Global Markets Trade Sideways In Quiet Trading

Barry Adams
10 Jan, 2024
New York City

Stocks on Wall Street edged higher, and investors shifted their attention to the inflation data and the quarterly results from banks.

Benchmark indexes managed to recover from lackluster trading in the morning, and Treasury yields hovered near recent levels as investors awaited the release of the consumer price inflation report on Thursday and the producer price inflation report on Friday.

Investors are hoping that the recent deceleration in inflation is likely to continue and may convince policymakers to lower rates in March.

The consumer price index in November eased to 3.1% from 3.2% in October, and economists are anticipating inflation in December to hover near the 3% level.

The producer price index in November was unchanged from the previous month, following a decline of 0.4% in October.

Investors are also awaiting the release of earnings this Friday from JP Morgan Chase, Citigroup, Wells Fargo, Delta Airlines, and UnitedHealth Group.

 

Mortgage Applications Rebound

Mortgage applications soared 9.9% in the first week of this year, reversing the slump of 10.7% in the previous week, the Mortgage Bankers Association reported Wednesday.

The average mortgage rate in the week rebounded to 6.81% from 6.76% in the previous week, but it was lower than the 23-year high of near 8% reached in October.

Mortgage applications to purchase a home jumped 6%, but those to refinance a home soared 19% from the previous week.

 

U.S. Indexes and Yields

The S&P 500 index increased 0.3% to 4,768.07, and the Nasdaq Composite rose 0.4% to 14,918.02.

The yield on 2-year Treasury notes decreased to 4.38%,410-year Treasury notes held steady at 4.0%, and 30-year Treasury bonds eased to 4.17%.

Crude oil futures declined after the Energy Information Agency showed that the U.S. crude inventories rose by 1.338 million barrels last week, contrasting the industry report showing a decline of 5.2 million barrels.   

Investors are still worried about the elevated tensions in the Red Sea could spark a wider regional war, and political protests in Libya has stopped a daily supply of 300,000 barrels of oil from the Sharara oil field.  

WTI crude oil decreased $0.08 to $72.14 a barrel, and natural gas prices decreased 17 cents to $3.01 a thermal unit.

Gold decreased $2.06 to $2,027.41 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.41.

 

U.S. Stock Movers

Hewlett-Packard Enterprise increased 0.4% to $16.20 after the company confirmed it agreed to acquire Juniper Networks for $40 a share, or about $14 billion, in an all-cash deal.

Lennar Corp. increased 1.4% to $150.17 after the home builder increased its annual dividend to $2.0 from $1.50 a share and the company's board approved the stock repurchase program of $5 billion.

WD-40 Company advanced 6.5% to $252.0 after the lubricant maker reported better-than-expected quarterly results.

Revenue in the fiscal first quarter ending in November increased 12% from a year ago to $140.4 million, rose to $17.5 million from $13.99 million, and diluted earnings per share advanced to $1.28 from $1.02 a year ago.

PriceSmart jumped 8.9% to $79.42 after the membership warehouse club reported fiscal first quarter results.

Revenue in the quarter ending in November rose 10.6% to $1.2 billion from $1.05 billion, net income jumped to $38 million from $32.9 million, and diluted earnings per share advanced to $1.24 from $1.05 a year ago.

Intuitive Surgical rose 4.9% to $347.0 after the medical equipment maker reported preliminary quarterly results and a stronger-than-expected fourth-quarter sales outlook.

Revenue in the fourth quarter increased 17% to $1.93 billion from $1.66 billion, and revenue in the full-year 2023 rose 14% to $7.12 billion from $6.22 billion a year ago.

The company placed 415 da Vinci surgical systems, an increase of 12% from a year ago.

In 2023, the number of da Vinci surgical systems installed increased by 8% to 1,370 from 1,264 a year ago.

 

Eurozone Faces Technical Recession and Inflation Rebound 

Benchmark indexes struggled to hold steady after economic growth and resurgent inflation worries dominated trading sentiment.

Market indexes in Frankfurt, Paris, and London traded around the flatline, and investors focused on the latest comments from ECB vice president Luis de Guindos.

Guindos stressed that economic activities are expected to remain weak in the short term in the face of weak export growth and tight financial conditions at home.

Moreover, the eurozone is facing a technical recession in the second half because of a broad-based slowdown driven by weaknesses in construction and manufacturing activities.

Inflation is expected to fall at a slower pace this year than in 2023, added Vice President Luis De Guindos.

"High wage pressures, geopolitical tensions, and upcoming wage negotiations are adding to uncertainty around the future path of inflation," added De Guindos.

