U.S. and Global Markets Advance, Crude Oil and Copper Jump After China Data Surpass Expectations

Barry Adams
18 Mar, 2024
New York City

Benchmark indexes advanced in Monday's trading, and tech stocks led the gainers ahead of the monetary policy announcements from major central banks. 

The U.S. Federal Reserve, the Bank of England, and the Bank of Japan are expected to keep interest rates unchanged, but investors are looking ahead to the economic growth outlook and interest rate projections. 

Investors pared rate-cut expectations in the U.S. after consumer and wholesale price inflation stayed ahead of expectations in February, supporting the case for keeping higher rates for longer. 

Moreover, crude oil prices have rebounded in March, which is expected to keep overall inflation higher in the current month, denting expectations of a rate even after the next policy meeting in May. 

In addition, investors are looking forward to the release of U.S. housing starts, completions, building permits, and existing home sales data.

Homebuilder sentiment rose more than expected in March, according to the latest update released by the industry association. 

The NAHB/Wells Fargo Housing Market Index increased to 51 in March from 48 in February, the National Association of Home Builders reported Monday. 

The measure of confidence was the highest in 8 months as a lack of existing home inventory pushed buyers to new home construction. 

But home builders anticipate another surge in demand for homes as the Federal Reserve prepares to lower the interest rate later in the year. 

In the UK, the Bank of England is expected to keep its benchmark rate steady at 5.25%, and consumer price inflation is expected to edge higher by 0.7% in February.

Central banks in Norway, Turkey, and Switzerland are also expected to keep their interest rates steady.

In Tokyo, expectations are high that the Bank of Japan may finally end its negative interest rate regime and stem the decline in the yen after large corporations agreed with labor unions for a wage increase above 5% for the second year in a row. 

Japanese investors are also awaiting the release of inflation, industrial production, and international trade data this week. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.8% to 5,157.22, and the Nasdaq Composite rose 0.9% to 16,132.21. 

The yield on 2-year Treasury notes decreased to 4.71%, 10-year Treasury notes inched up to 4.30%, and 30-year Treasury bonds edged down to 4.43%.

WTI crude oil increased $1.47 to $82.50 a barrel, and natural gas prices increased 4 cents to $1.69 a thermal unit.

Gold decreased by $5.60 to $2,160.70 an ounce, and silver rose 1 cent to $25.15. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.

 

U.S. Stock Movers

Nvidia jumped 2.5% to $900.60 ahead of the company's annual GTC conference, where the chipmaker is expected to release new artificial intelligence-related products. 

Alphabet Inc. advanced 5.2% to $148.67 on a report that the company is in advanced talks with Apple to power its iPhones with Gemini AI. 

Bloomberg News first reported the discussions between the companies, which could not be independently verified. 

Super Micro Computer gained 2.4% to $1,097.99 as the company's stock traded as part of the S&P 500 index. 

 

Positive Bias Lifts European Markets to New Intra-day Highs

European markets advanced in Monday's trading as investors awaited monetary policy decisions from major central banks. 

Investors pared expectations of a rate cut in the U.S. after consumer and producer price inflation in February stayed ahead of expectations. 

The Federal Reserve may keep interest rates unrevised for the next several months because of the resilient U.S. economy and healthy labor market conditions. 

Market participants may have to adjust their rate expectations if the Federal Reserve's economic growth projection and interest rate outlook call for higher rates for at least two months or longer. 

Benchmark indexes in Frankfurt and Paris gained about 0.2% in early trading but lost momentum in the late afternoon, and they traded near record highs as investors reviewed the latest eurozone inflation data. 

 

Euro Area Inflation Eases In February 

Euro Area inflation eased to 2.6% in February from 2.8% in January and fell from 8.5% in the corresponding month a year ago, Eurostat reported Monday. 

A year earlier, the rate was 8.5%. 

The steady decline in energy prices supported the easing of inflation from the previous month and from a year ago; services inflation was 1.73%; food, drink, and tobacco inflation decreased to 0.8%; and energy inflation turned negative to 0.4%. 

 

Europe Indexes and Yields

The DAX index increased by 0.01% to 17,939.24, the CAC-40 index fell by 0.2% to 8,148.14, and the FTSE 100 index inched lower by 0.06% to 7,722.55.

Last week, the DAX index gained 1.7%, the CAC-40 index advanced 2.4%, and the FTSE 100 index inched up 1.3%. 

The yield on 10-year German bonds edged up to 2.46%; French bonds inched higher to 2.90%; the UK gilts edged higher to 4.14%; and Italian bonds inched lower to 3.70%.

The euro edged higher to $1.089, the British pound inched higher to $1.273, and the U.S. dollar held steady at 88.34 Swiss cents.

Brent crude increased $1.19 to $86.58 a barrel, and the Dutch TTF natural gas advanced by €2.13 to €29.13 per MWh.

 

Europe Stock Movers

Hannover Re increased 1.1% to €247.30 after the German reinsurance company reported an increase in full-year net income, and the company estimated improved results in the fiscal year 2024. 

Logitech International decreased 7.4% to CHF 77.98 after the company announced the departure of its chief financial officer, Charles Boynton. 

Julius Baer declined 1.1% to CHF 49.57 after the Swiss financial services firm announced its targets for the next two years. 

Metals and mining companies declined after China reported construction industry investment shrank by more than 9% in the two months to February. 

Antofagasta and Anglo American declined by 1%, but Glencore increased by 1.2%. 

Marshalls declined 7% to 270.0 pence after the UK-based building materials group reported a decline in annual revenue and pre-tax earnings. 

