Middle East War Worries and Receding Near-term Rate-cut Hopes Keep U.S. Major Averages Down

U.S. stock extended yesterday's losses in pre-market trading, and investors confront multiple headwinds.

The S&P 500 index and the Nasdaq Composite futures declined 0.4%, and investors reassessed their rate-cut outlook after policymakers in the U.S. and Europe pushed back against expectations.

Moreover, the prospect of a wider war in the Middle East also sapped market enthusiasm after Iran launched missile attacks in Syria, Iraq, and Pakistan.

Houthi rebels backed by Iran also continued their attacks on merchant ships traveling through the Red Sea, forcing most shipping companies to divert shipments along the coast of Africa, increasing costs and shipment times.

China reported the slowest economic growth in nearly three years, and GDP expanded at a slower-than-expected 5.2% in 2023, following the growth of 3.0% in 2022.

China's retail sales growth of 7.0% fell short of market expectations, but industrial output accelerated to 6.8%, reaching a 22-month high in December.

China-exposed stocks traded down after the release of economic updates, and the Hang Seng index plunged 3.5% in Wednesday's trading.

Tesla declined 1.5% after the company lowered the price of its model Y in Germany, and Alibaba fell 3%.

U.S. Retail Sales Advanced In December 

Retail sales, adjusted for seasonal and calendar factors but not price changes, increased 5.6% from a year ago in December, the U.S. Census Bureau reported Wednesday.

Retail sales rose the most in eleven months, following a downwardly revised 4% rise in November.

Retail sales, unadjusted for price changes or inflation, increased 3.2% in the full year 2023.

U.S. Mortgage Applications Rebound  

Mortgage applications surged 10.4% in the week ending January 12, faster than 9.9% in the previous week, the Mortgage Bankers Association reported Wednesday.

Mortgage applications to purchase a new home jumped 9% from the 6% increase the previous week, and applications to refinance a home loan advanced by 11% as lower rates lured home buyers back to the market.

The average contract rate for 30-year fixed-rate mortgages with loan balances of less than $726,200 decreased to 6.75% from 6.81% with a down payment of 20% and points rising to 0.62 from 0.61.

Commercial Property Mortgage Delinquency Rate Advanced

The delinquency rate for mortgages backed by commercial properties rose in the fourth quarter of 2023, MBA reported in a separate report released on Wednesday.

Delinquency rates jumped to 6.5% of balances for loans backed by office properties and to 6.1% for lodging-backed loans.

Delinquencies for loans backed by retail properties remain elevated at 5.0%, matching the rate from the previous quarter and staying elevated since the onset of the pandemic.

About 96.8% of outstanding loan balances were current or less than 30 days late at the end of the third quarter, down from 97.3% at the end of the third quarter of 2023.

U.S. Indexes and Yields

The S&P 500 index decreased 0.4% to 4,773.12, and the Nasdaq Composite fell 0.7% to 14,843.08.

The yield on 2-year Treasury notes increased to 4.29%. 10-year Treasury notes advanced to 4.07%, and 30-year Treasury bonds edged up to 4.29%.

WTI crude oil decreased $1.40 to $71.03 a barrel, and natural gas prices decreased 11 cents to $2.78 a thermal unit.

Gold increased by $0.02 to $2,027.65 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.40.

U.S. Stock Movers

Charles Schwab decreased 1.3% to $63.51 after the financial services provider reported better-than-expected earnings but revenue fell short of market expectations.

U.S. Bancorp gained 0.3% to $41.49 after the regional bank reported lower-than-expected quarterly earnings.

China-linked stocks continued to drift lower for the second week this year after economic growth in the fourth quarter was below expectations.

JD.com, PDD Holdings, Alibaba Group Holdings, and Tencent Holdings declined between 4% and 6%.

Europe Movers: 888 Holdings, Antofagasta, Enel, Just Eat, Luxury Stocks, Renault, Wizz Air

European markets declined more than 1% after rate-cut hopes receded, China's GDP growth slowed to a three-decade low, and the prospect of a regional war in the Middle East rose after Iran stepped up attacks.

The DAX index decreased 1.1% to 16,397.04, the CAC-40 index fell 1.1% to 7,314.56, and the FTSE 100 index dropped 1.6% to 7,433.07.

The yield on 10-year German bonds edged up to 2.23%; French bonds inched higher to 2.76%; the UK gilts edged higher to 3.87%; and Italian bonds increased to 3.84%.

Just Eat Takeaway.com NV decreased 0.4% to 1,139.0 pence in a weak market after the food delivery company lifted its full-year core profit outlook.

Enel SpA declined 1.9% to €6.62 after the company launched a €1.75 billion bond offering.

Antofagasta plc declined 2.6% to 1,579.50 pence after the mining company released its annual production estimates.

Wizz Air Holdings fell 3.4% to 1,952.14 pence after the discount airline said it would pay an additional £1.2 million to customers in compensation.

Renault SA dropped 1.8% to €33.85 in a weak market, and the automaker reported global sales volume rose 9% from a year ago to 2.23 million in 2023. 

In the year, passenger car sales increased 6.9% from a year ago to 1.83 million and light commercial vehicle sales soared 20% to 397,594 vehicles. 

In France, Renault brand passenger car sales jumped 18% to 277,914 sales and light commercial vehicle sales advanced 13% to 112,569. 

Luxury fashion houses with significant sales in China declined after China's economy expanded at the slowest pace in nearly three decades.

Kering SA declined 2.6% to €349.55, LVMH dropped 2% to €652.90, and Hermes International fell 1.1% to €1,805.20.

888 Holdings PLC dropped 7.4% to 75.03 pence after the international sports betting and gambling company reported weak revenue in the fourth quarter and fiscal 2023.

