Europe Movers: Aviva, CRH, Entain, Luxury Stocks, Resource Stocks, SBB AB

European markets were under pressure on the rate uncertainties and looming economic slowdown as cumulative effect of higher interest rates negatively impact region's economy. 

The DAX index decreased 0.7% to 15,455.77, the CAC-40 index fell 0.5% to 7,147.40 and the FTSE 100 index fell 0.6% to 7,640.31. 

The yield on 10-year German bonds increased to 2.82%, French bonds traded higher to 3.75%, the UK gilts edged up to 4.31% and Italian bonds rose to 4.66%.

China-exposed luxury stocks in Paris declined between 2% and 3% and the UK-based mining companies fell between 1% and 2% on the ongoing China property market woes. 

China's largest property company and the most indebted property group in the world said it is not able to issue more debt because of ongoing investigation in its domestic subsidiary. 

Swedish property SBB AB jumped 26% to kr kr3.79 after the company agreed to handover control of a portfolio of school buildings to Canada-based Brookfield Asset Management Ltd. 

Entain Plc plunged 11.5% to 931.0 pence after the online gambling platform issued revenue alert for the third quarter and full-year. 

CRH added 2.2% to 4,459.0 pence after the building material company announced its plan to repurchase 17.7 million shares. 

Aviva Plc declined 1.3% to 393 pence after the UK-based insurance group agreed to acquire AIG's UK life insurance business for £460 million and expand its customer base by 1.3 million individuals and 1.4 million group members. 

European Bonds Yields Reach 12-year Highs Amid Expectations of Higher Rates

European markets extended losses and investors debated future rate path and looming global economic slowdown. 

Benchmark indexes in Frankfurt, Paris and London extended previous weeks losses after the yields on European bonds traded at one-decade high. 

German bond yields jumped to the level last seen in 2011 and investors expected higher rates to persist as central bankers struggle with elevated inflation.

The euro edged lower against the dollar after European Central Bank Governing Council member Francois Villeroy de Galhau supported the case for higher interest rates to stay longer. 

ECB President Christine Lagarde is scheduled to testify before the European Commission's Committee on Economic and Monetary Affairs later in the day, and investors looking for clues to the innerworkings of the economy after recently the central bank lifted rates 10th time in a row. 

Market sentiment has been steadily shifting away from stocks as bond yields advance, crude oil hover at this year's high, inflation stays above the target range and euro drifts lower in the last two months. 

Europe Indexes & Yields

The DAX index decreased 0.7% to 15,455.77, the CAC-40 index fell 0.5% to 7,147.40 and the FTSE 100 index fell 0.6% to 7,640.31. 

The yield on 10-year German bonds increased to 2.82%, French bonds traded higher to 3.75%, the UK gilts edged up to 4.31% and Italian bonds rose to 4.66%.

The euro edged lower to a three-month low to $1.064, the British pound to $1.223 and the U.S. dollar fetched 90.94 Swiss cents.

Natural gas prices continued to climb higher for the fifth day in a row amid supply worries, despite elevated inventories in the region. 

Norway's Gassco extended production shutdown at its Skarv field by a week to October 8. 

Investors have been bidding up prices on the production disruptions worries by extreme weather events and prolonged outages at the U.S. LNG shipment terminals amid ongoing Russia's invasion of Ukraine. 

Brent crude increased $0.70 to $93.31 a barrel and the Dutch TTF natural gas edged higher €2.96 to €42.73 per MWh.

Europe Stock Movers 

China-exposed luxury stocks in Paris declined between 2% and 3% and the UK-based mining companies fell between 1% and 2% on the ongoing China property market woes. 

China's largest property company and the most indebted property group in the world said it is not able to issue more debt because of ongoing investigation in its domestic subsidiary. 

Swedish property SBB AB jumped 26% to kr kr3.79 after the company agreed to handover control of a portfolio of school buildings to Canada-based Brookfield Asset Management Ltd. 

Entain Plc plunged 11.5% to 931.0 pence after the online gambling platform issued revenue alert for the third quarter and full-year. 

CRH added 2.2% to 4,459.0 pence after the building material company announced its plan to repurchase 17.7 million shares. 

Aviva Plc declined 1.3% to 393 pence after the UK-based insurance group agreed to acquire protection business in the UK owned by AIG.   

U.S. Movers: Activision Blizzard, Arm Holdings, Ford Motor, McDonald's, Scholastic Corp

McDonald's Corp advanced 0.7% to $273.0 after the fast food chain operator said it plans to increase its royalty fees charged to franchisee operators to 5% from 4%. 

McDonald's has not increased the fee for several decades but the company also charges for store rent, digital infrastructure and other marketing services.  

Ford Motor Company increased 2.5% to $12.51 after CNBC suggested that the company is making progress in negotiations with striking members of the United Auto Workers union. 

Scholastic Corp dropped 14.5% to $33.28 after the publishing company reported lower-than-expected revenue and earnings in its latest quarter. 

Revenue in the fiscal first quarter ending in August declined 13% to $228.5 million reflecting continuing softness in retail sales. 

Net loss surged to $74.2 million from $45.5 million and diluted loss per share expanded to $2.33 from $1.33 a year ago. 

Activision Blizzard Inc gained 1.9% to $93.93 after the U.K. regulators said new proposal from Microsoft met several terms required to clear the purchase of game developer for $69 billion.  

Arm Holdings Plc decreased 2.6% to $50.77 and the advanced chip designer traded below its initial public offering price of $51 a share priced on September 14.  

Instacart declined 2.1% to $30.03 and barely traded above its initial public offer price of $30 a share on September 19. 

U.S. Indexes Trim Weekly Losses Amid Looming Federal Government Shutdown, Auto Strike Expands

Market indexes advanced on Wall Street in Friday's trading but rate worries overshadowed market sentiment. 

Benchmark indexes gained after investors searched for bargains and trimmed weekly losses to just over 2%. 

Investors reviewed the growing possibilities of the federal government shutdown as lawmakers of both parties struggle to find common ground to pass budget. 

If the U.S. House of Representatives fail to agree on spending bill by the end of the month, which also marks the end of fiscal year for the federal government, several branches of the non-essential services will shut down beginning October 1. 

Automakers were also in focus after the United Auto Workers Union targeted strikes at more plants owned by Stellantis and General Motors. 

