Wall Street Indexes Lacked Direction on Merger Monday, European Markets Turned Lower, China Five-day Rally Extended Gains to 20%

Alexander Garcia
30 Sep, 2024
Miami

Stock market indexes on Wall Street flatlined in Monday's trading, and benchmark indexes are set to close higher for the month and for the quarter. 

The S&P 500 index and the Nasdaq traded in a tight range in early trading in New York as investors debated future rate paths and economic outlook. 

The S&P 500 index increased 1.5% in September and jumped 5.0% in the quarter, and the Nasdaq added 2.2% and advanced 2.0%, respectively. 

Two widely followed benchmark indexes advanced in previous consecutive weeks, supported by the Fed's super-sized rate cut and better-than-expected economic data indicating resilient consumer demand and moderating but strong labor market conditions. 

Investor anxieties rose after port workers at 14 major ports on the East Coast and along the Gulf Coast are set to strike at midnight Monday, potentially disrupting supplies for days or weeks.

The International Longshoremen's Association said in a post that workers plan to strike at 12:01 E.T. on Tuesday, after the master contract with the U.S. Maritime Alliance expires. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.1% to 5,740.46, the Nasdaq Composite rose 0.1% to 18,144.09, and the Russell 2000 index rose 0.1% to 2,227.09. 

The yield on 2-year Treasury notes edged higher to 3.63%, 10-year Treasury notes inched up to 3.75%, and 30-year Treasury bonds inched higher to 4.13%.

WTI crude oil increased $0.68 to $68.79 a barrel, and natural gas prices edged up 1 cent to $2.90 a thermal unit.

Gold fell by $21.83 to $2,636.52 an ounce, and silver decreased by $0.36 to $31.25.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.43.

 

U.S. Stock Movers

AT&T edged up 0.3% to $21.95 after the company said it has agreed to sell its 70% stake in satellite TV company DirectTV Entertainment Holding LLC to a private equity firm TPG for about $7.6 billion in cash payments stretching to 2029. 

AT&T will receive $1.7 billion in cash at the time of completion of the deal, $5.4 billion in payment in 2025, and $500 million in 2029. 

DirectTV also said in a separate statement it has agreed to buy Sling TV and Dish TV from EchoStar through debt exchange, culminating in a combination of two satellite TV companies. 

In addition, Direct TV will acquire Dish TV's video distribution business for $1 and assume a net debt of $9.75 billion. 

Verizon Communications edged up a fraction to a two-year high of $45.10 after the company struck a deal to lease its wireless communications towers for $3.3 billion.

Vertical Bridge agreed to pay upfront $2.8 billion in cash for an exclusive license to lease and operate 6,339 towers across 50 U.S. states and Washington, D.C. 

Stellantis declined 13% to $13.96 after the parent company of Jeep and Fiat lowered its annual outlook, citing sales weakness in "most regions."

Volkswagen AG dropped 2.2% to $11.13 after the German automaker issued its second profit warning in three months, citing ongoing weakness in China. 

Nio Inc. advanced 13.5% to $7.43 after the electric vehicle maker said its China-based subsidiary will receive a total of 13.3 billion yuan of investment, including 3.3 billion from a "strategic investor." 

After the investment, Nio Inc.'s stake in Nio China increased to 88.3% from 92.1%. 

Alibaba Group increased 4.4% to $111.93 following a surge in tech stocks in Hong Kong and mainland China in the hopes that Beijing will soon announce fiscal measures following a package of monetary stimulus by the People's Bank of China. 

Other China-linked stocks traded higher after three cities in China lowered down payment requirements and eased other restrictions for residential properties. 

JD.com increased 5.5% to $42.07, and Tencent Holdings fell 0.3% to $56.88. 

 

European Markets Dragged Down by Weak Auto Stocks, Italy's Inflation Eased to 2024 Low 

European stock market indexes traded lower in Monday's trading, bond yields edged higher, and the euro held firm against the dollar.

Benchmark indexes in London, Paris, and Frankfurt fell as investors debated future rate paths and calls for lowering interest rates rose amid cooling inflation.

Italy reported the annual inflation rate eased in September and dropped to the lowest level in 2024, reflecting a weakening of inflation in energy and manufactured goods, according to the statistical agency, ISTAT. 

