U.S. Stocks Accelerated Declines In Afternoon Trading, Global Markets Trend Lower

Barry Adams
30 Jan, 2023
New York City

Stocks on Wall Street closed down led by tech stocks and investors braced for weak quarterly results from leading technology companies. 

Apple Inc, Amazon.com Inc, Meta Platforms and Alphabet Inc are among 400 companies scheduled to release earnings. 

After Microsoft reported a decline in earnings and sales, investors have dilated back expectations and Apple Inc is expected to report a decline in revenues in three years. 

Apple is struggling to adjust to the weakening PC demand and production challenges for its advanced smartphones because of "zero-covid" policy in China. 

Apple has shifted production of some models of smartphone production to India and the company is planning to shift MacBook production to Vietnam as early this year after its key supplier Foxconn diversifies its manufacturing base. 

Investors are also looking ahead to economic reports this week.   

Monthly jobs report, consumer confidence data and activities in manufacturing and services sectors are scheduled to be released later in the week. 

In Europe, Philips announced to lay off 6,000 staff as the company reorganizes its operations after the boom and bust of Covid-19 related products. 

Electric vehicle makers brace for more price cuts after Ford Motor Company announced a price cut for some of its electric vehicles, following the price cuts by Tesla Inc. 

Ford Motor Company cut as much as 9% list prices on select models of Mustang-E after Tesla Inc offered buyer incentives in the U.S.  

Investors also overlooked the latest covid-peak assessment from health regulators in China and independent local sources confirmed Covid-flare-up remains a real threat in rural China. 

Benchmark indexes traded volatile with a downward bias and bond yields inched higher on the expectations of a smaller rate hike this week in the U.S. and the Euro Area. 

The S&P 500 index declined 1.3% to  4,017.77 and the Nasdaq Composite index dropped 1.95% to 11,393.81. 

Crude oil decreased $1.42 to $77.89 a barrel and natural gas futures declined 17 cents to $2.67 a barrel. 

The yield on 2-year Treasury notes increased to 4.24%, 10-year Treasury notes inched up to 3.55%, 30-year Treasury notes to 3.65%. 

 

Europe Markets Struggled, Germany's Fourth Quarter GDP Decreased 

European markets closed mixed as investors braced for a busy week of corporate earnings and central bank policy meetings. 

Semiconductor maker ASML Holding NV declined 2.7% in Amsterdam trading after the company said it is awaiting the details of legislation focused on export controls to China in a statement released on Friday. 

 

Germany's GDP Shrank In December Quarter 

Germany's economy contracted in the final quarter of 2022 but expanded in 2022 despite the supply chain challenges and elevated energy prices and weakening consumer spending. 

Germany's real GDP decreased 0.2% on the quarter in the final three months of 2022 from the upwardly revised 0.5% in the third quarter, the Federal Statistical Office or Destatis reported Monday. 

In 2022, real GDP after adjusting for prices increased 1.8% and rose 1.9% after adjusting for prices and calendar days. 

 

Italian Wholesale Prices Accelerated In December

Italian wholesale price indexes rose in December to 31.7%, accelerating for the second month in a row from 29.4% in the previous month, the Italian National 

On a monthly basis prices rose 2.9% from 2.6% in November.

 

European Indexes Closed Lower 

The DAX index fell 0.2% to 15,126.08, the CAC-40 index declined 0.2% to 7,082.01 and the FTSE 100 index rose 0.3% to 7,784.87. 

Brent crude fell $1.25 to $85.26 a barrel and the Dutch natural gas TTF  futures contract price inched up 2% to €56.55 per MWh. 

The yield on 10-year German Bunds rose to 2.28%, French bonds increased to 2.75%, UK Gilts to 3.35% and Italian bonds advanced to 4.28%.  

The euro increased to 1.089, the pound traded down to $1.238 and the Swiss franc inched higher to 92.32 U.S. cents. 

 

Europe Movers 

Renault SA declined 4.1% to €36.63 after the company agreed to adjust its holding structure in a partnership with Nissan in Japan. 

After months of tense discussions, Nissan and Renault agreed to limit and neutralize their cross holdings and voting rights to 15%. 

Renault will transfer 28.4% stake in a French trust but retain economic rights for those shares and any gains associated with the sale of the stake. 

