- Bridgette Randall
- 21 Apr, 2023
- Frankfurt
European markets struggled and investors digested a fresh batch of earnings amid growing economic anxieties.
The latest PMI surveys in the Euro Area and UK showed service sector growth accelerated in April but manufacturing remained under pressure on weakening demand for goods.
The HCOB Eurozone Composite PMI increased to 54.4 in April, highest in 11 months.
The HCOB Germany Composite PMI rose to 53.9 in April from 52.6 in March, indicating accelerating business activities in the private sector after service sector activities rose to a 12-month high.
The S&P Global/CIPS UK Composite PMI increased to 53.9 in April from 52.2 in March, indicating the fastest pace of expansion since April 2022.
The index above 50 indicates expansion and below 50 shows deceleration.
Investors also welcomed positive quarterly results from EssilorLuxottica and Mercedes Benz reported sharply higher industrial free cash flow.
Poor Weather Contributed to March Retail Sales Decline In UK
Retail sales in the U.K. fell more than expected in March, the Office for National Statistics reported Friday.
Poor weather contributed to stretched consumer budgets, negatively impacting retail sales.
March retail sales, including motor fuel, decreased 0.9% from the previous month after rising for two months in a row.
February retail sales growth was downwardly revised to 1.1% from the previous estimate of 1.2%.
Retail sales, excluding motor fuel, declined 0.6% from the previous month, after rising 2.1% in February.
Retail sales volume in the three months to March increased 0.6% from the previous three-month period.
Europe Indexes & Yields
European markets were in holding patten in Friday's trading but benchmark indexes are set to close higher for the fifth week in a row.
The DAX index declined 0.3% to 15,755.08, the CAC-40 index decreased 1.09 points to 7,537.62 and the FTSE 100 index added 7.48 points to 7,910.09.
The yield on 10-year German Bunds eased to 2.44%, French bonds decreased to 2.96%, the UK gilts to 3.71% and Italian bonds to 4.32%.
The euro held at $1.096, the British pound at $1.284 and the Swiss franc
Brent crude edged up 11 cents to $81.09 a barrel and the Dutch TTF natural gas futures rose 36 cents to Є40.92 per MWh.
Europe Stock Movers
Glencore Plc decreased 1.1% to 496.54 pence and the resource company reported first quarter production that met investors' expectations.
Coal production declined 6% to 26.9 million tons and zinc production fell 15% to 205.3 kt or (thousands of tons) and copper production eased 5% to 244.1 kt.
Holcim AG declined 0.3% to Sfr 58.74 and the Swiss cement and construction materials company reiterated its full-year outlook.
Tele2 AB declined 1.1% to SEK 104.70 after the company reported less-than-expected 3% increase in first quarter revenue from a year ago.
Mercedes Benz Group AG rose 0.4% to €68.46 after the luxury automaker reported "strong" first quarter preliminary results.
Earnings before interest and taxes rose to €5.5 billion, largely driven by vans division and industrial free cash flow increased to €2.2 billion, surpassing market expectation of €1.2 billion.
SAP SE increased 1.3% to €117.14 after the German software company lowered its annual outlook following the sale of its Qualtrics unit.
EssilorLuxottica SA increased 6.6% to €187.0 after the French-Italian company reported a first quarter sales increase driven by the sales rebound in China.
- Barry Adams
- 20 Apr, 2023
- New York City
Major averages on Wall Street traded lower after poor quality of earnings added to economic slowdown worries.
The latest earnings announcements signaled depressed gross margins and lower profitability at some of the largest companies, raising the prospects of another round of downward earnings revisions.
Tesla dropped 11% after the electric vehicle maker reported a decline in first quarter earnings, dragging Apple, Microsoft and Amazon lower.
Chipmakers declined between 2% and 4% and Seagate Technology estimated weak revenue in the current quarter citing lower demand for micro computing products.
Lack of earnings guidance from several companies so far in the earnings season has also dented investor confidence.
