Market Update
Japan's Inflation Acceleration Lifts Yields, China's Home Price Decline Extended In December
Arjun Pandit
16 Jan, 2023
Mumbai
Tokyo stocks were under pressure after wholesale prices accelerated in December and investors awaited the rate increase on Wednesday from the Bank of Japan after the two-day meeting.
Wholesale prices accelerated in Japan in December, the Bank of Japan reported today.
The Corporate Goods Price Index increased 10.2% in December after rising at a revised annual pace of 9.7% in November.
While the import price index eased to 22.8% in December from 28.0% in November, domestic good prices are still rising at elevated levels.
In 2022, wholesale prices rose at a faster pace of 9.7% after rising at 4.6% in November, the fastest pace since record keeping began in 1981.
After the release of the inflation data, the yield on 10-year Japanese government bonds increased to 0.52%, the highest level since 2015.
The Nikkei index declined 1.1% to 25,822.32 and the yen traded up to 128 level against the U.S. dollar, the strongest level in seven months on the rising government bond yields.
Housing market weakness persisted for the sixteenth month in a row in December, the National Bureau of Statistics reported Monday.
New home prices eased 0.25% in December and existing home prices declined 0.5%
Of the 70 urban markets tracked by the government agency, the number of cities reporting new home price decline increased to 55 in December from 51 and existing home price decline increased to 63 cities from 62 in November.
China's reopening is expected to increase transaction volume and improve market confidence and the announced government measures are also likely to support completions of unfinished projects.
The Shanghai Composite index increased 1.0% to 3,227.59 and the Hang Seng index added 8.06 points to 21,746.72.
The Sensex index fell 0.3% to 60,092.97 after wholesale inflation dropped to the lowest level since February 2021.
Wholesale inflation eased to 4.95% from a year ago in Dec from 5.85% in Nov, the lowest level since February 2021.
On a monthly basis contraction deepened to 1.1% from 0.5% in the previous month.
The Indian rupee held steady at 81.62 against the U.S. dollar.
With Easing Recession Worries and Earnings Optimism, Wall Street Extended Weekly Gains
Barry Adams
13 Jan, 2023
New York City
Benchmark indexes struggled in morning trading and bank earnings weighed on market sentiment but indexes rebounded in afternoon and extended weekly advance.
Popular indexes traded lower after Citigroup and Wells Fargo increased loan loss provisions and JPMorgan Chase and Bank of America forecasted mild recession.
Market sentiment recovered slightly after two hours of trading and investors shrugged aside the recession worries and tech stocks advanced.
The US consumer sentiment index tracked by the University of Michigan rose to 64.6 in January 2023 from 59.7 in December 2022, the highest since April.
The forward looking annual inflation expectation in January receded to 4.0% from 4.4% in December.
Signals from international markets also supported the market advance after China's imports fell less than expected in December and the euro are industrial production rebounded.
Investors awaited earnings from 90 companies next week including Netflix, Procter & Gamble, Goldman Sachs and Morgan Stanley, American Airlines and United Air and at least 30 small and mid-sized banks.
S&P 500 and Nasdaq Extend Weekly Advance
Benchmark indexes struggled after the release of major bank earnings but sentiment improved after bond yields stayed muted and rate path worries and tech stocks rebounded.
The S&P 500 index increased 0.4% to 3,999.09 and the Nasdaq Composite index increased 0.7% to 11,079.16.
For the week, the S&P 500 index increased 4.8% and the Nasdaq Composite index rose 2.7%.
Energy markets lacked direction but optimism prevailed on the hopes of higher global demand after Chinese travel season gained momentum ahead of the Lunar New Year.
Chinese policymakers also proposed a $67 billion plan to resuscitate property market and focus on 30 leading property developers without identifying names.
Crude oil increased $1.53 to $79.93 a barrel and natural gas fell 21 cents to $3.48 a thermal unit.
U.S. Treasury bonds traded nearly unchanged and investors reviewed cautious comments from large banks.
The yield on 2-year Treasury notes increased to 4.24%, 10-year Treasury notes rose to 3.50% and 30-year Treasury bonds edged lower to 3.61%.
U.S. Stock Movers
Wells Fargo declined 1.9% to $42.07 after the bank reported a plunge in earnings and the bank set aside higher reserves for credit losses and higher settlement costs linked to mortgage loan practices.