U.S. short term Treasury notes yields traded near 16-year highs as investors adjust to one possible rate hike later in the year and rates staying elevated in 2024. 

U.S. Indexes & Yields 

The S&P 500 index increased 0.5% to 4,349.05 and the Nasdaq Composite advanced 0.8% to 13,325.59. 

The yield on 2-year Treasury notes hovered at 5.11%, 10-year Treasury notes inched higher to 4.43% and 30-year Treasury bonds edged up to 4.56%. 

Crude oil increased $1.10 to $90.71 a barrel and natural gas prices declined 1 cent to $2.60 a thermal unit. 

The dollar index edged higher to 105.47, the level last seen in March and extended gains from the low of 99.85 on July 13. 

U.S. Stock Movers 

McDonald's Corp advanced 0.7% to $273.0 after the fast food chain operator said it plans to increase its royalty fees charged to franchisee operators to 5% from 4%. 

McDonald's has not increased the fee for several decades but the company also charges for store rent, digital infrastructure and other marketing services.  

Ford Motor Company increased 2.5% to $12.51 after CNBC suggested that the company is making progress in negotiations with striking members of the United Auto Workers union. 

Scholastic Corp dropped 14.5% to $33.28 after the publishing company reported lower-than-expected revenue and earnings in its latest quarter. 

Revenue in the fiscal first quarter ending in August declined 13% to $228.5 million reflecting continuing softness in retail sales. 

Net loss surged to $74.2 million from $45.5 million and diluted loss per share expanded to $2.33 from $1.33 a year ago. 

Activision Blizzard Inc gained 1.9% to $93.93 after the U.K. regulators said new proposal from Microsoft met several terms required to clear the purchase of the company. 

Arm Holdings Plc decreased 2.6% to $50.77 and the advanced chip designer traded below its initial public offering price  of $51 a share priced on September 14.  

Europe Movers: Adevinta, AstraZeneca, Mothercare, Sanofi, Tele2, Telenor

Mothercare Plc declined 3.5% to 4.01 pence after the children's apparel retailer said the company is nearing the completion of refinancing. 

AstraZeneca Plc increased 2.2% to 11,136.04 pence after the company said it found "statistically significant and clinically meaningful" results in a phase III trial for a common type of breast cancer.

Sanofi SA decreased 0.2% to €102.26 after the company said recent developments in the currency markets will negatively impact its third quarter sales between 7.5% and 8.5% and earnings per share between 8.5% and 9.5%. 

Tele2 AB Class B increased 0.5% to skr 86.60 and Telenor ASA advanced 0.9% to €10.87 after the two companies joint venture N4M acquired operating license in Sweden for 900, 2100 and 2600 MHz through an auction for skr 1.475 billon.  

Adevinta ASA jumped 22.1% to €9.13 after the Norwegian marketplace operator confirmed that it has received a takeover offer from a consortium led by Permira and Blackstone. 

Bond Yields Advanced In Europe, Euro and Pound Extended 8-week Losses

Interest rate worries dominated stock markets and bond yields advanced across the Euro Area. 

Investors are adjusting to a new reality that interest rates are far from peak rates and central are more likely to continue with rate hike campaigns in the months ahead. 

There was a widespread belief among investors that rate are nearing peaks and central banks are preparing to lower rates in the months ahead. 

However, elevated inflation and the recent rebound in energy prices have forced investors to reevaluate rate path scenario and terminal rate levels expectations. 

The British pound extended 8-week decline, a day after the Bank of England held interest rates steady for the first time since November 2021.   

The bond yields in the Euro Area turned volatile after a survey showed that economy in the currency union is likely to contract in the third quarter. 

Europe Indexes & Yields

The DAX index decreased 0.1% to 15,555.87, the CAC-40 index fell 0.4% to 7,182.29 and the FTSE 100 index jumped 0.7% to 7,731.21. 

The yield on 10-year German bonds increased to 2.75%, French bonds traded higher to 3.20%, the UK gilts edged up to 4.29% and Italian bonds rose to 4.56%.

The euro edged lower to a three-month low to $1.063, the British pound to $1.225 and the U.S. dollar fetched 90.65 Swiss cents.

Brent crude increased $0.70 to $94.01 a barrel and the Dutch TTF natural gas edged higher €0.25 to €36.36 per MWh.

Europe Stock Movers 

Mothercare Plc declined 3.5% to 4.01 pence after the children's apparel retailer said the company is nearing the completion of refinancing. 

AstraZeneca Plc increased 2.2% to 11,136.04 pence after the company said it found "statistically significant and clinically meaningful" results in a phase III trial for a common type of breast cancer.

Sanofi SA decreased 0.2% to €102.26 after the company said recent developments in the currency markets will negatively impact its third quarter sales between 7.5% and 8.5% and earnings per share between 8.5% and 9.5%. 

Tele2 AB Class B increased 0.5% to skr 86.60 and Telenor ASA advanced 0.9% to €10.87 after the two companies joint venture N4M acquired operating license in Sweden for 900, 2100 and 2600 MHz through an auction for skr 1.475 billion. 

Adevinta ASA jumped 22.1% to €9.13 after the Norwegian marketplace operator confirmed that it has received a takeover offer from a consortium led by Permira and Blackstone. 

Fed Funds Rate Left Unchanged, 2023 GDP Growth Estimate Revised Higher

The Federal Reserve said it will hold the fed funds target range at 22-year high between 5.25% and 5.50% but also held out for another rate hike later in the year, after the conclusion of two-day meeting. 

Policymakers appeared divided after mixed economic signals, but committee members prefer more restrictive interest rate policy in future. 

The Fed's projection released showed that policymakers are likely to increase rates higher one more time at the next meeting in November, but are also estimating fewer rate cuts in 2024. 

Policymakers now estimate the fed funds rate at 5.6% by the year's end, the same as in the June forecast, while rates are expected to be higher at 5.1% in 2024, compared to 4.6% estimated at the end of June meeting.

Committee members sharply revised higher economic growth outlook to 2.1% from the previous estimate of 1.0% released in June, and 2024 GDP rate of 1.5% compared to 1.1%. 

The economic growth forecast suggested that members are not looking for a recession this year or next. 

