World Markets Shift Focus to Earnings, Gold and Crude Oil Fall

Alexander Garcia
22 Apr, 2024
Miami

Stock indexes on Wall Street pared gains as investors geared up for a busy week of earnings and key economic data. 

Investors are looking forward to the release of first quarter economic growth, the personal consumption expenditure index, and S&P Global PMI data. 

The S&P 500 index and the Nasdaq Composite advanced 0.7% in early trading after tensions between Israel and Iran eased for now. 

Both countries showed little interest in escalating tensions after conducting face-saving limited strikes and walked away from the brink of starting what could have turned into a regional war in the Middle East. 

Crude oil eased from five-month highs after tensions in the Middle East eased and investors shifted their focus to upcoming earnings from leading tech companies. 

About 700 companies are scheduled to release earnings this week as the earnings season picks up momentum. 

After the close of the regular trading session on Tuesday, the electric vehicle maker Tesla is scheduled to release earnings, Facebook-parent Meta on Wednesday, and Apple, Microsoft, and Intel on Thursday. 

Investors are looking for clues about how companies are adjusting to persistent inflation, rising wage demands, and a stronger dollar. 

The U.S. dollar has retained its upward bias in the last three months amid rising geopolitical tensions, and the Japanese yen, the Chinese yuan, the Indian rupee, the euro, and the pound have lost ground. 

The Japanese yen is now down about 50% against the U.S. dollar in the last three years. The Chinese yuan is trading near a record low, the Indian rupee is trading at a record low, the Korean won at an 18-month low, and the euro and the pound are hovering near multi-month lows. 

The Swiss franc has been the only currency to appreciate against the U.S. dollar over the last two years. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.2% to 4981.02, and the Nasdaq Composite advanced 0.3% to 15,332,06. 

The yield on 2-year Treasury notes edged higher to 4.98%, 10-year Treasury notes inched down to 4.59%, and 30-year Treasury bonds edged lower to 4.69%.

WTI crude oil decreased $0.59 to $82.13 a barrel, and natural gas prices increased 2 cents to $1.78 a thermal unit.

Gold dropped 2% and silver fell 5% after geopolitical tensions eased and both Iran and Israel showed no interest in escalating the conflict. 

Gold decreased by $56.19 to $2,337.18 an ounce, and silver fell $1.40 to $27.21. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 106.21.

 

U.S. Stock Movers

Tesla declined 3.2% to $141.25 on news that the company announced a 5% discount for all electric vehicles in China and Germany as demand lags supply. 

Tesla lowered the Model 3 price in China by 14,000 yuan to 231,000 yuan and also lowered the price in Germany by 2,000 euros to 40,990 euros. 

Cryptocurrency-focused stocks declined ahead of the so-called "halving" of Bitcoin, where cryptocurrency miners are rewarded for miners. 

Bitcoin hovered around $65,000 in early Monday's trading. 

Energy complex stocks declined for the second day in a row following the easing of crude oil prices after tensions in the Middle East eased. 

 

European Markets Edge Higher After Middle East Tensions Ease and Crude Oil Prices Turn Lower 

European market indexes advanced after a week of choppy trading as geopolitical tensions eased and crude prices descended from five-month highs. 

Benchmark indexes in Frankfurt, Paris, and London rebounded after declining for three weeks in a row as investors prepare to review earnings from leading global tech companies and European banks. 

Tensions between Iran and Israel eased for now after two countries carried out limited strikes and avoided escalating tensions following intense diplomatic efforts by the U.S., Oman, Switzerland, and France. 

Crude oil futures prices edged lower after tensions eased in the Middle East and U.S. crude oil inventories rose more than expected, easing global demand growth. 

 

Europe Indexes and Yields

The DAX index increased by 0.6% to 17,851.39; the CAC-40 index rose by 0.2% to 8,039.40; and the FTSE 100 index inched higher by 1.6% to 8,023.87.

The yield on 10-year German bonds edged up to 2.53%; French bonds inched higher to 3.03%; the UK gilts edged higher to 4.24%; and Italian bonds inched higher to 3.90%.

The euro edged higher to $1.065; the British pound inched higher to $1.234; and the U.S. dollar edged higher to 91.11 Swiss cents.

Brent crude decreased $0.19 to $87.09 a barrel, and the Dutch TTF natural gas fell by €1.49 to €29.26 per MWh.

 

Europe Stock Movers

Tyman soared 31% to 388.50 pence after the U.K.-based doors and windows supplier agreed to be acquired by the U.S.-based metal windows maker Quanex for about £788 million in cash and stock. 

