Italy, Malaysia, and Germany and expressed confidence that it is on track to achieve its $250 million cost-cutting target by the end of fiscal year 2027.
Essentra PLC plunged 18.2% to 136.80 pence after the UK-based manufacturing company lowered its annual outlook in the current fiscal year, citing market challenges.
The company revised its annual profit estimate to between £40 million and £42 million, citing adverse market conditions and a negative foreign exchange impact of £2 million.
The company reversed its previous outlook of an improvement in volume in the expectations of a rebound in demand in Europe, including Turkey.
However, sales have lagged the company's expectations in the second half in the U.S. and APAC region.
Japan Indexes Plunged Nearly 2% Ahead of Rate Decisions
Benchmark indexes in Tokyo faced selling pressure ahead of the monetary policy decisions by the Bank of Japan on Friday.
The Nikkei 225 stock average declined as much as 2% and the Topix index fell as much as 1.8%, and losses in tech stocks contributed to the market weakness.
Investors turned cautious after a three-day holiday and reacted to the weak tech stocks on Wall Street ahead of rate decisions this week by the Federal Reserve Bank, the Bank of England, the Norges Bank, and the Bank of Japan.
The Bank of Japan is widely anticipated to hold its interest rate range, but investors are looking forward to the central bank's rate outlook and the timing of future rate increases.
The yield on 10-year Japanese bonds fell to a one-year low of 0.83%, ahead of the central bank's rate decisions.
The Japanese yen traded at 140.34 against the U.S. dollar in Tokyo as investors turned cautious.
Investors are also hoping that the Federal Reserve Bank will lower its key lending rates by at least 25 basis points, shrinking the gap with rates in Japan.
Japan Stock Movers
The Nikkei 225 stock average decreased 1% to 36,180.30, and the Topix index declined 0.7% to 2,554.52.
Tech stocks led the losers in Tokyo following sharp losses in overnight trading in New York after investors worried that the Apple iPhone 16 sales may lag expectations.
Tokyo Electron decreased 5.2% to ¥22,440.0, Advantest dropped 5.6% to ¥6,016.0, and Screen Holdings declined 2.9% to ¥9,577.0.
Retailers were also among the leading decliners after the yen continued to advance.
Seven & I Holdings declined 0.4% to ¥2,158.50, Isetan Mitsukoshi dropped 3% to ¥2,196.50, and Fast Retailing added 0.4% to ¥44,070.0.
Banks accelerated losses for the second session in a row ahead of the Bank of Japan's rate decisions on Friday.
Mizuho Financial Group declined 2.5% to ¥2,746.50, Sumitomo Mitsui decreased 2.6% to ¥8,750.0, and Mitsubishi UFJ dropped 2.2% to ¥1,419.0.
Property Stocks Rebound In Hong Kong, Midea Group IPO Sizzles On Debut
Stocks in Hong Kong advanced for the fourth day in a row, and property stocks led the gainers.
The Hang Seng index soared more than 1.5%, and the financial markets in mainland China are set to resume trading on Wednesday after a 4-day weekend.
Stocks advanced ahead of the possible rate cut by the U.S. Federal Reserve on Wednesday, and investors increased their bets that the central bank is more likely to cut rates by 50 basis points.
Amid widespread speculation, investors are hoping that the Federal Reserve is expected to signal that the central bank is prepared to lower rates by as much as 100 basis points by the end of 2024.
Rate cuts in the U.S. also automatically lower interest rates in Hong Kong to maintain the city's currency peg with the U.S. dollar.
Moreover, the Bank of England is scheduled to hold its rate steady on Thursday, and the Bank of Japan is likely to keep its interest rate range unrevised on Friday.
Market sentiment in Hong Kong was also boosted by the expectation that the Chinese government will provide additional stimulus following weak economic data over the weekend.
China Stock Movers
The Hang Seng index added 1.6% to 17,696.54, and financial markets in mainland China were closed for a holiday.
Midea Group increased 10% to HK $59.30, and the Foshan-based electric appliance and household consumer electronics maker raised HK $31 billion in an offering last week.
The company priced its Hong Kong initial public offering at HK $54.80 per share and raised $3.98 billion in the largest offering in three years.
The company is likely to exercise its option to sell additional shares amid strong interest from international investors and increase its offering size to $4.6 billion.
The company is the largest maker of white goods, and the appliance maker also owns Germany-based industrial robot company Kuka.
The company's stock in Hong Kong traded at a 20% discount to its closing price in Shenzhen at ¥63.51.
Tech stocks advanced in Hong Kong trading, tracking gains on Wall Street in overnight trading.
Alibaba Group gained 1.6% to HK $82.95, Tencent Holdings jumped 0.9% to HK $381.20, and Baidu gained 1% to HK $83.50.
