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Market Update

European Markets Attempted a Rebound Ahead of Monetary Policy Decisions Later This Week

Bridgette Randall
09 Sep, 2024
London

European markets rebounded amid widespread expectations of a rate cut later in the week.

Benchmark indexes in Paris, London, and Frankfurt advanced 0.6% in active trading, and investors awaited the release of final updates on inflation in Germany, France, and Spain later in the week.

The European Central Bank is expected to lower rates by 25 basis points at the end of its policy meeting on Thursday, and investors are looking ahead to revised economic projects for the year.

Consumer price inflation in the eurozone is on a downward slide, but that decline in inflation is largely driven by the fall in energy prices.

Core inflation, which strips out volatile food and energy price inflation, is still hovering above 3%, indicating that it is well-anchored in the economy and prices are still rising at a faster rate than the 2% target rate set by the European Central Bank.

The Eurozone’s trade balance is also on tap this week.

Investors in the U.K. are awaiting the updates on unemployment rate, trade balance, and industrial production.

Europe Indexes and Yields

The DAX index increased by 0.5% to 18,402.53; the CAC-40 index rose by 0.6% to 7,393.17; and the FTSE 100 index advanced by 0.6% to 8,231.36.

The yield on 10-year German bonds edged higher to 2.22%, French bonds inched up to 2.93%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

The euro edged down to $1.10; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 84.89 Swiss cents.

Brent crude increased $0.56 to $71.61 a barrel, and the Dutch TTF natural gas rose by €0.54 to €36.91 per MWh.

Europe Stock Movers

Banks in the eurozone rebounded ahead of the expected interest rate cut later in the week.

Deutsche Bank gained 2.9% to €15.09, UniCredit jumped 2.2% to €37.04, Societe Generale advanced 2.1% to €22.29, and BNP Paribas increased 1.2% to €62.91.

Oil explorers rebounded in Monday's trading, tracking a technical rebound in crude oil prices after falling 8% in the previous week.

Shell PLC gained 1% to 2,542.0 pence, and BP plc edged up 0.5% to 407.65 pence.

Mining companies edged higher after copper edged up 2% and iron ore stabilized around a four-year low.

Glencore Plc jumped 1.3% to 371.75 pence, Anglo American Plc advanced 0.7% to 2,040.50 pence, and Antofagasta gained 1.9% to 1,669.50 pence.

Luxury stocks were under pressure after China reported weak consumer price inflation and producer price inflation, confirming ongoing economic growth slowdown.

Kering SA dropped 3.5% to €228.0, Hermes International increased 0.4% to €1,916.50, and LNMH Moet Hennessey inched up 0.3% to €1,916.50.

Barratt Developments increased 0.7% to 496.23 pence, and the homebuilder and Lloyds Banking Group, along with the UK government agency Homes England, launched a £165 million joint venture.

Entain PLC soared 8.3% to 692.20 pence, and the online gambling platform operator said its businesses in the U.K. and Ireland rebounded faster than previously estimated.

Japan's Nikkei 225 Drops to One-Month Low, Second Quarter GDP Revised Lower

Akira Ito
09 Sep, 2024
Tokyo

Weak market indexes persisted for the fifth session in a row, following the sharp sell-off in Friday's trading in New York.

The Nikkei 225 and the Topix indexes closed down 0.9% and recovered from morning losses of 3%.

Investors sold stocks on the growing concerns about the health of the U.S. economy and rising domestic inflation and wages, supporting the case for the Bank of Japan to lift rates later in the month.

Japan's second quarter GDP growth was revised down to an annual rate of 2.9% from the preliminary estimate of 3.1%, the Cabinet Office reported Friday.

In addition, overall bank lending in Japan increased 3% from a year ago, slightly lower than 3.2% advance in July, the Bank of Japan reported on Monday.

Bank lending increased to 624.24 trillion yen, and excluding trusts, lending increased 3.6% to 547.3 trillion yen.

Japan's current account surplus also increased 15.1% to 3.19 trillion yen, the Ministry of Finance reported Monday.

The surplus shot up from 1.53 trillion yen in June, and the trade deficit stood in the month at 4.48 trillion yen after exports increased 9.4% to 9.4 trillion yen and imports soared 16.8% to 9.9 trillion yen.

Financial account surplus was 2.3 trillion yen, and capital account surplus stood at 20 billion yen.

Japan Stock Movers

The Nikkei 225 stock average declined 0.9% to 36,105.29, and the Topix index dropped 0.9% to 2,575.82.

Tech stocks led the decliners in Tokyo after another down day in New York in Friday's trading.

Tokyo Electron declined 2.2% to ¥21,500.0, Advantest Corp. dropped 0.6% to ¥5,830.0, and Screen Holdings fell 1.4% to ¥9,569.0.

