U.S. Stocks Inch Higher After Morning Doldrums, Europe Indexes Close at New Record Highs

Barry Adams
12 Feb, 2024
New York City

Benchmark indexes hovered near the flatline amid optimism about economic growth, accommodating labor markets, and positive corporate earnings.

The S&P 500 and the Nasdaq 100 indexes hovered near their record highs, and traders generally refrained from making significant moves ahead of the release of the consumer price inflation report tomorrow.

Moreover, economists are looking to review the release of retail trade and industrial production data on Thursday and the producer price index on Friday.

Last week, U.S. stock markets continued to pull ahead following strong earnings, dovish monetary policy, and a resilient economy.

The S&P 500 index traded above 5,000 for the first time after reaching 4,000 on April 2, 2021.

Benchmark indexes extended weekly gains for the fifth week in a row after December’s U.S. consumer price inflation was revised slightly lower in a busy week of earnings.

last week, market sentiment was also bolstered following the decline in the U.S. trade deficit in 2023 after weak energy prices drove the decline in imports at a faster pace than the rise in exports.

This week the earnings season is entering into its fourth week, with leading companies including Airbnb, Applied Materials, Auto Nation, Cisco, Coca-Cola, Deere, DoorDash, Instacart, Kraft Heinz, and Lyft set to announce their results.

 

Russia's Trade Surplus Shrank In 2023

Russia's trade surplus in 2023 dropped 58.5% from a year ago to $140 billion, after exports to Europe plunged 68% to $84.9 billion but to Asia rose 5.6% to $306.6 billion.

Overall, goods exports dropped 28.3% to $425.1 billion, and imports declined 11.7% to $285.1 billion.

Exports to the Americas declined by 40.4%, but to Africa they soared by 42.9%.

Russia's imports from Europe also fell 12.3% to $78.5 billion as the country ramped up purchases from Asia by 29.2% to $187.5 billion, according to the state-run Interfax news agency, citing the federal customs agency.

 

U.S. indexes and yields

The S&P 500 index decreased 0.03% to 5,031.07, and the Nasdaq Composite fell 0.03% to 15,841.08.

The yield on 2-year Treasury notes decreased to 4.48%, 10-year Treasury notes eased to 4.18%, and 30-year Treasury bonds edged up to 4.39%.

WTI crude oil decreased $0.31 to $76.55 a barrel, and natural gas prices declined 3 cents to $1.83 a thermal unit, a low last seen in September 2020.

Gold decreased by $8.72 to $2,015.46 an ounce after the U.S. dollar gained in international trading.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.14.

 

U.S. Stock Movers

Diamondback Energy rose 3.1% to $156.36 after the company agreed to merge with Endeavor Energy Partners in a deal worth $26 billion.

After the completion of the deal, Diamondback shareholders are expected to hold 60.5% stake in the merged entity, and Endeavor shareholders are expected to hold the remaining stake.

After the merger, Diamondback will be the largest independent and third-largest shale gas producer in the Permian Basin, Texas, following Exxon Mobil and Chevron.

Endeavor Energy Partners is the largest independent shale gas producer in the prolific shale gas field in the Permian Basin, spanning western Texas and eastern New Mexico.

The merged company anticipated pumping 816,000 barrels of oil equivalent per day and saving annual operating costs by $550 million.

Diamondback said the Endeavor deal is expected to close in the fourth quarter.

The merger between Diamondback and Endeavor follows the largest deal in Permian region after Exxon Mobil announced to acquire Pioneer Natural Resource for $64 billion in October 2023. 

 

European Markets Breakout After Lackluster Morning Trading

European markets advanced in Monday's trading and attempted to extend gains from the previous week.

Market indexes in London, Paris, and Frankfurt gained quiet trading, and investors prepared for a busy week of corporate results and earnings releases.

Financial markets in Japan were closed to celebrate a public holiday and Greater China, South Korea, Malaysia, and Singapore were closed for the Lunar New Year.

Investors are looking ahead to the release of GDP estimates in the Euro Area and the UK and employment, retail sales, and inflation data in the UK.

European markets struggled in the previous week's trading, and investors lowered their rate-cut expectations, but worries about domestic retail sales and export growth overshadowed market sentiment.

Last week, economic data from the Federal Statistics Office in Germany showed factory orders declined 1.5% in 2023 from a year ago and exports fell 1.4% from a year ago amid weak global demand.

Germany, the largest economy in the Euro Area, contracted 0.3% in 2023, and the economic weakness is likely to persist in the first and second quarters of 2024.