Consumer price inflation slowed to 0.7% from 1.1% in August, and core inflation, which excludes volatile food and energy prices, eased to 1.8% from 1.9% in the previous month. 

Germany's annual consumer price inflation eased to 1.6% in September from 1.9% in August, the Federal Statistical Office, Destatis, reported Monday. 

Last week France and Spain reported a slowing of inflation, largely reflecting weaker energy prices, but core inflation held steady because of elevated service inflation. 

The U.K.'s second quarter gross domestic product increase from the previous quarter was revised down to 0.5%, slower than the previously estimated rise of 0.6%. 

The inflation dropped to the lowest level since February 2021, largely because of the decline in energy price accelerated to 7.6% from 5.1% in the previous month, offsetting food price inflation increase to 1.6% from 1.5%, respectively. 

Core inflation, which excludes food and energy prices, eased to 2.7% from 2.5%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.8% to 19,324.93; the CAC-40 index fell by 2.0% to 7,635.75; and the FTSE 100 index declined by 1.1% to 8,236.95. 

The yield on 10-year German bonds edged higher to 2.15%, French bonds inched higher to 2.95%, the UK gilts edged up to 4.0%, and Italian bonds increased to 3.48%.

The euro edged lower to $1.11; the British pound inched higher to $1.33; and the U.S. dollar weakened to 84.41 Swiss cents.

Brent crude increased $0.65 to $72.21 a barrel, and the Dutch TTF natural gas fell by €0.03 to €38.67 per MWh. 

 

Europe Stock Movers

Rightmove PLC decreased 613.40 pence and extended losses for the second day in a row after the company's board rejected a £6.2 billion offer from Australia-based REA Group. 

Oil exploration companies were in focus after tensions in the Middle East rose and Israel carried out more targeted bombing campaigns in Beirut and accelerated its land grab in Gaza. 

Shell PLC increased 0.1% to 2,426.50 pence. BP plc gained 0.6% to 390.55 pence, and TotalEnergies SE declined 1.4% to €58.35. 

Automakers traded down after Volkswagen AG issued a profit warning for the second time in three months and Stellantis NV lowered its annual outlook amid weakness in sales across all regions.

Stellantis dropped 15.4% to €12.36 and extended losses to more than 60% from a high of €27 in March; Volkswagen decreased 2.5% to €94.66 and traded at a five-year low. 

3i Group plc decreased 2.6% to 3,300 pence, and Shadowfall Capital reportedly took a multi-million-pound short position in the private equity venture capital firm. 

 

Japan to Call General Election On October 27, Yen Rallies and the Nikkei 225 Plunges 4% 

Stock market indexes in Tokyo plunged following the announcement of the new leader of the ruling Liberal Democratic Party. 

The Nikkei 225 stock average and the Topix index jumped as much as 5%, and investors overlooked the latest updates on retail sales and industrial production data. 

Former defense minister Shigeru Ishiba won the tightly contested leadership race by nine candidates, garnering more votes than the run-off rival Sanae Takaichi, setting the stage for the premiership of Japan. 

The newly elected party leader also expressed his plan to hold a general election as early as October, and Ishiba in the past has supported more hawkish monetary policy. 

"I believe it is important for the new administration to be judged by the people as soon as possible," and added, "we would like to hold a general election on October 27," Ishiba said at an LDP news conference.

The party is expected to confirm his nomination as the next prime minister at the Diet session on Tuesday. 

The Japanese yen soared to 141.7 against the U.S. dollar, dampening the stock market sentiment. 

On the economic front, Japan's annual retail sales growth slightly accelerated to 2.8% in August from 2.7% in July, the Ministry of Economy, Trade & Industry reported. 

Retail sales increased for the 29th month in a row, supported by the increase in wages, which continue to support higher consumption of basic items. 

On a monthly basis, retail sales accelerated to an increase of 0.8%, after sales rose 0.2% in July. 

Japan's industrial production declined 3.3% from the previous month in August, the fifth monthly decline in 2024, the ministry said in a separate report. 

From the previous year, industrial production declined 4.9%, marking the sixth decline in 2024 and reversing the 2.9% increase in July. 