Henderson Land Development increased 3.2% to HK $24.55, Sun Hung Kai Properties gained 2.2% to HK $80.80, and CK Asset Holdings gained 4.4% to HK $32.30.
U.S. Movers: Hewlett Packard Enterprise, Intel, Microsoft
Scott Peters
17 Sep, 2024
New York City
Microsoft Corp. jumped 2.2% to $440.71 after the software developer announced a $60 billion stock buyback plan and increased its dividend by 10.7% to 83 cents per share.
Intel Corp. advanced 2.4% to $21.42, and the advanced chipmaker said it plans to create a new entity for its foundry business, allowing the unit to raise its own capital.
Hewlett Packard Enterprise jumped 5.5% to $18.17 after Bank of America upgraded the stock to "buy" from "neutral," citing several catalysts for the company's server demand.
S&P 500 and Nasdaq Composite Traded Higher After Retail Sales Advanced
Barry Adams
17 Sep, 2024
New York City
Benchmark indexes on Wall Street advanced after retail sales were ahead of expectations.
The S&P 500 index and the Nasdaq Composite gained 0.1% as investors reviewed the latest update on retail sales in August.
Investors are anticipating the Federal Reserve to lower rates by at least 25 basis points, and many on Wall Street are hoping for the Fed to take a bold stance and cut rates by 50 basis points.
Despite eleven rate increases over 2022 and 2023, prices are still rising faster than the Fed's 2% target rate.
Moreover, inflation is seeping deeper into the economy, and service sector inflation is well above 3%.
In addition, even though the pace of price increases has slowed from a year ago, prices are rising from a higher base, hitting the consumers who are living on relatively fixed income.
The decline in overall inflation is largely driven by the fall in goods inflation and a decline in energy prices, and very little of this could be credited to the Fed's policy and measures.
August Retail Sales Surpassed Market Expectations
Retail and food services sales increased 0.1% from the previous month in August as consumers showed resilience despite growing anxieties about the economic slowdown.
The sales data adjusted for seasonal and calendar effects but not for inflation.
The monthly growth slowed sharply from the revised 1.1% increase in the previous month.
On an annual basis, retail sales growth eased to 2.1%, a slowdown in growth for the third month in a row, the U.S. Commerce Department reported Tuesday.
Retail trade sales were up 0.1% from July and up 2.0% from last year, and nonstore retail sales were up 7.8%, while sales at food services and drinking places were up 2.7%, respectively.
Sales at gasoline stores decreased 1.2% following the fall in gasoline prices, and electronics and appliance store sales eased 0.7%.
Meanwhile, retail sales excluding food services, auto dealers, building materials stores, and gas stations, which are used to calculate GDP, were up 0.3%, following an upwardly revised 0.4% rise in July.
The Fed's lowering of inflation will only stoke inflationary forces in the months ahead, sending another ripple of higher prices.
U.S. Indexes and Treasury Yields
The S&P 500 index increased 0.5% to 5,657.95, the Nasdaq Composite rose 0.8% to 17,728.08, and the Russell 2000 index advanced 0.9% to 2,207.92.
The yield on 2-year Treasury notes edged higher to 3.59%, 10-year Treasury notes inched down to 3.63%, and 30-year Treasury bonds inched lower to 4.0%.
WTI crude oil increased $0.15 to $70.25 a barrel, and natural gas prices edged up 3 cents to $2.41 a thermal unit.
Gold fell by $6.0 to $2,577.67 an ounce, and silver increased by $0.04 to $30.79.
The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.75.
U.S. Stock Movers
Microsoft Corp. jumped 2.2% to $440.71 after the software developer announced a $60 billion stock buyback plan and increased its dividend by 10.7% to 83 cents per share.
Intel Corp. advanced 2.4% to $21.42, and the advanced chipmaker said it plans to create a new entity for its foundry business, allowing the unit to raise its own capital.
Hewlett Packard Enterprise jumped 5.5% to $18.17 after Bank of America upgraded the stock to "buy" from "neutral," citing several catalysts for the company's server demand.
Europe Movers: Barry Callebaut, Essentra, Kingfisher
Inga Muller
17 Sep, 2024
Frankfurt
European markets advanced ahead of rate decisions from major central banks later in the week.
German investor sentiment dropped to an 11-month low amid faltering economic recovery and growing problems in the automobile sector.
The DAX index increased by 0.9% to 18,794.30; the CAC-40 index rose by 0.9% to 7,514.68; and the FTSE 100 index increased by 7% to 8,339.07.
The yield on 10-year German bonds edged lower to 2.10%, French bonds inched lower to 2.82%, the UK gilts edged down to 3.74%, and Italian bonds decreased to 3.44%.
Kingfisher plc increased 7.7% to 310.90 pence after the UK-based home improvement retailer raised the lower end of its fiscal 2025 profit estimate.