Fast Retailing declined 0.5% to ¥43,900.0, Isetan Mitsukoshi fell 2.4% to ¥2,169.0, and Seven & I gained 2.1% to ¥2,185.0.

Mitsubishi UFJ Financial dropped 2.3% to ¥1,443.00, Sumitomo Mitsui Financial declined 2% to ¥8,990.0, and Mizuho Financial dropped 2.9% to ¥2,838.50.

Hang Seng Index Plunged 2% as China Inflation Data Confirmed Slowdown Trend

Li Chen
09 Sep, 2024
Hong Kong

Stocks in Hong Kong and mainland China faced renewed selling pressure in Monday's trading after investors reviewed the latest inflation reports.

The Hang Seng index dropped nearly 2% and the mainland-focused CSI 300 index dropped more than 1% after deflation worries were compounded by weak global market sentiment.

China's consumer price inflation rose to 0.6% in August from a year earlier, accelerating from 0.5% in July, the National Bureau of Statistics reported Monday.

Core inflation, which excludes food and energy prices, increased 0.3% from a year ago as consumers spending retrenched amid falling property prices and a weak job market outlook.

Producer price index, a measure of wholesale prices, declined 1.8% in August, confirming weakening price trend. according to a separate report by the statistical agency.

The wholesale inflation measure deepened its slide from 0.8% in July, and the index dropped for the 23rd month in a row, suggesting weak demand conditions.

Market sentiment was further weakened in Hong Kong amid U.S. rate path uncertainty after the U.S. labor market expanded at a slower pace than in the previous-year pace.

Market sentiment was weak across Asia after the U.S. economy added about 142,000 net new jobs in August, higher than the revised 89,000 jobs in July but below the market's expectations.

The moderating labor market conditions supported the case for a rate cut at the policy meeting next week, but policymakers have been sending mixed signals over the last four weeks.

Investors have been hypersensitive to the U.S. interest rate direction, and the world market indexes plunged between 2% and 6% last week amid rate path uncertainty.

Global market indexes are likely to tread water with a downward bias until the U.S. monetary policy announcement at the end of a two-day meeting on September 18.

China Stock Movers

The Hang Seng index decreased 1.9% to 17,119.54, and the mainland-focused CSI 300 index dropped 1.1% to 3,197.53.

Tech stocks plunged more than 2% following the market weakness in Hong Kong trading.

Alibaba Group declined 1.9% to HK $78.25, Tencent Holdings dropped 1.5% to HK $368.0, and JD.com dropped 2.9% to HK $101.30.

Property developers accelerated the previous week's decline amid rate path uncertainty and weak interim results released last week.

Longfor Group declined 3.7% to HK $8.27, China Resources Land dropped 4.2% to HK $19.90, China Vanke fell 3.7% to HK $3.92, and Henderson Land Development eased 1.9% to HK $23.40.

China Renaissance Holdings plunged 66% to HK $2.48, and the boutique investment bank's stock resumed trading after more than one year of trading suspension following the arrest of its founder, Bao Fan.

India Movers: Bank of Maharashtra, Deep Industries, Mazagon Dock, PNB, PNB Housing, Spicejet

Arun Goswami
09 Sep, 2024
Mumbai

Mumbai stocks lacked direction amid weak global market sentiment.

Investors are looking forward to the release of consumer price inflation and industrial production updates later in the week.

The Sensex index decreased by 0.1% to 81,150.87, and the Nifty index fell by 0.1% to 24,835.45.

On the Mumbai stock exchange, 137 stocks traded at their 52-week highs, and 39 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 6.85%, and the Indian rupee weakened to 83.96 against the U.S. dollar.

Punjab National Bank decreased 0.6% to ₹109.40 and Bank of Maharashtra fell 0.3% to ₹60.17, and the central government approved their secondary offering plans.

Both state-controlled are looking to raise as much as ₹5,000 crore through an institutional offering.

PNB Housing Finance declined 0.5% to ₹1,016.0, and the residential mortgage lender is looking to raise as much as an additional $125 million in international markets.

The home loan lender is planning to expand its current loan book of 65,000 crore to 1 lakh crore by the end of March 2028.

Spicejet increased 4% to ₹64.07, and the company is in the early stage of preparing for its 3,200 crore secondary offering.

Deep Industries increased 15% to ₹455.70, and the company won a ₹1,450 crore order from ONGC to improve its production capacity at its Rajahmundry facility.

Deep Industry's order backlog at the end of June stood at ₹1,246 crore.

Mazagon Dock Shipbuilders fell 0.8% to ₹4,366.10, and the company received a 1,486 crore order for subsea pipeline replacement project.

Wall Street Indexes Wavered After U.S. Jobs Additions Leveled Off

Barry Adams
06 Sep, 2024
New York City

Stocks struggled in early trading on Friday as investors reviewed the latest jobs report and its implication on future rate paths.