American Express reported a decline in earnings and the company sharply hiked its estimate of credit provision to $1.3 billion also soured mood on Wall Street.
Regional banks were in focus after Zions Bancorp reported a 16% decline in its deposit balances, reflecting ongoing stress in smaller banks as more deposits moved out to larger banks.
Market sentiment was weak after the Philadelphia Fed manufacturing index fell more than expected and dropped to its lowest level since May 2020.
The index declined to -31.3 points from -23.2 in March, marking the eighth negative reading in a row, driven by weak order outlook.
Weak earnings guidance and falling earnings compounded to general macroeconomic worries and initial jobless claims edged up slightly at the end of last week.
U.S. Jobless Claims Edged Higher
Unemployment claims for the last week highlighted the tight labor markets conditions despite multiple rate hikes by the Federal Reserve.
Weekly initial jobless claims rose 5,000 to 245,000 for the week ending April 15, the U.S. Department of Labor reported Thursday.
The previous week's claims were upwardly revised 1,000 to 240,000.
The 4-week moving average decreased 500 to 239,750 from the previous week's revised average. The previous week's average was revised up by 250 to 240,250.
The advance seasonally adjusted insured unemployment rate was 1.3% for the week ending April 8, an increase of 0.1 percentage point from the previous week's unrevised rate.
U.S. Indexes & Yields
The S&P 500 index fell 0.6% to 4,129.96 and the Nasdaq Composite index declined 0.8% to 12,057.83.
The yield on 2-year Treasury notes declined to 4.17%, 10-year Treasury notes traded at 3.54% and 30-year Treasury bonds hovered near 3.75%.
Crude oil futures price for immediate month delivery decreased $1.93 to $77.36 barrel and natural gas hovered near $2.21 a thermal unit.
U.S. Stock Movers
Tesla Inc decreased 8.3% to $165.67 after the electric vehicle maker reported a sharp fall in earnings in the first quarter.
Revenue in the quarter rose 24% to $23.3 billion and net income declined 24% to $3.3 billion from $3.7 billion and diluted earnings per share fell to 95 cents from $1.07 a year ago.
Vehicle deliveries increased 36% to 422,875 from 310,048 a year ago.
American Express Company declined 3.7% to $158.96 after the payment processor said revenue rose but net income declined.
Revenue in the first quarter increased 22% to $14.3 billion and net income fell 13% to $1.8 billion from $2.1 billion and diluted earnings per share declined to $2.40 from $2.73 a year ago.
D R Horton Inc rose 6.9% to $108.87 after the home builder reported flat revenue and a decline in earnings.
Revenue in the fiscal second quarter ending in March was flat $7.9 billion and net income plunged to $949 million from $1.4 billion and diluted earnings per share fell to $2.73 from $4.03 a year ago.
Net sales orders for the fiscal second quarter fell 5% to 23,142 homes and 11% in value to $8.6 billion compared to 24,340 homes and $9.7 billion in the same quarter a year ago.
European Markets Trade Near Record Highs, German Wholesale Inflation Eased
European markets paused for the second day in a row ahead of central bank announcements in the next few weeks.
Cautions investors pored over a fresh batch of earnings and debated the future rate paths in the U.S. and the euro area.
Germany's producer prices sharply eased in March and extended monthly decreases to the sixth month in a row following the downward trajectory of energy prices.
Investors also welcomed the international goods trade swinging to surplus in February after exports rose faster than imports.
Eurozone Posted Trade Surplus In February
The euro area international goods trade swung to a surplus of Є4.6 billion in February from a deficit of Є9.4 in January, Eurostat reported Thursday.
The Euro Area recorded, for the first time since September 2021,
The goods trade surplus in February was €4.6 billion with the rest of the world compared with a deficit of €9.4 billion in February 2022.
Exports from the region increased 7.6% to €232.7 billion and imports rose 1.1% to €228.1 billion.
The Euro Are reported a rise in exports with all of its major trading partners.
Exports to the UK and Switzerland rose 10.4%, to the U.S. 10.9%, to Norway 14%, to Turkey 27.6% and to China 5.8%.
