Market Update
Selloff Resumes On Wall Street After Bond Yields Advanced to 16-year Highs
Barry Adams
26 Sep, 2023
New York City
Stocks resumed downward slide and extended previous week's losses after gains in Monday's trading.
Benchmark indexes fell 1% as fear of rising rates gripped market sentiment and investors sold high growth and tech stocks.
Investors have been bidding stocks up for the first six months of the year on the hopes that interest rates are closer to peak rates.
However, investors changed their views on interest rate trajectory two weeks and finally accepted the Fed's views on interest rates.
So what convinced investors, the Fed's forward projections released at the time of announcing rate decision after the two-day meeting, suggested at least one more rate hike this year, and fewer rate cuts in 2024.
Moreover, the rebound in crude oil prices also contributed to the market sentiment turning bearish on bonds.
With yields on 2-year and 10-year Treasury notes at 16-yea highs and 30-year Treasury bonds at 11-year highs, higher rates are beginning to have impact on stock valuations.
However, despite multiple rate hikes, the U.S. economy is still expected to grow at 2.1% in 2023, according to the Fed's latest projection, sharply higher than the previous estimate of 1%, release in June.
But investors decided to focus on the Fed's higher-for-longer stance and overlooked the resilient economy and strong labor market conditions.
In Wednesday's trading, all sectors declined and technology and consumer discretionary sectors led with losses of 1.4% but energy and healthcare sectors lagged the market decline with losses of 0.3%.
New Home Sales Declined In August
New single-family home sales declined 8.7% to a seasonally adjusted annualized rate of 675,000 in August, the Commerce Department reported today.
Home sales fell the most in 11 months from the upwardly revised 8% jump in the previous month.
The median price of new home sold was $430,300 and the average sales price was $514,000, lower than $440,300 and $530,800 respectively, a year ago.
Sales plunged in the Midwest by 17.2% to 77,000, the West by 9.4% to 183,000 and the South by 7.5% to 383,000 but rose in the Northeast by 6.7% to 32,000.
U.S. Indexes & Yields
The S&P 500 index decreased 1.03% to 4,293.08 and the Nasdaq Composite fell 1.1% to 13,126.05.
The yield on 2-year Treasury notes hovered at 5.16%, 10-year Treasury notes inched higher to 4.55% and 30-year Treasury bonds edged up to 4.68%.
Crude oil increased $0.33 to $90.02 a barrel and natural gas prices declined 1 cent to $2.64 a thermal unit.
The dollar index edged higher to 106.12, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Thor industries rose 1.% to $95.68 after the company reported revenue declined 28.4% in its latest quarter of $2.74 billion.
Net income in the quarter declined to $90.3 million from $280.9 million and diluted earnings per share fell to $1.68 from $5.15 a year ago.
The company also forecasted revenue to decline in the next fiscal year to between $10.5 billion and $11.0 billion from $11.2 billion in fiscal 2023.
United Natural Foods Inc dropped 23% to $14.44 after the company reported weaker-than-expected sales in its latest quarter and forecasted additional weakness in sales and operating earnings in the current quarter.
Europe Movers: ASOS, Luxury Stocks, Origin Enterprises, Rheinmetall, Smiths Group
Inga Muller
26 Sep, 2023
Frankfurt
European markets extended losses of the previous week after bond yields surged and the euro, the pound and the Swiss franc dropped to multi-month lows.
The DAX index decreased 0.7% to 15,295.80, the CAC-40 index fell 0.8% to 7,067.34 and the FTSE 100 index added 0.2% to 7,638.78.
The yield on 10-year German bonds decreased to 2.77%, French bonds traded lower to 3.32%, the UK gilts edged down to 4.28% and Italian bonds rose to 4.67%.
Rheinmetall AG advanced 0.2% to €249.20 after the German automotive and arms maker won orders from two companies totaling several hundred million euros.
Origin Enterprises Plc jumped 6% to €3.34 despite the company reporting lower profit before tax in the fiscal year 2023.
ASOS Plc decreased 2.7% to 377.60 after the online apparel and fashion retailer reported a decline in sales in the fiscal fourth quarter and warned that net income is likely to be near the bottom end of its estimate.
Smiths Group plc declined 1.5% to 1,649.0 pence despite the engineering services company reporting record operating profit in the year ending in July.