The S&P 500 index decreased 0.2%, and the Nasdaq Composite declined 0.3% after nonfarm payrolls in August accelerated from July but fell short of market expectations.

The U.S. economy added 142,000 net new jobs in August, higher than the downwardly revised 89,000 jobs in July, according to the U.S. Bureau of Labor Statistics report released on Friday.

Investors were looking for the nonfarm payroll to increase by at least 155,000 in August.

The U.S. labor market is clearly softening after expanding by 200,000 jobs a month in 2022 and 2023, but the economy is adding jobs and wages are rising.

Hourly wages for all employees increased 14 cents, or 0.4%, from the previous month to $35.21 following a 0.2% rise in July, the statistical agency noted.

Over the past twelve months, wage growth accelerated to 3.8% in August from 3.6% in July, suggesting that higher income will stoke inflationary pressures in the near future.

Despite the increase in wages, investors are still hoping that the softer labor market conditions are likely to convince policymakers to lower interest later this month.

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.4% to 5,484.27, the Nasdaq Composite fell 0.8% to 17,000.87, and the Russell 2000 index added 2.4% to 2,137.11.

The yield on 2-year Treasury notes edged lower to 3.70%, 10-year Treasury notes decreased to 3.71%, and 30-year Treasury bonds inched lower to 4.0%.

WTI crude oil increased $0.29 to $69.33 a barrel, and natural gas prices edged up 1 cent to $2.26 a thermal unit.

Gold rose by $5.26 to $2,522.01 an ounce, and silver increased by $0.07 to $28.91.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.88.

U.S. Stock Movers

Broadcom declined 9% to $138.93, and the advanced chipmaker reported slightly lower-than-expected revenue in the fiscal third quarter.

Revenue in the quarter increased 47% to $13.07 billion from $8.9 billion, net income swung to a loss of $1.88 billion from a profit of $6.12 billion, and diluted earnings per share were a loss of 40 cents compared to an income of $1.24 a year earlier.

The company said net loss in the current quarter includes one-time tax provision of $4.5 billion related to trading of intellectual property rights between two divisions controlled by the company.

The company estimated fiscal fourth quarter revenue of $14 billion and adjusted operating earnings margin of 64%.

Broadcom estimated sales from AI parts and custom chips are likely to be $12 billion in fiscal 2024, higher than the previous estimate of $11 billion.

UiPath increased 1.2% to $12.90, and the software developer reported better-than-expected second-quarter results.

DocuSign advanced 1.3% to $57.65, and the e-signature company reported better-than-expected revenue and earnings in its latest quarter.

Bowlero Group advanced 15% to $12.40, and the bowling alley chain operator reported better-than-expected revenue in the fiscal fourth quarter.

Europe Movers: Airbus, Berkely Group, Camellia, Elis, Rolls Royce

Inga Muller
06 Sep, 2024
Hong Kong

European markets struggled to advance for the fifth session in a row amid rate path worries and economic growth anxieties.

The Euro Area second quarter GDP growth was revised slightly lower, and Germany's trade surplus dropped to a four-month low.

The DAX index decreased by 0.5% to 18,485.08; the CAC-40 index fell by 0.2% to 7,413.79; and the FTSE 100 index declined by 0.3% to 8,214.31.

The yield on 10-year German bonds edged lower to 2.16%, French bonds inched down to 2.85%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

Airbus declined 1.2% to €130.14 after Europe's air safety regulator ordered a precautionary check on some engines of its A350-100 planes following an engine fire on a Cathay Pacific flight from Hong Kong to Zurich on Monday.

Cathay Pacific grounded all long-haul Airbus 350-1041 planes for safety checks after a fire was detected shortly after the takeoff from Hong Kong.

Rolls Royce, which makes engines for the Airbus 350 planes, said it has launched its own investigation as well.

Rolls Royce declined 0.9% to 473.80 pence.

Elis SA declined 15.4% to €19.56 after Reuters reported that the company has approached Vestis, a former uniform rental business owned by Aramark.

Berkeley Group Holdings PLC declined 1.6% to 4,908.0 pence, and the UK-based house builder said revenue in the first four months of the fiscal year has been "stable" and reiterated its annual outlook.

Camellia PLC dropped 5.6% to 4,199.40 pence, and the agriculture company reported a loss of £11 million in the first half.

European Markets Extend Losses to Fifth Consecutive Day, Eurozone Q2 GDP Growth Revised Lower

Bridgette Randall
06 Sep, 2024
London

European markets struggled to advance for the fifth session in a row amid global growth and rate path worries.

Benchmark indexes in Paris, London, and Frankfurt declined as investors reviewed the latest updates on international trade balances and second quarter GDP growth revision.