Exports of manufactured goods increased 7.2% driven by machinery and vehicles exports increase of 13.2% and chemicals 2.3%.
Overall imports rose 1.1% driven by 1.8% increase in raw materials purchase and fuel imports declined 8.2% and food imports rose 13.2%.
Imports from Switzerland declined 13.8%, from China fell 4.3% and from Russia plunged 77.3%.
In January and February 2023, euro area exports of goods to the rest of the world rose 9.2% to €455.3 billion and imports advanced 5.6% to €482.4 billion.
As a result the euro area recorded a deficit of €27.0 billion, compared with €39.7 billion a year ago.
Germany's Wholesale Price Inflation Dropped In March
Producer price inflation or wholesale inflation in Germany slowed to 7.5% in March from 15.8% in February, destatis or the Federal Statistics Office reported Thursday.
The wholesale price decline was largely driven by a steep fall in energy price inflation to 6.8% in February from 27.6% in January, distributed natural gas prices rose 19.1% and electricity prices were flat.
The preliminary estimate on natural gas and electricity inflation is subject to revision after adjusting for the government subsidy starting March.
Excluding energy, producer prices rose 7.9% from a year ago.
Wholesale price inflation on a monthly basis declined 2.6% in March from February, extending monthly decline to the sixth month in a row.
Prices of non-durable consumer goods increased by 15.4% in March and consumer durable goods rose 10.0% from a year ago.
Indexes & Yields
The DAX index decreased 0.6% to 15,795.71, the CAC-40 index fell 0.1% to 7,538.17 and the FTSE 100 index added 0.05% to 7,902.61.
The yield on 10-year German Bunds decreased to 2.47%5 French bonds to 2.95%, the UK Gilts to 3.76% and Italian bonds to 4.31%.
The euro inched lower to $1.097, the British pound to $1.247 and the Swiss franc to 89.37 cents.
Brent crude oil decreased $2.34 to $80.77 a barrel and the Dutch TTF natural gas edged up 42 cents to Є40.58 per MWh.
Stock Movers
Renault SA decreased 6.4% to €34.24 after the French automaker said revenue in the first quarter increased 29% and the company reaffirmed its annual outlook.
The stock was under pressure after the automaker said the company is reviewing its pricing for electric vehicles worldwide.
Volvo AB Class B increased 1% to SEK211.25 after the Swedish vehicle and industrial equipment maker posted higher adjusted earnings and lifted its outlook for its heavy duty truck unit on easing supply chain issues.
Schindler Holding AG increased 0.9% to Sfr 190.80 after the Swiss elevator and escalator maker said first quarter profit jumped 47%.
Nokia Oyj fell 4.3% to €4.08 after the Finnish telecom and technology company reported weaker-than-expected earnings in the first quarter.
Centamin PLC declined 0.8% to 105.59 pence after the gold miner reported a decline in gold production from the previous quarter.
- Scott Peters
- 20 Apr, 2023
- New York City
Alaska Air Group, Inc declined a fraction to $43.62 after the airline reported mixed quarterly results and reaffirmed annual outlook.
Revenue in the first quarter increased 31% to $2.2 billion and net loss shrank to $142 million from $143 million and diluted loss per share fell to $1.11 from $1.14 a year ago.
The regional airline guided second quarter revenue to rise between 2.5% and 5.5% and full-year 2023 earnings per share between $5.50 and $7.50.
American Express Company declined 3.7% to $158.96 after the payment processor said revenue rose but net income declined.
Revenue in the first quarter increased 22% to $14.3 billion and net income fell 13% to $1.8 billion from $2.1 billion and diluted earnings per share declined to $2.40 from $2.73 a year ago.
AT&T Inc decreased 10.1% to $17.70 after the telecom company reported weaker-than-expected quarterly results.
Revenue in the first quarter increased 1.4% to $30.1 billion and net income attributable to common stockholders declined to $4.2 billion from $4.8 billion and earnings per share fell to 57 cents from 65 cents a year ago.