Currys gained 2.5% to 58.25 pence after the UK-based electronics retailer raised its profit outlook. 

British American Tobacco increased 1.1% to 2,369.0 pence after the company launched its stock buyback program after selling part of its stake in ITC for £1.6 billion. 

ProsiebenSat Media decreased 0.2% to €6.32, and the company's major shareholder, MFE-MediatorEurope, stepped up its pressure on the German broadcaster to separate its e-commerce operations from its core television services. 

British Land Company advanced 2.8% to 378.90 pence after the company announced a 50:50 joint venture with Royal London Asset Management. 

 

China's Economic Data and Japan's Rate Decision Dominate Asian Market Sentiment

Asian stock markets advanced after China reported better-than-expected retail sales, fixed investment, and industrial output in two-month period to February.  

Benchmark indexes in Tokyo advanced ahead of the monetary policy announcements by the Bank of Japan at the end of its two-day meeting on Tuesday. 

The Nikkei 225 Stock Average gained 2.5% to 39,665.98, and the Topix index added 1.9% to 2,720.33. 

Investors are hoping that the Bank of Japan will announce its plans to end the negative interest rate regime and adjust the yield curve to arrest the widening rate gap with the U.S.

Moreover, strong wage increases for the second year in a row agreed upon by large corporations during the annual negotiations with the labor unions also raised hopes that the Bank of Japan may be nearing the end of its ultra-loose monetary policy. 

The yen eased against the U.S. dollar to 149.16 ahead of the rate decision on Tuesday. 

Tech stocks led the gainers in Tokyo trading, and Advantest, Tokyo Electron, Screen Holdings, and Disco Corp. jumped between 2% and 4%. 

Vehicle makers were also among the leading gainers, and Toyota Moto, Honda Motor, and Nissan Motor advanced between 1% and 2%. 

Banks also participated in the market rally in the hope of a rise in interest rates and a change in yield curve management policy. 

Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial advanced between 1.4% and 2.5%. 

 

China Stocks Rebound 

Market indexes in Shanghai and Hong Kong advanced following better-than-expected economic data in January and February. 

China releases key economic data for two months combined to smooth out the calendar shift because of the Lunar Holidays. 

The CSI 300 index gained 0.7% to 3,595.09, and the Hang Seng index advanced 0.2% to 16,751.31.

Property developers extended losses from the previous week after construction investment declined in the two-month period. 

Longfor Group, China Resources Land, China Vanke, and Sun Hung Kai Properties fell between 2% and 4%. 

 

China's Industrial Output, Retail Sales and Fixed Investment Data Ahead of Expectations 

China's fixed investment, retail sales, and industrial output gathered speed in the first two months of 2024, driven in part by the economic stimulus provided in October. 

China's industrial output increased 7.0% for the two-month period ending in February from a year ago, faster than 5.8% in December, the National Bureau of Statistics reported Monday. 

Manufacturing accelerated to 7.7% growth from 7.1% in December, utility output increased at a faster pace of 7.9% from 7.7%, while production at mines slowed to an increase of 2.3% from 4.7% a year ago. 

China is struggling to revive its industrial output amid a fragile economic recovery from the coronavirus pandemic. 

Fixed asset investment increased 4.2% from the previous year in the two-month period to February, despite the sharp decline in real estate investments. 

Real estate investment contracted by 9.4% in the period compared to a 9.6% decline in the corresponding period a year ago. 

But investment in electricity, gas, water, and heat jumped 25.4%, and in the mining sector, it advanced 14.4%. 

China's consumer demand recovery has also been slower than anticipated by a wide margin because of the protracted weakness in the property market and economic uncertainties. 

Retail sales increased 5.5% in the period, slower than the 7.4% rebound in December. largely reflecting a higher base last year after consumer spending surged following the ending of the coronavirus lockdown. 

China's jobless rate increased to a 7-month high of 5.3% in February from 5.2% in January, the National Bureau of Statistics reported Monday. 

The jobless rate in 31 large cities and towns was estimated at 5.1%. 

The statistical bureau said youth unemployment data for February will be released later in the week, and January's modified jobless rate stood at 14.6% in the 16–24 age group. 

China's economic data is generally viewed with skepticism by most international observers for its lack of transparency and widespread practice of generating data to satisfy goals set by political leaders. 

 

India's Overall Trade Deficit Plunged  

Stocks in Mumbai lacked direction in early trading as investors awaited rate decisions from major central banks this week. 

The Sensex and the Nifty indexes traded around the flatline, and investors turned cautious in Monday's trading after volatile sessions in two consecutive weeks in a row. 

Moreover, investors reviewed the international trade balance data for February, released late Friday by the Ministry of Commerce and Industry. 

Overall exports in the month increased 14.2% from a year ago to $73.55 billion, while imports jumped 10.1% to $75.50 billion, driving the overall trade deficit down 53% to $1.95 billion from $4.15 billion. 

Goods exports rose 11.9% to $41.4 billion from $37.01 billion, and imports jumped 12.1% to $60.1 billion from $53.6 billion, widening the trade deficit by 6.8% to $18.7 billion from $17.5 billion. 

Gold imports surged 133% from a year ago to $6.2 billion amid rising demand ahead of the wedding season. 

The Sensex index decreased 0.1% to 72,556.30, and the Nifty index edged down 0.2% to 21,973.40. 

On the Mumbai stock exchange, 60 stocks traded at their 52-week highs and 29 stocks traded at their 52-week lows.