Euro Area GDP Growth Revised Lower In Second Quarter

The Euro Area second quarter GDP growth was downwardly revised to 0.2% from the previous estimate of 0.3%, Eurostat reported Friday.

Economic activities expanded at a slowed pace compared to a 0.3% increase in the first quarter.

Household consumption edged lower by 0.1%, government spending increased by 0.6%, and gross fixed capital formation or investment declined by 2.2% as high prices and interest rates restrained activities.

Net international trade contribution was positive after exports increased 1.4% and imports advanced 0.5%.

Across four large economies of the currency union, economic activities increased by 0.2% in France and Italy, by 0.8% in Spain, but contracted by 0.1% in Germany.

On an annual basis, economic activities expanded by 0.6% in the second quarter in the Euro Area, matching the preliminary estimate and the strongest expansion in the last five quarters.

Government spending showed the largest increase with a rise of 2.1%, while household consumption edged up 0.5% and investment shrank 3%.

Exports increased 1.7% while imports decreased 1.1%.

Germany's Trade Balance Dropped to a 4-Month Low

Germany's goods trade surplus in July declined from a year ago, after exports and imports fell over the year, according to a preliminary estimate by the Federal Statistical Office, or Destatis, reported Friday.

Calendar and seasonally adjusted exports declined 1.2% from a year ago to €130 billion, and imports edged down 0.1% to €113.2 billion.

Trade balance declined to €16.8 billion from €18.3 billion in the corresponding period a year ago.

Exports to the U.S. decreased 1.7% from the previous month to €12.7 billion, to the People's Republic of China fell 8.0% to €7.3 billion, and to the U.K. declined 2.7% to €6.4 billion.

Imports from China increased from the previous month by 6.6% to €13.6 billion, rose 5.3% from the U.S. to €7.8 billion, but declined 2.9% to 4.5 billion.

In nominal terms, not adjusted for calendar and seasonal factors, the international trade surplus increased to €20.7 billion in July from €19.0 billion in the corresponding month a year ago.

Europe Indexes and Yields

The DAX index decreased by 0.5% to 18,485.08; the CAC-40 index fell by 0.2% to 7,413.79; and the FTSE 100 index declined by 0.3% to 8,214.31.

The yield on 10-year German bonds edged lower to 2.16%, French bonds inched down to 2.85%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

The euro edged down to $1.11; the British pound inched higher to $1.32; and the U.S. dollar strengthened to 84.22 Swiss cents.

Brent crude increased $0.19 to $72.83 a barrel, and the Dutch TTF natural gas rose by €1.45 to €37.33 per MWh.

Europe Stock Movers

Airbus declined 1.2% to €130.14 after Europe's air safety regulator ordered a precautionary check on some engines of its A350-100 planes following an engine fire on a Cathay Pacific flight from Hong Kong to Zurich on Monday.

Cathay Pacific grounded all long-haul Airbus 350-1041 planes for safety checks after a fire was detected shortly after the takeoff from Hong Kong.

Rolls Royce, which makes engines for the Airbus 350 planes, said it has launched its own investigation as well.

Rolls Royce declined 0.9% to 473.80 pence.

Elis SA declined 15.4% to €19.56 after Reuters reported that the company has approached Vestis, a former uniform rental business owned by Aramark.

Berkeley Group Holdings PLC declined 1.6% to 4,908.0 pence, and the UK-based house builder said revenue in the first four months of the fiscal year has been "stable" and reiterated its annual outlook.

Camellia PLC dropped 5.6% to 4,199.40 pence, and the agriculture company reported a loss of £11 million in the first half.

Japan's Indexes Extended Weekly Losses to Over 5%

Akira Ito
06 Sep, 2024
Tokyo

Stock market indexes in Tokyo declined for the third session in a row, following the rise in the yen and resurfacing of the U.S. economic slowdown.

The Nikkei 225 stock average fell 0.5%, and the broader Topix index dropped 0.9%.

The yen advanced 0.5% to 142.57 against the U.S. dollar and gained 3% in the week amid rising expectations of a rate hike by the Bank of Japan later in the month.

Market indexes dropped as much as 6% this week, following a weak U.S. manufacturing growth report, followed by a weaker-than-expected increase in private sector payrolls in August.

Weak manufacturing and labor market data raised fears of a wider economic slowdown for the second time in two months, dragging down benchmark indexes in losses for the first time since early August.

Closer home, investors reviewed the smaller-than-expected increase in household spending in August.

Household spending, adjusted for seasonal factors and inflation, rose 1.7% from the previous month in July to 290,931 yen, the Ministry of Internal Affairs and Communication said on Friday.

On a yearly basis, real household spending rose 0.1% following the contraction of 1.4% in the previous month and increased for the first time since April.