Mobile telephony segment added 572,000 net subscribers in the quarter, slower than at least 650,000 postpaid subscribers in every quarter in 2022.
Fiber subscribers increased 272,000 to 7.8 million in the quarter.
The stock declined after the free cash flow at the end of the quarter fell to $1 billion from $2.8 billion a year ago but the telecom company retained its full-year free cash flow estimate of $16 billion.
D R Horton Inc rose 6.9% to $108.87 after the home builder reported flat revenue and a decline in earnings.
Revenue in the fiscal second quarter ending in March was flat $7.9 billion and net income plunged to $949 million from $1.4 billion and diluted earnings per share fell to $2.73 from $4.03 a year ago.
Net sales orders for the fiscal second quarter fell 5% to 23,142 homes and 11% in value to $8.6 billion compared to 24,340 homes and $9.7 billion in the same quarter a year ago.
The home builder guided full-year 2023 revenue in a range from $31.5 billion to $33.0 billion and estimated home sales between 77,000 and 80,000 units.
IBM increased 0.4% to $126.84 after the technology company reported better-than-expected earnings.
Revenue in the first quarter increased 0.4% to $14.3 billion and net income increased 41% to $927 million from $733 million and diluted earnings per share rose to $1.02 from 82 cents a year ago.
Free cash flow increased to $1.34 billion from $1.24 billion and long term debt increased to $53.8 billion from $46.2 billion from a year ago.
The company guided full-year 2023 free cash flow to increase $1.0 billion to $10.5 billion and revenue growth between 3% and 5% in constant currency.
Seagate Technology Holdings PLC declined 7.6% to $58.11 after the disk maker reported weak quarterly results.
Revenue in the fiscal third quarter ending in March declined to $1.8 billion from $2.8 billion and the company swung to a net loss of $433 million from $346 million and diluted earnings per share was ($2.09) compared to $1.56 a year ago.
The company also announced a restructuring plan to reduce its cost structure in the face of market weakness. The plan is expected to be completed by the year's end and cost $150 million.
Seagate forecasted venue in the fiscal fourth quarter decline to $1.7 billion with a band of $150 million and non-GAAP loss per share of 20 cents with a band of 20 cents.
Tesla Inc decreased 8.3% to $165.67 after the electric vehicle maker reported a sharp fall in earnings in the first quarter.
Revenue in the quarter rose 24% to $23.3 billion and net income declined 24% to $3.3 billion from $3.7 billion and diluted earnings per share fell to 95 cents from $1.07 a year ago.
Vehicle deliveries increased 36% to 422,875 from 310,048 a year ago.
Zions Bancorporation NA fell 4.3% to $31.32 after the regional bank reported a decline in deposits and earnings below expectations.
Net interest income in the first quarter increased 25% to $679 million and net income attributable to common stockholders increased to $198 million from $195 million and diluted earnings per share rose to $1.33 from $1.27 a year ago.
Net interest margin increased to 3.33% from 2.60% a year ago.
Stock fell after the bank reported a decline in deposits in the aftermath of the demise of Silicon Valley Bank on March 10.
Total deposits fell 16% or $13.1 billion to $69.2 billion at the end of the quarter.
More than two-thirds of the decrease related to accounts with balances greater than $10 million and loan-to-deposit ratio was 81%, compared with 62% in the prior year quarter.
Accounts with deposits larger than $250,000 are not insured by the Federal Deposit Insurance Corporation or FDIC, and balances larger than the insured amount may be lost in the event if the bank collapses.
- Barry Adams
- 20 Apr, 2023
- New York City
Stocks faced headwinds on earnings disappointments from several popular companies.
Benchmark indexes traded down after Tesla, Seagate Technology, AT&T and American Express reported weaker-than-expected earnings.
Tech stocks led the decliners after Tesla reported a 24% fall in earnings and cut prices on several electric vehicle models.
Seagate Technology also offered a downbeat outlook citing weak global demand.