The committee members also revised slightly higher inflation outlook, as measured by the Price Consumption Expenditure Index, to 3.3% from 3.2% but the was unrevised at 2.4% in 2024. 

The core PCE rate in 2023 was revised slightly lower to 3.7% from 3.9% but the alternative measure of inflation was left unchanged for 2024 at 2.6%. 

The unemployment rate forecast was revised lower to 3.8% from 4.1% in 2023 and to 4.1% from 4.5% in 2024.

Despite multiple rate hikes by the Federal Reserve over the last seventeen months, inflation has stayed above the Fed's target rate because inflation pressures have broadened from commodities and manufactured goods to services and wages. 

The policymakers have little influence over the direction of the commodities prices, like metals and energy, but hold a larger sway on the direction of mortgage rates and borrowing rates for corporations and consumers. 

Asian Markets Fall Following Losses In New York, Japan Holds Rates Steady

Market indexes in Asia rebounded and investors reacted to local news amid widespread selloff in Europe and in the U.S. 

In overnight trading, the S&P 500 index and the Nasdaq Composite index declined about 1.6% after smaller-than-expected weekly jobless claims suggested persistent tight labor market conditions. 

U.S. market indexes extended weekly losses to over 3% on the worries that the Federal Reserve is more likely to keep rates higher well into 2024. 

However, bargain hunting lifted market indexes in China but sentiment remained weak in India, Korea and Japan. 

The ongoing weakness in tech stocks kept the Nikkei down in Friday's trading and for the week and investors reviewed inflation data and rate decisions from the Bank of Japan. 

BoJ Holds Interest Rates 

The Bank of Japan left its key lending rate at -0.1% and maintained its ultra-loose monetary policy intact with its target range between 0% and 0.25% in an unanimous vote on Friday. 

Japan Consumer Inflation Slowed In August 

Japan's consumer price index edged lower to 3.2% on an annual basis in August, the Ministry of Internal Affairs and Communications reported Friday. 

Annual inflation dropped to a three-month low after a faster decrease in food prices of 12.3% from 9.6% overwhelmed the increase in food prices by 8.6% from 8.8% in the previous month. 

Core rate of inflation, which excludes volatile food and energy prices, was unchanged at a four-month low of 3.1%. 

On a monthly basis, consumer inflation increased 0.2%, slower than a three-month high 0.4% rise in July.   

Asia Market Indexes 

In Friday's trading, the Nikkei index decreased 0.3% to 32,486.52 following the persistent weakness in tech stocks all week. 

Market indexes in China rebounded after foreign investors appeared for bargain hunting. 

Foreign investors purchased 310 million yuan or $42 million on-shore listed stocks on Friday, the largest inflow in two weeks. 

Stock Connect data also showed foreign investors sold $15 billion of stocks in the previous six weeks. 

In China trading, the Shanghai SSE Composite index inched up 0.8% to 3,108.45 and the Hang Seng index increased 1.2% to 17,868.68 and the KOSPI index decreased 0.3% to 2,508.73. 

China's yuan edged slightly higher to 7.29 in offshore trading but hovered near a 16-year low after about $68 billion of capital outflow between July and August. 

The Sensex index declined 0.1% to 66,157.68 following the overnight decline in New York trading and elevated crude oil prices also kept resurgent inflation worries alive. 

In the week, the Nikkei index decreased 0.3%, the SSE Composite index declined 0.1%, the Hang Seng index fell 1.1%, the Sensex dropped 2.2% and the KOSPI index plunged 3.0%. 

Global Markets Selloff Extends to Second Day On Rate Jitters

Market sentiment swung to caution and worries of rate path dominated  trading on Wall Street. 

In a broad market selloff, popular indexes trended down for the third day this week and trading in crude oil in the last three weeks added to market gloom on the worries of resurgent inflation because of higher oil prices. 

in influencing driven by higher energy and commodities prices, and the higher 

Market averages deepened weekly losses and Treasury yields jumped to multi-year highs after the Federal Reserve signaled rates are likely to stay higher for a longer time. 

Market averages declined after weekly jobless claims indicated strong labor market conditions, suggesting that policymakers may opt for another rate hike at the next meeting.

Initial jobless claims for the week ending September 16 declined 20,000 to 201.,000, the Department of Labor reported  Thursday. 

The initial jobless claims were the lowest since January, and continuing claims decreased 21,000 to an eight-month low of 1.662 million, suggesting unemployed workers are able to find new jobs in relatively shorter duration. 

Treasury yields jumped to multi-year highs as investors adjust to higher interest rate scenario and the U.S. economy is likely to avoid a recession in 2023. 

The yield on 2-year Treasury notes jumped to a level since 2007 and 10-year Treasury notes reached the highest level in 15 years after the release of weekly jobless report. 

U.S. Indexes & Yields 

The S&P 500 index declined 1.5% to 4,330.00 and the Nasdaq Composite decreased 1.8% to 13,223.99. 

The yield on 2-year Treasury notes hovered at 5.17%, 10-year Treasury notes inched higher to 4.47% and 30-year Treasury bonds edged up to 4.52%. 

Crude oil decreased $0.05 to $89.59 a barrel and natural gas prices declined 1 cent to $2.77 a thermal unit. 

The dollar index edged higher to 105.58, the level last seen in March and extended gains from the low of 99.85 on July 13. 

U.S. Stock Movers 

Klaviyo Inc decreased 1.7% to $32.21 after the company completed its initial public offering and sold 19.2 million shares at $30 each, 

The stock of the marketing software automation company opened at $36.75 and closed at $32.76, about 9% higher than its price.

KB Home declined 4% to $46.10 despite the home builder reporting quarterly results that met investor expectations. 

Revenue in the fiscal third quarter ending in August fell to $1.59 billion from $1.84 billion and the delivered homes declined 7% to 3,375 from a year ago. 

Higher mortgage rates negatively impacted home prices and average selling price in the quarter declined to $466,300 compared to $508,700 a year ago. 

The home building operating income margin declined to 11.3% from 17.7% and housing gross profit margin fell 520 basis points to 21.5%. 

Net income declined to $149.9 million from $255.3 million and diluted earnings per share and diluted earnings per share fell to $1.80 from $2.86 a year ago. 