European Markets Drop 1%, UK Inflation Accelerate In December

Stock market sentiment in Europe turned negative after policymakers in the region pushed back against the timing of rate cuts.

Moreover, market sentiment was weak at the opening after China's GDP in the fourth quarter expanded at a slower-than-expected pace of 5.2% in the fourth quarter.

China's GDP for 2023 also rose at the same rate of 5.2%, the slowest pace in three decades amid a protracted property crisis, weak consumer spending growth, and global uncertainties.

While China's economy is still growing at a faster rate than the economies of the eurozone and the U.S., growth has steadily declined from as high as 7% enjoyed in the 2010s.

Benchmark indexes in Frankfurt, Paris, and London declined more than 1% on the economic uncertainties and interest rate outlook.

UK Consumer Inflation Accelerated In December

The UK's annual inflation in December rose to 4% from 3.9% in November, the Office for National Statistics reported on Wednesday.

Inflation perked up for the first time in ten months after prices of tobacco and alcohol jumped 12.9% from 10.2%, reflecting a higher duty on tobacco, and recreation and culture inflation advanced to 5.7% from 5.2% in the previous month, respectively.

However, inflation for food and non-alcoholic beverages eased to 8% from 9.2% and for restaurants and hotels to 7% from 7.5%.

Europe Indexes and Yields

The DAX index decreased 1.1% to 16,397.04, the CAC-40 index fell 1.1% to 7,314.56, and the FTSE 100 index dropped 1.6% to 7,433.07.

The yield on 10-year German bonds edged up to 2.23%; French bonds inched higher to 2.76%; the UK gilts edged higher to 3.87%; and Italian bonds increased to 3.84%.

The euro edged lower to $1.087, the British pound inched lower to $1.267, and the U.S. dollar eased to 86.21 Swiss cents.

Brent crude advanced $1.67 to $76.64 a barrel, and the Dutch TTF natural gas decreased by €0.80 to €28.86 per MWh.

Europe Stock Movers

Just Eat Takeaway.com NV decreased 0.4% to 1,139.0 pence in a weak market after the food delivery company lifted its full-year core profit outlook.

Enel SpA declined 1.9% to €6.62 after the company launched a €1.75 billion bond offering.

Antofagasta plc declined 2.6% to 1,579.50 pence after the mining company released its annual production estimates.

Wizz Air Holdings fell 3.4% to 1,952.14 pence after the discount airline said it would pay an additional £1.2 million to customers in compensation.

Renault SA dropped 1.8% to €33.85 in a weak market, and the automaker reported a rise in global sales volume.

Luxury fashion houses with significant sales in China declined after China's economy expanded at the slowest pace in nearly three decades.

Kering SA declined 2.6% to €349.55, LVMH dropped 2% to €652.90, and Hermes International fell 1.1% to €1,805.20.

888 Holdings PLC dropped 7.4% to 75.03 pence after the international sports betting and gambling company reported weak revenue in the fourth quarter and fiscal 2023.

Weak Growth Drags Down China Stocks, and Prospects of a Wider Middle East War Overhangs Asian Markets

Stocks in Asia dropped sharply after China reported weaker-than-expected GDP growth and Iran launched drone strikes in Pakistan, Syria, and Iraq as the Israel-Hamas war spiraled into a wider war in the Middle East.

Market indexes in China declined sharply after a government report showed the economy expanded at a slower-than-expected pace and home prices fell.

The weaker-than-expected growth rate raised the prospect of downward earnings revisions.

The Hang Seng Index in Hong Kong plunged 3.2% to 15,362.56, and the CSI 300 index dropped 1% to 3,268.69.

GDP in the fourth quarter expanded 5.2% from the previous year and rose at the same rate in the full-year 2023, the National Bureau of Statistics reported Wednesday.

The economy accelerated in the fourth quarter after expanding by 4.9% in the third quarter.

In full-year 2023, the economy expanded at a faster pace than the 3% increase in 2022, but expectations of faster growth at the start of the year ran high.

Protracted property market slumps and weak growth in consumer spending held back the economy from recovering from the pandemic era.

Economists and investors were anticipating China's economy to expand at a faster pace of 5.3% to 5.5% in the fourth quarter.

Retail sales in December rose 7.4% from a year ago, and industrial output accelerated to 6.8% in the month from 6.6% in the prior month, the statistics bureau noted in separate reports released Wednesday.

New home prices in major cities in mainland China declined by 0.45% from the previous month, the sharpest decline since February 2015.

Alibaba Group, Tencent, and JD.com declined between 3% and 4%, and property developers extended losses of 4% after new home prices fell.

Longfor Group, China Resources Land, and China Overseas Land declined between 4% and 6%.

Iran conducted a "combination of missiles and drone strikes" targeting bases belonging to the Jaysh al-Dhulm, also known as the Jeysh al-Adl terrorist group, on Tuesday.

Iran said in mid-December that Jaish al-Adl stormed a police station in Sistan and Balouchestan province’s city of Rask, southeast of Iran, killing 11 Iranian police forces, according to Iran's state-aligned Tasnim news agency report today.

On Monday, Iran launched missile attacks in northern Iraq and Syria, and Iran-backed Houthi rebels stepped up their attacks in the Red Sea.

The prospect of a wider war disrupting crude oil supplies and merchant ship passage in the Red Sea kept investors in India and Asia on edge.

In Mumbai trading, the Nifty and Sensex indexes dropped as much as 1% in early trading after Iran conducted strikes in the southwest Baluchistan province of Pakistan.

The Nikkei index in Tokyo edged up 0.2% to 35,671.79, the ASX index in Sydney fell 0.3% to 7,393.10, and the KOSPI index dropped 2.3% to 2,440.10.

