U.S. and World Indexes Extend 2-Day Losses but Stay Close to Record Highs

Barry Adams
11 Mar, 2024
New York City

Benchmark indexes lacked direction and  extended the previous week's losses as investors looked ahead to the release of inflation data later in the week. 

The S&P500 index and the Nasdaq Composite declined 0.2% in trading in New York, and investors debated the future rate path and labor market conditions. 

Last week, stock market indexes declined, and investors focused on labor market updates and overlooked international trade data.

U.S. nonfarm payrolls expanded at a healthy pace in February, and the growing job market also enticed more people to apply for jobs, which in turn increased the jobless rate to a 2-year high, and annual wage gains decelerated to 4.3%.

Moreover, job openings edged slightly lower but remained at a high level, indicating that labor market conditions are healthy, despite multiple rate hikes over the last two years.

The yield on Treasury notes declined on the growing optimism that policymakers are more likely to cut rates as early as June, providing another boost to the stock market advance and driving gold to a record high.

Traders are anticipating that February's consumer price inflation will rise by 0.4% on a monthly basis and 3.0% from a year ago, according to a survey conducted by Ticker.com. 

Core inflation, which excludes volatile food and energy prices, is expected to rise 0.3% from the previous month and advance at a faster pace of 3.7% from a year ago. 

The U.S. Bureau of Labor Statistics is set to release inflation data on Tuesday and producer price index data on Thursday. 

Despite multiple interest rate hikes over the last two years, inflation has still stayed well above the Federal Reserve's target rate of 2%, and bringing down inflation may require higher interest rates to stay longer, contrary to the market's expectations. 

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.2% to 5,112.30, and the Nasdaq Composite fell 0.4% to 16,022.73. 

The yield on 2-year Treasury notes increased to 4.51%, 10-year Treasury notes inched up to 4.07%, and 30-year Treasury bonds edged down to 4.24%.

WTI crude oil decreased $0.10 to $77.90 a barrel, and natural gas prices decreased 3 cents to $1.78 a thermal unit.

Gold increased by $1.64 to $2,179.40 an ounce, and silver rose 13 cents to $24.43. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.84.

 

U.S. Stock Movers

Cryptocurrency stocks advanced after Bitcoin surged above $71,000 in the hopes that the U.K. securities regulator may approve retail investing in the digital currency through an exchange-traded note vehicle. 

MicroStrategy soared 9%, Coinbase advanced 6%, and Marathon Digital jumped 5%. 

Artificial intelligence applications and infrastructure-related stocks declined in Monday's trading. 

Nvidia declined 1%, Super Micro dropped 3%, Broadcom fell 1%, and Advanced Micro Devices eased 2%. 

 

European Markets Ease from Record  Highs

European market indexes declined from record highs after investors booked profits and reviewed the latest rate announcements last week. 

Benchmark indexes in Frankfurt, Paris, and London inched lower in Monday's trading, and bond yields also drifted lower. 

Central banks in the U.S. and Eurozone led investors to believe that interest rates are near their peak in the current cycle and raised hopes for rate cuts to begin as early as June. 

Last week, the European Central Bank also held its key lending rates steady for the fourth consecutive time in a row, and ECB President Lagarde confirmed that the market’s view of rate cuts in three months is converging with the view of policymakers.

Moreover, last week's latest batch of economic reports showed Germany's exports rose more than expected and the trade surplus widened in January, but France's trade balance remained in deficit because of high energy prices. 

Spain's retail trade activity increased by 0.3% in January, following the downwardly revised 2.7% rise in the previous month, the National Statistics Institute reported Monday. 

Retail sales rose for the fourteenth month in a row, but the rise was the smallest in the period. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 17,746.27, the CAC-40 index fell by 0.1% to 8,019.73, and the FTSE 100 index inched higher by 0.1% to 7,669.23.

The yield on 10-year German bonds edged down to 2.26%; French bonds inched lower to 2.71%; the UK gilts edged lower to 3.95%; and Italian bonds inched lower to 3.59%.

The euro edged higher to $1.09, the British pound inched higher to $1.28, and the U.S. dollar weakened to 87.67 Swiss cents.

Brent crude increased $0.11 to $82.19 a barrel, and the Dutch TTF natural gas decreased by €1.96 to €24.93 per MWh.

 

Europe Stock Movers

Metals and mining companies fell after cautious comments from the Chinese minister. 

China's housing minister said on Monday that the government is prepared to let some property developers go bankrupt if they are deemed to be financially unviable. 

Anglo American declined 2.1% to 1,811.60 pence, and Glencore fell 2.2% to 391.70 pence after copper and iron ore prices eased on China's growth worries. 