Starbucks Corp decreased 25 cents to $94.94 after the company said announced to hike its quarterly dividend by 7.5% to 57 cents a share from 53 cents payable on November 24 to shareholders on record November 10. 

The coffee retailer opened a $220 million distribution and manufacturing facility in China, second largest market for the company. 

Darden Restaurants, Inc fell 1.5% to $147.72 after the company said same store sales at its comparable fine dining locations declined 2.8% in the fiscal first quarter ending on August 27. 

Consolidated comparable sales increased 5% driven by rise of 6.0% at Olive Garden stores and 8.1% jump at Long Horn Steak House locations.  

Revenue in the quarter increased to $2.7 billion from $2.4 billion and net income rose to $194.5 million from $193 million and diluted earnings per share rose to $1.59 from $1.56 a year ago. 

The company declared a dividend of $1.31 a share payable on November to shareholders on record on October 10. 

During the quarter, the company repurchased 0.9 million shares for a total of $143 million, and at the end of the quarter $509 million were still available in its $1 billion stock repurchase program. 

Higher-for-Longer Rates Worry European Markets 

Market mood across Europe soured after the growing realization that central banks are not done  with their aggressive rate hike campaigns. 

European markets plunged more than 1% and the euro declined to a six-month low and the yields on Euro Area bonds advanced to multi-month highs. 

The U.S. Federal Reserve held its target rate range steady for the second time in a row between 5.25% and 5.50% but held out for one more rate hike in the year. 

But policymakers' views on interest rates in 2024 weighed on the market after the Federal Reserve forecasted two rate cuts in 2024, fewer than previously estimated in June.  

Despite higher rates, committee members do not see a recession in 2023 and 2024.

The policy committee also sharply revised higher its 2023 economic growth outlook to 2.1% from the June estimate of 1.0% and 2024 growth to 1.5% from 1.1%. 

Switzerland Rates Steady, Norway and Sweden Hiked Rates

Higher-for-longer rate worries gripped market sentiment after the Swiss National Bank unexpectedly held its interest rate at 1.75% but said more rate hikes may be needed to control inflation. 

The central bank held its inflation outlook at 2.2% in 2023 and 2024 and estimated economic growth around 1% in 2023. 

However, Norgesbank in Norway and Riksbank in Sweden lifted rates by 25 basis points. 

The Monetary Policy and Financial Stability Committee in Norway raised the policy rate from 4.0 to 4.25% and Governor Ida Wolden Bache said another rate hike is likely after the December meeting because inflation is significantly higher than the 2% target. 

Riksbank lifted its policy rate by 25 basis points to 4.0% and said another rate hike may be needed after the policy meeting in November. 

Bank of England Held Rates at 5.25%

The Bank of England held its rate steady at 5.25% in a 5-4 vote deciding to review the impact on the economy of the cumulative rates. 

The policy committee forecasted inflation to cool in the coming months largely because of weaker inflation in food and energy prices, despite the resurgent energy prices in the last month. 

The committee also voted to reduce bonds held by the central bank by an additional £100 billion after lowering holdings by £80 billion in the twelve months ending in September. 

The Bank of England held £759 billion of UK government bonds as of Sept 20, 2023. 

Europe Indexes & Yields

The DAX index decreased 1.3% to 15,571.86, the CAC-40 index fell 1.6% to 7,213.90 and the FTSE 100 index declined 0.7% to 7,678.62. 

The yield on 10-year German bonds increased to 2.73%, French bonds traded higher to 3.27%, the UK gilts edged up to 4.29% and Italian bonds rose to 4.51%.

The euro edged lower to a three-month low to $1.065, the British pound to $1.236 and the U.S. dollar fetched 90.58 Swiss cents.

Brent crude decreased $0.40 to $93.13 a barrel and the Dutch TTF natural gas advanced €1.82 to €39.11 per MWh.

Europe Stock Movers 

Mining and resource companies were in focus after the dollar index rebounded to a six-month high and energy prices turned lower. 

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

BP Plc and Shell Plc declined about 1% after crude oil prices turned lower after flirting with a one-year high two days ago. 

Essentra Plc gained 2.3% to 151.0 pence after the plastics and fiber products maker announced the acquisition of Italy-based and family owned BMP s.r.l for Є33 million in cash with additional payments based on earnings milestones.  

NEXT plc increased 3.2% to 7,344.0 pence after the company revised higher its earnings outlook for the third time on improving sales. 

Casino Guichard Perrachon SA declined 8.2% to €1.51 after the French grocery retailer announced its five year plan ending in 2028.  

ABN AMRO Bank NV decreased 1.3% to €13.56 and the Dutch lender appointed Ton van Nimwegen as its chief operations officer and member of the executive board for four years.

Valneva SE declined 3.4% to €5.98 after the French vaccine maker announced a loss in the first-half. 

Delivery Hero SE increased 2.8% to €32.80 after the delivery service company confirmed talks to sell Foodpanda's business in select Southeast Asia markets. 

Electrolux AB decreased 1% to €9.67 after the Swedish home appliance company agreed to sell its manufacturing facility in Memphis, Tennessee for $61 million to a U.S. based investment management company. 

Asian Markets Extend Losses, Yen and Yuan Under Pressure After Fed Rate Action and Views 

Market indexes across Asia turned lower after the U.S. Federal Reserve decided to hold rates for the second time in a row. 

The rate was widely anticipated by investor, but the Fed's forecast of future rate hikes and levels got market worried. 

Fed policymakers held out for a one possible rate hike before the year's end and fewer rate cuts in 2024. 

Policymakers also estimated that the U.S. economy is likely to avoid a recession in 2023 and 2024. 

In the latest estimate, the Fed forecasted the economy to grow at 2.1% in 2023 from the previous estimate of 1% and continue its growth in 2024 at 1.5% compared to 1.0% estimate released in June. 

Market sentiment was weak in Tokyo after the Fed's hawkish stance and the yen declined to 148.35 against the U.S. dollar. 

Long-term Japanese government bond rates increased to a 10-year high of 0.745%.

Investors in Tokyo are also awaiting the Bank of Japan's rate decision on Friday and most market participants are looking forward to the central bank's views on inflation and future rate path. 

In Thursday's trading, the Nikkei index decreased 1.3% to 32,605.45 and tech stocks led decliners for the fourth day in a row on the worries of higher global rates. 