Luxury stocks declined for the second day in a row after China property woes deepened and dampened hopes of a speedy economic recovery.
LVMH, Kering, Hermes and Richemont declined between 1% and 3%.
Surging Bond Yields Roiled European Stocks Markets
Bridgette Randall
26 Sep, 2023
Frankfurt
European markets retained downward bias and investors debated interest rate path and the impact of higher rates on the economy.
Benchmark indexes in Frankfurt, and Paris edged lower but in London traded higher and investors reacted to growing global uncertainties.
Chinese property market worries were in forefront after the most-indebted property group in the world and the largest Chinese property developer faced more headwinds in restructuring its debt.
China Evergrande said its listed subsidiary Hengda Real Estate defaulted on a 4 billion yuan or $547 million loan principal and interest payment.
Moreover, the potential U.S. government shutdown and higher crude oil prices also weighed on market sentiment.
The U.S. federal government is expected to run out of cash if the Congress fails to pass the fiscal year budget on October 1.
Moody's Investors Service said on Monday that the U.S. federal government shutdown will be "credit negative" and could hamper the country's AAA rating, and push bond yields higher.
"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," Moody's said in a statement.
Europe Indexes & Yields
The DAX index decreased 0.7% to 15,295.80, the CAC-40 index fell 0.8% to 7,067.34 and the FTSE 100 index added 0.2% to 7,638.78.
The yield on 10-year German bonds decreased to 2.77%, French bonds traded lower to 3.32%, the UK gilts edged down to 4.28% and Italian bonds rose to 4.67%.
The euro edged lower to a three-month low to $1.060, the British pound to $1.218 and the U.S. dollar fetched 91.22 Swiss cents.
Natural gas prices eased after rallying for five days in a row amid supply worries, despite elevated inventories in the region.
Yesterday, Norway's Gassco extended production shutdown at its Skarv field by a week to October 8.
Investors have been bidding up prices on the production disruptions worries by extreme weather events and prolonged outages at the U.S. LNG shipment terminals amid ongoing Russia's invasion of Ukraine.
Brent crude decreased $0.72 to $92.56 a barrel and the Dutch TTF natural gas edged higher €2.99 to €41.45 per MWh.
Europe Stock Movers
Rheinmetall AG advanced 0.2% to €249.20 after the German automotive and arms maker won orders from two companies totaling several hundred million euros.
Origin Enterprises Plc jumped 6% to €3.34 despite the company reporting lower profit before tax in the fiscal year 2023.
ASOS Plc decreased 2.7% to 377.60 after the online apparel and fashion retailer reported a decline in sales in the fiscal fourth quarter and warned that net income is likely to be near the bottom end of its estimate.
Smiths Group plc declined 1.5% to 1,649.0 pence despite the engineering services company reporting record operating profit in the year ending in July.
Luxury stocks declined for the second day in a row after China property woes deepened and dampened hopes of a speedy economic recovery.
LVMH, Kering, Hermes and Richemont declined between 1% and 3%.
Currencies In Asia Drop Near Record Lows After Sudden Shift in Sentiment in Global Bond Markets
Arjun Pandit
26 Sep, 2023
Mumbai
Asian markets fell sharply after global bond yields advanced and currencies in the region weakened against the U.S. dollar.
The fear of rising U.S. bond yields spilling over in Asia pushed currencies to record lows in China, India and the yen dropped to the level not seen since April 1990.
The Korean won weakened to the level last seen 11 years ago, barring a weakness in the third quarter in 2022.
U.S. Treasury yields jumped to 16-year highs and bond yields in the Euro Area also advanced to 12-year highs as central banks signaled a higher-for-longer stance.
Investors are finally incorporating higher interest rate scenarios and are suddenly pricing in higher policy rate trajectory after months of announcements by the U.S. Federal Reserve.
Rising bond yields negatively impacted high growth stocks, and tech stocks are set to close down more than 4% worldwide in September, extending sell-off for the second month in a row.
Moreover, the looming U.S. government shutdown also kept bond yields rising and the federal government is set to run out of cash in five days, if lawmakers fail to pass a spending plan for the fiscal year starting October 1.
Moody's Investors Service said on Monday that the U.S. federal government shutdown will be "credit negative" and could hamper the country's AAA rating, and push bond yields higher.