India Movers: HDFC Bank, ICICI Securities, ICICI Lombard, L&T, LTTS, PNC Infratech, TV18

Stocks in Mumbai dropped sharply on the worries of a wider war in the Middle East after Iran stepped up attacks on its neighbors and Houthi rebels continued their attacks on merchant ships in Red Sea lanes.

The Sensex index decreased 1,062.91 points to 72,065.86, and the Nifty index fell 293.80 points to 21,739.90.

On the Mumbai stock exchange, 112 stocks traded at their 52-week highs and 13 stocks traded at their 52-week lows.

HDFC Bank declined 5.7% to ₹1,582.25 after the largest private sector bank reported a weaker-than-expected quarterly profit.

Net income in the December quarter rose 34% to ₹16,373 crore, and net interest margin jumped 24% to ₹28,471 crore, missing the market estimate.

L&T Technology Service said consolidated operating revenue increased 12% to 2,422 crore and net income advanced to 336 crore from 297 crore a year ago.

ICICI Securities declined 2.5% to ₹764.95 after the brokerage firm reported quarterly results.

Revenue in the December quarter rose 50% to ₹1,322 crore, and net income soared 67% to ₹465 crore from a year ago, respectively.

ICICI Lombard General Insurance increased 6% to ₹1,458.55 after the company reported a sharp jump in premiums and investment income.

Net premium in the December quarter increased 13.5% from a year ago to ₹4,305 crore, and net profit rose 22.4% from a year ago to ₹431 crore.

TV18 Broadcast jumped 8.8% to ₹66.10 after the company swung to net profit in the latest quarter after the company stepped up investment in digital and sports channels.

Consolidated revenue in the December quarter decreased 5.2% to ₹1,676.19 crore, and the company suffered a loss of ₹55.83 crore compared to a profit of ₹37.81 crore a year ago.

PNC Infratech advanced 1.8% to ₹412.55 after the company received a 1,174 crore order from a Madhya Pradesh government agency for several projects.

Larsen & Toubro increased 0.5% to ₹3,593.90 after the company said it won several significant orders in India, including a railway electrification project worth at least ₹10,000 crore and orders from a private company in Oman.

Sensex and Nifty Drop 1% After Iran Attacks Pakistan

Stocks in Mumbai dropped sharply after Iran launched drone strikes in Pakistan, Syria, and Iraq as the Israel-Hamas war spiraled into a wider war in the Middle East.

The Nifty and Sensex indexes dropped as much as 1% in early trading after Iran conducted strikes in the southwest Baluchistan province of Pakistan.

Iran conducted a "combination of missiles and drone strikes" targeting bases belonging to the Jaysh al-Dhulm, also known as the Jeysh al-Adl terrorist group, on Tuesday.

Iran said in mid-December that Jaish al-Adl stormed a police station in Sistan and Balouchestan province’s city of Rask, southeast of Iran, killing 11 Iranian police forces, according to Iran's state-aligned Tasnim news agency report today.

On Monday, Iran launched missile attacks in northern Iraq and Syria, and Iran-backed Houthi rebels stepped up their attacks in the Red Sea.

The prospect of a wider war disrupting crude oil supplies and merchant ship passage in the Red Sea kept investors in India and Asia on edge.

India Indexes and Yields

The Sensex index decreased 838.67 points to 72,290.10, and the Nifty index fell 231.80 points to 21,800.50.

On the Mumbai stock exchange, 112 stocks traded at their 52-week highs and 13 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds eased 7.15%, and the Indian rupee edged lower to ₹83.14 against the U.S. dollar.

The gold price decreased by 0.1% to ₹61,995 per ten grams, and silver fell by 0.3% to ₹71,867 per kilo.

Crude oil decreased by 0.2% to ₹6,023 per barrel, and natural gas fell by 3.9% to ₹255.50 per thermal unit.

India Stock Movers

HDFC Bank declined 5.7% to ₹1,582.25 after the largest private sector bank reported a weaker-than-expected quarterly profit.

Net income in the December quarter rose 34% to ₹16,373 crore, and net interest margin jumped 24% to ₹28,471 crore, missing the market estimate.

L&T Technology Service said consolidated operating revenue increased 12% to 2,422 crore and net income advanced to 336 crore from 297 crore a year ago.

ICICI Securities declined 2.5% to ₹764.95 after the brokerage firm reported quarterly results.

Revenue in the December quarter rose 50% to ₹1,322 crore, and net income soared 67% to ₹465 crore from a year ago, respectively.

TV18 Broadcast jumped 8.8% to ₹66.10 after the company swung to net profit in the latest quarter after the company stepped up investment in digital and sports channels.

Consolidated revenue in the December quarter decreased 5.2% to ₹1,676.19 crore, and the company suffered a loss of ₹55.83 crore compared to a profit of ₹37.81 crore a year ago.

U.S. and World Markets Turn Lower Amid Rising Economic Uncertainties and Geopolitical Tensions

U.S. market averages turned lower after investors returned from a three-day holiday, and Treasury yields advanced as investors reviewed the latest earnings reports and debated the future direction of interest rates.

The S&P 500 index and the Nasdaq Composite edged down about 0.4% as investors debated future rate cuts and their timing.

Investors were also worried about the possibility of another bout of inflation amid rising supply chain disruptions for shipments between Asia and Europe.

Houthi rebels stepped up their attacks on merchant ships for the second day in a row in the Red Sea, forcing shipments to be diverted away from the Suze Canal.

Investors also bid up Morgan Stanley and Goldman Sachs stocks after the financial services companies reported better-than-expected quarterly results.