The Hong Kong Monetary Authority left its base rate unchanged at 5.75%, following the rate pause in the U.S. 

The yuan edged down and hovered near its 16-year low to 7.31 against the U.S. dollar on the worries of higher rates in the U.S.

In China trading, the Shanghai SSE Composite index inched down 0.3% to 3,090.31 and the Hang Seng index decreased 1.3% to 17,651.44 and the KOSPI index fell 1.7% 2,516.74, 

The Hang Seng index extended weekly losses to 2.9% and September losses to 4%, after tech stocks and property developers led decliners. 

Asian Markets Extend Losses, Yen and Yuan Under Pressure After Fed Rate Action and Views

Market indexes across Asia turned lower after the U.S. Federal Reserve decided to hold rates for the second time in a row. 

The rate was widely anticipated by investor, but the Fed's forecast of future rate hikes and levels got market worried. 

Fed policymakers held out for a one possible rate hike before the year's end and fewer rate cuts in 2024. 

Policymakers also estimated that the U.S. economy is likely to avoid a recession in 2023 and 2024. 

In the latest estimate, the Fed forecasted the economy to grow at 2.1% in 2023 from the previous estimate of 1% and continue its growth in 2024 at 1.5% compared to 1.0% estimate released in June. 

Market sentiment was weak in Tokyo after the Fed's hawkish stance and the yen declined to 148.35 against the U.S. dollar. 

Long-term Japanese government bond rates increased to a 10-year high of 0.745%.

Investors in Tokyo are also awaiting the Bank of Japan's rate decision on Friday and most market participants are looking forward to the central bank's views on inflation and future rate path. 

In Thursday's trading, the Nikkei index decreased 1.3% to 32,605.45 and tech stocks led decliners for the fourth day in a row on the worries of higher global rates. 

The Hong Kong Monetary Authority left its base rate unchanged at 5.75%, following the rate pause in the U.S. 

The yuan edged down and hovered near its 16-year low to 7.31 against the U.S. dollar on the worries of higher rates in the U.S.

In China trading, the Shanghai SSE Composite index inched down 0.3% to 3,090.31 and the Hang Seng index decreased 1.3% to 17,651.44 and the KOSPI index fell 1.7% 2,516.74, 

The Hang Seng index extended weekly losses to 2.9% and September losses to 4%, after tech stocks and property developers led decliners. 

U.S. Movers: Cisco, Darden Restaurants, FedEx, KB Home, Klaviyo, Starbucks

Klaviyo Inc decreased 1.7% to $32.21 after the company completed its initial public offering and sold 19.2 million shares at $30 each, 

The stock of the marketing software automation company opened at $36.75 and closed at $32.76, about 9% higher than its price.

KB Home declined 4% to $46.10 despite the home builder reporting quarterly results that met investor expectations. 

Revenue in the fiscal third quarter ending in August fell to $1.59 billion from $1.84 billion and the delivered homes declined 7% to 3,375 from a year ago. 

Higher mortgage rates negatively impacted home prices and average selling price in the quarter declined to $466,300 compared to $508,700 a year ago. 

The home building operating income margin declined to 11.3% from 17.7% and housing gross profit margin fell 520 basis points to 21.5%. 

Net income declined to $149.9 million from $255.3 million and diluted earnings per share and diluted earnings per share fell to $1.80 from $2.86 a year ago. 

Starbucks Corp decreased 25 cents to $94.94 after the company said announced to hike its quarterly dividend by 7.5% to 57 cents a share from 53 cents payable on November 24 to shareholders on record November 10. 

The coffee retailer opened a $220 million distribution and manufacturing facility in China, second largest market for the company. 

Darden Restaurants, Inc fell 1.5% to $147.72 after the company said same store sales at its comparable fine dining locations declined 2.8% in the fiscal first quarter ending on August 27. 

Consolidated comparable sales increased 5% driven by rise of 6.0% at Olive Garden stores and 8.1% jump at Long Horn Steak House locations.  

Revenue in the quarter increased to $2.7 billion from $2.4 billion and net income rose to $194.5 million from $193 million and diluted earnings per share rose to $1.59 from $1.56 a year ago. 

The company declared a dividend of $1.31 a share payable on November to shareholders on record on October 10. 

During the quarter, the company repurchased 0.9 million shares for a total of $143 million, and at the end of the quarter $509 million were still available in its $1 billion stock repurchase program. 

FedEx Corp increased 4.6% to $262.09 after the parcel delivery company reported better-than-expected quarterly results and earnings rose despite the decline in revenue. 

Revenue in the fiscal first quarter ending in August declined 7% to $21.6 billion from $23.6 billion and net income jumped 23% to $1.0 billion from $875 million and diluted earnings per share rose 27% to $4.23 from $3.33 from a year ago. 

Cisco Systems Inc decreased 4% to $53.26 after the company agreed to acquire cybersecurity company Splunk Inc for $157 a share or $28 billion in cash. 

Splunk jumped 21.1% to $144.82 after the deal announcement. 

S&P 500 and Nasdaq Composite Extended Losses After Treasury Yields Jumped to 15-year Highs

Market averages extended weekly losses and Treasury yields jumped to multi-year highs after the Federal Reserve signaled rates are likely to stay higher for a longer time. 

Market averages declined after weekly jobless claims indicated strong labor market conditions, suggesting that policymakers may opt for another rate hike at the next meeting.

Initial jobless claims for the week ending September 16 declined 20,000 to 201.,000, the Department of Labor reported  Thursday. 

The initial jobless claims were the lowest since January, and continuing claims decreased 21,000 to an eight-month low of 1.662 million, suggesting unemployed workers are able to find new jobs in relatively shorter duration. 

Treasury yields jumped to multi-year highs as investors adjust to higher interest rate scenario and the U.S. economy is likely to avoid a recession in 2023. 

The yield on 2-year Treasury notes jumped to a level since 2007 and 10-year Treasury notes reached the highest level in 15 years after the release of weekly jobless report. 

U.S. Indexes & Yields 

The S&P 500 index declined 0.8% to 4,363.74 and the Nasdaq Composite decreased 1.0% to 13,332.16. 

The yield on 2-year Treasury notes hovered at 5.17%, 10-year Treasury notes inched higher to 4.47% and 30-year Treasury bonds edged up to 4.52%. 