Moreover, the German economy is likely to enter a technical recession as the high cost of living and elevated interest rates are negatively impacting consumer demand and small and medium-sized businesses, the backbone of the German economy.

Despite the market jitters of the last three weeks, benchmark indexes are trading near record highs, and corporate earnings are ahead of market expectations.

 

Europe Indexes and Yields

The DAX index increased 0.6% to 17,028.81, the CAC-40 index rose 0.5% to 7,685.27, and the FTSE 100 index inched higher by 0.01% to 7,573.69.

The yield on 10-year German bonds edged down to 2.34%; French bonds inched lower to 2.84%; the UK gilts edged lower to 4.04%; and Italian bonds inched higher to 3.90%.

The euro edged lower to $1.077, the British pound inched higher to $1.262, and the U.S. dollar gained to 87.50 Swiss cents.

Brent crude increased $0.48 to $81.69 a barrel, and the Dutch TTF natural gas decreased by €1.34 to €25.78 per MWh.

 

Europe Stock Movers

Tod's SpA soared 18% to €42.92 after the LVMH-backed private equity group Catterton announced its plans to acquire a 36% stake in the Italian luxury fashion accessories maker.

Nordex SE increased 7.9% to €10.25 after the German wind turbine maker reported 2023 sales that surpassed its own estimate.

Consolidated revenue increased to €6.5 billion, exceeding its own target range between €5.6 billion and €6.1 billion.

Novo Nordisk A/S increased 0.3% to DKK 834.60 after the controlling shareholder in the company said it plans to invest up to $7 billion by 2030.

Tritax Big Box PLC decreased 2.5% to 156.0 pence after the UK-based real estate investment trust agreed to acquire UK Commercial Property REIT Ltd.

Tritax will exchange 0.444 of its own share for one share of UKCM.

 

Quiet Trading In Asian, Lunar New Year Holidays

Across Asia, markets in mainland China, Hong Kong, Taiwan, South Korea, Malaysia, and Singapore are close for the celebration of Lunar New Year, and in Japan, it is National Foundation Day.

In Friday's trading, market indexes in New York advanced as investors looked beyond interest rate uncertainty and shifted their focus to resilient consumer spending and a healthy labor market.

 

Surging Exports to Lift Japan's GDP Growth

Japan's economy is likely to show an expansion in rising exports of vehicles and electronic goods, according to the Tokyo-based Japan Center for Economic Research.

The independent research company estimated 0.8% growth in Japan's economy in December from the previous month, despite the persistent weakness in domestic consumption.

The center also estimated the GDP expanded by 2.6% in the December quarter from the previous quarter on a solid performance of exports.

The government is set to release its preliminary estimate on February 15.

 

India-based GMR Leads Manila Airport Project Bidding

India-based GMR is viewed as a front-runner for a $3.0 billion project to upgrade Manila's Ninoy Aquino International Airport, which currently handles 48 million passengers a year.

The government is set to announce the winner of the project on February 15, and GMR's bid is considered a top contender for the project, beating three other local consortiums of bidders, according to sources in transportation ministry of Philippines. 

Philippines has short listed three out of the four qualified bids, and the winner of the project is scheduled to be announced on February. 

If GMR wins the bid, this will be the third airport project in the Philippines, after winning the projects to develop and operate Cebu International Airport in 2014 and Clark International Airport in 2019.

France-based Airports de Paris, the operator of three large airports in France, is looking to acquire a 49% stake in GMR.

Market indexes in Mumbai struggled to advance in Monday's trading despite optimism about upcoming earnings releases and positive international market sentiment.

The Sensex and the Nifty indexes advanced, and investors are looking ahead to a busy week of earnings and economic data.

On the earnings front, Mahindra & Mahindra, IRCTC, Coal India, SAIL, and Bharat Forge are some of the leading companies scheduled to release their quarterly results this week.

Among economic releases, market participants are also looking forward to the release of the international trade balance, industrial output, and overall inflation.

The Sensex index decreased 122.22 points to 71,473.27, and the Nifty index fell 14.05 points to 21,768.45.

On the Mumbai stock exchange, 229 stocks traded at their 52-week highs and 21 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds held steady at 7.08%, and the Indian rupee strengthened to ₹82.96 against the U.S. dollar.

Navin Fluorine International gained 0.7% to ₹3,049.35 after the Life Insurance Company, through its various funds, increased its stake in the company to 7.07% from 5.03%.

ONGC declined 2.3% to ₹261.40 after the energy explorer reported a decline in earnings in its latest quarter.

Net profit in the December quarter dropped 10% to ₹10,356 crore from ₹11,489 crore a year ago.