Wells Fargo fourth quarter revenue declined 6% to $19.6 billion and net income plunged 57% to $2.8 billion from $5.7 billion and earnings per share fell to 67 cents from $1.38 a year ago.
Citigroup fell 0.6% to $48.81 after the bank increased reserves to cover loan losses.
Citigroup said fourth quarter revenue increased 6% to $18 billion and net income fell to $2.5 billion from $3.2 billion and earnings per share decreased to $1.16 from $1.46 a year ago.
Bank of America Corp declined 1.5% to $33.95 after the bank reported nearly flat earnings.
BofA said fourth quarter revenue rose 11% to $24.5 billion and net income edged up to $7.1 billion from $7.0 billion and diluted earnings per share increased to 85 cents from 82 cents a year ago.
JPMorgan Chase & Company increased 0.2% to $139.80 after the bank reported higher-than-expected revenue and earnings.
JPMorgan said fourth quarter revenue rose 18% to $34.5 billion and net income increased 6% to $11 billion or $3.57 a diluted share.
Wipro Ltd declined 2% to $4.76 after the tech services providers from India reported weaker-than-expected earnings.
Wipro Ltd said December quarter revenue rose 14.4% to 2?3,200 crore and net income increased 2.8% to ?3,050 crore or ?5.57 a share.
Attrition rate for the last twelve months fell to 21.2% in the December quarter from 23% in the previous quarter.
European Markets Close at 9-month High
European market indexes closed at 9-month highs and investors searched for bargains among beaten down stocks.
Market sentiment was upbeat after the U.S. inflation moderated in December and China's international trade in December was ahead of expectations.
Investors also turned positive after Chinese policymakers proposed a $67 billion 21-point action plan to help the leading 30 property developers and support the rebound in the moribund sector.
The Euro Area trade deficit soared in November from a year ago but dropped to a 9-month low after exports expanded and imports fell sharply.
Industrial production in the currency zone also rebounded 1.0% in November after contracting 1.9% in October and the production declined 2.0% from a year ago after falling at a faster pace of 3.4% in October.
Moreover, Germany's economic growth slowed in 2022 and the UK's economy unexpectedly expanded in November.
Euro Area Trade Deficit Expands
The Euro Area trade deficit in November surged after imports rose at a faster pace than exports, Eurostat said in its latest monthly report.
Exports rose 17.2% to
Euro Area Goods Trade Deficit Doubles In Eleven Months of 2022
Bridgette Randall
13 Jan, 2023
Frankfurt
The Euro Area trade deficit in November surged after imports rose at a faster pace than exports, Eurostat said in its latest monthly report.
Exports rose 17.2% to
Euro Area Sentiment Improved After Trade Deficit Narrowed and Industrial Output Rebounded
Bridgette Randall
13 Jan, 2023
Frankfurt
European market indexes closed at 9-month highs and investors searched for bargains among beaten down stocks.
Market sentiment was upbeat after the U.S. inflation moderated in December and China's international trade in December was ahead of expectations.
Investors also turned positive after Chinese policymakers proposed a $67 billion 21-point action plan to help the leading 30 property developers and support the rebound in the moribund sector.
The Euro Area trade deficit soared in November from a year ago but dropped to a 9-month low after exports expanded and imports fell sharply.
Industrial production in the currency zone also rebounded 1.0% in November after contracting 1.9% in October and the production declined 2.0% from a year ago after falling at a faster pace of 3.4% in October.
Moreover, Germany's economic growth slowed in 2022 and the UK's economy unexpectedly expanded in November.
Euro Area Trade Deficit Expands
The Euro Area trade deficit in November surged after imports rose at a faster pace than exports, Eurostat said in its latest monthly report.
Exports rose 17.2% to
Movers: Bank of America, Citigroup, Delta, Goldman Sachs, JPMorgan, UnitedHealth, Wells Fargo, Wipro
Scott Peters
13 Jan, 2023
New York City
Bank of America Corp declined 1.5% to $33.95 after the bank reported nearly flat earnings.
BofA said fourth quarter revenue rose 11% to $24.5 billion and net income edged up to $7.1 billion from $7.0 billion and diluted earnings per share increased to 85 cents from 82 cents a year ago.