Crude oil increased $0.80 to $90.47 a barrel and natural gas prices declined 1 cent to $2.77 a thermal unit. 

The dollar index edged higher to 105.58, the level last seen in March and extended gains from the low of 99.85 on July 13. 

U.S. Stock Movers 

Klaviyo Inc decreased 1.7% to $32.21 after the company completed its initial public offering and sold 19.2 million shares at $30 each, 

The stock of the marketing software automation company opened at $36.75 and closed at $32.76, about 9% higher than its price.

KB Home declined 4% to $46.10 despite the home builder reporting quarterly results that met investor expectations. 

Revenue in the fiscal third quarter ending in August fell to $1.59 billion from $1.84 billion and the delivered homes declined 7% to 3,375 from a year ago. 

Higher mortgage rates negatively impacted home prices and average selling price in the quarter declined to $466,300 compared to $508,700 a year ago. 

The home building operating income margin declined to 11.3% from 17.7% and housing gross profit margin fell 520 basis points to 21.5%. 

Net income declined to $149.9 million from $255.3 million and diluted earnings per share and diluted earnings per share fell to $1.80 from $2.86 a year ago. 

Starbucks Corp decreased 25 cents to $94.94 after the company said announced to hike its quarterly dividend by 7.5% to 57 cents a share from 53 cents payable on November 24 to shareholders on record November 10. 

The coffee retailer opened a $220 million distribution and manufacturing facility in China, second largest market for the company. 

Darden Restaurants, Inc fell 1.5% to $147.72 after the company said same store sales at its comparable fine dining locations declined 2.8% in the fiscal first quarter ending on August 27. 

Consolidated comparable sales increased 5% driven by rise of 6.0% at Olive Garden stores and 8.1% jump at Long Horn Steak House locations.  

Revenue in the quarter increased to $2.7 billion from $2.4 billion and net income rose to $194.5 million from $193 million and diluted earnings per share rose to $1.59 from $1.56 a year ago. 

The company declared a dividend of $1.31 a share payable on November to shareholders on record on October 10. 

During the quarter, the company repurchased 0.9 million shares for a total of $143 million, and at the end of the quarter $509 million were still available in its $1 billion stock repurchase program. 

European Markets Drop 1%, UK and Switzerland Held Rates, Norway and Sweden Hiked Rates by 0.25%

Market mood across Europe soured after the growing realization that central banks are not done  with their aggressive rate hike campaigns. 

European markets plunged more than 1% and the euro declined to a six-month low and the yields on Euro Area bonds advanced to multi-month highs. 

The U.S. Federal Reserve held its target rate range steady for the second time in a row between 5.25% and 5.50% but held out for one more rate hike in the year. 

But policymakers' views on interest rates in 2024 weighed on the market after the Federal Reserve forecasted two rate cuts in 2024, fewer than previously estimated in June.  

Despite higher rates, committee members do not see a recession in 2023 and 2024.

The policy committee also sharply revised higher its 2023 economic growth outlook to 2.1% from the June estimate of 1.0% and 2024 growth to 1.5% from 1.1%. 

Switzerland Rates Steady, Norway and Sweden Hiked Rates

Higher-for-longer rate worries gripped market sentiment after the Swiss National Bank unexpectedly held its interest rate at 1.75% but said more rate hikes may be needed to control inflation. 

The central bank held its inflation outlook at 2.2% in 2023 and 2024 and estimated economic growth around 1% in 2023. 

However, Norgesbank in Norway and Riksbank in Sweden lifted rates by 25 basis points. 

The Monetary Policy and Financial Stability Committee in Norway raised the policy rate from 4.0 to 4.25% and Governor Ida Wolden Bache said another rate hike is likely after the December meeting because inflation is significantly higher than the 2% target. 

Riksbank lifted its policy rate by 25 basis points to 4.0% and said another rate hike may be needed after the policy meeting in November. 

Bank of England Held Rates at 5.25%

The Bank of England held its rate steady at 5.25% in a 5-4 vote deciding to review the impact on the economy of the cumulative rates. 

The policy committee forecasted inflation to cool in the coming months largely because of weaker inflation in food and energy prices, despite the resurgent energy prices in the last month. 

The committee also voted to reduce bonds held by the central bank by an additional £100 billion after lowering holdings by £80 billion in the twelve months ending in September. 

The Bank of England held £759 billion of UK government bonds as of Sept 20, 2023. 

Europe Indexes & Yields

The DAX index decreased 1.1% to 15,599.24, the CAC-40 index fell 1.5% to 7,220.30 and the FTSE 100 index declined 0.7% to 7,679.40. 

The yield on 10-year German bonds increased to 2.73%, French bonds traded higher to 3.27%, the UK gilts edged up to 4.29% and Italian bonds rose to 4.51%.

The euro edged lower to a three-month low to $1.065, the British pound to $1.236 and the U.S. dollar fetched 90.58 Swiss cents.

Brent crude decreased $0.59 to $92.63 a barrel and the Dutch TTF natural gas declined €0.63 to €36.65 per MWh.

Europe Stock Movers 

Mining and resource companies were in focus after the dollar index rebounded to a six-month high and energy prices turned lower. 

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

BP Plc and Shell Plc declined about 1% after crude oil prices turned lower after flirting with a one-year high two days ago. 

Essentra Plc gained 2.3% to 151.0 pence after the plastics and fiber products maker announced the acquisition of Italy-based and family owned BMP s.r.l for Є33 million in cash with additional payments based on earnings milestones.  

NEXT plc increased 3.2% to 7,344.0 pence after the company revised higher its earnings outlook for the third time on improving sales. 

Casino Guichard Perrachon SA declined 8.2% to €1.51 after the French grocery retailer announced its five year plan ending in 2028.  

ABN AMRO Bank NV decreased 1.3% to €13.56 and the Dutch lender appointed Ton van Nimwegen as its chief operations officer and member of the executive board for four years.

Valneva SE declined 3.4% to €5.98 after the French vaccine maker announced a loss in the first-half. 

Delivery Hero SE increased 2.8% to €32.80 after the delivery service company confirmed talks to sell Foodpanda's business in select Southeast Asia markets. 