Spirit Airlines and JetBlue faced a new hurdle after a federal judge blocked the $3.8 billion merger plan between the two airlines.

Spirit Airlines plunged 50% to $7.43, and JetBlue advanced 4% to $5.08.

"The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” U.S. District Court Judge William Young said in his decision.

U.S. Indexes and Yields

The S&P 500 index decreased 0.5% to 4,760.08, and the Nasdaq Composite fell 0.4% to 14,909.30.

The yield on 2-year Treasury notes decreased to 4.22%. 10-year Treasury notes held steady at 4.0%, and 30-year Treasury bonds edged up to 4.23%.

WTI crude oil increased $0.55 to $72.06 a barrel, and natural gas prices decreased 14 cents to $2.94 a thermal unit.

Gold decreased by $28.51 to $2,025.92 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.12.

U.S. Stock Movers

Goldman Sachs rose 1.1% to $382.04 after the financial services company reported better-than-expected quarterly results on the back of strong performance in the asset management group.

Morgan Stanley increased 0.8% to $90.40 after the financial services company reported quarterly results that topped market expectations and were supported by strength in its investment banking unit.

European Markets Turn Lower After Rate Cut Hopes Fade

European markets declined after investors scaled back hopes of rate cuts in the near future.

Benchmark indexes in Frankfurt, Paris, and London traded down amid growing worries of a wider war in the Middle East, fading hopes of rate cuts, and persistent economic growth worries.

European policymakers drummed up their campaign against rate-cut hopes, and French central bank Governor Francois Villeroy de Galhau said it is too early to declare victory over inflation.

ECB policymaker Joachim Nagel said it was too early to discuss rate cuts, emphasizing that inflation remains too high, while delivering his prepared remarks at a gathering in Davos. Switzerland.

But the central bank's next move is likely to cut rates at some point this year, Villeroy de Galhau added during his comments delivered in Davos.

Yesterday, Austria's central bank governor, Robert Holzmann, said investors should not count on the European Central Bank cutting rates at all this year.

Investors reviewed the latest update on German inflation and UK wage growth.

Germany's December Inflation Rate Confirmed

Germany's consumer price inflation accelerated to 3.7% in December from 3.2% in November, the Federal Statistics Office, or Destatis, confirmed Tuesday the preliminary estimate released on January 4.

UK Wage Growth Slowed

Regular pay for UK wage earners increased 6.6% from a year ago in three months to November, the Office for National Statistics reported Tuesday.

The increase in wages, excluding bonuses, slowed from the downwardly revised 7.2% in the previous three-month period.

Wages, including bonuses, rose 6.5% in the three months to November.

The unemployment rate held steady at 4.2%, matching the rate in the previous three-month period.

Europe Indexes and Yields

The DAX index decreased 0.3% to 16,571.68, the CAC-40 index fell 0.2% to 7,3098.0, and the FTSE 100 index inched lower by 0.5% to 7,558.34.

The yield on 10-year German bonds edged up to 2.18%; French bonds inched higher to 2.76%; the UK gilts decreased slightly to 3.78%; and Italian bonds increased to 3.80%.

The euro edged lower to $1.08, the British pound inched lower to $1.267, and the U.S. dollar eased to 86.04 Swiss cents.

Brent crude advanced $0.07 to $78.07 a barrel, and the Dutch TTF natural gas decreased by €0.27 to €29.66 per MWh.

Europe Stock Movers

Energy and mining companies traded mixed after crude oil and metal prices turned higher in volatile trading.

BP plc rose 0.4% to 454.05 pence, and Shell plc decreased 0.5% to 2,447.90 pence.

Glencore PLC dropped 0.8% to 441.30 pence, Anglo American increased 0.3% to 1,830.40 pence, and Antofagasta decreased 0.4% to 1,617.0 pence.

Banks headed lower after European policymakers pushed back against the timing of rate cuts this year.

Deutsche Bank declined 1.2% to €11.79, Banco Santander declined 1.7% to €3.70, and UniCredit fell 0.6% to €25.46.

Asian Markets Turned Lower Ahead of China GDP and Retail Sales Data

Benchmark indexes in Asia traded down amid rising geopolitical tensions in the Middle East.

Market indexes in Tokyo, Shanghai, Hong Kong, Seoul, and Mumbai fell after Houthi rebels launched attacks in the Red Sea targeting U.S.-controlled ships.

Moreover, more shipping companies are avoiding the Red Sea shipping lanes to the Suez Canal and diverting shipments along the coast of South Africa.

But the shipment rerouting is disrupting supply chains between Asia and Europe and increasing the cost and time of shipments from India and Asia.

On the economic front, investors reviewed the latest update on international trade and the wholesale price index by India.

The trade deficit in December declined to a three-month low of $19.8 billion, the Commerce Ministry said late Monday.

A separate report showed that India's wholesale inflation increased to 0.73% in December, the office of the Economic Adviser reported on Monday.

Wholesale inflation edged higher after food prices rose 5.4%, primary article prices increased 5.8%, but fuel and power prices edged down 2.4%.

The Sensex index increased 0.08% to 73,384.57, and the Nifty index rose 0.07% to 22,112.70.

On the Mumbai stock exchange, 273 stocks traded at their 52-week highs and 7 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds eased 7.15%, and the Indian rupee edged lower to ₹82.94 against the U.S. dollar.

The Hang Seng index in Hong Kong fell 2.2% to 15,864.20 after property developers dropped a new low on debt default worries and a lack of government stimulus to spur demand.

The Hang Seng index dropped to a 14-month low and extended 2024 losses by 6%, after falling 14% in 2023 and for the fourth year in a row after foreign investors sold their holdings and avoided exposure to Chinese stocks.