The average monthly household income increased 5.5% in real terms and, in nominal terms, rose 8.9% to 694,483 yen.

Japan Stock Movers

The Nikkei 225 stock average decreased 0.5% to 36,474.15, and the Topix index dropped 0.9% to 2,597.94.

For the week, the Nikkei 225 declined 6.5% and the Topix fell 4.6%.

Financial markets in Hong Kong were closed, and the city and Vietnam closed airports ahead of the arrival of Typhoon Yagi.

Seven & I declined 1.2% to ¥2,139.0, and the company said the acquisition offer from Canada-based Couche Tard undervalues the convenience chain operator.

Tech stocks were under pressure following weakness in the sector in Thursday's trading on Wall Street.

Advantest Corp. fell 1.9% to ¥5,835.0, Tokyo Electron decreased 2% to ¥21,965.0, and Screen Holdings increased 0.8% to ¥9,648.0.

Retailers were in focus after the yen strengthened against the U.S. dollar.

Aeon Co. increased 2.4% to ¥3,838.0, Isetan Mitsukoshi gained 1.1% to ¥2,211.0, and Fast Retailing added 0.7% to ¥44,330.0.

Nippon Steel declined 2.2% to ¥3,080.0, IHI Corp fell 0.6% to ¥6,199.0, Kawasaki Heavy Industries dropped 3.3% to ¥4,705.0, and Keyence decreased 3.7% to ¥63,870.0.

Stocks Traded Down in Mainland China, Hong Kong Prepares for the Arrival of Typhoon Yagi

Li Chen
06 Sep, 2024
Hong Kong

Stocks in Shanghai and Shenzhen struggled to hold early morning gains, and investors turned cautious on the final trading day of the first week in September.

Financial markets are closed in Hong Kong after the weather service issued its first severe storm alert of the year as Typhoon Yagi barreled towards Southern China with a maximum speed of 210 kilometers per hour.

Hong Kong airport was closed and suspended its flight services, and commuter rail services were limited as the authorities prepared for severe weather on Friday.

For the week, the Hang Seng index declined 3% and nearly wiped out the gains of August, following weak economic data and underwhelming corporate earnings results.

On mainland China, stocks felt selling pressure as investors stayed on the sidelines ahead of the release of second quarter GDP data in Europe and nonfarm payroll data in the U.S.

Global investors are on edge after U.S. manufacturing activities contracted for the fifth month in a row in August, and private sector payroll expanded at the slowest pace since January 2021.

The yuan traded at 7.08 against the U.S. dollar and hovered at a one-year low amid persistent capital outflow and a lack of interest from foreign investors.

A central bank official signaled that monetary policy easing is likely in the coming months to support economic growth in the second half of 2024.

A cut in the bank's reserve ratio from the current 7% could increase liquidity and provide more funds for the economy, Zou Lan, the head of the monetary policy department at the People's Bank of China, commented at a press conference in Beijing on Thursday.

Lan also said there are constraints in lowering deposit and lending rates because lower rates generally drive bank deposits away to asset management products and narrow bank interest rate margins.

China Stock Movers

The mainland China-focused CSI 300 index declined 0.3% to 3,249.04, and financial markets in Hong Kong were closed because of a typhoon.

Stock brokerage firms were in focus after China said it plans to merge Guotai Junan with Haitong Securities to create a larger company that can compete with its overseas rivals.

Beijing plans to create 10 large securities brokerage firms over the next ten years that are capable of competing with the leaders of Wall Street, according to a plan laid out by Wu Quing, the incoming chairman of the China Securities Regulatory Commission.

The merger plan announcement lifted other leading brokerages higher in Shanghai trading.

Sealand Securities soared daily limit of 10% to ¥3.19, and China Galaxy Securities jumped 6.6% to ¥11.70.

India Movers: Adani Green Energy, Brigade Enterprises, Glenmark Pharma, Godfrey Philips, Max Financial, Mrs Bectors Food, Reliance Industries

Arun Goswami
06 Sep, 2024
Mumbai

The Nifty and Sensex indexes extended weekly losses after a tumultuous week of trading in global markets.

The worries of the U.S. economic slowdown dragged down global market indexes for the second time in as many months.

The Sensex index decreased by 0.2% to 82,201.16, and the Nifty index fell by 0.2% to 25,093.70.

For the week, the Sensex declined 0.2% and the Nifty fell 0.6%.

On the Mumbai stock exchange, 191 stocks traded at their 52-week highs, and 20 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 6.85%, and the Indian rupee weakened to 83.98 against the U.S. dollar.

Reliance Industries declined 0.3% to ₹2,991.0, and the company's board approved the 1-for-1 stock split during the annual general meeting held on Thursday.

Adani Green Energy decreased 1.8% to ₹1,896.0, and the company is in discussion with international bankers to sell bonds worth $1.5 billion.