Currys PLC dropped 8.7% to 59.15 pence after U.S.-based activist investment manager Elliott Investment Management said it no longer plans to make a bid for the electronics retailer. 

Marston's PLC decreased 1.1% to 29.50 pence after the UK-based pub's chairman confirmed his plans to step down from the company's board later in the year.

Imperial Brands rose 2.1% to 1,728.0 pence after the company announced a stock repurchase plan of £11 billion.

HelloFresh advanced 3.7% to €7.11 after the German meal-kit company's stock plunged 40% last week following the company's weak outlook. 

Enel SpA rose 0.6% to €6.16 after the Italian energy company's subsidiary E-distribuzione announced its plans to sell some of its distribution activities for €1.2 billion to Italian regional utility A2A. 

LEG Immobilien gained 3.7% to €74.62 after the property company reported better-than-expected quarterly results. 

EssilorLuxttica decreased 2.1% to €204.45, and the Financial Times said that the company was one of the top contenders to acquire Italian eyewear maker Marcolin. 

 

Asian Markets  Head Lower

Asian markets traded mixed in Monday's trading, and tech stocks led the indexes in Tokyo and Mumbai lower, but the benchmark indexes in China edged higher after the release of inflation data. 

 

Nikkei In Tokyo Dropped 2%, Q4 GDP Revised Higher 

Stocks in Tokyo dropped sharply following the weakness in tech stocks in Friday's trading in New York. 

Profit-taking sentiment dictated market volatility, and the Japanese yen strengthened against the U.S. dollar after the fourth quarter. GDP was upwardly revised and stoked speculation that the Bank of Japan is likely to end its ultra-loose monetary policy at the end of its policy meeting on March 19. 

Japan's fourth-quarter GDP growth was revised to an increase of 0.1% from the preliminary estimate of a decline of 0.1%, avoiding a technical recession after contracting 0.8% in the third quarter. Japan's Cabinet Office reported Monday. 

On an annualized basis, GDP increased 0.4% after slumping 2.9% in the three months prior. GDP capital expenditure was up 2.0 percent on the quarter after declining 0.4% in the third quarter. 

The Nikkei 225 Stock Average declined 2% to 38,868.10, and the Topix index dropped 2.2% to 2,666.72. 

Tokyo Electron, Disco Corp., SoftBank, Advantest, and Screen Holdings declined between 3% and 5%. 

Sumitomo Mitsui Financial, Mizuho Financial, and Mitsubishi UFJ Financial declined more than 3%.

 

Inflation Rebounded and Foreign Investments Lift China Stocks Higher

Stocks in Shanghai and Hong Kong advanced on the hopes that demand conditions are recovering after the rebound in inflation. 

Market sentiment was also bolstered by a net inflow of $9.6 billion of funds in Chinese stocks in February, reversing a net outflow in the previous six months in a row, according to the Institute of International Finance. 

China's consumer price inflation rebounded to an increase of 0.7% in February after a 14-year steep decline of 0.8% in January, the National Bureau of Statistics reported over the weekend. 

The shifting lunar holiday calendar also played a role in the rebound in inflation following the early arrival of the annual holidays last year. 

Property developers declined after the housing minister confirmed that the government is prepared to let some developers go bankrupt for a lack of financial viability. 

The CSI 300 index increased 0.4% to 3,559.88, and the Hang Seng index added 1.1% to 16,548.22. 

Longfor Group, China Vanke, China Resources Land, Henderson Land Development, and Sun Hung Kai traded down but managed to recover in the afternoon trading. 

Longfor Group traded higher by 0.5% to HK$9.43, despite the property developer saying its annual profit declined by as much as 50% in the last year.

Alibaba Group, Tencent Holdings, JD.com, Meituan, and Baidu advanced between 2% and 4% following the bargain hunting for foreign investors. 

 

India indexes track lower global markets. 

The Sensex index decreased 0.2% to 73,952.93, and the Nifty index fell 0.2% to 22,458.20.

On the Mumbai stock exchange, 160 stocks traded at their 52-week highs and 57 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.05%, and the Indian rupee strengthened to ₹82.82 against the U.S. dollar.

Stocks in Mumbai headed lower in Monday's trading, and investors reacted to local corporate news amid global markets. 

The Sensex and the Nifty indexes dropped more than 0.1% in early trading on global interest rate uncertainties compounded by high valuations in local markets.

Market indexes struggled after extending weekly gains for the seventh week in a row, and international crude oil prices hovered near two-week lows on the ongoing demand growth worries in China and rising supplies in the U.S.