Benchmark Indexes In U.S., Europe, Japan, and China Register Solid Gains In February

Barry Adams
29 Feb, 2024
New York City

Stocks on Wall Street rebounded after the closely watched measure of inflation met the market's expectations. 

The S&P 500 index inched up 0.1% and the Nasdaq Composite advanced 0.3%, and Treasury yields held steady after personal income rose, spending edged lower, and an alternative measure of watered-down inflation accelerated as expected. 

Moreover, initial weekly jobless claims increased by 13,000 to 215,000 at the end of the week ending on February 24, the U.S. Department of Labor reported Thursday. 

Continuing jobless claims increased by 45,000 to 1,905,000 in the previous week and advanced to the highest level since November. 

The U.S. labor market is still experiencing tight labor market conditions, but multiple rate hikes over the last sixteen months have finally begun to soften labor market tightness. 

 

Personal Income Advanced, Outlays Eased, PCE Index Accelerated 

Personal income unexpectedly increased by 1.0%, while personal expenditure declined by 0.1%, according to the data released by the Bureau of Economic Analysis on Thursday. 

The personal consumption expenditures price index, an alternative measure of inflation that accounts for product substitution by consumers, increased by 0.3% on the month and by 2.4% from a year ago. 

The December price index was downwardly revised to an increase of 0.1%. 

The core price index, which excludes food and energy, increased 0.4% for the month and rose 2.8% from a year ago as consumers continued to shift spending to services from goods. 

Core inflation accelerated from an increase of 0.1% in December. 

Services prices increased by 0.6% and goods prices decreased by 0.2% from the previous year, respectively, and the changes were larger when compared to the data a year ago. 

Services prices rose 3.9%, and goods prices declined 0.5% from a year ago. 

 

U.S. indexes and Yields

The S&P 500 index increased 0.1% to 5,074.96, and the Nasdaq Composite advanced 0.3% to 15,993.48. 

The yield on 2-year Treasury notes decreased to 4.66%, 10-year Treasury notes inched up to 4.28%, and 30-year Treasury bonds edged down to 4.42%.

WTI crude oil decreased $0.02 to $78.52 a barrel, and natural gas prices decreased 4 cents to $1.84 a thermal unit.

Gold increased by $4.25 to $2,036.69 an ounce, and silver fell 7 cents to $22.52. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.80.

 

U.S. Stock Movers

Duolingo soared 20.1% to $235.56 after the language  learning platform estimated strong revenue guidance in the fiscal first quarter and full-year after posting better-than-expected fourth-quarter results. 

Snowflake plunged 22.9% to $177.20 after the company reported better-than-expected quarterly results and also announced the retirement of its chief executive, Frank Slootman. 

The stock was also under pressure after the company estimated a weaker-than-expected product revenue outlook in the first quarter. 

Okta soared 24.5% to $108.50 after the identity software management company reported better-than-expected quarterly results and estimated higher-than-expected quarterly results. 

C3.ai surged 19% to $35.07 after the artificial intelligence company reported better-than-expected quarterly results. 

Salesforce inched up 0.5% to $301.36 after the customer relationship management software reported better-than-expected quarterly results but guided revenue growth of less than 9% in the current fiscal year. 

 

Inflation Cooled in France and Spain, German Retail Sales Contracted In January 

European markets traded higher and bond yields rose after a flood of economic data and earnings results. 

Benchmark indexes in Paris, Frankfurt, and London edged higher after inflation in Spain cooled more than expected and in France slowed to its weakest level since September 2021. 

The Swiss GDP expanded 0.3% from the previous month and rose 0.6% from a year ago in the final quarter of 2023, the State Secretariat for Economic Affairs reported Thursday. 

For all of 2023, Swiss GDP rose 0.8% from a year ago after industrial and service sectors rebounded and exports held up despite macroeconomic uncertainties. 

 

German Unemployment Rate Rises to a 3-year High, French Payrolls Stable

France confirmed payroll employment in the fourth quarter was stable, as previously estimated. 

