Market Update
China Linkages Worry European Corporations, UK Auto Production Rebounds
Bridgette Randall
28 Nov, 2022
Frankfurt
European markets traded down led by weak resource sector stocks and growing anger against zero-Covid policy in China sparked a fresh wave of unrest.
Automakers led the decline amid rising fears that a Chinese government crackdown may impact operations and disrupt economic activities.
ECB President Christine Lagarde said inflation is high and has not peaked yet and the central bank is not through raising interest rates.
Lagarde was addressing lawmakers at the European Parliament's Committee on Economic Affairs.
Consumer price Inflation in the 19-member eurozone rose to 10.6% in October and Lagarde said there are too many uncertainties to determine when the inflationary forces are likely to recede.
The European Central Bank is expected to lift rates by at least 50 basis points following its next rate setting committee's meeting on December 15.
This year, the central bank ended net bond purchases and lifted rates three times in a row since July but interest rates at 2.0% are still considerably lagging inflation hovering above 10%.
The surge in core inflation was initially mainly supply driven factors, but the importance of demand factors increased over time as the economic activities picked up and the labor market remained tight.
Policymakers are also struggling with record spread in inflation rates in the currency union with France reporting the lowest rate 0f 7.1% and the rate of 22.5% in Estonia in October.
The DAX index fell 1.1% to 14,383.36, the CAC-40 index declined 0.7% to 6,665.20 and the FTSE 100 index dropped 0.2% to 7,474.02.
The benchmark Swiss Market Index closed down 5.87 points to 11,162.16.
Brent crude oil declined 30 cents to $83.30 a barrel and Dutch TTF natural gas eased 0.9% to 123.28 euros a MWh.
The euro edged down to $1.035 and the British pound extended recent gains to $1.197.
The yield in 10-year German Bunds increased to 1.99%, French bonds t0 2.66%, the U.K. Gilts to 3.12% and Italian bonds to 3.91%.
UK Automobile Production Rebounds
UK automakers production increased 7.4% in October reversing a 6.0% decline in September, the Society of Motor Manufacturers and Traders reported Friday.
Automobile production rose to 69,524 units but 48.4% below the pre-pandemic level of 134,669 units in October 2019.
Luxury automobile exports dominated the production rebound, with exports increasing 6.3% to 56,469 units and domestic sales rising 12.5% to 13,055.
For the year-to-date to October, automobile production declined 10.8% to 643,755 from 721,509 a year ago.
Europe Stock Movers
Brenntag fell 9.7% to
Persistent China Disruptions Drag World Markets Down, Oil Drops to 11-month Low
Barry Adams
28 Nov, 2022
New York City
Stocks on Wall Street opened lower after protests spread to more cities in China, prompting worries of crackdown and disrupting supply chains.
Global companies are increasingly shifting manufacturing away from China as zero-Covid linked supply chains are likely to persist.
After three years of coronavirus pandemic, China, the only nation among large economies, is still struggling with rising infections.
Coronavirus infections rose to a daily high of 44,000 but reported deaths in China are still less than a handful.
China's zero-Covid strategy has now put more than 400 million people under strict lockdown conditions and several cities are facing stricter mobility restrictions for more than three months.
The S&P 500 index declined 0.8% to 3,993.86 and the Nasdaq Composite index dropped 0.6% to 11,152.74.
Crude oil rose 50 cents to $77.78 s barrel and natural gas declined 35 cents to $6.67 a thermal unit.
The yield on 2-year Treasury notes fell to 4.45%, 10-year Treasury notes eased to 3.69% and 30-year Treasury bonds inched lower to 3.74%.
Stock Movers
Apple Inc declined 2.2% to $144.94 on the worries that the growing unrest in China and at its main contractor Foxconn may create a shortage of iPhone Pro models.
iPhone shipments fell 17% to 8.4 million in October from Henan province, China's customs data showed on Thursday.
Foxconn's mega-complex is based in its capital city Zhengzhou, Henan province where thousands of employees are forced to stay in the factory compounds for more than two months.
Energy producers declined after WTI crude oil prices fell to a 11-month low on China-demand worries.
Exxon Mobil, Chevron, Marathon Oil, Valero, Occidental Petroleum, Hess and Baker Hughes declined between 1% and 3%.
Casino operators increased after China granted provisional licenses to keep operation running in gambling center Macau.
Las Vegas Sands, Wynn Resort, Melco and MGM gained between 0.5% and 6.5%.
Taboola.com Limited soared 47% to $2.70 after Yahoo agreed to acquire a minority stake of 26% in the advertising company.
Yahoo also signed a 30-year contract with Taboola to power its native advertising on all sites operated by the publishing company.
Stocks On Hold After China Lockdowns Spread
Barry Adams
25 Nov, 2022
New York City
Stocks on Wall Street lacked direction and closed mixed in shortened trading session.
Benchmark indexes generally closed down in thin trading a day after Thanksgiving holiday and investors reacted to the latest news from China.
The People's Bank of China lowered its bank reserve ratio by 25 basis points to a weighted average ratio of 7.8%, freeing as much as $70 billion in capital.
Investors grew worried after the resurgence of Covid19 virus forced more regions to lockdown conditions impacting about 20% economic activities, from 10% just a week ago.
The S&P 500 index decreased 1.14 points to 4,026.12 and the Nasdaq Composite index eased 0.5% or 58.96 points to 11,226.36.
For the week, the S&P 500 index gained 1.5% and the Nasdaq Composite increased 0.7%.
Crude oil price declined $1.70 to $76.38 a barrel and natural gas prices eased 38 cents to $6.79 a thermal unit.
The yield on 2-year Treasury noted closed at 4.47%, 10-year Treasury notes at 3.69% and 30-year Treasury bonds at 3.79%.
Investors also reviewed the latest minutes from the European Central Bank' rate setting meeting held on October 27.
The hawkish tone of the committee members suggested that interest rates are likely to go higher by at least 50 basis points at the next meeting scheduled November 30.
The dollar edged lower after the release of minutes and extended decline against the British pound and the euro for the fourth day in a row.
Stock Movers
Apple Inc declined 2% to $48.11 after the protest broke out at Foxconn's factories in China after months of lockdowns, a key contract-manufacturer of iPhone devices.
Activision Blizzard declined 4.1% to $73.47 after Politico reported that the Federal Trade Commission is likely to sue Microsoft and block its $69 billion acquisition of the company.
Coupa Software soared 6.4% to $62.69 following a 29% surge in the previous session on the Bloomberg News report that Vista Equity Partners is looking to acquire the company.
Grindr Inc declined 4.5% to $9.55 and extended weeklong losses from the high of $63.71 on November 18.
The, recently merged with a special purposed acquisition company Tiga Acquisition Corp., generated a profit of $5.1 million on $146 million in revenue, compared to a $13 million loss on $104 million in sales.
Tesla declined 0.2% to $182.86 after the electric vehicle maker recalled 80,000 vehicles in China to fix seat-belt and software issues.