Global Markets On Hold Ahead of the U.S. Inflation Report and Rate Decisions in the Euro Area

Barry Adams
09 Apr, 2024
New York City

Stocks traded sideways, Treasury yields edged slightly lower in Tuesday's trading, and metals extended recent gains. 

The S&P 500 index and the Nasdaq Composite turned lower in choppy trading and erased morning gains as investors awaited the release of the consumer price index report on Wednesday. 

Investors are estimating overall consumer price inflation to increase 3.4% from a year ago, and advance 0.35% on the month in March, according to a survey of ten economists conducted by Ticker.com. 

Investors are also anticipating the producer price inflation report on Thursday. 

The yield on 10-year Treasury notes edged slightly lower after rising for two days in a row following Friday's nonfarm payrolls report. 

The U.S. economy added more-than-expected 330,000 net new jobs in March, the fastest pace of increase in ten months, and indicating resilient labor market conditions. 

The jobs report was the last of several reports over the last two weeks that highlighted strong U.S. economic and labor market conditions. 

Copper traded at a new high in Shanghai, gold reached a new high in New York, and silver hovered near multi-year highs. 

Higher base metal prices suggested robust industrial activities, which are driven by strong construction activities, and demand for consumer and capital goods.  

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.2% to 5,192.68, and the Nasdaq Composite rose 0.01% to 16,254.46. 

The yield on 2-year Treasury notes edged higher to 4.78%, 10-year Treasury notes inched down to 4.39%, and 30-year Treasury bonds edged up to 4.53%.

WTI crude oil decreased $1.25 to $85.25 a barrel, and natural gas prices increased 1 cent to $1.86 a thermal unit.

Gold increased by $5.40 to $2,344.85 an ounce, and silver fell 5 cents to $27.85. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.10.

 

U.S. Stock Movers

Boeing Co. declined 0.9% to $181.56, and Southwest Airline's flight lost engine cover during flight takeoff from Denver, Colorado, to Houston, Texas, on Sunday. 

Southwest Flight 2695 Boeing 737 800 jet plane safely returned to the ground after reaching a height of 3,140 meters with 135 passengers and six crew members. 

Boeing has been under intense scrutiny from aviation regulators and airlines after a series of mishaps and safety lapses over the last four years. 

Ally Financial increased 1.3% to $39.26, and Discover Financial Services chief executive Michael Rhodes was appointed as chief executive of the company. 

 

European Markets Closed Down In Cautious Trading Ahead of ECB Rate Decisions 

European market indexes traded lower, bond yields declined, and the euro hovered near its two-month average. 

Benchmark indexes in Frankfurt, Paris, and London edged lower amid cautious trading ahead of the European Central Bank's monetary policy decisions on Thursday. 

Market participants are worried that policymakers may not follow through on the possible rate cut as early as June, as signaled at the end of the last meeting on March 7. 

Moreover, investors are also concerned that the U.S. Federal Reserve Bank is more likely to delay its advertised rate cut later than previously expected, with spillover effects in global bond market. 

 

France's Goods Trade Deficit Shrank In February 

France's international goods trade deficit shrank to Є5.2 billion from Є7.2 billion in January after exports rose faster than imports, according to the latest data released by the general directorate of customs on Tuesday. 

Exports in February rose 4.7% to Є51.1 billion from Є48.8 billion in January, and imports advanced 0.5% to Є56.3 billion from Є56.0 billion in the previous month. 

The goods trade deficit in February decreased to Є5.2 billion from Є7.2 billion in the previous month, and the cumulative deficit improved to Є90.9 billion.  

Trade deficit dropped to the lowest since January 2021, after exports rose and the energy deficit declined in the month to Є3.8 billion from Є4.5 billion in the previous month. 

Excluding energy, the trade deficit shrank to Є2.8 billion from Є4.0 billion in January. 

In the manufacturing sector, trade deficit shrank to Є3.3 billon from Є4.0 billion; after consumer goods surplus rose to Є0.8 billion from Є0.7 billion, intermediate goods deficit shrank to Є0.9 billion from Є1.8 billion, and capital goods deficit expanded to Є3.2 billion from Є2.9 billion. 

 

Europe Indexes and Yields

The DAX index decreased by 1.3% to 18,076.69, the CAC-40 index fell by 0.9% to 8,049.17, and the FTSE 100 index inched lower by 0.1% to 7,934.79.

The yield on 10-year German bonds edged down to 2.39%; French bonds inched lower to 2.89%; the UK gilts edged higher to 4.08%; and Italian bonds inched lower to 3.73%.

The euro edged higher to $1.086, the British pound inched higher to $1.267, and the U.S. dollar edged lower to 90.35 Swiss cents.

Brent crude decreased $1.01 to $89.50. a barrel, and the Dutch TTF natural gas fell by €0.36 to €27.56 per MWh.

 

Europe Stock Movers

Atos declined 15% to €1.96, after the struggling French IT company announced its restructuring plan details. 

Nordex SE gained 2.5% to Є12.88 after the German wind turbine company won an order to supply 295 MW wind turbines to EDF Renewables in South Africa. 

Siemens AG declined a fraction to Є173.68 after the German engineering company said its Supervisory Board extended the contract for President and Chief Executive Officer Roland Busch for five years, starting April 1, 2025. 

