Japan Led World Markets In the First Quarter; the U.S. Gained 10%, Europe Advanced 9%

Barry Adams
28 Mar, 2024
New York City

Benchmark indexes traded flat, and stocks lacked direction in thin trading ahead of the three-day weekend. 

The S&P 500 index and the Nasdaq Composite are set to close higher for the week, the month, and the quarter. 

Investors bid up stocks and extended the market rally from the previous quarter on the continued boom in artificial intelligence, resilient corporate earnings, and growing optimism about the interest rate cut later in the year. 

The S&P 500 index is up about 10.7% in the first quarter, 3.6% in March, and 0.3% in the week. 

The Nasdaq Composite is up 11% in the quarter, 2.8% in March, and down 0.08% in the week. 

Among the top 20 financial markets around the world, the Nikkei index led with a rise of 20.7%, followed by the indexes gaining in Germany around 11%, in the U.S. around 10%, in France 9%, and in India around 2%. 

The benchmark indexes in London, Shanghai, Seoul, and Sydney gained around 3% in the first quarter. 

The Hang Seng Index in Hong Kong was the lone decliner, with a loss of 1.5%. 

The U.S. economic growth estimate for the fourth quarter was revised higher to 3.4% from the previous estimate of 3.2%, the Bureau of Economic Analysis reported Thursday. 

In the third estimate, the agency left the 2023 economic growth estimate unchanged at 2.5%. 

Investors are looking forward to the release of the personal income and outlays report and personal consumption expenditure price index on Friday, and the market will react to these reports when trading resumes on Monday following the Good Friday holiday. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.08% to 5,253.07, and the Nasdaq Composite fell 0.05% to 16,390.63. 

The yield on 2-year Treasury notes increased to 4.62%, 10-year Treasury notes inched up to 4.22%, and 30-year Treasury bonds edged down to 4.36%.

WTI crude oil increased $1.19 to $82.53 a barrel, and natural gas prices decreased 6 cents to $1.69 a thermal unit.

Gold increased by $22.49 to $2,214.50 an ounce, and silver rose 8 cents to $24.74. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.55.

 

U.S. Stock Movers

MillerKnoll plunged 17.3% to $25.31 after the steel furniture company reported weaker-than-expected revenue of $872.3 million in its latest quarter. Adjusted earnings per share of 45 cents were ahead of market expectations. 

RH rose 9.4% to $325.0 after the furniture retailer reported weaker-than-expected quarterly financial results, and the company guided sales to decline by a low single digit in the current quarter. 

However, stock advanced after the retailer estimated an improving demand trend for the remainder of the year. 

Verint Systems rose 3.1% to $32.06 after the customer engagement software system developer reported better-than-expected quarterly results. 

Revenue in the quarter increased to $265.1 million, and adjusted earnings per share were $1.07. 

Sprinklr increased 12.4% to $14.59 after the social media marketing and content management software developer reported better-than-expected quarterly results. 

Revenue increased to $194.2 million, and adjusted earnings per share were 13 cents. 

Home Depot declined 0.7% to $383.37 after the retailer announced its plan to buy the building materials supplier SRS Distribution for $18.25 billion. 

The deal is expected to enlarge company's offering to its professional customer base. 

 

European Markets Trimmed Gains In Tight Trading 

European markets advanced, bond yields eased, and the euro and the pound drifted lower. 

Benchmark indexes in Paris and Frankfurt inched higher in record territory and extended weekly gains ahead of the Easter holiday on Friday and Monday. 

The DAX index extended its holiday-shortened weekly gain to 1.8%, the CAC-40 gained 1.2%, and the FTSE 100 index advanced 1%. 

In March, the DAX gained 5%, the CAC-40 index advanced 3.2%, and the FTSE 100 index increased 4.5%.  

In the quarter, the DAX increased 10.3%, the CAC-40 jumped 9.0%, and the FTSE 100 index gained 3.2%. 