"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," Moody's said in a statement.
Asia Market Indexes
Rising bond yields dragged market indexes across Asia with the benchmark indexes in Tokyo and Hong Kong leading the losers.
In Monday's trading, the Nikkei index decreased 1.1% to 32,315.05 and the yen briefly crossed 149 against the U.S. dollar.
Market indexes in China traded lower on the worries linked to the property market and worries of rising capital outflow on the rising bond yields.
In China trading, the Shanghai SSE Composite index inched down 0.4% to 3,102.27 and the Hang Seng index decreased 1.4% to 17,481.77 and the KOSPI index declined 1.3% to 2,463.63.
The Hang Seng index dropped to a 10-month low last seen in November after the U.S. Treasury yields advanced, prompting fears of higher corporate borrowing costs and more pressure on emerging markets.
China's yuan dropped to 7.30 in offshore trading and hovered at a 16-year low as investors continue to pull money out of Chinese markets.
The Sensex index decreased 11.37 points to 66,012.32 and the Nifty index added 9.50 points to 19,684.05.
On the Mumbai stock exchange, 78 stocks traded at their 52-week highs and 13 fell to their 52-week lows.
In the previous week, the Nikkei index decreased 3%.2, the SSE Composite index rose 0.7%, the Hang Seng index was unchanged and the Sensex dropped 2.4%.
U.S. Treasury Yields Advanced and Investors Adjust to Higher Rates for Longer
Barry Adams
25 Sep, 2023
New York City
Market indexes lacked direction as investors looked to rising bond yields around the world.
Benchmark indexes on Wall Street were little changed as investors debated the future direction of interest rates.
Stocks traded sideways on the first day of the final week in September and popular indexes are expected to close down for the second month in a row.
The yield on 2-year and 10-year Treasury notes jumped to the levels last seen in 2007 and 30-year Treasury bonds edged higher to the level last seen in 2010.
Stocks have struggled after the Federal Reserve signaled rates are likely to stay higher despite the recent cooling trend in inflation, but prices are rising at a faster rate than the Fed's target rate of 2%.
Rate hike worries have negatively impacted the S&P 500 index and the Nasdaq Composite index for the second month in a row in September.
The Nasdaq is down 6% and the S&P 500 index has declined 4% in the month so far, after the higher rates dampened the earnings outlook.
However, for the year so far, the S&P 500 index is up 13% and the Nasdaq Composite has advanced 27%.
The rate hike worries were also visible in European trading and the yield on German, French and Italian bonds jumped to 11-year highs.
The European Central Bank is also expected to keep higher rates for longer because despite multiple rate hikes in the currency union inflation is still significantly above the central bank's target rate of 2%.
U.S. Indexes & Yields
The S&P 500 index increased 0.07% to 4,324.65 and the Nasdaq Composite advanced 0.1% to 13,230.27.
The yield on 2-year Treasury notes hovered at 5.13%, 10-year Treasury notes inched higher to 4.54% and 30-year Treasury bonds edged up to 4.66%.
Crude oil decreased $0.40 to $89.62 a barrel and natural gas prices declined 1 cent to $2.62 a thermal unit.
The dollar index edged higher to 105.97, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Movie studio operators traded higher after writers' union reached a preliminary agreement with studios.
Warner Bros Discovery, Paramount Global, Amazon and Disney traded slightly higher.
HP Inc decreased .2% to $26.77 after Berkshire Hathaway sold 4.8 million shares held by the conglomerate for approximately for $130 million.
Nio Inc decreased 4.3% to after the company said it is considering to raise $3 billion.
European Bond Yields Jump to 12-year Highs
European markets extended losses and investors debated future rate path and looming global economic slowdown.
Benchmark indexes in Frankfurt, Paris and London extended previous weeks losses after the yields on European bonds traded at one-decade high.
German bond yields jumped to the level last seen in 2011 and investors expected higher rates to persist as central bankers struggle with elevated inflation.
The euro edged lower against the dollar after European Central Bank Governing Council member Francois Villeroy de Galhau supported the case for higher interest rates to stay longer.
ECB President Christine Lagarde is scheduled to testify before the European Commission's Committee on Economic and Monetary Affairs later in the day, and investors looking for clues to the innerworkings of the economy after recently the central bank lifted rates 10th time in a row.