The CSI 300 index in Shanghai traded down 0.2% to 3,275.57 ahead of the release of retail sales, GDP, and gross investment data on Wednesday.

China's economy is expected to expand at least 5.0% in 2023, according to economists interviewed by Ticker.com.

In Tokyo, the Nikkei index declined 0.5% to 35,721.08, and the index hovered near its 34-year high and traded in a tight range.

In Sydney, Australia, the ASX 200 index decreased 1% to 7,414.80 and dropped to a four-week low after energy and mining-related stocks led the decline.

U.S. Movers: Carrols Restaurant, Goldman Sachs, Morgan Stanley, Restaurant Brands

Goldman Sachs rose 1.1% to $382.04 after the financial services company reported better-than-expected quarterly results on the back of strong performance in the asset management group.

Morgan Stanley increased 0.8% to $90.40 after the financial services company reported quarterly results that topped market expectations and were supported by strength in its investment banking unit.

Tesla decreased 1.4% to $215.86 after chief executive Elon Musk sough to increase its voting control to 25% from the current 13%.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. 

Enough to be influential, but not so much that I can’t be overturned,” Musk urged in a post on social media platform X on Monday. 

Musk's post indicated unless he is compensated for his work in AI, robotics, and other emerging technologies, he prefers to build these businesses outside of Tesla. 

Restaurant Brands International increased 0.4% to $78.45 after the company said it plans to acquire the largest franchisee of Burger King for $1 billion in cash. 

Carrols Restaurant Group operates 1,000 Burger King locations and 60 Popeyes locations across the U.S.

Restaurant Brands offered $9.55 per share, 12% than Friday's close price of $8.42. 

Middle East Tensions Weigh On U.S. Market Sentiment, Major Averages Trend Lower

U.S. stocks inched lower and Treasury yields advanced as investors reviewed the latest earnings reports after returning from a three-day holiday. 

The S&P 500 index and the Nasdaq Composite edged up fractions as investors debated future rate cuts and their timings and possibilities of another bout of inflation amid rising supply chain disruptions for shipments between Asia and Europe.

Houthi rebels stepped up their attacks on merchant ships for the second day in a row in the Red Sea, forcing shipments to be diverted away from the Suze Canal.

Investors also bid up Morgan Stanley and Goldman Sachs stocks after the financial services companies reported better-than-expected quarterly results.

In overseas trading, European markets turned lower after policymakers pushed back on the hopes of rate cuts in the near future.

Market indexes in London, Paris, and Frankfurt decreased more than 0.5%, and the euro dropped to a five-week low against the U.S. dollar.

In Asia, market indexes in Hong Kong dropped to a new 14-month low and extended the losses of the last four years, and the CSI 300 index edged down ahead of the release of the GDP and retail sales data.

U.S. Indexes and Yields

The S&P 500 index decreased 0.3% to 4,799.92, and the Nasdaq Composite fell 0.4% to 15,041.60.

The yield on 2-year Treasury notes decreased to 4.22%. 10-year Treasury notes held steady at 4.0%, and 30-year Treasury bonds edged up to 4.23%.

WTI crude oil increased $0.45 to $73.08 a barrel, and natural gas prices decreased 4 cents to $3.04 a thermal unit.

Gold decreased by $16.16 to $2,038.42 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.12.

U.S. Stock Movers

Goldman Sachs rose 1.1% to $382.04 after the financial services company reported better-than-expected quarterly results on the back of strong performance in the asset management group.

Morgan Stanley increased 0.8% to $90.40 after the financial services company reported quarterly results that topped market expectations and were supported by strength in its investment banking unit.

Europe Movers: Air France KLM, Banks, Hugo Boss, Ocado, Resource Stocks, Spirent Communications

European stocks turned lower amid rising tensions in the Middle East and worries of resurgent inflation after supply chains were disrupted for shipments between Asia and Europe following the persistent attacks in the Red Sea lanes.

The DAX index decreased 0.6% to 16,515.75, the CAC-40 index fell 0.5% to 7,376.57, and the FTSE 100 index inched lower by 0.6% to 7,552.54.

The yield on 10-year German bonds edged up to 2.18%; French bonds inched higher to 2.76%; the UK gilts decreased slightly to 3.78%; and Italian bonds increased to 3.80%.

Energy and mining companies traded mixed after crude oil and metal prices turned higher in volatile trading.

BP plc rose 0.4% to 454.05 pence, and Shell plc decreased 0.5% to 2,447.90 pence.

Glencore PLC dropped 0.8% to 441.30 pence, Anglo American increased 0.3% to 1,830.40 pence, and Antofagasta decreased 0.4% to 1,617.0 pence.

Banks headed lower after European policymakers pushed back against the timing of rate cuts this year.

Deutsche Bank declined 1.2% to €11.79, Banco Santander declined 1.7% to €3.70, and UniCredit fell 0.6% to €25.46.

Air France KLM declined 2.8% to €11.69 after the company withdrew from its existing air cargo arrangements with the French shipping and logistics company CMA CMG.

Hugo Boss AG plunged 12% to €58.06 after the German fashion group reported lower-than-expected fourth-quarter operating earnings in its preliminary results.

Ocado Group gained 5.5% to 653.20 pence after the online grocery shopping company reported a 10.9% increase in its fourth quarter revenue and estimated profit in the full year.

Spirent Communications plc increased 7% to 123.90 pence after the telecom testing company said it has started the new year with a growing order book and conditions are favorable for the full-year outlook.

European Markets Turn Lower After Rate Cut Hopes Fade, UK Wage Growth Slowed

European markets declined after investors scaled back hopes of rate cuts in the near future.

Benchmark indexes in Frankfurt, Paris, and London traded down amid growing worries of a wider war in the Middle East, fading hopes of rate cuts, and persistent economic growth worries.