Glenmark Pharmaceuticals gained 1% to ₹1,703.70, and the company's U.S. subsidiary settled for a $25 fine with the U.S. Department of Justice related to the generic drug pricing.

The company agreed to pay the fine in six installments over five years.

Godfrey Philips India advanced 0.3% to ₹6,385.0, and the Delhi High Court favored Bina Modi, which will facilitate her reappointment as managing director of the cigarette maker.

Max Financial Services decreased 1.4% to ₹1,117.25, and the promoter entity Max Ventures Investment Holdings lowered its stake to 3.34% from 6.52%.

The promoter group's company sold 1.1 crore shares at an average price of ₹1,107.37 crore per share.

Mrs. Bectors Food Specialties gained 1% to ₹1,609.0, and the food product maker plans to raise 400 crore in a secondary offering to institutions.

The company priced the offering at a 3.9% discount to ₹1,550 per share, and proceeds will be used to repay debt and production expansion.

Sundaram Clayton rose 2.6% to ₹1,790.0, and the company has started commercial production of aluminum die castings at a new capacity in Tamil Nadu with an annual capacity of 7,750 tons.

Brigade Enterprises gained 2.8% to ₹1,303.30, and the real estate development company completed its institutional offering priced at ₹1,150 per share and raised ₹1,500 crore.

Growth Weary Investors Pin Hopes On Friday's Nonfarm Payroll Report

Alexander Garcia
05 Sep, 2024
Miami

Another month, and another scare of economic slowdown.

Wall Street stocks declined for the third day in a row after growth worries resurfaced after a weak manufacturing report on Tuesday, followed by a weak private sector payroll growth update today.

Investors are sensitive to growth slowdowns, but the labor market and the economy have been humming at above-average rates for more than three years, and at some point growth is going to slowdown.

Global financial markets have been in a holding pattern since Wednesday, awaiting the nonfarm payroll data, and any slowdown in hiring is likely to further exacerbate market volatility.

Stocks on Wall Street plunged on August 5th after the release of July nonfarm payroll showed a sharp deceleration to 114,000 from 179,000 in June.

Investors are estimating that August nonfarm payroll growth will at least exceed the previous month additions.

Tech stocks continued to decline for the third day in a row as investors worried about the economic slowdown amid mixed signals.

The S&P 500 index and the Nasdaq Composite declined in early trading as investors sold high-flying tech and chip stocks amid growing worries of an economic slowdown and weakening labor market.

Private sector employment expanded below market estimates, according to the latest data released by ADP.

Private corporations added 99,000 new jobs in August, lower than 111,000 in the previous month, following two years of above-normal growth.

"Moreover, job gains were flat at 4.8% for existing employees and increased to 7.3% for those who switched jobs, the data showed.

"The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth.," ADP chief economist Nela Richardson said in a statement.

Initial weekly jobless claims declined last week, the Labor Department reported Thursday.

Weekly jobless claims dropped by 5,000 from the previous week to 227,000 in the week ending on August 31.

The initial claims fell to a new 7-week low, easing fears of a potential increase in jobless claims amid moderating labor market conditions.

Continuing claims, which lag by one week, dropped by 22,000 to 1.838 million in the previous week.

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.6% to 5,485.54, the Nasdaq Composite fell 0.1% to 17,066.51, and the Russell 2000 index fell 0.9% to 2,126.40.

The yield on 2-year Treasury notes edged lower to 3.73%, 10-year Treasury notes decreased to 3.74%, and 30-year Treasury bonds inched lower to 4.04%.

WTI crude oil increased $0.15 to $69.05 a barrel, and natural gas prices edged up 12 cents to $2.27 a thermal unit.

Gold rose by $11.15 to $2,507.03 an ounce, and silver increased by $0.42 to $28.68.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.15.

U.S. Stock Movers

Topgolf Callaway Brands increased 1.1% to $10.90 after the company said it plans to separate into two companies. The company will separate its golf equipment and lifestyle business from its entertainment business.

C3.ai declined 11.5% to $20.42, and the company reported sharply lower-than-expected subscription revenue in its latest quarter.

Total revenue in the fiscal first quarter increased 21% to $87.2 million from $72.4 million, and subscription revenue advanced 20% to $73.5 million from $61.4 million a year ago.

The weaker-than-expected growth in its subscription revenue negatively impacted the stock.

Net loss in the quarter shrank to $62.8 million from $64.3 million, and diluted loss per share fell to 50 cents from 56 cents a year earlier.

AeroVironment declined by 3.5% to $186.60 despite the defense contractor reporting better-than-expected revenue and earnings in the fiscal first quarter.