Market sentiment has been steadily shifting away from stocks as bond yields advance, crude oil prices hover at this year's high, stubborn inflation stays above the target range and the euro drifts to two-month low.
Europe Indexes & Yields
The DAX index decreased 1.0% to 15,405.49, the CAC-40 index fell 0.9% to 7,123.88 and the FTSE 100 index fell 0.8% to 7,623.99.
The yield on 10-year German bonds increased to 2.80%, French bonds traded higher to 3.34%, the UK gilts edged up to 4.32% and Italian bonds rose to 4.69%.
The euro edged lower to a three-month low to $1.059, the British pound to $1.22 and the U.S. dollar fetched 91.22 Swiss cents.
Natural gas prices continued to climb higher for the fifth day in a row amid supply worries, despite elevated inventories in the region.
Norway's Gassco extended production shutdown at its Skarv field by a week to October 8.
Investors have been bidding up prices on the production disruptions worries by extreme weather events and prolonged outages at the U.S. LNG shipment terminals amid ongoing Russia's invasion of Ukraine.
Brent crude increased $0.21 to $93.48 a barrel and the Dutch TTF natural gas edged higher €4.65 to €44.44 per MWh.
Europe Stock Movers
China-exposed luxury stocks in Paris declined between 2% and 3% and the UK-based mining companies fell between 1% and 2% on the ongoing China property market woes.
China's largest property company and the most indebted property group in the world said it is not able to issue more debt because of ongoing investigation in its domestic subsidiary.
Swedish property SBB AB jumped 26% to kr kr3.79 after the company agreed to handover control of a portfolio of school buildings to Canada-based Brookfield Asset Management Ltd.
Entain Plc plunged 11.5% to 931.0 pence after the online gambling platform issued revenue alert for the third quarter and full-year.
CRH added 2.2% to 4,459.0 pence after the building material company announced its plan to repurchase 17.7 million shares.
Aviva Plc declined 1.3% to 393 pence after the UK-based insurance group agreed to acquire protection business in the UK owned by AIG.
U.S. Movers: Amazon.com, HP, Movie Studios, Nio
Scott Peters
25 Sep, 2023
New York City
Stocks lacked direction on the first day of the final week of trading as divided investors grappled with interest rate uncertainties and the rebound in energy prices.
The S&P 500 index increased 0.5% to 4,349.05 and the Nasdaq Composite advanced 0.8% to 13,325.59.
The yield on 2-year Treasury notes hovered at 5.12%, 10-year Treasury notes inched higher to 4.53% and 30-year Treasury bonds edged up to 4.64%.
Movie studio operators traded higher after writers' union reached a preliminary agreement with studios.
Warner Bros Discovery, Paramount Global, Amazon and Disney traded slightly higher.
Amazon.com Inc inched higher 1.3% to $130.65 after the company said it plans to invest up to $4 billion in artificial intelligence tools developer Anthropic, a rival to ChatGPT developer OpenAI.
HP Inc decreased .2% to $26.77 after Berkshire Hathaway sold 4.8 million shares held by the conglomerate for approximately for $130 million.
Nio Inc decreased 4.3% to after the company said it is considering to raise $3 billion.
Negative Sentiment Drives Trading In Last Week of Third Quarter
Barry Adams
25 Sep, 2023
New York City
Benchmark indexes on Wall Street were little changed as investors debated future direction of interest rates and hunted for bargains in beaten down tech stocks.
Market indexes traded sideways on the first day of the final week in September and popular indexes are expected to close down for the second month in a row.
Market indexes have struggled after the Federal Reserve signaled rates are likely to stay higher despite the recent inflation cooling trend, but prices are rising at a faster than the Fed's target rate of 2%.
Rate hike worries have negatively impacted the S&P 500 index and the Nasdaq Composite index for the second month in a row.
The Nasdaq is down 6% and the S&P 500 index has declined 4% in the month so far, after the higher rates dampened the earnings outlook.
However, for the year so far, the S&P 500 index is up 13% and the Nasdaq Composite has advanced 27%.
The rate hike worries was also visible in European trading and the yield on German, French and Italian bonds jumped to 11-year highs.
The European Central Bank is also expected to keep higher rates for longer because despite multiple rate hikes in the currency union inflation is still significantly above the central bank's target rate of 2%.