 

Italian Retail Sales Advanced In November

Italian retail sales rose 0.4% from the previous month and 1.5% from the previous year in November, the National Institute of Statistics, or ISTAT, reported Wednesday.

Retail sales rose for the second month in a row and matched the growth rate in October.

Food product sales increased by 0.2%, and non-food goods sales advanced by 0.6% in the month.

 

France's Industrial Production Rebounded In November

France's industrial production rose 0.5% from the previous month and 0.6% from a year ago in November, the statistical agency INSEE reported Wednesday.

Volatile industrial production on a monthly basis rose for the first time after falling for three months in a row and falling 0.3% in the previous month.

Mining and energy exploration rebounded to an increase of 1.8% from the decline of 2.7% in the previous month; manufacturing growth rose slightly to 0.3% from 0.2%; and construction activities declined at a slower pace of 1% from 2.2%.

 

Europe Indexes and Yields

The DAX index increased 0.008% to 16,689.81, the CAC-40 index rose 0.007% to 7,426.08, and the FTSE 100 index inched lower by 0.4% to 7,651.76.

The yield on 10-year German bonds edged down to 2.16%; French bonds inched lower to 2.69%; the UK gilts edged down to 3.77%; and Italian bonds decreased to 3.80%.

The euro edged higher to $1.095, the British pound inched higher to $1.275, and the U.S. dollar eased to 85.17 Swiss cents.

Brent crude decreased $0.31 to $77.21 a barrel, and the Dutch TTF natural gas decreased by €0.40 to €31.05 per MWh.

 

Europe Stock Movers

ASML edged up 0.06% to €654.90, and the Dutch chip-making equipment maker was in focus after TSMC, the world's largest chip-making foundry, reported better-than-expected fourth-quarter revenue.

J Sainsbury plc declined by 5% to 290.54 pence after the UK-based grocery company reported weaker-than-expected sales during the holiday period.

Total retail sales, excluding fuel, in the sixteen-week period ending on January 6 rose 6.5%, and in the six-week Christmas holiday period, sales advanced 4.9%.

Grocery sales rose 9.3% and 8.6%, and non-food sales rose 1.5% and decreased 1.3%, excluding the impact of Argos in Ireland, in the sixteen-week and six-week periods, respectively.

Greggs plc rose 6% to 2,623.95 pence after the bakery and convenience food retailer reported strong year-end sales.

Total sales in the financial year 2023 rose 19.6% to £1.8 billion from £1.5 billion, and comparable sales at the company-managed stores rose 13.7% in the year and 9.4% in the fourth quarter.

The company opened a record 220 new stores in the year, with 33 closures and 42 relocations, resulting in a net new 145 stores totaling 2,473 stores at the end of 2023.

Hunting Plc increased 2.4% to 280.50 pence after the precision engineering group reiterated its 2023 outlook and confirmed it is in alignment with market expectations.

 

China Stocks Extend Losses, Suzuki to Double Capacity In India 

In Asian trading, most markets traded down amid U.S. interest rate uncertainties, on-going property woes in China, and the lack of stimulus measures from the Chinese government.

Benchmark indexes in Tokyo edged higher by 1.9% to 34,402.07 on the expectation that the Bank of Japan will maintain its ultra-loose policy stance, despite the early signs of a rise in inflation.

Average cash earnings in Japan rose 0.2% in November from the previous month, the Ministry of Health, Labor, and Welfare reported Wednesday.

The wage gains slowed from a 1.5% increase in October and lagged behind the increase of 2% in core inflation in November, marking the 20th consecutive month of decline in real wages after adjusting for inflation.

Maruti Suzuki India will invest about $4 billion to set up its second manufacturing facility in Gujarat, Suzuki Motor Corporation President Toshihiro Suzuki said on Wednesday.

Toshihiro announced the investment plan at the 10th Vibrant Gujarat Global Summit and added that the manufacturing plant will double its annual production capacity to 2 million vehicles in Gujarat. 

The company currently manufactures 2.2 million vehicles in plants based in Haryana and Gujarat, and the automobile company is looking to double its capacity by the end of this decade.  

China stocks continue to drift lower in the new year amid consumer confidence and the lack of a meaningful policy response from the government. 

The benchmark index in Hong Kong declined for the seventh session in a row.  

The Hang Seng index declined 0.7% to 16,077.01 and extended this year's loss to 5.5%, the worst start of the year in about two decades. 

In Shanghai, the SSE Composite decreased 0.3% to 2,884.99 and extended this year's loss to 3% amid deepening property market woes across the mainland. 

China also revved up cross-strait tensions ahead of a presidential election in Taiwan this Saturday.