Renault acquired a stake in the near-bankrupt Nissan in early 1999 and Mitsubishi Motor acquired a stake in the alliance in 2016. 

Renault also signed a pact with China-based  Geely Automobile to manufacture powertrains for hybrid and internal combustion engine powered vehicles. 

Separately, the French automaker struck a strategic deal with the U.S.-based Qualcomm for its new electric and software company, Ampere. 

Philips SA rose 7% to €16.64 and the company said it plans to layoff another 6,000 following the recall of faulty respirators. 

Prosus NV declined 6.3% to €73.89 after the company said it plans to cut staff reflecting macroeconomic headwinds.  

Prosus and its South Africa-based parent Naspers Ltd plan to lay off 30% of its corporate staff, chief executive officer Bob van Dijk said in an interview. 

888 Holdings plunged 28% to 74.85 pence after the company announced the departure of chief executive and executive director Itai Pazner.  

DEUTZ AG increased 1.9% to €4.97 after the German internal combustion engine maker said it struck two deals with Daimler Truck Holdings AG to develop medium- and heavy-duty commercial engines.  

 

Japan-Holland-US Alliance In Focus In Tokyo and China Trading 

Asian markets lacked direction as investors awaited rate decisions and Chinese stocks closed mixed after a week-long holiday 

The Chinese State Council reiterated its commitment to boost spending and health authorities announced a sharp decline in daily death rate related to Convid-19. 

Investors were also cautious after the U.S., Japan and the Netherlands struck a deal to limit their exports of advanced semiconductor equipment to China. 

The details of the pact are still not clear, but the alliance of three countries are expected to finalize the details of legislation in the next six months. 

The restrictions are likely to include 28 nanometer ultraviolet lithography equipment used in the production of graphic chips, central processing units and high-speed networking chips, according to a research note prepared by Jeffries analyst Edison Lee.  

Deep ultraviolet equipment made by the Japanese companies Canon and Nikon Corp could also come into restrictions, forcing production cuts at the leading Chinese chipmakers China Semiconductor Manufacturing International Corp and Hua Hong and Shanghai Huali Microelectronics Corp and ChangXin Memory Technologies, Lee said in the note. 

Stocks in Japan closed higher after a volatile session. and semiconductor equipment stocks were in focus. 

The Nikkei index increased 0.2% to 27,433.40 and the yen inched lower to 130.18 against the U.S. dollar. 

Fanuc Corp increased 3.5% to ¥23,165.0 and Shin-Etsu Chemical 5% to ¥19,235.0 after the silicon wafer maker lifted its operating earnings outlook. 

 

Covid-19 Flare-up Worries Chinese Health Authorities 

Stocks in China closed mixed and about 300 million completed their holiday travel according to a statement by the ministry of tourism and culture. 

Markets are worried that Covid-19 infections are likely to flare-up in the coming weeks in rural China and death rates are expected rise in Sichuan, Hebei, Yunnan and Guangxi provinces.   

The Shanghai Composite index increased 0.1% to 3,269.32 and the Hang Seng index fell 2.7% to 22,069.73. 

The Kospi average in Seoul decreased 1.35% to close at 2,450.47 after five days of advance in a row following the weakness in auto and technology stocks. 

 

India Stocks React to Earnings 

Stocks rebounded after a holiday-shortened week of volatile trading and Adani Group stocks remained under pressure.  

Adani Enterprises is still looking to complete its secondary offering as early as this week and the Abu Dhabi, UAE controlled investment arm agreed to invest about $400 million. 

International Holding Company will make its second investment after the company invested $2 billion in three companies controlled by the group last year.

The Sensex index increased 0.3% or 158.81 points to 59,500.41 and the Nifty index added 0.3% or 44.60 points to 17,648.95. 

The rupee held firm near 81.47 against the U.S. dollar. 

After the close of regular trading hours, Larsen & Toubro said quarterly net income increased 24% and Bharat Petroleum Corporation said quarterly net declined 36%. 

Tech Mahindra said quarterly revenue topped $1 billion for the first time and revenue increased 19.9% but net income fell 5.3% from a year ago in the December quarter. 

Bajaj Finance jumped 4% after the financial services provider reported a surge in the December quarter earnings.