U.S. Indexes & Yields
The S&P 500 index increased 0.5% to 4,349.05 and the Nasdaq Composite advanced 0.8% to 13,325.59.
The yield on 2-year Treasury notes hovered at 5.12%, 10-year Treasury notes inched higher to 4.53% and 30-year Treasury bonds edged up to 4.64%.
Crude oil increased $0.45 to $90.48 a barrel and natural gas prices declined 1 cent to $2.60 a thermal unit.
The dollar index edged higher to 105.83, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Movie studio operators traded higher after writers' union reached a preliminary agreement with studios.
Warner Bros Discovery, Paramount Global, Amazon and Disney traded slightly higher.
HP Inc decreased .2% to $26.77 after Berkshire Hathaway sold 4.8 million shares held by the conglomerate for approximately for $130 million.
Nio Inc decreased 4.3% to after the company said it is considering to raise $3 billion.
Europe Movers: Aviva, CRH, Entain, Luxury Stocks, Resource Stocks, SBB AB
Inga Muller
25 Sep, 2023
New York City
European markets were under pressure on the rate uncertainties and looming economic slowdown as cumulative effect of higher interest rates negatively impact region's economy.
The DAX index decreased 0.7% to 15,455.77, the CAC-40 index fell 0.5% to 7,147.40 and the FTSE 100 index fell 0.6% to 7,640.31.
The yield on 10-year German bonds increased to 2.82%, French bonds traded higher to 3.75%, the UK gilts edged up to 4.31% and Italian bonds rose to 4.66%.
China-exposed luxury stocks in Paris declined between 2% and 3% and the UK-based mining companies fell between 1% and 2% on the ongoing China property market woes.
China's largest property company and the most indebted property group in the world said it is not able to issue more debt because of ongoing investigation in its domestic subsidiary.
Swedish property SBB AB jumped 26% to kr kr3.79 after the company agreed to handover control of a portfolio of school buildings to Canada-based Brookfield Asset Management Ltd.
Entain Plc plunged 11.5% to 931.0 pence after the online gambling platform issued revenue alert for the third quarter and full-year.
CRH added 2.2% to 4,459.0 pence after the building material company announced its plan to repurchase 17.7 million shares.
Aviva Plc declined 1.3% to 393 pence after the UK-based insurance group agreed to acquire AIG's UK life insurance business for £460 million and expand its customer base by 1.3 million individuals and 1.4 million group members.
European Bonds Yields Reach 12-year Highs Amid Expectations of Higher Rates
Bridgette Randall
25 Sep, 2023
Frankfurt
European markets extended losses and investors debated future rate path and looming global economic slowdown.
Benchmark indexes in Frankfurt, Paris and London extended previous weeks losses after the yields on European bonds traded at one-decade high.
German bond yields jumped to the level last seen in 2011 and investors expected higher rates to persist as central bankers struggle with elevated inflation.
The euro edged lower against the dollar after European Central Bank Governing Council member Francois Villeroy de Galhau supported the case for higher interest rates to stay longer.
ECB President Christine Lagarde is scheduled to testify before the European Commission's Committee on Economic and Monetary Affairs later in the day, and investors looking for clues to the innerworkings of the economy after recently the central bank lifted rates 10th time in a row.
Market sentiment has been steadily shifting away from stocks as bond yields advance, crude oil hover at this year's high, inflation stays above the target range and euro drifts lower in the last two months.
Europe Indexes & Yields
The DAX index decreased 0.7% to 15,455.77, the CAC-40 index fell 0.5% to 7,147.40 and the FTSE 100 index fell 0.6% to 7,640.31.
The yield on 10-year German bonds increased to 2.82%, French bonds traded higher to 3.75%, the UK gilts edged up to 4.31% and Italian bonds rose to 4.66%.
The euro edged lower to a three-month low to $1.064, the British pound to $1.223 and the U.S. dollar fetched 90.94 Swiss cents.
Natural gas prices continued to climb higher for the fifth day in a row amid supply worries, despite elevated inventories in the region.
Norway's Gassco extended production shutdown at its Skarv field by a week to October 8.
Investors have been bidding up prices on the production disruptions worries by extreme weather events and prolonged outages at the U.S. LNG shipment terminals amid ongoing Russia's invasion of Ukraine.