Investors bid up stocks in the hope that the European Central Bank is likely to lower its rate as early as June after the Riksbank on Wednesday held its policy rate steady and suggested a possible rate cut in May or June. 

The UK economy was confirmed to be in a technical recession, according to the latest data released by the Office for National Statistics. 

The UK's economy contracted by 0.3% in the fourth quarter, as previously estimated, after shrinking by 0.1% in the third quarter, according to the final data released by the statistical agency. 

With the economy in a technical recession towards the end of the year, gross domestic product rose only 0.1% in 2023, sharply lower than 4.3% in 2022. 

 

German Retail Sales Extend Decline to Fourth Month

German retail sales unexpectedly declined in February after consumers retrenched to basics amid elevated interest rates and high inflation. 

Retail sales declined for the fourth month in a row to 1.9% in February, and the decline was the steepest since October 2022, the Federal Statistical Office, destatis, reported Thursday. 

Retail sales declined 2.7% from a year ago, fell for the fourth month in a row, and fell at the fastest pace in five months. 

Food sales declined 1.7%, and non-food item sales dropped 1.0%. 

Real calendar and seasonally adjusted sales in non-food retail fell by 1.0% in February compared to the previous month and by 2.6% compared to a year ago. 

Real sales in Internet and mail order sales in February declined 2.8% compared to the previous month and dropped 4.7% from a year ago. 

 

German Payrolls Expanded at a Slower pace. 

The German job market expanded at a slower pace in February compared to the previous month. 

Seasonally adjusted payrolls increased by 14,000 following the expansion of 56,000 in January, and about 45.7 million people were employed in Germany, according to the preliminary calculation by the statistical agency. 

Germany's jobless rate increased after the expanding job market attracted more people to the labor force. 

The German unemployment rate rose to 3.5% in February from 3.0% in the corresponding month a year ago, Destatis reported Thursday in a separate report. 

About 1.55 million people were unemployed in February, an increase of 14.3%, or 193,000, compared to a year ago. 

Adjusted for seasonal and irregular effects, the number of unemployed people was 1.41 million in February, 5,000 higher than in the previous month of January. 

The adjusted unemployment rate is unchanged from the previous month of January, at 3.2%. 

 

Europe Indexes and Yields

The DAX index increased by 0.1% to 18,495.11, the CAC-40 index rose by 0.07% to 8,210.56, and the FTSE 100 index inched higher by 0.3% to 7,961.53.

The yield on 10-year German bonds edged down to 2.31%; French bonds inched lower to 2.81%; the UK gilts edged lower to 3.99%; and Italian bonds inched lower to 3.66%.

The euro edged higher to $1.077, the British pound inched higher to $1.259, and the U.S. dollar held steady at 90.60 Swiss cents.

Brent crude decreased $1.0 to $86.41. a barrel, and the Dutch TTF natural gas fell by €0.24 to €27.45 per MWh.

 

Europe Stock Movers

Renault SA advanced 1.1% to €46.96 after the company sold 99.13 million shares, or about 2.5%, to Nissan for €358 million and participated in the company's stock repurchase program. 

Casino Guichard Perrachon plunged 66% to €0.036 after the retailer announced the completion of its financial restructuring. 

Stratec SE dropped 9.8% to €38.55 after the German maker of in-vitro diagnostic analyzers reported a decline in 2023 profit due to a fall in sales and an increase in expenses. 

 

Profit Booking Drives Tokyo Stocks Lower 

In Asia, the Nikkei 225 Stock Average fell more than 1% on profit-taking and the worries of an intervention to support the falling yen, which is hovering near a 34-year low. 

Stocks in Tokyo closed lower on the final day of the holiday-shortened week as investors booked profits in tech and financial stocks. 

The yen traded at 151.43 against the U.S. dollar after finance ministry officials stepped up their verbal intervention efforts in support of the yen, despite the Bank of Japan ending its negative rate regime last week. 

