U.S. and Global Markets Rested, China GDP Data and BoJ Next Move Awaited

Alexander Garcia
16 Jan, 2025
Miami

Wall Street indexes lacked direction in Thursday's trading following the best single-day increase since November, after banks reported strong quarterly results and a cooler inflation report. 

The S&P 500 index decreased a fraction, and the Nasdaq Composite fell 0.5%, and investors reviewed the strong advances in tech stocks in the previous session. 

Investors may have to revise their inflation outlook in the months ahead, as the services inflation and wage gains across all industries are expected to stay closer to 4%, fueling inflationary forces. 

The Federal Reserve is more likely to walk back from its current estimate of rate cuts totaling 200 basis points in 2025 if overall and core inflation fails to dip below 3%. 

Costs of shelter and transportation services in December jumped 4.6% and 7.3%, respectively, and they have consistently been above the Fed's target rate for overall inflation of 2%. 

The Fed's monetary policy has largely been ineffective in controlling or impacting these two key drivers of inflation in recent years. 

On the economic front, retail and food services sales adjusted for seasonal factors but not for inflation, increased 0.4% to $729.2 billion, the U.S. Census Bureau reported Thursday. 

Sales increased 3.9% from a year ago, confirming resilient consumer spending, and core retail sales which are used to calculate GDP advanced monthly 0.7%. 

Initial jobless claims rose 14,000 from the previous week to 217,000 for the period ending January 11, the U.S. Department of Labor reported Thursday.  

Despite the increase, the initial claims remain below the average in the second half of 2024, confirming strong labor market conditions. 

Continuing weekly jobless claims ending on January 4 unexpectedly edged lower to 1,859,000, a decline of 18,000 from the revised level in the previous week.     

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.1% to 5,946.84, the Nasdaq Composite fell 0.5% to 19,431.67, and the Russell 2000 index inched up by 0.2% to 2,268.07. 

The yield on 2-year Treasury notes edged up to 4.31%, 10-year Treasury notes inched down to 4.69%, and 30-year Treasury bonds declined to 4.90%.

WTI crude oil decreased $0.64 to $79.43 a barrel, and natural gas prices edged up 4 cents to $4.13 a thermal unit.

Gold increased by $6.70 to $2,701.77 an ounce, and silver fell by $0.07 to $30.58. 

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased by 0.24 to 109.31 and traded at a two-year high. 

 

U.S. Stock Movers 

Bank of America increased 0.5% to $47.10 after the financial service company reported better-than-expected revenue and earnings in the fourth quarter. 

Morgan Stanley advanced 1% to $131.79 after the investment and asset management company reported higher-than-expected revenue and earnings in the fourth quarter. 

The company benefited from a rise in its investment banking fees and a surge in fixed income trading revenue. 

Target Corp. declined 0.8% to $133.52 after the big-box retailer raised its sales outlook in the fourth quarter. 

The retailer said comparable sales are likely to increase 1.5% in the fourth quarter, compared to the previous estimate of flat. 

The company left its earnings estimate unrevised for the quarter and the full year, indicating customers were driven by promotions and deals during the holiday period. 

The retailer anticipated earnings per share in the fourth quarter between $1.85 and $2.45 and for the full year between $8.30 and $8.90. 

Target said it will release detailed financial results on March 4. 

UnitedHealth Group decreased 3.5% to $525.0 after the health insurance company reported mixed quarterly results. 

Total revenue in the quarter was $100.81 billion, and adjusted earnings per share were $6.81. 

The annual medical cost ratio, the percentage of collected premiums spent on medical care costs, increased to 85.5% from 83.2% in 2023. 

The company reaffirmed its annual earnings per share in 2025 between $29.50 and $30.0, confirming its previous estimate released in December. 

 

Luxury Stocks In Paris and Milan Surge After Richemont Quarterly Sales Soar 

Stock market indexes in Europe advanced amid positive market sentiment following the release of corporate updates in France and the U.K. 

Benchmark indexes in Paris soared, driven by a surge in luxury stocks after the Switzerland-based Richemont SA reported sales in the fiscal third quarter jumped 15%. 

Market indexes in London advanced after Rio Tinto and Antofagasta released their monthly production reports; however, market gains were capped after a muted increase in monthly GDP in the U.K.

Gross domestic product increased 0.1% on a monthly basis in November following an unrevised decrease of 0.1% in October, the Office for National Statistics reported Thursday. 

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 20,633.64; the CAC-40 index rose by 2.2% to 7,632.77; and the FTSE 100 index inched higher by 1.1% to 8,391.90.

The yield on 10-year German bonds edged lower to 2.55%, French bonds fell to 3.36%, the UK gilts decreased to 4.71%, and Italian bonds edged lower to 3.70%.

The euro edged lower to $1.02; the British pound inched lower to $1.22; and the U.S. dollar eased to 91.15 Swiss cents. 

Brent crude decreased $1.49 to $80.54 a barrel, and the Dutch TTF natural gas fell by €0.90 to €46.23 per MWh.

 

Europe Stock Movers

Richemont SA soared 16.6% to CHF 162.15 after the parent company of Cartier reported a 10% increase in sales in the December quarter. 

Luxury peers advanced sharply in Paris and Milan after the company's sales update. 