Alstom SA jumped 0.5% to €15.19 after the French train maker agreed to sell its North American rail conventional signaling business to Knorr-Bremse for €630 million. 

Hipgnosis Song Fund soared 10% to 101.0 pence after alternative asset manager Blackstone offered to buy the troubled music rights investor for $1.5 billion. 

Galp Energia rose 16% to €18.67, and the Portuguese oil company said the Mopane oil field off the coast of Namibia could have at least 10 billion barrels of oil. 

Tesco PLC increased 2.8% to 289.20 pence after the UK-based grocery retailer commenced its first tranche of its £1 billion stock repurchase program.

 

Tokyo Stocks Advance Higher, Yen Drifts Lower Ahead of the BoJ's Rate Decisions 

Stocks attempted to rebound in Japan, and investors looked forward to the Bank of Japan's rate decision and Tokyo area inflation data later in the week. 

Last week, market indexes in Tokyo plunged 4.7% and declined seven of the last nine weeks, following sharp losses in New York and Europe after investors lowered their expectations of rate cuts in the U.S.

The sharp fall in market indexes was led by a plunge in popular semiconductor and tech stocks after Taiwan Semiconductor projected a weaker-than-expected sales outlook. 

Taiwan-based TSMC lowered its growth estimate for global logic semiconductors to 10% from the previous estimate of more than 10%. 

The S&P 500 index registered its worst weekly decline in six months after investors estimated that the previously estimated three rate cuts are less likely to materialize this year after the latest data showed a resilient U.S. economy. 

The Nikkei 225 Stock Average rose 0.4% to 37,222.11, and the Topix index advanced 1% to 2,651.93. 

Asian markets rebounded from a sharp selloff in the previous week due to the lowered rate-cut expectations in the U.S. 

Benchmark indexes in Seoul jumped 0.8%, in Sydney advanced 1.0%, in Shanghai edged up 0.01%, and in Hong Kong soared 2.2%. 

In Tokyo's trading, tech stocks led the gainers in Monday's trading. 

SoftBank, Tokyo Electron, Advantest, and Screen Holdings rebounded between 0.5% and 2.5%. 

Tech stocks are expected to be in focus as Alphabet, Meta Platforms, Microsoft, SK Hynix, and Advantest are scheduled to release their quarterly results later in the week. 

Financial stocks advanced in the hopes that the Bank of Japan would lay the groundwork to lift rates; however, Governor Kazuo Ueda signaled last week that the central bank is likely to retain an accommodative stance for some time. 

The Bank of Japan is scheduled to announce its rate decisions on Friday, April 26.  

The yen traded at 154.64 against the U.S. dollar. 

Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsubishi gained between 1% and 1.5%. 

 

Hong Kong Stocks Rebound After China Announces Regulatory Support 

Stock market indexes in Shanghai struggled to advance, and market indexes in Hong Kong soared following regulatory reforms. 

The People's Bank of China held steady its 1-year and 5-year loan prime rates at 3.45% and 3.95%, respectively. 

The decision by the central bank was widely anticipated after China's economy expanded at a faster-than-expected pace of 5.3%. 

The CSI 300 index decreased 0.2% to 3,533.98, and the Hang Seng index rose 1.7% to 16,506.66. 

Hong Kong indexes rose after the China Securities Regulatory Commission announced reforms to facilitate the listing of mainland Chinese companies on the Hong Kong Stock Exchange. 

The move comes after the Hang Seng index plunged more than 40% over the last three years as foreign investors fled Chinese stocks. 

The securities regulator also said it plans to enhance the Stock Connect system that will facilitate trading in mainland China companies listed on stock exchanges in mainland China. 

Tech stocks advanced and participated in the market rally. 

Tencent Holdings jumped 4.4% to HK$318.20, Meituan jumped 4.9% to $100.0, and Alibaba Group advanced 3.3% to $68.90. 

Oil-related stocks traded lower after crude oil prices fell in international trading following the easing of tensions between Iran and Israel and rising inventories in the U.S. 

PetroChina decreased 2.2% to HK$7.33, and CNOOC declined 2% to HK$18.26. 

Electric vehicle makers were under pressure after the price war intensified in the industry. 

Tesla lowered prices by 5% in mainland China for its electric vehicle manufactured in a Shanghai-based facility. 

Li Auto declined 9.6% to HK$26.38, Geely Automotive rose 1.2% to HK$8.92, and BYD fell 0.6% to HK$200.40.