European policymakers drummed up their campaign against rate-cut hopes, and French central bank Governor Francois Villeroy de Galhau said it is too early to declare victory over inflation.

ECB policymaker Joachim Nagel said it was too early to discuss rate cuts, emphasizing that inflation remains too high, while delivering his prepared remarks at a gathering in Davos. Switzerland.

But the central bank's next move is likely to cut rates at some point this year, Villeroy de Galhau added during his comments delivered in Davos.

Yesterday, Austria's central bank governor, Robert Holzmann, said investors should not count on the European Central Bank cutting rates at all this year.

Investors reviewed the latest update on German inflation and UK wage growth.

Germany's December Inflation Rate Confirmed

Germany's consumer price inflation accelerated to 3.7% in December from 3.2% in November, the Federal Statistics Office, or Destatis, confirmed Tuesday the preliminary estimate released on January 4.

UK Wage Growth Slowed

Regular pay for UK wage earners increased 6.6% from a year ago in three months to November, the Office for National Statistics reported Tuesday.

The increase in wages, excluding bonuses, slowed from the downwardly revised 7.2% in the previous three-month period.

Wages, including bonuses, rose 6.5% in the three months to November.

The unemployment rate held steady at 4.2%, matching the rate in the previous three-month period.

Europe Indexes and Yields

The DAX index decreased 0.6% to 16,515.75, the CAC-40 index fell 0.5% to 7,376.57, and the FTSE 100 index inched lower by 0.6% to 7,552.54.

The yield on 10-year German bonds edged up to 2.18%; French bonds inched higher to 2.76%; the UK gilts decreased slightly to 3.78%; and Italian bonds increased to 3.80%.

The euro edged lower to $1.08, the British pound inched lower to $1.267, and the U.S. dollar eased to 86.04 Swiss cents.

Brent crude advanced $0.78 to $78.90 a barrel, and the Dutch TTF natural gas decreased by €0.26 to €29.67 per MWh.

Europe Stock Movers

Energy and mining companies traded mixed after crude oil and metal prices turned higher in volatile trading.

BP plc rose 0.4% to 454.05 pence, and Shell plc decreased 0.5% to 2,447.90 pence.

Glencore PLC dropped 0.8% to 441.30 pence, Anglo American increased 0.3% to 1,830.40 pence, and Antofagasta decreased 0.4% to 1,617.0 pence.

Banks headed lower after European policymakers pushed back against the timing of rate cuts this year.

Deutsche Bank declined 1.2% to €11.79, Banco Santander declined 1.7% to €3.70, and UniCredit fell 0.6% to €25.46.

Asian Markets Turn Lower Ahead of China GDP and Retail Sales Data

Benchmark indexes in Asia traded down amid rising geopolitical tensions in the Middle East.

Market indexes in Tokyo, Shanghai, Hong Kong, Seoul, and Mumbai fell after Houthi rebels launched attacks in the Red Sea targeting U.S.-controlled ships.

Moreover, more shipping companies are avoiding the Red Sea shipping lanes to the Suez Canal and diverting shipments along the coast of South Africa.

But the shipment rerouting is disrupting supply chains between Asia and Europe and increasing the cost and time of shipments from India and Asia.

On the economic front, investors reviewed the latest update on international trade and the wholesale price index by India.

The trade deficit in December declined to a three-month low of $19.8 billion, the Commerce Ministry said late Monday.

A separate report showed that India's wholesale inflation increased to 0.73% in December, the office of the Economic Adviser reported on Monday.

Wholesale inflation edged higher after food prices rose 5.4%, primary article prices increased 5.8%, but fuel and power prices edged down 2.4%.

The Sensex index increased 0.08% to 73,384.57, and the Nifty index rose 0.07% to 22,112.70.

On the Mumbai stock exchange, 273 stocks traded at their 52-week highs and 7 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds eased 7.15%, and the Indian rupee edged lower to ₹82.94 against the U.S. dollar.

The Hang Seng index in Hong Kong fell 2.2% to 15,864.20 after property developers dropped a new low on debt default worries and a lack of government stimulus to spur demand.

The Hang Seng index dropped to a 14-month low and extended 2024 losses by 6%, after falling 14% in 2023 and for the fourth year in a row after foreign investors sold their holdings and avoided exposure to Chinese stocks.

The CSI 300 index in Shanghai traded down 0.2% to 3,275.57 ahead of the release of retail sales, GDP, and gross investment data on Wednesday.

China's economy is expected to expand at least 5.0% in 2023, according to economists interviewed by Ticker.com.

In Tokyo, the Nikkei index declined 0.5% to 35,721.08, and the index hovered near its 34-year high and traded in a tight range.

In Sydney, Australia, the ASX 200 index decreased 1% to 7,414.80 and dropped to a four-week low after energy and mining-related stocks led the decline.

India Movers: Angle One, Aster DM, BLS International, HDFC, Jio Financial, RVNL

Stocks in Mumbai turned lower amid rising tensions in the Middle East after Houthi rebels attacked a U.S. Navy ship in the Red Sea.

The growing attacks in the Red Sea are forcing shipping companies to divert shipments away from the Suze Canal, increasing shipment time and costs.

The Sensex index decreased 570.02 points to 71,925.24, and the Nifty index fell 176.65 points to 21,688.75.

On the Mumbai stock exchange, 273 stocks traded at their 52-week highs and 7 stocks traded at their 52-week lows.

Jio Financial Services declined 3.5% to ₹256.45 after the company reported quarterly results.

Consolidated revenue in the December quarter fell 32% from the previous quarter to ₹414.3 crore, and net income declined 56% to ₹293.8 crore.