Sales in the first half declined 1.8% to £6.7 billion from £6.9 billion, pre-tax income increased 2.3% to £324 million from £317 million, and earnings per share advanced 3.9% to 12.8 pence from 12.4 pence a year ago.
The company blamed the sales weakness to a decline in sales of large tickets and unusual weather conditions.
The retailer also lifted its annual profit-before-tax range to between £510 million and £550 million from the previous estimate between £490 million and £550 million.
Barry Callebaut increased 6.9% to CHF 1,557.0 after Barclays upgraded the stock to "overweight" from "underweight," citing a decline in cocoa prices and the company's focus on improving its operating costs.
The company has closed underperforming plants in Italy, Malaysia, and Germany and expressed confidence that it is on track to achieve its $250 million cost-cutting target by the end of fiscal year 2027.
Essentra PLC plunged 18.2% to 136.80 pence after the UK-based manufacturing company lowered its annual outlook in the current fiscal year, citing market challenges.
The company revised its annual profit estimate to between £40 million and £42 million, citing adverse market conditions and a negative foreign exchange impact of £2 million.
The company reversed its previous outlook of an improvement in volume in the expectations of a rebound in demand in Europe, including Turkey.
However, sales have lagged the company's expectations in the second half in the U.S. and APAC region.
European Markets Advanced Ahead of Rate Decisions, German Investor Morale Dropped to 11-Month Low
Bridgette Randall
17 Sep, 2024
London
European markets advanced for the second consecutive day in a row and extended weekly gains ahead of key monetary policy decisions.
Benchmark indexes in London, Paris, and Frankfurt advanced ahead of rate decisions from the U.S. Federal Reserve Bank, the Bank of England, the Norges Bank, and the Bank of Japan.
Investors are hoping that the Federal Reserve will deliver a widely anticipated rate cut of at least 25 basis points, but the central banks of the U.K., Norway, and Japan are likely to hold rates steady.
Consumer price inflation in the U.S. has slowed over the last eighteen months, but that decline is largely reflecting lower energy prices.
Prices are still rising at a faster pace than the Fed's target rate of 2% and from a higher base, stretching consumer budgets for most families.
Moreover, the service sector inflation is still above 4%, and many small and medium-sized businesses are still looking to pass on higher operating costs to consumers, which is likely to keep inflation at an elevated pace for several more months.
Closer to home, the ZEW Indicator of Economic Sentiment for Germany plunged to 3.6 in September from 19.2 in August, the Center for European Economic Research announced Tuesday.
The investor morale indicator declined for the third month in a row and fell to the lowest level since October 2023.
Investors are widely discounting the hope for an economic rebound in Germany amid rising cost of living, elevated interest rates, and weakening labor market conditions.
Europe Indexes and Yields
The DAX index increased by 0.9% to 18,794.30; the CAC-40 index rose by 0.9% to 7,514.68; and the FTSE 100 index increased by 0.7% to 8,339.07.
The yield on 10-year German bonds edged lower to 2.10%, French bonds inched lower to 2.82%, the UK gilts edged down to 3.74%, and Italian bonds decreased to 3.44%.
The euro edged up to $1.11; the British pound inched higher to $1.32; and the U.S. dollar weakened to 84.46 Swiss cents.
Brent crude decreased $0.22 to $72.52 a barrel, and the Dutch TTF natural gas rose by €0.47 to €34.78 per MWh.
Europe Stock Movers
Kingfisher plc increased 7.7% to 310.90 pence after the UK-based home improvement retailer raised the lower end of its fiscal 2025 profit estimate.
Sales in the first half declined 1.8% to £6.7 billion from £6.9 billion, pre-tax income increased 2.3% to £324 million from £317 million, and earnings per share advanced 3.9% to 12.8 pence from 12.4 pence a year ago.
The company blamed the sales weakness to a decline in sales of large tickets and unusual weather conditions.
The retailer also lifted its annual profit-before-tax range to between £510 million and £550 million from the previous estimate between £490 million and £550 million.
Barry Callebaut increased 6.9% to CHF 1,557.0 after Barclays upgraded the stock to "overweight" from "underweight," citing a decline in cocoa prices and the company's focus on improving its operating costs.
The company has closed underperforming plants in Italy, Malaysia, and Germany and expressed confidence that it is on track to achieve its $250 million cost-cutting target by the end of fiscal year 2027.
Essentra PLC plunged 18.2% to 136.80 pence after the UK-based manufacturing company lowered its annual outlook in the current fiscal year, citing market challenges.
The company revised its annual profit estimate to between £40 million and £42 million, citing adverse market conditions and a negative foreign exchange impact of £2 million.
The company reversed its previous outlook of an improvement in volume in the expectations of a rebound in demand in Europe, including Turkey.
However, sales have lagged the company's expectations in the second half in the U.S. and APAC region.