France added 11,900 net new jobs in the fourth quarter, after adding 60,800 in the third quarter compared to the previous quarter, respectively. 

Payrolls expanded by 1.3 million or 5% in the fourth quarter compared to the pre-Covid fourth quarter in 2019, and about one in three jobs are apprentice contracts. 

Germany's unemployment rate expanded to nearly a 3-year high of 5.9% in February from 5.8% in January, destatis reported Thursday. 

 

German Retail Sales Contracted In January 

Germany retail sales decreased 0.4% from the previous month in January as high borrowing costs and elevated inflation forced consumers to stick to basic items, destatis, or the Federal Statistics Office, reported Thursday. 

Retail sales declined for the third month in a row and fell in eight of the last twelve months. 

From a year ago, retail sales declined 1.4% in January, after falling 1.7% in each of the previous two months, as consumers battled rising costs of food, energy, and housing. 

For all of 2023, retail sales declined, deepening to 3.3% from a fall of 0.7% in 2022. 

 

Spain's Inflation Cools to a 6-month Low In February

Spain's annual consumer price inflation eased to a six-month low of 2.8% in February, down from 3.4% in January, the National Statistics Institute reported Thursday. 

Consumer inflation increased by 0.3% when measured on a monthly basis. 

The core rate of inflation, which excludes food and energy prices, eased for the seventh month in a row to 3.4%. 

 

French Inflation Eased Due to Base Effects

France's annual inflation rate eased to 2.9% in February from 3.1% in the previous month, the statistical agency INSEE reported Thursday. 

Consumer price inflation slowed in February largely because of the higher base in the previous year, and compared to the previous month, inflation rose by 0.8%. 

Food, which is about 15% of the consumer basket, saw inflation rise at a slower pace of 3.6% compared to 5.6% a year ago. 

For services, which account for about 51% of consumption, inflation eased to 3.1% from 3.2% in the previous year. 

Over the year, the harmonized consumer price index increased by 3.1% in February after a 3.4% rise in January, and from the previous month, inflation rebounded by 0.9% after falling 0.2% the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 0.4% to 17,678.19, the CAC-40 index decreased by 0.3% to 7,927.43, and the FTSE 100 index inched higher by 0.2% to 7,639.69.

The yield on 10-year German bonds edged up to 2.50%; French bonds inched higher to 2.98%; the UK gilts edged lower to 4.26%; and Italian bonds inched lower to 3.95%.

The euro edged higher to $1.084, the British pound inched higher to $1.266, and the U.S. dollar weakened to 87.99 Swiss cents.

Brent crude increased $0.13 to $82.29 a barrel, and the Dutch TTF natural gas decreased by €0.32 to €25.30 per MWh.

 

Europe Stock Movers

International Consolidated Airlines eased 0.7% to 151.74 pence after the parent company of British Air and Iberian Airlines reported a surge in profit. 

Air France KLM dropped 8.2% to €10.47 after the international airline swung to a loss in the fourth quarter. 

Nordex jumped 4.8% to €10.10 after the German wind turbine maker narrowed its full-year net loss in the previous fiscal year. 

CRH PLC rose 7.2% to 6,646.0 pence after the Ireland-based diversified construction material maker reported a rise in pre-tax profit. 

Total revenue in 2023 increased 7% to $34.9 billion from $32.7 billion, net income from continuing operations increased 14% to $3.1 billion from $2.7 billion, and diluted earnings per share rose to $4.36 from $3.58 a year ago. 

 

Retail Sales Advance but Industrial Output Falls in Japan

Stocks in Asia lacked direction, and investors reacted to domestic corporate and economic news. 

Benchmark indexes in Japan declined after industrial production fell for the third month in a row; in China, they edged slightly higher in lackluster trading; and in India, they traded around flatline amid a lack of fresh market catalysts after the end of the earnings season. 

 

Nikkei In Japan Extend Losses to Second Consecutive Session

Stocks in Tokyo declined for the second day in a row, and benchmark indexes edged lower following weak markets in New York. 