Brent crude increased $0.70 to $93.31 a barrel and the Dutch TTF natural gas edged higher €2.96 to €42.73 per MWh.
Europe Stock Movers
China-exposed luxury stocks in Paris declined between 2% and 3% and the UK-based mining companies fell between 1% and 2% on the ongoing China property market woes.
China's largest property company and the most indebted property group in the world said it is not able to issue more debt because of ongoing investigation in its domestic subsidiary.
Swedish property SBB AB jumped 26% to kr kr3.79 after the company agreed to handover control of a portfolio of school buildings to Canada-based Brookfield Asset Management Ltd.
Entain Plc plunged 11.5% to 931.0 pence after the online gambling platform issued revenue alert for the third quarter and full-year.
CRH added 2.2% to 4,459.0 pence after the building material company announced its plan to repurchase 17.7 million shares.
Aviva Plc declined 1.3% to 393 pence after the UK-based insurance group agreed to acquire protection business in the UK owned by AIG.
U.S. Movers: Activision Blizzard, Arm Holdings, Ford Motor, McDonald's, Scholastic Corp
Scott Peters
22 Sep, 2023
New York City
McDonald's Corp advanced 0.7% to $273.0 after the fast food chain operator said it plans to increase its royalty fees charged to franchisee operators to 5% from 4%.
McDonald's has not increased the fee for several decades but the company also charges for store rent, digital infrastructure and other marketing services.
Ford Motor Company increased 2.5% to $12.51 after CNBC suggested that the company is making progress in negotiations with striking members of the United Auto Workers union.
Scholastic Corp dropped 14.5% to $33.28 after the publishing company reported lower-than-expected revenue and earnings in its latest quarter.
Revenue in the fiscal first quarter ending in August declined 13% to $228.5 million reflecting continuing softness in retail sales.
Net loss surged to $74.2 million from $45.5 million and diluted loss per share expanded to $2.33 from $1.33 a year ago.
Activision Blizzard Inc gained 1.9% to $93.93 after the U.K. regulators said new proposal from Microsoft met several terms required to clear the purchase of game developer for $69 billion.
Arm Holdings Plc decreased 2.6% to $50.77 and the advanced chip designer traded below its initial public offering price of $51 a share priced on September 14.
Instacart declined 2.1% to $30.03 and barely traded above its initial public offer price of $30 a share on September 19.
U.S. Indexes Trim Weekly Losses Amid Looming Federal Government Shutdown, Auto Strike Expands
Barry Adams
22 Sep, 2023
New York City
Market indexes advanced on Wall Street in Friday's trading but rate worries overshadowed market sentiment.
Benchmark indexes gained after investors searched for bargains and trimmed weekly losses to just over 2%.
Investors reviewed the growing possibilities of the federal government shutdown as lawmakers of both parties struggle to find common ground to pass budget.
If the U.S. House of Representatives fail to agree on spending bill by the end of the month, which also marks the end of fiscal year for the federal government, several branches of the non-essential services will shut down beginning October 1.
Automakers were also in focus after the United Auto Workers Union targeted strikes at more plants owned by Stellantis and General Motors.
U.S. short term Treasury notes yields traded near 16-year highs as investors adjust to one possible rate hike later in the year and rates staying elevated in 2024.
U.S. Indexes & Yields
The S&P 500 index increased 0.5% to 4,349.05 and the Nasdaq Composite advanced 0.8% to 13,325.59.
The yield on 2-year Treasury notes hovered at 5.11%, 10-year Treasury notes inched higher to 4.43% and 30-year Treasury bonds edged up to 4.56%.
Crude oil increased $1.10 to $90.71 a barrel and natural gas prices declined 1 cent to $2.60 a thermal unit.
The dollar index edged higher to 105.47, the level last seen in March and extended gains from the low of 99.85 on July 13.
U.S. Stock Movers
McDonald's Corp advanced 0.7% to $273.0 after the fast food chain operator said it plans to increase its royalty fees charged to franchisee operators to 5% from 4%.
McDonald's has not increased the fee for several decades but the company also charges for store rent, digital infrastructure and other marketing services.
Ford Motor Company increased 2.5% to $12.51 after CNBC suggested that the company is making progress in negotiations with striking members of the United Auto Workers union.
Scholastic Corp dropped 14.5% to $33.28 after the publishing company reported lower-than-expected revenue and earnings in its latest quarter.