Lack of earnings guidance from several companies so far in the earnings season has also dented investor confidence.
American Express reported a decline in earnings and the company sharply hiked its estimate of credit provision to $1.3 billion also soured mood on Wall Street.
Market sentiment was weak after the Philadelphia Fed manufacturing index fell more than expected and fell to its lowest level since May 2020.
Weak earnings guidance and falling earnings compounded to general macroeconomic worries and initial jobless claims edged up slightly at the end of last week.
Jobless Claims Edged Higher
Unemployment claims for the last week highlighted the tight labor markets conditions despite multiple rate hikes by the Federal Reserve.
Weekly initial jobless claims rose 5,000 to 245,000 for the week ending April 15, the U.S. Department of Labor reported Thursday.
The previous week's claims were upwardly revised 1,000 to 240,000.
The 4-week moving average decreased 500 to 239,750 from the previous week's revised average. The previous week's average was revised up by 250 to 240,250.
The advance seasonally adjusted insured unemployment rate was 1.3% for the week ending April 8, an increase of 0.1 percentage point from the previous week's unrevised rate.
Indexes & Yields
The S&P 500 index fell 0.6% to 4,128.21 and the Nasdaq Composite index declined 0.6% to 12,085.63.
The yield on 2-year Treasury notes declined to 4.17%, 10-year Treasury notes traded at 3.54% and 30-year Treasury bonds hovered near 3.75%.
Crude oil futures price for immediate month delivery decreased $1.60 to $77.66 barrel and natural gas hovered near $2.20 a thermal unit.
Stock Movers
Tesla Inc decreased 8.3% to $165.67 after the electric vehicle maker reported a sharp fall in earnings in the first quarter.
Revenue in the quarter rose 24% to $23.3 billion and net income declined 24% to $3.3 billion from $3.7 billion and diluted earnings per share fell to 95 cents from $1.07 a year ago.
Vehicle deliveries increased 36% to 422,875 from 310,048 a year ago.
American Express Company declined 3.7% to $158.96 after the payment processor said revenue rose but net income declined.
Revenue in the first quarter increased 22% to $14.3 billion and net income fell 13% to $1.8 billion from $2.1 billion and diluted earnings per share declined to $2.40 from $2.73 a year ago.
D R Horton Inc rose 6.9% to $108.87 after the home builder reported flat revenue and a decline in earnings.
Revenue in the fiscal second quarter ending in March was flat $7.9 billion and net income plunged to $949 million from $1.4 billion and diluted earnings per share fell to $2.73 from $4.03 a year ago.
Net sales orders for the fiscal second quarter fell 5% to 23,142 homes and 11% in value to $8.6 billion compared to 24,340 homes and $9.7 billion in the same quarter a year ago.
- Bridgette Randall
- 20 Apr, 2023
- Frankfurt
European markets paused for the second day in a row ahead of central bank announcements in the next few weeks.
Cautions investors pored over a fresh batch of earnings and debated the future rate paths in the U.S. and the euro area.
Germany's producer prices sharply eased in March and extended monthly decreases to the sixth month in a row following the downward trajectory of energy prices.
Investors also welcomed the international goods trade swinging to surplus in February after exports rose faster than imports.
Eurozone Posted Trade Surplus In February
The euro area international goods trade swung to a surplus of Є4.6 billion in February from a deficit of Є9.4 in January, Eurostat reported Thursday.
The Euro Area recorded, for the first time since September 2021,
The goods trade surplus in February was €4.6 billion with the rest of the world compared with a deficit of €9.4 billion in February 2022.
Exports from the region increased 7.6% to €232.7 billion and imports rose 1.1% to €228.1 billion.
The Euro Are reported a rise in exports with all of its major trading partners.
Exports to the UK and Switzerland rose 10.4%, to the U.S. 10.9%, to Norway 14%, to Turkey 27.6% and to China 5.8%.
Exports of manufactured goods increased 7.2% driven by machinery and vehicles exports increase of 13.2% and chemicals 2.3%.