Electrolux AB decreased 1% to €9.67 after the Swedish home appliance company agreed to sell its manufacturing facility in Memphis, Tennessee for $61 million to a U.S. based investment management company. 

Japan Exports Declined After China's Seafood Ban Adds to Trade Deficit

The latest decline in exports was driven by a fall in food exports after its largest trading partner China impose ban on Japanese seafood in late August.   

Japan's imports declined for the fifth month in a row and fell at the fastest pace after energy cost declined. 

Japan's imports declined 17.8% from a year ago to ¥8,924.82 billion in August following a 13.6% decline in July, data from Finance Ministry showed today. 

Imports from China declined by 12.1%, the U.S. by 9.5%, Hong Kong by 20.8%, South Korea by 10.8%, Malaysia by  30.0%, India by 9.4%, Australia by 41.6%, and Russia by 62.5%, but increased from Germany by 7.9%. 

Japan's exports decreased for the second month in a row in August, largely because of weak demand from China. 

Exports decreased 0.8% from a year ago to ¥7,994.35 billion. 

Exports declined to China by 11.0%, Taiwan by 14.3%, South Korea by 10.8%, Singapore by 24.6%, Australia by 10.6%, and Russia by 57.6% but increased to the U.S. by 5.1%, India by 16.2%, and the EU by 12.7%. 

Japan reported trade deficit of ¥930.48 billion in August, second monthly deficit in a row, and the shortfall jumped from ¥66.3 billion in July, despite rising automobile exports to the U.S. 

Japan has recorded monthly trade deficit for two years in a row barring June 2023. 

Japan's trade surplus with the U.S. surged 38.2% to ¥650.60 billion. 

Exports increased 5.1% to record August-high of ¥1.62 trillion but imports decreased 9.5% to ¥967.39 billion.

U.S. Market Averages Dropped 1% After Fed's Future Rate Outlook Signaled Hawkish Stance

Market indexes closed down after the Federal Reserve held interest rate target range as expected but policymakers left the door open for one more rate hike before the end of the year. 

The S&P 500 and the Nasdaq Composite indexes fell after the release of interest rate decisions and economic projections. 

But averages rebounded after thirty minutes of trading, only to drift lower and accelerate decline in the final hour of trading. 

Investors worried that rates are likely to stay higher for longer, despite the Fed's projection that the economy is not likely to go into a recession either in 2023 or 2024. 

The Federal Reserve said it will hold the fed funds target range at 22-year high between 5.25% and 5.50% but also held out for another rate hike later in the year, after the conclusion of two-day meeting. 

Policymakers appeared divided after mixed economic signals, but committee members prefer more restrictive interest rate policy in future. 

The Fed's projection released showed that policymakers are likely to increase rates higher one more time at the next meeting in November, but are also estimating fewer rate cuts in 2024. 

Policymakers now estimate the fed funds rate at 5.6% by the year's end, the same as in the June forecast, while rates are expected to be higher at 5.1% in 2024, compared to 4.6% estimated at the end of June meeting.

Committee members sharply revised higher economic growth outlook to 2.1% from the previous estimate of 1.0% released in June, and 2024 GDP rate of 1.5% compared to 1.1%. 

The economic growth forecast suggested that members are not looking for a recession this year or next. 

The committee members also revised slightly higher inflation outlook, as measured by the Price Consumption Expenditure Index, to 3.3% from 3.2% but the was unrevised at 2.4% in 2024. 

The core PCE rate in 2023 was revised slightly lower to 3.7% from 3.9% but the alternative measure of inflation was left unchanged for 2024 at 2.6%. 

The unemployment rate forecast was revised lower to 3.8% from 4.1% in 2023 and to 4.1% from 4.5% in 2024.

Despite multiple rate hikes by the Federal Reserve over the last seventeen months, inflation has stayed above the Fed's target rate because inflation pressures have broadened from commodities and manufactured goods to services and wages. 

The policymakers have little influence over the direction of the commodities prices, like metals and energy, but hold a larger sway on the direction of mortgage rates and borrowing rates for corporations and consumers. 

U.S. Indexes & Yields 

The S&P 500 index declined 1.% to 4,402.20 and the Nasdaq Composite decreased 1.5% to 13,469.13. 

The yield on 2-year Treasury notes hovered near 5.05%, 10-year Treasury notes inched lower to 4.32% and 30-year Treasury bonds edged up to 4.40%. 

Crude oil decreased $1.09 to $89.38 a barrel and natural gas prices declined 10 cents to $2.73 a thermal unit. 

The dollar index edged slightly lower to 104.78, the level last seen in March but higher than the low of 99.85 on July 13. 

U.S. Stock Movers 

Instacart declined 10.3% to $30.01 on the second day of trading after the grocery delivery company priced its initial public offering at $30 a share and struggled to hold its early gains on the first day. 

The company sold 30 million shares in the public offering but all shares changed hands on the first day of trading, suggesting that stock may face more headwinds in the next few weeks. 

Pinterest Inc rose 4.3% to $27.34 after the company forecasted annual revenue growth to accelerate following the slowdown in 2022 and 2023.

The company laid out its future plans in its first investor day On Tuesday. 

Coty Inc increased 5.7% to $12.12 after the cosmetic company lifted its full-year 2024 outlook and said comparable sales to grow in the range between 8% and 10% from its previous estimate between 6% and 8%. 

European Markets Rebounded After Inflation Eased in Germany and UK 

European markets rebounded after investors reacted positively to inflation reports from Germany and the U.K.

Positive market sentiment was in check ahead of the U.S. Federal Reserve's rate decision later today and the Bank of England's rate announcement Thursday. 

Despite the improvement in inflation in the last seven months, the rebound in crude oil and natural gas prices in the last five weeks stoked fears of another bout of inflation. 

Crude oil prices are hovering at one-year highs and natural gas prices have rebounded from the lows in June. 

Additionally, investors reacted positively after passenger car registration in August was in double digits, despite the decline in registration rate from a year ago. 

Record Decline In German PPI

German producer price index declined at a record pace in August since data collection began in August, the Federal Statistical Office or DeStatis reported Wednesday. 

The producer price index dropped 12.6% from a year ago, largely because of a base effect reflecting higher prices last year, and the decline accelerated for the second month in a row after falling 6.0% in the previous month. 