Citigroup fell 0.6% to $48.81 after the bank increased reserves to cover loan losses.
Citigroup said fourth quarter revenue increased 6% to $18 billion and net income fell to $2.5 billion from $3.2 billion and earnings per share decreased to $1.16 from $1.46 a year ago.
JPMorgan Chase & Company increased 0.2% to $139.80 after the bank reported higher-than-expected revenue and earnings.
JPMorgan said fourth quarter revenue rose 18% to $34.5 billion and net income increased 6% to $11 billion or $3.57 a diluted share.
Wells Fargo declined 1.9% to $42.07 after the bank reported a plunge in earnings and the bank set aside higher reserves for credit losses and higher settlement costs linked to mortgage loan practices.
Wells Fargo fourth quarter revenue declined 6% to $19.6 billion and net income plunged 57% to $2.8 billion from $5.7 billion and earnings per share fell to 67 cents from $1.38 a year ago.
Wipro Ltd declined 2% to $4.76 after the tech services providers from India reported weaker-than-expected earnings.
Wipro Ltd said December quarter revenue rose 14.4% to ?23,200 crore and net income increased 2.8% to ?3,050 crore or ?5.57 a share.
Attrition rate for the last twelve months fell to 21.2% in the December quarter from 23% in the previous quarter.
Delta Air Lines, Inc dropped 4.5% to $37.98 despite the airline reporting better-than-expected quarterly results.
December quarter revenue increased 17% to $13.4 billion but net income decreased 25% to $828 million from $1.1 billion and diluted earnings per share fell to $1.29 from $1.71 a year ago.
The weak revenue guidance in the first quarter disappointed some investors.
The airline estimated first quarter 2023 revenue to increase between 14% and 17% of the corresponding period in 2019, operating margin between 4% and 6% and earnings per share between 15 cents and 40 cents.
Goldman Sachs increased 0.8% to $372.90 after the financial services provider said in a regulatory filing it plans to reorganize its operations to three business units focused on banking and financial markets, asset and wealth management and consumer services.
The company also said its recent push in consumer financial services has cost more than $3 billion between 2021 and September 2022.
UnitedHealth Group Inc increased 0.2% to $496.85 after the health insurance company said fourth quarter 2022 revenue increased to $82.8 billion from $73.7 billion a year ago.
Net income increased to $4.7 billion from $4.1 billion and diluted earnings per share rose to $5.03 from $4.26 a year ago.
The medical care ratio at 82.0% for full year 2022 and 82.8% for the fourth quarter was consistent with the company
China Property Stimulus Lifts Hopes, Japan Bond Yields at 6-year High
Arjun Pandit
13 Jan, 2023
New York City
Asian markets traded mixed after the yen and the Japanese government bond yields rose.
Markets in the region reacted to local economic news and government actions and crude oil prices advanced on the hopes of a demand recovery in China.
Yen and JGB Yields Advance
Japan's benchmark indexes traded lower on the worries that the rising yen may negatively impact exporting companies.
Taiwan-based TSMC said that the company is considering expanding its chip production operation in Japan if "demand from customers and the level of government support makes sense."
The Nikkei 225 average declined 1.3% to 26,119.52 and the yen rose to a seven-month high after Japanese government bond yields rose to a seven-year high to 0.545%.
Hong Kong Stocks Rebound on Property Market Stimulus
Hong Kong stocks surged after the government's task force said it plans to provide US$67 billion in liquidity to a select list of 30 developers and support the property market, according to a report from the state-controlled news agency Xinhua.
About 50 Chinese property developers have defaulted on $100 billion in loans to international investors in the last two years, according to an estimate by JPMorgan.
People's Bank of China to Pursue Flexible Yuan Policy
Mainland China stocks also gained after the People's Bank of China showed more willingness to pursue "flexible yuan" to support domestic price stability and growth as advanced economies adjust.
The Shanghai Composite index increased 1% to 3,195.31 and the Hang Seng index advanced 1% to 21,738.66.
India Stocks Rebound On Moderating Inflation
Market indexes in Mumbai rebounded after consumer price inflation in December fell for the third month in a row and the index stayed below the Reserve Bank of India's target range between 2% and 6%.
Industrial production also rebounded in November and gold imports plunged almost 80% in December, raising the prospect of stronger rupee and better earnings in the December quarter.