Revenue in the fiscal first quarter ending in August declined 13% to $228.5 million reflecting continuing softness in retail sales.
Net loss surged to $74.2 million from $45.5 million and diluted loss per share expanded to $2.33 from $1.33 a year ago.
Activision Blizzard Inc gained 1.9% to $93.93 after the U.K. regulators said new proposal from Microsoft met several terms required to clear the purchase of the company.
Arm Holdings Plc decreased 2.6% to $50.77 and the advanced chip designer traded below its initial public offering price of $51 a share priced on September 14.
Europe Movers: Adevinta, AstraZeneca, Mothercare, Sanofi, Tele2, Telenor
Inga Muller
22 Sep, 2023
Frankfurt
Mothercare Plc declined 3.5% to 4.01 pence after the children's apparel retailer said the company is nearing the completion of refinancing.
AstraZeneca Plc increased 2.2% to 11,136.04 pence after the company said it found "statistically significant and clinically meaningful" results in a phase III trial for a common type of breast cancer.
Sanofi SA decreased 0.2% to €102.26 after the company said recent developments in the currency markets will negatively impact its third quarter sales between 7.5% and 8.5% and earnings per share between 8.5% and 9.5%.
Tele2 AB Class B increased 0.5% to skr 86.60 and Telenor ASA advanced 0.9% to €10.87 after the two companies joint venture N4M acquired operating license in Sweden for 900, 2100 and 2600 MHz through an auction for skr 1.475 billon.
Adevinta ASA jumped 22.1% to €9.13 after the Norwegian marketplace operator confirmed that it has received a takeover offer from a consortium led by Permira and Blackstone.
Bond Yields Advanced In Europe, Euro and Pound Extended 8-week Losses
Bridgette Randall
22 Sep, 2023
Frankfurt
Interest rate worries dominated stock markets and bond yields advanced across the Euro Area.
Investors are adjusting to a new reality that interest rates are far from peak rates and central are more likely to continue with rate hike campaigns in the months ahead.
There was a widespread belief among investors that rate are nearing peaks and central banks are preparing to lower rates in the months ahead.
However, elevated inflation and the recent rebound in energy prices have forced investors to reevaluate rate path scenario and terminal rate levels expectations.
The British pound extended 8-week decline, a day after the Bank of England held interest rates steady for the first time since November 2021.
The bond yields in the Euro Area turned volatile after a survey showed that economy in the currency union is likely to contract in the third quarter.
Europe Indexes & Yields
The DAX index decreased 0.1% to 15,555.87, the CAC-40 index fell 0.4% to 7,182.29 and the FTSE 100 index jumped 0.7% to 7,731.21.
The yield on 10-year German bonds increased to 2.75%, French bonds traded higher to 3.20%, the UK gilts edged up to 4.29% and Italian bonds rose to 4.56%.
The euro edged lower to a three-month low to $1.063, the British pound to $1.225 and the U.S. dollar fetched 90.65 Swiss cents.
Brent crude increased $0.70 to $94.01 a barrel and the Dutch TTF natural gas edged higher €0.25 to €36.36 per MWh.
Europe Stock Movers
Mothercare Plc declined 3.5% to 4.01 pence after the children's apparel retailer said the company is nearing the completion of refinancing.
AstraZeneca Plc increased 2.2% to 11,136.04 pence after the company said it found "statistically significant and clinically meaningful" results in a phase III trial for a common type of breast cancer.
Sanofi SA decreased 0.2% to €102.26 after the company said recent developments in the currency markets will negatively impact its third quarter sales between 7.5% and 8.5% and earnings per share between 8.5% and 9.5%.
Tele2 AB Class B increased 0.5% to skr 86.60 and Telenor ASA advanced 0.9% to €10.87 after the two companies joint venture N4M acquired operating license in Sweden for 900, 2100 and 2600 MHz through an auction for skr 1.475 billion.
Adevinta ASA jumped 22.1% to €9.13 after the Norwegian marketplace operator confirmed that it has received a takeover offer from a consortium led by Permira and Blackstone.
Fed Funds Rate Left Unchanged, 2023 GDP Growth Estimate Revised Higher
Brian Turner
20 Sep, 2023
New York City
The Federal Reserve said it will hold the fed funds target range at 22-year high between 5.25% and 5.50% but also held out for another rate hike later in the year, after the conclusion of two-day meeting.