Investors also reviewed the latest update on retail sales and industrial production, but market sentiment remained cautious ahead of the release of inflation data in the U.S. 

Retail sales in Japan rose 2.3% from a year ago in January, following the upwardly revised 2.4% increase in December, the Ministry of Economy, Trade, and Industry reported Thursday. 

Retail sales rose for the 23rd month in a row as consumption continued to rebound since the decline during the pandemic era over the two years between 2020 and 2021. 

A separate report by the government agency showed industrial production declined 7.5% from the previous month in January after rising 1.4% in the previous month. 

On an annual basis, industrial production declined 1.5%, after declining 1.0% in December and extending contraction for the third month in a row. 

The Nikkei 225 average declined 0.1% to 39,172.78, and the Topix index added 0.1% to 2,677.82. 

 

China Stocks Turned Higher In Weak Trading, Hang Seng Gained 6% In February

Market indexes in Shanghai and Hong Kong edged higher on the hopes that the regulators would take more steps and China-controlled funds would provide capital to stabilize financial markets. 

Property stocks advanced for the second day in a row in Hong Kong after the local government removed decade-old measures to cool residential property speculation. 

The CSI 300 index added 0.9% to 3,481.52, and the Hang Seng index added 0.2% to 16,561.53. 

Longfor, China Vanke, China Resource Land, Sun Hung Kai, and Henderson Land advanced between 0.3% and 0.8%. 

Tech stocks were mixed, and Baidu declined 8.1% after the largest search engine operator in China reported revenue in the fourth quarter increased by 6% but net income dropped by half. 

Xinyi Solar soared 22% to HK$4.68 after the company reported better-than-expected quarterly earnings due to a higher margin. 

 

Hong Kong Exchanges Annual Earnings Rebound  

Hong Kong Exchanges & Clearing increased 0.1% to $245.0 after the company reported an 18% increase in annual profit to HK$11.9 billion, or HK$9.37 per share, meeting market expectations. 

The company proposed to pay a second interim cash dividend of HK$3.91, increasing the annual total to HK$8.41 and higher than HK$7.14 in 2022. 

The exchange operator's annual earnings were aided by HK$1.5 billion in net investment income in its global stock and bond portfolio, compared to a loss of HK$48 million in the previous year.  

The steady decline in trading activity by 16% to HK$105 billion in 2023 also negatively impacted the company's core revenue by 18%, as the exchange struggled under weakening market confidence and faltering interest from foreign investors. 

The Hong Kong Exchange was an attractive place for foreign investors looking to get exposure to mainland Chinese stocks.

But the exchange has lost its luster among foreign investors and young companies seeking to list their companies, as Chinese regulators have stepped up arbitrary spying charges and clamped down on tech companies under the guise of national security. 

This week, Chinese regulators forced out a quant hedge fund manager after the regulators and China-controlled funds intervened in the market to stabilize faltering stocks, further denting investors' confidence in the financial systems of Hong Kong and mainland China. 

About 68 Chinese companies raised $6 billion through an initial public offering in 2023, a 20-year low, amid weak interest from investors. 

 

India Stocks Attempt to Rebound Amid Cautious Asian Markets

Stocks in Mumbai traded slightly higher amid cautious market sentiment. 

The Sensex and the Nifty indexes edged up 0.2% as investors debated market drivers for the next leg up. 

So far in 2024, foreign investors have poured money into Indian stocks in the hopes of a continued rebound in corporate earnings driven by sustained economic growth. 

Moreover, domestic investors have supported the market advance despite high stock valuations. 

In addition, global market sentiment has been cautious as several markets around the world trade at record highs. 

Benchmark indexes in the U.S., Germany, France, Japan, and India are trading near record highs. 

The Sensex index increased 0.2% to 72,500.30, and the Nifty index rose 0.3% to 21,982.80. 

On the Mumbai stock exchange, 203 stocks traded at their 52-week highs and 49 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.06%, and the Indian rupee strengthened to ₹82.86 against the U.S. dollar.