The Sensex index in Mumbai rebounded 0.5% to 60,261.18 and the Indian rupee recovered to one-month high to 81.20 against the U.S. dollar.
Stocks On Pause After Mixed Earnings from Major Banks and Recession Worries
Barry Adams
13 Jan, 2023
New York City
Benchmark indexes struggled in morning trading and bank earnings weighed on market sentiment.
Popular indexes traded lower after Citigroup and Wells Fargo increased loan loss provisions and JPMorgan Chase and Bank of America forecasted mild recession.
Market sentiment recovered slightly after two hours of trading and investors shrugged aside the recession worries and tech stocks advanced.
The US consumer sentiment index tracked by the University of Michigan rose to 64.6 in January 2023 from 59.7 in December 2022, the highest since April.
The forward looking annual inflation expectation in January receded to 4.0% from 4.4% in December.
U.S. Indexes
Benchmark indexes are set to close higher for the week and the Nasdaq index is up 3.5% and the S&P 500 index 1.5% so far.
The S&P 500 index fell 0.1% to 3,979.10 and the Nasdaq Composite index increased 7.94 points to 11,009.04.
Energy markets lacked direction but optimism prevailed on the hopes of higher global demand after Chinese business activities picked up and travel season gained momentum ahead of the Lunar New Year.
Crude oil increased $1.11 to $79.51 a barrel and natural gas fell 9 cents to $3.60 a thermal unit.
U.S. Treasury bonds traded nearly unchanged and investors reviewed cautious comments from large banks.
The yield on 2-year Treasury notes increased to 4.16%, 10-year Treasury notes rose to 3.53% and 30-year Treasury bonds edged lower to 3.57%.
U.S. Stock Movers
Wells Fargo declined 1.9% to $42.07 after the bank reported a plunge in earnings and the bank set aside higher reserves for credit losses and higher settlement costs linked to mortgage loan practices.
Wells Fargo fourth quarter revenue declined 6% to $19.6 billion and net income plunged 57% to $2.8 billion from $5.7 billion and earnings per share fell to 67 cents from $1.38 a year ago.
Citigroup fell 0.6% to $48.81 after the bank increased reserves to cover loan losses.
Citigroup said fourth quarter revenue increased 6% to $18 billion and net income fell to $2.5 billion from $3.2 billion and earnings per share decreased to $1.16 from $1.46 a year ago.
Bank of America Corp declined 1.5% to $33.95 after the bank reported nearly flat earnings.
BofA said fourth quarter revenue rose 11% to $24.5 billion and net income edged up to $7.1 billion from $7.0 billion and diluted earnings per share increased to 85 cents from 82 cents a year ago.
JPMorgan Chase & Company increased 0.2% to $139.80 after the bank reported higher-than-expected revenue and earnings.
JPMorgan said fourth quarter revenue rose 18% to $34.5 billion and net income increased 6% to $11 billion or $3.57 a diluted share.
Wipro Ltd declined 2% to $4.76 after the tech services providers from India reported weaker-than-expected earnings.
Wipro Ltd said December quarter revenue rose 14.4% to 2?3,200 crore and net income increased 2.8% to ?3,050 crore or ?5.57 a share.
Attrition rate for the last twelve months fell to 21.2% in the December quarter from 23% in the previous quarter.
European Markets Close at 9-month Highs
European market indexes closed at 9-month highs and investors searched for bargains among beaten down stocks.
The DAX index increased 0.4% to 15,114.08, the CAC-40 index rose 0.8% to 7,030.58 and the FTSE 100 index advanced 0.8% to 7,852.90.
The region's currencies continued to advance on the hopes that the U.S. rate hikes may slow.
The Federal Reserve is likely to raise rates by 25 basis points at the next policy meeting after raising rates by 75 basis points in a row followed by the last 50 basis points rate increase.
The euro edged higher to $1.082, the British pound inched higher to $1.2206 and the Swiss franc advanced to 92.65 U.S. cents.
The yield on 10-year German Bunds declined to 2.13%, French bonds fell to 2.60%, UK Gilts to 3.33% and Italian bonds to 3.96%.
Energy prices continued to decline in the region amid mild weather conditions and elevated natural gas storage.
Brent crude oil rose 86 cents to $84.89 a barrel and Dutch TTF natural futures contract price edged lower 2.9% to