HDFC Bank declined 0.3% to ₹1,666.75 ahead of the release of the company's quarterly results.

The largest private sector bank in India is expected to show a decline in earnings of around 1.3% from the previous quarter, when it reported earnings of ₹15,976 crore.

Angle One Limited dropped 9.4% to ₹3,493.05 after the stock brokerage company reported profit in the December quarter rose 14% to ₹260 crore.

Housing finance companies were the focus after the Reserve Bank of India matched the rules for attracting customer deposits with the recently revised rules for non-bank finance companies.

LIC Housing Finance rose 0.05% to ₹578.40, and Can Fin Homes added 0.3% to ₹766.40.

Aster DM Healthcare rose 8.7% to ₹434.75 after the company said it plans to distribute the majority of the proceeds from the sale of its business in the Middle East to shareholders through a special dividend of ₹120 per share.

Khanij Bidesh India signed an agreement with Argentina-controlled CAMYEN SE to explore four lithium mining blocks in the Catamarca province.

Khanij Bidesh is a joint venture between Nalco, Hindustan Copper, and the Mineral Exploration Company.

Nalco gained 4% to ₹141.20, and Hindustan Copper jumped 2.6% to ₹266.50.

India currently imports about $3 billion of lithium, and 95% of these imports originate in China.

The government has signed a similar lithium exploration deal with Australia to diversify its lithium sourcing.

Rail Vikas Nigam jumped 3% to ₹227.10, and the company is likely to win a ₹251 crore contract to develop a power transmission project in Madhya Pradesh.

BLS International Services increased 1% to ₹395.35 after the company's UAE subsidiary agreed to acquire iData Danismanlik for 50 million euros, or ₹450 crore.

IDATA provides visa application support services in Turkey.

European and Asian Markets Diverge, Investors Keep Rate-cut Hopes Alive

World markets closed mixed in Monday's trading, and the U.S. financial markets were closed for Martin Luther King's Day.

Market indexes in Tokyo continued to advance on the hopes that the Bank of Japan would keep its monetary stimulus intact despite the recent rise in inflation, but markets in China struggled after the People's Bank of China did not announce any economic stimulus measures while keeping the medium-term rates steady.

Asian markets have diverged over the last fifteen months, with the market indexes in India and Japan surging ahead, but the indexes in China continued to drift lower, extending losses for the fourth year in a row.

In Europe, market indexes struggled to advance after the German economy contracted in 2023 and eurozone industrial activities declined for the third month in a row.

German consumers are facing dual headwinds of rising interest rates and elevated inflation, and businesses are struggling with elevated input costs and weak domestic and external demands.

The eurozone economy is expected to struggle in 2024 amid weak consumer demand and high interest rates.

Moreover, the European Central Bank is likely to keep interest rates higher for longer in its efforts to bring down inflation to 2% while keeping the unemployment rate low and avoiding a full-blown recession.

European Markets Closed Down After Choppy Trading

European markets were on the defensive in Monday's trading, and investors reviewed the economic data from Germany and the eurozone.

Benchmark indexes in Frankfurt, Paris, and London declined about 0.3% after Germany's economy contracted in 2023 and wholesale prices fell at a slower pace in December.

Market indexes in Europe are expected to trade in a tight range, and the financial markets are closed on Martin Luther King Day.

In Asia, the Nikkei extended gains by 0.9% to 35,901.79, and the benchmark indexes traded at a new 34-year high on the expectation that the Bank of Japan is not likely to end its ultra-loose monetary policy soon.

Market indexes in Hong Kong and the mainland China declined after the People's Bank of China held its one-year medium-term loan rate at 2.5%, dashing hopes of an unexpected rate cut.

Markets in India inched higher into record territory after investors reacted to positive earnings from domestic corporations, and retail inflation stayed within the range preferred by the Reserve Bank of India.

German Economy Stalled In 2023

The German economy adjusted for inflation and fell by 0.3% in 2023, following a revised 1.8% expansion in 2022, the Federal Statistics Office, or Destatis, reported Monday.

The largest economy in the region faced multiple headwinds as consumers and businesses battled high inflation and rising interest rates, and weak external demand kept export activity growth in check.

Industrial output declined 2%, largely because of weaker production in the energy supply sector; manufacturing output fell 0.4% due to the ongoing weakness in vehicle manufacturing; and construction activities rose 0.2% despite high building costs and elevated interest rates.

Germany's economy at the end of 2023 was larger by 0.7% from its level in 2019, the year before the onset of the pandemic, when the economy plunged 3.8%.

Most service sectors expanded their economic activities in 2023, but economic growth slowed from the previous year.

On the demand side, private consumption adjusted for price declined 0.8%, investment fell 0.3%, and government spending dropped 1.7%, the first decline in 20 years after the government withdrew medical care provided during the coronavirus pandemic era between 2000 and 2022.

German Wholesale Prices Decline Extended to Ninth Month

Germany's wholesale price declined 2.6% from a year ago in December, Destatis said in a separate report released Monday.

The wholesale price declined, slowed from 3.6% in the previous month, and fell for the ninth month in a row.

On a monthly basis, prices fell 0.3% in December after falling at a 0.2% monthly rate in November.

Eurozone Activities Contracted Third Consecutive Month in November

Elsewhere in the region, eurozone industrial activities declined by 0.3% in November, Eurostat reported Monday.

Industrial activities declined for the third month in a row after durable consumer goods output declined at a faster pace of 2.0% compared to 1.0% in October.

The production of non-durable consumer goods output rose 1.2%, matching the same pace in October.

The industrial activities shrank by 6.8% from a year ago and extended the contraction for the ninth month in a row.