Policymakers appeared divided after mixed economic signals, but committee members prefer more restrictive interest rate policy in future.
The Fed's projection released showed that policymakers are likely to increase rates higher one more time at the next meeting in November, but are also estimating fewer rate cuts in 2024.
Policymakers now estimate the fed funds rate at 5.6% by the year's end, the same as in the June forecast, while rates are expected to be higher at 5.1% in 2024, compared to 4.6% estimated at the end of June meeting.
Committee members sharply revised higher economic growth outlook to 2.1% from the previous estimate of 1.0% released in June, and 2024 GDP rate of 1.5% compared to 1.1%.
The economic growth forecast suggested that members are not looking for a recession this year or next.
The committee members also revised slightly higher inflation outlook, as measured by the Price Consumption Expenditure Index, to 3.3% from 3.2% but the was unrevised at 2.4% in 2024.
The core PCE rate in 2023 was revised slightly lower to 3.7% from 3.9% but the alternative measure of inflation was left unchanged for 2024 at 2.6%.
The unemployment rate forecast was revised lower to 3.8% from 4.1% in 2023 and to 4.1% from 4.5% in 2024.
Despite multiple rate hikes by the Federal Reserve over the last seventeen months, inflation has stayed above the Fed's target rate because inflation pressures have broadened from commodities and manufactured goods to services and wages.
The policymakers have little influence over the direction of the commodities prices, like metals and energy, but hold a larger sway on the direction of mortgage rates and borrowing rates for corporations and consumers.
Asian Markets Fall Following Losses In New York, Japan Holds Rates Steady
Arjun Pandit
22 Sep, 2023
New York City
Market indexes in Asia rebounded and investors reacted to local news amid widespread selloff in Europe and in the U.S.
In overnight trading, the S&P 500 index and the Nasdaq Composite index declined about 1.6% after smaller-than-expected weekly jobless claims suggested persistent tight labor market conditions.
U.S. market indexes extended weekly losses to over 3% on the worries that the Federal Reserve is more likely to keep rates higher well into 2024.
However, bargain hunting lifted market indexes in China but sentiment remained weak in India, Korea and Japan.
The ongoing weakness in tech stocks kept the Nikkei down in Friday's trading and for the week and investors reviewed inflation data and rate decisions from the Bank of Japan.
BoJ Holds Interest Rates
The Bank of Japan left its key lending rate at -0.1% and maintained its ultra-loose monetary policy intact with its target range between 0% and 0.25% in an unanimous vote on Friday.
Japan Consumer Inflation Slowed In August
Japan's consumer price index edged lower to 3.2% on an annual basis in August, the Ministry of Internal Affairs and Communications reported Friday.
Annual inflation dropped to a three-month low after a faster decrease in food prices of 12.3% from 9.6% overwhelmed the increase in food prices by 8.6% from 8.8% in the previous month.
Core rate of inflation, which excludes volatile food and energy prices, was unchanged at a four-month low of 3.1%.
On a monthly basis, consumer inflation increased 0.2%, slower than a three-month high 0.4% rise in July.
Asia Market Indexes
In Friday's trading, the Nikkei index decreased 0.3% to 32,486.52 following the persistent weakness in tech stocks all week.
Market indexes in China rebounded after foreign investors appeared for bargain hunting.
Foreign investors purchased 310 million yuan or $42 million on-shore listed stocks on Friday, the largest inflow in two weeks.
Stock Connect data also showed foreign investors sold $15 billion of stocks in the previous six weeks.
In China trading, the Shanghai SSE Composite index inched up 0.8% to 3,108.45 and the Hang Seng index increased 1.2% to 17,868.68 and the KOSPI index decreased 0.3% to 2,508.73.
China's yuan edged slightly higher to 7.29 in offshore trading but hovered near a 16-year low after about $68 billion of capital outflow between July and August.
The Sensex index declined 0.1% to 66,157.68 following the overnight decline in New York trading and elevated crude oil prices also kept resurgent inflation worries alive.
In the week, the Nikkei index decreased 0.3%, the SSE Composite index declined 0.1%, the Hang Seng index fell 1.1%, the Sensex dropped 2.2% and the KOSPI index plunged 3.0%.