Hermes International SCA jumped 5.9% to €2,504.0, LVMH advanced 9.5% to €697.70, and Kering SA soared 9.2% to €243.75. 

Rio Tinto plc gained 1.7% to 5,017.0 pence after the UK-based mining company reported strong production results in the December quarter. 

Antofagasta plc rose 3.5% to 1,756.0 pence, despite the UK-based mining company operating in Chile reporting flat production of copper in 2024. 

Renault SA advanced 3.9% to €49.33 after the French automaker reported a 1.3% increase in unit sales in 2024, and the sales increase was driven in part by a faster adoption of electric vehicles. 

Stellantis NV increased 1% to €12.46, despite the Italian automaker reporting a 9% decline in global shipments of vehicles in the fourth quarter. 

Whitbread plc declined 2.2% to 2,903.0 pence after the hotel and restaurant company reported a decline in sales. 

Revenue in the fiscal third quarter ending in December declined 2%, driven by a 1% fall in comparable sales. 

UK comparable accommodation sales decreased 3%, and food and beverage sales decreased 1%, and total UK sales dropped 3%. 

However, comparable sales in Germany soared 20% in the third quarter. 

 

Japan's Producer Price Holds Steady In December, Yen Trades at One-Month High 

Stocks in Tokyo advanced in early trading, reflecting gains in overnight trading in New York, but the market rally fizzled towards the end of the session. 

The Nikkei 225 stock average gained 0.1%, and the broader TOPIX edged down a fraction at close. 

Benchmark indexes in Tokyo opened higher after the U.S. monthly core rate of inflation declined in December, the first decrease in six months. 

Investors bid up stocks on speculation that the stubborn inflationary forces are finally weakening, which could help the U.S. Federal Reserve to deliver additional rate cuts in 2025. 

Wall Street enthusiasm was also fueled by strong earnings from Goldman Sachs, JPMorgan Chase, BlackRock, Wells Fargo, and Citigroup. 

Closer to home, Japan's annual producer price inflation held steady at 3.8% in December, matching the rate in the previous month, supporting the case for the Bank of Japan to delay its next rate hike after the March meeting. 

 

Japan Stock Movers

The Nikkei 225 Stock Average increased 0.1% to 38,478.15, and the broader TOPIX declined 0.01%. 

The yen edged higher to 156.05 against the U.S. dollar as investors debated the Bank of Japan's next move. 

Sumitomo Mitsui Financial Group edged higher 0.2% to ¥3,807.0, Mitsubishi UFJ Financial Group fell 0.2% to ¥1,889.0, and Mizuho Financial Group decreased 0.2% to ¥3,971.0. 

Shipping companies were in focus for the second day in a row after the U.S. placed new and stricter sanctions on Russian shipping companies and blacklisted several Chinese shipping companies. 

Nippon Yusen decreased 1.2% to ¥4,802.0, Mitsui OSK Lines Ltd. fell 3% to ¥5,129.0, and Kawasaki Kisen Kaisha Ltd. declined 3.2% to ¥1,991.50. 

Seven & I Holdings increased 1% to ¥2,469.50, and Takashimaya Co. Ltd. rose 0.6% to ¥1,238.0, and J Front Retailing edged up 0.01% to ¥1,988.0, and Fast Retailing advanced 0.2% to ¥48,440.0. 

 

Hong Kong Stocks Rebound On Rate Path Speculation Ahead of China's Fourth Quarter GDP Update

Benchmark indexes in China and Hong Kong traded higher, mirroring their peers following a surge on Wall Street in overnight trading in New York. 

The Hang Seng index increased 0.9%, and the mainland-focused CSI 300 index advanced a fraction, reflecting the strength in the U.S. stocks. 

Market indexes in Hong Kong soared in the hopes that the U.S. inflation will continue to slide after December's monthly core rate of inflation declined for the first time in six months. 

The monthly core inflation rate decreased 0.2%, and the annual rate eased to 3.2% from 3.5% in the previous month. 

However, the overall consumer price inflation accelerated for the third month in a row to 2.9% amid a rise in energy prices and the sustained increase in housing costs. 

Despite the elevated inflation, investors focused on the decrease in the monthly inflation rate and bid up stock prices in New York, sparking a rally in Asian markets in Thursday's trading. 

Closer to home, investors are looking forward to the release of fourth quarter GDP growth on Friday. 

China's GDP in the fourth quarter is likely to accelerate to an annual pace of 5.0% from a 4.6% increase in the third quarter, largely driven by a raft of stimulus measures and steps to shore up the faltering property market. 

 

China Stock Movers 

The Hang Seng index increased 0.9% to 19,445.68, and the CSI 300 index advanced 0.02% to 3,796.80. 

China Hongqiao Group Ltd. increased 4.2% to HK $11.90 after the aluminum producer said it repurchased 5.56 million of its own shares at a total price of HK $63.3 million or $8.1 million. 

The company said it plans to cancel repurchased stocks. 

Property developers in Hong Kong advanced on speculation that mortgage rates could head lower if the U.S. Federal Reserve sticks with its rate-cut plans following the release of December's inflation report. 

Wharf Real Estate Company increased 0.9% to HK $18.76, Link Real Estate Investment Trust advanced 2% to HK $31.90, and Henderson Land Development Company fell 0.5% to HK $21.70.