Energy prices dropped 31.9% and electricity prices fell 43.2%. 

However, the core rate of producer price index, which excludes energy prices, rose 1.2%. 

On a monthly basis producer prices rose 0.3% in August, the first rise in four months.  

UK Inflation Rate Drops to 18-month Low

Consumer price inflation in the U.K. slowed to 6.7% in August from 6.8% in the previous month, the Office for National Statistics reported Wednesday. 

The inflation rate fell to the slowest pace since February 2022 after food prices rose at a slower pace and housing cost declined.  

Core rate of inflation, which excludes volatile food and energy prices, eased to 6.2% from 6.9% in the previous, the lowest level since March. 

On a monthly basis, consumer price inflation rose 0.3%. 

Passenger Vehicle Registration Expanded In August 

Passenger car registrations in the European Union rose 21% from a year ago to 787,600 units in August, the European Automobile Manufacturers Association or ACEA reported Wednesday. 

Sales in August are generally slower, but a double-digit increase in registration suggested that pandemic-era component shortages are finally easing and automakers are able to meet higher demand. 

Vehicle registration rose for the thirteenth month in a row in August and market share of battery-electric cars rose above 20% for the first time and surpassed diesel cars for the second time this year. 

Passenger vehicle registration increased in double-digits in most markets, including in the three largest markets in the region, with registration rising in Germany by 37.3%, in France by 24.3%, and in Italy by 11.9%. 

Battery electric car registrations in the European Union soared 118.1% to 165,200 vehicles in August, about 21% of the market. 

For the first eight months of the year, EU passenger car registrations rose 17.9% from the same period a year ago to 7.1 million units. 

Despite the improvement in sales this year, sales are still lower than the pre-pandemic level of 9.0 million units sold in 2019.  

Europe Indexes & Yields

The DAX index increased 0.8% to 15,781.59, the CAC-40 index advanced 0.7% to 7,330.79 and the FTSE 100 index inched up 0.9% to 7,731.65. 

The yield on 10-year German bonds increased to 2.71%, French bonds traded higher to 3.26%, the UK gilts edged down to 4.26% and Italian bonds rose to 4.49%.

The euro edged lower to a three-month low to $1.069, the British pound to $1.237 and the U.S. dollar fetched 89.74 Swiss cents.

Brent crude decreased $0.83 to $93.49 a barrel and the Dutch TTF natural gas increased €0.13 to €36.65 per MWh.

Japan Trade Swings to Deficit In August, China Holds Rates 

Popular indexes in Asia dropped ahead of rate decisions from several central banks this week. 

Global market sentiment was weak ahead of interest rate decisions from the U.S. Federal Reserve, the Bank of England and the Bank of Japan. 

Sweden, Norway and Switzerland are also set to announce their rate decisions this week. 

The Bank of Japan is expected to leave its  ultra-loose monetary policy intact but some investors are hoping that policymakers will provide better insights on future rate patch and inflation pressures in the economy. 

Market sentiment was weak on the worries of a rebound in inflation and uncertainty about interest rates in the U.S. and Europe and looming global slowdown. 

Higher oil prices weighed on the market sentiment after Brent crude oil price jumped above $95 a barrel after Saudi Arabia and Russia extended voluntary production cuts to the end of 2023. 

China Holds Rates 

The People's Bank of China also announced its monthly rate decisions as the overall outlook for the economy remains uncertain. 

China's one-year loan prime rate, used for consumer and corporate lending, was held at 3.45% and 5-year loan prime rate, reference rate for mortgage lending, was left unchanged at 4.2%.  

Japan's International Trade Shrank In August 

Japan's imports declined for the fifth month in a row and fell at the fastest pace after energy cost declined. 

Japan's imports declined 17.8% from a year ago to ¥8,924.82 billion in August following a 13.6% decline in July, data from Finance Ministry showed today. 

Imports from China declined by 12.1%, the U.S. by 9.5%, Hong Kong by 20.8%, South Korea by 10.8%, Malaysia by  30.0%, India by 9.4%, Australia by 41.6%, and Russia by 62.5%, but increased from Germany by 7.9%. 

Japan's exports decreased for the second month in a row in August, largely because of weak demand from China. 

Exports decreased 0.8% from a year ago to ¥7,994.35 billion. 

Exports declined to China by 11.0%, Taiwan by 14.3%, South Korea by 10.8%, Singapore by 24.6%, Australia by 10.6%, and Russia by 57.6% but increased to the U.S. by 5.1%, India by 16.2%, and the EU by 12.7%. 

Japan reported trade deficit of ¥930.48 billion in August, second monthly deficit in a row, and the shortfall jumped from ¥66.3 billion in July, despite rising automobile exports to the U.S. 

Japan has recorded monthly trade deficit for two years in a row barring June 2023. 

The latest decline in exports was driven by a decline in food exports after its largest trading partner China impose ban on Japanese seafood in late August.   

Japan's trade surplus with the U.S. surged 38.2% to ¥650.60 billion. 

Exports increased 5.1% to record August-high of ¥1.62 trillion but imports decreased 9.5% to ¥967.39 billion.

Asia Market Indexes 

In Wednesday's trading, the Nikkei index decreased 0.7% to 33,023.78 and tech stock weakness extended to the third day in a row. 

Market indexes in Hong Kong declined to a 4-week low as investors await the Fed's rate decision and economic projections later today. 

Two new stocks started trading on the Shanghai Stock Exchange on Wednesday after completing their initial public offerings. 

Jilin Joinature Polymer jumped 11% to 32.79 yuan and Hunan Sund Technological advanced 26% to 83.86 yuan. 

In China trading, the Shanghai SSE Composite index inched down 0.5% to 3,108.57 and the Hang Seng index decreased 0.5% to 17,908.48 and the KOSPI index increased 0.02% to 2,559.74.

China's yuan has been trading near a 16-year low after about $68 billion of capital outflow between July and August. 

Stocks in Mumbai fell sharply on the worries of resurgent inflation after crude oil prices jumped to a one-year high. 

The Sensex index decreased 561.19 points to 67,043.80 and the Nifty index declined 165.40 points to 19,968.30. 

On the Bombay Stock Exchange, 226 stocks traded at their 52-week highs and 138 traded at their 52-week lows. 

In August, the Nikkei index fell 0.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.