Revenue in the first quarter ending in July increased by 24% to $189.5 million from $152.3 million, net income edged slightly lower to $21.2 million from $21.8 million, and diluted earnings per share fell to 75 cents from 84 cents a year ago.

European Markets On Hold Amid Global Rate Path and Economic Growth Uncertainties

European markets lacked direction, and investors debated economic growth outlook and future interest rate path.

Benchmark indexes in Paris, London, and Frankfurt traded sideways, and investors reviewed the latest updates on German factory orders and retail sales in the Euro Area.

Jittery investors have been selling stocks amid growing anxieties about the economic growth outlook in the U.S., China, and the Euro Area.

Investors are on edge after a private manufacturing survey showed weakening activities for the fifth month in a row, and job openings also dropped to the level last seen in 2021.

In the eurozone, consumer price inflation fell closer to the 2% target level set by the central bank largely because of the decline in energy prices, and consumer spending remains depressed amid high cost of living and weak wage growth.

Moreover, consumer demand remains weak in China, once the key driver of demand for luxury goods from Europe, amid a protracted slump in the property market and growing uncertainty in the labor market.

Large Transportation Orders Lift Germany's Factory Orders In July

Closer to home, Germany's factory orders rose 2.9% in July, following an upwardly revised 4.6% increase in June, the Federal Statistical Office, or Destatis, reported Thursday.

Orders unexpectedly rose for the second consecutive month, driven by an 86.5% jump in orders for transportation equipment and an 18.6% rise in electrical equipment.

While domestic orders were unchanged in the month, orders from other countries increased 5.1%, driven by a 5.9% rise in orders from the eurozone and a 4.6% advance from outside the currency union.

Incoming orders on an annual basis rose 3.7%, and excluding large orders, they fell 0.4% from June.

Lack of Retail Sales Growth Highlights Weak consumer demand

Retail sales in the Euro Area in July increased 0.1% from the previous month when sales were revised to a decline of 0.4%, Eurostat reported Thursday.

The fuel sales declined 1% and outweighed the increase of 0.4% in food, beverage, and tobacco product sales and the 0.1% rise in non-food product sales.

Euro Area retail sales in July declined 0.1% from a year ago as consumers limited purchases to basic items amid a cost of living crisis and high interest rates.

Europe Indexes and Yields

The DAX index increased by 0.02% to 18,595.51; the CAC-40 index fell by 0.9% to 7,431.56; and the FTSE 100 index declined by 0.3% to 8,241.71.

The yield on 10-year German bonds edged lower to 2.22%, French bonds inched down to 2.95%, the UK gilts edged down to 3.94%, and Italian bonds decreased to 3.59%.

The euro edged down to $1.10; the British pound inched higher to $1.31; and the U.S. dollar strengthened to 84.62 Swiss cents.

Brent crude increased $0.01 to $72.67 a barrel, and the Dutch TTF natural gas rose by €0.34 to €35.96 per MWh.

Europe Stock Movers

Volvo AB Class B increased by 0.2% to SEK 261.70 despite the automaker lowering its sales and profit estimates.

Associated British Foods decreased 5% to 2,365.18 pence after the parent company of Primark said wet weather negatively impacted its second-half retail sales.

Vistry Group PLC jumped 5.6% to 1,392.76 pence after the UK-based home builder said it plans to buyback £130 million worth of its own stock.

Churchill China declined 9.2% to 981.0 pence after the UK-based pottery company reported a sharp decline in revenue in its first half, driven by weakness in sales in the UK and Europe.

Revenue plunged 7.8% to £40.6 million, net income increased 3.1% to £3.5 million, and earnings per share rose 2.8% to 32.8 pence from 31.9 pence a year earlier.

The company announced to increase its interim dividend by 4.5% to 11.5 pence from 11.0 pence a year ago.

Ashmore Group gained 6.8% to 184.70 pence, and the emerging markets-focused fund manager reported slightly better-than-expected annual results.

Rising Wages and Yen Keep Stocks in Japan In Check

Market sentiment in Tokyo remained negative, benchmark indexes extended weekly losses after the yen edged higher, and the latest jobs data supported the case for a rate hike.

The Nikkei 225 stock average decreased 1%, and the broader Topix index fell 0.5%.

Nominal wage growth in July slowed from the previous month, the Ministry of Health, Labour, and Welfare reported Thursday.

The nominal cash wage increase slowed to 3.6% in July from a 4.5% growth in June, which was the largest since 1997.

Wages have been rising faster than the core inflation rate of 2.7% for the second month in a row, supporting the case for the Bank of Japan to increase interest rates at the end of its policy meeting later in the month.

Mining industry wages increased 14.8% and construction wages advanced 9.6%, but wages in information and communication fell 0.8% and transportation and postal services decreased 0.7%.

Nominal wages have been on the rise for 30th month in a row, but real wages have been on the rise only for the last three months.