Investors are looking forward to the release of industrial output, retail sales, and unemployment data on Friday. 

The Nikkei 2225 Stock Average dropped 1.5% to 40,162.65, and the Topix index dropped 1.7% to 2,751.92. 

SoftBank, Tokyo Electron, Screen Holdings, and Advantest declined between 0.2% and 1%, but FANUC advanced 0.5%. 

Among vehicle markers, Honda Motor, Toyota Motor, Nissan Motor, Suzuki Motor, and Subaru Corp. traded between 0.5% gain and 1.6% fall. 

Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui declined between 0.3% and 1.2%. 

 

The Chinese President Assures Foreign Leaders of Additional Reforms 

Stocks in Shanghai and Hong Kong advanced following better-than-expected earnings from China Life, Haier Smart Home, and ICBC. 

Investors have shifted their attention to corporate earnings and economic data flow after the market intervention by government-controlled funds lifted broader indexes by more than 10% in February. 

President Xi Jinping met with a with a delegation of U.S. business leaders and pledged to create a more market-friendly business environment for foreign investors. 

The meeting between President Xi and the U.S. business leaders, including senior executives from Pfizer, FedEx, Blackstone, Qualcomm, and Bloomberg, was held at the end of the China Development Forum in Beijing on Wednesday. 

Xi proposed deepening economic reform that is "market-oriented" and "law-based" to create more room for foreign businesses and rejected the narrative that China's economic growth has peaked. 

However, Chinese policymakers have stepped up efforts to support state-controlled large enterprises at the expense of the private sector and curtail the activities of foreign businesses. 

Moreover, small and medium-sized foreign businesses have started leaving China in droves and shifting their business activities to neighboring Vietnam, Mexico, or other markets in India and ASEAN countries. 

The Chinese government's support of widespread intellectual property theft and recent stringent controls on profit repatriation have also accelerated the sharp decline in foreign direct investment in the last four years. 

Financial markets are closed on Friday and Monday for public holidays in Hong Kong, but markets will remain open for business in mainland China. 

The CSI 300 index increased 1.1% to 3,542.0, and the Hang Seng index added 1.6% to 16,660.76. 

Haier Smart Home rose 7.5% to HK$24.20 after the maker of consumer appliances reported better-than-expected 2023 financial results. 

China Life Insurance rose 5.4% to HK$9.41 after the largest insurance company in China reported a smaller-than-expected 31% decline in earnings in 2023. 

ICBC Bank declined 3.4% to HK$3.94 after the financial services company reported weaker-than-expected 2023 financial results. 

 

India Indexes Extend Weekly Gains 

Benchmark indexes in Mumbai advanced ahead of a 3-day weekend in light trading. 

The Sensex and the Nifty indexes gained a fraction and inched into record territory as investors debated the global interest rate outlook. 

Investors are hoping that interest rate cuts in the U.S. and the eurozone may encourage the Reserve Bank of India to lower domestic rates. 

However, persistently high inflation may delay a rate cut, and the Federal Reserve may decide to keep higher rates for longer. 

The Sensex index increased 0.5% to 73,360.05, and the Nifty index edged up 0.5% to 22,225.40. 

Two popular indexes extended holiday-shortened weekly gains to 1.3%. 

On the Mumbai stock exchange, 47 stocks traded at their 52-week highs and 56 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds decreased to 7.04%, and the Indian rupee edged lower to ₹83.35 against the U.S. dollar.

 

Cooler Inflation Lifts Australian Index to a New Record High

Australian stock market indexes traded at a new record high after consumer price inflation in February was weaker than expected at 3.4%. 

Australian indexes advanced in the hopes that the two-year low inflation rate for the third month in a row in February may spur the central bank to lower the policy rate. 

The ASX 200 index gained 1% to close at 7,896.90, a new record high. 

The benchmark index advanced 3% in March and jumped 3.6% in the first quarter of 2024.