Europe Indexes and Yields

The DAX index decreased 0.5% to 16,626.08, the CAC-40 index fell 0.7% to 7,414.33, and the FTSE 100 index inched lower by 0.4% to 7,594.91.

The yield on 10-year German bonds edged up to 2.18%; French bonds inched higher to 2.71%; the UK gilts held steady at 3.80%; and Italian bonds increased to 3.78%.

The euro edged lower to $1.093, the British pound inched lower to $1.271, and the U.S. dollar eased to 85.44 Swiss cents.

Brent crude advanced $0.15 to $78.12 a barrel, and the Dutch TTF natural gas increased by €2.05 to €29.95 per MWh.

Taiwan Stocks Advance After DPP Wins Presidential Election

In Asia, Tokyo stock markets hovered near a 34-year high, and the Taiwan Weighted Index advanced 0.4% after the ruling Democratic Progressive Party won the presidential election for the third consecutive time.

William Lai Ching-te won the presidential election on Saturday by winning 40%, or 5.59 million votes, but neither of the three contesting parties won an outright majority in the Legislative Yuan or the governing parliament.

The DPP lost its majority in the 113-member legislative body to 51 seats from 61, and the rival KMT increased its tally by 14 to 52 seats.

Elsewhere in the region, the Hang Seng Index decreased 0.6% to 16,190.59 and the CSI 300 index dropped 0.2% to 3,278.51 after the People's Bank of China held its rates  steady and dashed the hopes of a surprise rate cut.

The central bank held its one-year policy rate on medium-term lending facilities at 2.5%, and the central bank injected 216 billion yuan into the financial system via the facility.

Logan Group in Hong Kong traded up 5.5% to HK$0.63 after the struggling developer pledged to cut its total debt load by $3 billion and speed up its debt repayment plan.

Some key creditors agreed to the company's plan to repay offshore debt and a shareholder loan of $8 billion through cash and new securities over a nine-year period.

In Tokyo, the Nikkei index increased 1% to 35,930.42, and in Seoul trading, the KOSPI index declined 0.2% to 35,930.42.

Tech stocks led the gainers in Tokyo trading on the receding hopes of a rate cut by the U.S. Federal Reserve.

India Stocks Advanced On Earnings Optimism, Retail Inflation Accelerated

Stocks in Mumbai looked up after a week of volatile trading amid rising tensions in the Red Sea, and investors reviewed the latest update on inflation and industrial production data.

Consumer price inflation in December accelerated to 5.69%, following 5.55% in October, the statistical agency reported late Friday.

The rise in inflation was driven by elevated food prices following unseasonal rain in several parts of the nation, disrupting food supplies.

Despite the rise, inflation still stayed within the 2%–6% range preferred by the Reserve Bank.

Industrial production plunged to an increase of 2.4% in November from the revised 11.6% rise in October, the statistical agency announced in a separate report on Friday.

The growth in activities in manufacturing, mining, and electricity generation dropped sharply in the month.

The growth in manufacturing activities plunged to 1.2% from 6.7%, mining slowed to 6.8% from 9.7%, and electricity declined to 5.8% from 12.7% in the month a year ago.

India Indexes and Yields

The Sensex index increased 759.49 points to 73,327.94, and the Nifty index rose 202.95 points to 22,097.45.

On the Mumbai stock exchange, 459 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 edged up 7.17%, and the Indian rupee edged lower to ₹82.83 against the U.S. dollar.

The gold price increased by 0.4% to ₹62,591 per ten grams, and silver rose by 0.4% to ₹72,770 per kilo.

Crude oil increased by 0.2% to ₹6,204 per barrel, and natural gas fell by 0.7% to ₹263.60 per thermal unit.

Europe Movers: Atos, Commerzbank, Crest Nicholson, Dassault Aviation, Filtronic, Kontron, PageGRoup

European markets traded in a tight range with a downward bias after Germany's GDP shrank in 2023 and eurozone industrial activities declined for the third month in a row in December. 

The DAX index increased 0.9% to 16,696.72, the CAC-40 index rose 1.1% to 7,469.05, and the FTSE 100 index inched higher by 0.7% to 7,629.48.

The yield on 10-year German bonds edged down to 2.16%; French bonds inched lower to 2.69%; the UK gilts edged down to 3.80%; and Italian bonds decreased to 3.76%.

Europe Stock Movers

Commerzbank AG advanced 1.7% to €11.54 on speculation that the company  is in merger talks with Deutsche Bank. 

Deutsche Bank declined 0.7% to €11.97. 

Dassault Aviation dropped 5.7% to €178.80 after the French aircraft maker delivered fewer than expected aircrafts in 2023.  

Rafael aircraft orders in 2023 declined to 60 compared to 92 in 2022 and 23 Falcon aircraft orders were received compared to 64 in the previous year. 

Rafael aircraft deliveries decreased to 13 from 14 and Falcon aircraft deliveries eased to 26 from 32 in the previous year. 

However, Rafael aircraft backlog at the end of 2023 increased to 211 from 164 and  Falcon aircraft order rose to 84 from 87 a year ago. 

Atos SE dropped 13.5% to €4.21 after the company said free cash flow is likely to be slightly lower than expected in the second half of the year.

Kontron AG rose 1.6% to €21.60 after the IoT company estimated net income in 2024 to exceed €87 million. 

Filtronic Plc increased 3.8% to 21.81 pence after the maker of aerospace and defense infrastructure products won an order from QientiQ, a global defense company. 

Crest Nicholson Holdings PLC dropped 5.4% to 206.80 pence after the homebuilder lowered its profit outlook. 

PageGroup Plc decreased 2.2% to 446.45 pence after the UK-based recruiting company said current quarter earnings are likely to fall below its estimate on the weak demand.