The Japanese yen edged higher to 143.17 against the U.S. dollar and extended this week's advance to 2%.

Japan Stock Movers

The Nikkei 225 stock average declined 1% to 36,678.0, and the broader Topix index fell 0.5% to 2,620.05.

Tech stocks declined in Tokyo for the third session in a row amid persistent weakness on Wall Street.

Tokyo Electron decreased 2.5% to ¥22,425.0, Advantest Corp. dropped 2.9% to ¥5,950.0, SoftBank Group edged up 0.6% to ¥7,835.0, and Screen Holdings fell 1% to ¥9,575.0.

Banks were in focus after the yen gained against the U.S. dollar amid rising expectations of a rate hike later in the month.

Mitsubishi UFJ Financial Group decreased 1.5% to ¥1,485.50, Sumitomo Mitsui declined 1% to ¥9,324.0, and Mizuho Financial Group fell 0.4% to ¥2,962.0.

Mitsubishi Logistics gained 5.4% to ¥5,157.0, Hitachi Zosen Group gained 2.9% to ¥971.0, and GS Yuasa Corp. gained 4.2% to ¥2,870.0.

Toray Industries and Mitsubishi Chemical Group advanced more than 3%.

China Indexes Wavered; Property Developers, Oil Producers and Tech Stocks In Focus

Stocks in Hong Kong and mainland China lacked direction after falling in the previous three trading sessions.

The Hang Seng index decreased 0.6% and extended the three-day loss to over 3% after soaring 4% in August.

The CSI 300 index traded around the flatline amid a lack of interest from retail investors on the mainland.

The August rally stalled over the last three days as worries of an economic slowdown in the U.S. resurfaced following a weak reading on the manufacturing sector.

The latest update on the U.S. labor market also showed weakening market conditions after new job openings shrank in July to the lowest level since January 2021.

The number of job openings declined 237,000 to 7.673 million from the downwardly revised 7.91 million in June, the U.S. Bureau of Labor Statistics reported Wednesday.

Amid widespread belief that the Federal Reserve is likely to lower its key lending rates by at least 25 basis points at the end of a two-day policy meeting on September 18,.

The move by the Federal Reserve would also lead to a similar rate cut in Hong Kong, as the city maintains its currency peg with the U.S. dollar.

Property developers in Hong Kong advanced in the hopes that the interest rates are heading lower in the near future, supporting a rebound in property sales.

China Stock Movers

The Hang Seng index decreased 0.6% to 17,359.37, and the CSI 300 index edged down 0.01% to 3,251.83.

Oil producers were in focus for the third day in a row amid weakening crude oil prices in international markets.

Crude oil prices dropped below $70 a barrel and hovered near $69.35 amid demand growth worries in the U.S. and China and rising supply from OPEC+ countries.

CNOOC decreased 0.7% to HK $19.74, Petro China fell 3.7% to HK $6.27, and China Petroleum and Chemical Corp. declined 6.5% to HK $4.63.

Property developers advanced in the hopes of rate cuts in the near future.

Sun Hung Kai Properties gained 2% to HK $75.25, Henderson Land Development increased 1.8% to HK $23.70, and CK Hutchison Holdings added 2.2% to HK $42.90.

Tech stocks remained under pressure for the fourth day in a row amid weakness in semiconductor stocks and online platforms.

Alibaba Group was in focus after the e-commerce platform operator said it may consider accepting payments originating on the WeChat service operated by the rival Tencent Holding.

Tencent Holding declined 0.2% to HK $369.0, Alibaba Group decreased 0.6% to HK $79.60, JD.com 1.9% to $103.80, and Meituan fell 0.4% to HK $118.80.

U.S. Movers: AeroVironment, C3.ai, Topgolf Callaway Brands

Scott Peters
05 Sep, 2024
New York City

Topgolf Callaway Brands increased 1.1% to $10.90 after the company said it plans to separate into two companies. The company will separate its golf equipment and lifestyle business from its entertainment business.

C3.ai declined 11.5% to $20.42, and the company reported sharply lower-than-expected subscription revenue in its latest quarter.

Total revenue in the fiscal first quarter increased 21% to $87.2 million from $72.4 million, and subscription revenue advanced 20% to $73.5 million from $61.4 million a year ago.

The weaker-than-expected growth in its subscription revenue negatively impacted the stock.

Net loss in the quarter shrank to $62.8 million from $64.3 million, and diluted loss per share fell to 50 cents from 56 cents a year earlier.

AeroVironment declined by 3.5% to $186.60 despite the defense contractor reporting better-than-expected revenue and earnings in the fiscal first quarter.

Tech Stock Weakness Overshadow Wall Street Trading Ahead of Nonfarm Payroll Data

Barry Adams
05 Sep, 2024
New York City