Imperial Brands inched up 0.4% to 1,737.50 pence after the UK-based tobacco company reiterated its revenue and earnings outlook for fiscal 2024. 

Mining companies advanced in London trading after the copper price in Shanghai traded at a record high on the expectation of rising demand for manufactured goods in developed economies and in China. 

Anglo American, Antofagasta, and Glencore advanced between 1% and 2%. 

BP plc increased 1.5% to 516.30 pence after the company said it anticipates strong performance in the first quarter. 

HSBC Holdings gained 0.3% to 646.40 pence after the UK- and China-based bank said it plans to sell its banking operation in Argentina to Grupo Financiero Gallicia for about $550 million. 

 

Asian Markets Scale Higher Ahead of Earnings Season Kickoff 

Stocks in Asia generally advanced as investors shifted their focus to the start of the earnings season. 

Market sentiment was positive in Asia, ahead of the release of key economic data in China. 

In Asia, market indexes in Tokyo advanced 0.4%, Hong Kong advanced 0.6%, and Shanghai and Seoul declined 0.3%. 

 

Tech Stocks Lead Japan Indexes Higher 

Stocks in Tokyo rebounded for the second day in a row, led by a surge in tech stocks. 

The yen approached the 152 mark against the U.S. dollar as nervous traders worried about government intervention in the currency market. 

The yen has been hovering at a multi-year high after the Bank of Japan ended its negative rate policy after eight years and lifted interest rates for the first time since February 2007.

Policymakers were hoping that the yen would strengthen after the end of the negative rate regime on March 19, but the currency has continued to weaken. 

The Nikkei 225 Stock Average jumped 0.9% to 39,713.49, and the Topix index advanced 0.8% to 2,750.40. 

Among the most active tech stocks, SoftBank, Tokyo Electron, Advantest, Disco Corp., Renesas Electronics, and Shin-Etsu Chemical advanced between 1% and 3%. 

Financial stocks also participated in the market rally. 

Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial advanced between 0.2% and 0.4%. 

 

Cautious Trading in China Ahead of Inflation and Foreign Trade Data

Stocks in Shanghai and Hong Kong diverged, and investors looked forward to the release of inflation and foreign trade data later in the week. 

Stocks in Shanghai remained under pressure ahead of the release of consumer price data on Wednesday, and investors are hoping prices edged higher by 0.4% in March, the second monthly increase in a row. 

Moreover, investors are anticipating exports to decline between 1% and 2% in March, and trade surplus to expand.  

China's exports in the January–February period rose 7.1% and imports rose 3.1% from a year ago, respectively, according to the customs agency. 

The CSI 300 index decreased 0.3% to 3,526.63, and the Hang Seng Index advanced 0.8% to 16,861.38. 

Net Ease increased 4.7% to HK$158.50, after the National Press and Publication Administration approved 15 foreign computer games for the Chinese market. 

Electric vehicle makers advanced in the hopes of higher domestic and international sales in the second quarte.  

Li Auto increased 2.2% to HK$123.40, BYD added 2.5% to $207.0, and Xiamo Corp. jumped 2.9% to HK$15.94. 

Property stocks were in focus after Country Garden reported a sharp decline in sales in March. 

Contracted sales in March plunged 83% to 4.3 billion yuan, and when measured by area, they dropped 85% to 450,000 square meters. 

China Vanke, China Resources Land, and Henderson Land edged higher between 0.2% and 0.6%.  

The Guangdong-based Country Garden's stock is suspended from trading on the Hong Kong Stock Exchange, as the company missed Thursday's deadline to file its annual report. 

 

India Indexes Inch Higher in Record Zone Ahead of Earnings Season

Stocks in Mumbai edged higher in subdued trading, as the earnings season gained momentum. 

The Sensex and the Nifty indexes struggled to advance in early trading as investors looked forward to the release of corporate earnings from tech services providers. 

Stocks in Mumbai are struggling to advance in the second quarter ahead of the general election next month, and there are worries about high valuations in the small and mid-cap sectors. 

Moreover, the recent rise in commodity and metal prices has rekindled the fear of resurgent inflation, negatively impacting vehicle sales. 

Brent crude oil price decreased 1.6% to $89.70 a barrel, after tensions eased in the Middle East after negotiations between Israel and Hamas resumed in Egypt. 

However, Israel stressed that its army is ready to launch a military strike in Rafah City, Gaza, if a settlement is not reached soon. 

The Sensex index increased 0.5% to 74,635.23, and the Nifty index edged higher by 0.3% to 22,621.95. 

On the Mumbai stock exchange, 266 stocks traded at their 52-week highs, and 12 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 7.15%, and the Indian rupee edged lower at ₹83.26 against the U.S. dollar.

Axis Bank rose 1.7% to ₹1,077.0 after the private equity firm Bain Capital plans to sell its remaining stake in the bank through a block trade in the price range between ₹1,071 and ₹1,076 per share.

Tata Motors increased 0.6% to ₹1,012.70 after the company's Jaguar Land Rover unit said vehicle sales in the March quarter increased 11% to 114,038. 

For the fiscal year ending in March 2024, vehicle sales advanced 22% to 431,733 units.