 

Japan Stock Movers

The Nikkei 225 Stock Average declined 5% to 37,826.07 and the Topix index dropped 3.6% to 2,641.68. 

Tech stocks led the decliners in Tokyo, and semiconductor-related stocks were the worst hit. 

Advantest Corp. fell 6.5% to ¥6,741.0, Tokyo Electron declined 8% to ¥25,290.0, and Lasertec dropped 10% to ¥23,605.0. 

Seven & I Holding declined 3.2% to HK ¥2,146.50, Fast Retailing decreased 3.4% to ¥47,420.0, and Isetan Mitsukoshi plunged 10.5% to ¥2,226.0. 

Toyota Motor decreased 7.6% to ¥2,542.50, Honda Motor declined 7% to ¥1,507.50, and Nissan Motor fell 6% to ¥402.50. 

Marubeni declined 3% to ¥2,340.0, Itochu Corp. fell 3.3% to ¥7,678.0, Mitsui & Company decreased 2.8% to ¥3,178.0, and Mitsubishi eased 4.2% to ¥2,952.50. 

Sumitomo Mitsui Financial gained 3% to ¥3,045.0, Mitsubishi UFJ Financial advanced 0.2% to ¥1,453.50, and Mizuho Financial gained 4.2% to ¥2,936.0. 

 

China's Stimulus Rally Extended September Gains to Over 20% 

Stock market indexes soared in mainland China and Hong Kong as a stimulus rally extended gains to the holiday-shortened third week. 

The Hang Seng index jumped 3% and the mainland-focused CSI 300 index soared more than 6%, and the two widely followed indexes extended September gains to over 20%. 

Investors bid up stocks in the hopes that the latest easing of property market restrictions coupled with monetary policy stimulus and the expected fiscal measure will revive consumer confidence. 

On Monday, three leading cities in China relaxed terms to acquire residential property. 

Guangzhou city authorities removed all restrictions on buying multiple residential properties.

Shanghai and Shenzhen relaxed down payment requirements for first and additional home purchases and permitted non-locals to acquire residential properties, boosting demand for new homes. 

Moreover, the People's Bank of China lowered its mortgage rate following the announcement last week. 

Investors are hoping that policymakers will follow up with significant fiscal measures in about two weeks ahead of the policy committee meeting. 

On Tuesday, financial markets in Hong Kong are closed for the National Holiday, and mainland China markets will remain closed through October 8. 

Investors largely ignored the latest update on the manufacturing sector, highlighting the weakness for the fifth month in a row. 

The manufacturing purchasing managers' index edged higher to 49.8 in September from 49.1 in the previous month, the National Bureau of Statistics reported on Monday. 

The non-manufacturing PMI index, which includes construction and service sector activities, eased to 50.0 in September from 50.3 in the previous month, the official report showed. 

The Caixin China General Manufacturing PMI decreased to 49.3 in September from 50.4 in August and fell to the lowest level since July 2023, according to the latest update reported by S&P Global. 

New orders, foreign sales, and employment all contracted amid weakness in foreign and domestic orders. 

Moreover, business sentiment dropped to the second-lowest on record after new orders fell to the lowest level in two years. 

The government survey data differs from the private survey because the official sample is dominated by larger and state-controlled companies, while the private survey includes more smaller companies active in international trade.

 

China Stock Movers 

The Hang Seng index decreased 3.3% to 21,321.97, and the CSI 300 index soared 6.2% to 3,934.08. 

Property stocks soared following the easing of curbs on residential property purchases in three leading southern cities. 

Longfor Group soared 17% to HK $16.04, China Vanke advanced 12.7% to HK $7.52, China Resources Land gained 4.1% to HK $29.05, and Sun Hung Kai Properties declined 0.6% to HK $86.05. 

Alibaba Group jumped 9.6% to HK $112.20, JD.com advanced 10.7% to HK $168.30, and Tencent Holdings gained 4.4% to HK $455.40. 

BYD gained 3.9% to HK $286.40, Li Auto soared 10.1% to HK $110.0, and Xpeng surged 15.3% to HK $54.50. 

Bank of China decreased 1.9% to HK $3.66, China Merchants Bank added 1.6% to HK $38.80, and Industrial and Commercial Bank of China fell 1.7%.