Overall imports rose 1.1% driven by 1.8% increase in raw materials purchase and fuel imports declined 8.2% and food imports rose 13.2%.
Imports from Switzerland declined 13.8%, from China fell 4.3% and from Russia plunged 77.3%.
In January and February 2023, euro area exports of goods to the rest of the world rose 9.2% to €455.3 billion and imports advanced 5.6% to €482.4 billion.
As a result the euro area recorded a deficit of €27.0 billion, compared with €39.7 billion a year ago.
Germany's Wholesale Price Inflation Dropped In March
Producer price inflation or wholesale inflation in Germany slowed to 7.5% in March from 15.8% in February, destatis or the Federal Statistics Office reported Thursday.
The wholesale price decline was largely driven by a steep fall in energy price inflation to 6.8% in February from 27.6% in January, distributed natural gas prices rose 19.1% and electricity prices were flat.
The preliminary estimate on natural gas and electricity inflation is subject to revision after adjusting for the government subsidy starting March.
Excluding energy, producer prices rose 7.9% from a year ago.
Wholesale price inflation on a monthly basis declined 2.6% in March from February, extending monthly decline to the sixth month in a row.
Prices of non-durable consumer goods increased by 15.4% in March and consumer durable goods rose 10.0% from a year ago.
Indexes & Yields
The DAX index decreased 0.8% to 15,761.04, the CAC-40 index fell 0.5% to 7,514.71 and the FTSE 100 index declined 0.2% to 7,881.75.
The yield on 10-year German Bunds decreased to 2.47%, French bonds to 2.97%, the UK Gilts to 3.82% and Italian bonds to 4.33%.
The euro inched lower to $1.097, the British pound to $1.247 and the Swiss franc to 89.37 cents.
Brent crude oil decreased $1.08 to $82.05 a barrel and the Dutch TTF natural gas edged up 68 cents to Є40.98 per MWh.
Stock Movers
Renault SA decreased 6.4% to €34.24 after the French automaker said revenue in the first quarter increased 29% and the company reaffirmed its annual outlook.
The stock was under pressure after the automaker said the company is reviewing its pricing for electric vehicles worldwide.
Volvo AB Class B increased 1% to SEK211.25 after the Swedish vehicle and industrial equipment maker posted higher adjusted earnings and lifted its outlook for its heavy duty truck unit on easing supply chain issues.
Schindler Holding AG increased 0.9% to Sfr 190.80 after the Swiss elevator and escalator maker said first quarter profit jumped 47%.
Nokia Oyj fell 4.3% to €4.08 after the Finnish telecom and technology company reported weaker-than-expected earnings in the first quarter.
Centamin PLC declined 0.8% to 105.59 pence after the gold miner reported a decline in gold production from the previous quarter.
- Arjun Pandit
- 20 Apr, 2023
- Mumbai
Markets in Asia traded mixed with a downward bias and investors digested the latest earnings releases from the companies in the region and around the world.
China's commercial lenders kept lending rates unchanged for one-year and five-year loans, the National Bureau of Statistics reported Thursday.
Banks left one-year lending prime rate at 3.65% for the eighth month in a row and 5-year reference rate, used for home lending, was held at 4.3%.
Earlier in the week, the People's Bank of China left its medium-term policy rate at 2.75%.
The Nikkei index increased 0.2% to 28,672.85, the Shanghai Composite Index fell 0.7% to 3,345.36 and the Hang Seng Index decreased 0.1% to 3,345.36.
Markets in South Korea decreased 0.2% and the benchmark index in Australia was unchanged.
Benchmark indexes in India attempted a rebound after three days of weak trading amid better-than-expected earnings from domestic corporations.
In Mumbai, investors turned cautious on the worries that crude oil prices may rebound faster after a stronger-than-expected first quarter GDP rebound in China.
India imports about 70% of its energy needs, and higher crude oil prices fuel domestic inflation.
Japan's International Trade Deficit Expanded In March
Japan reported a rise in its trade deficit for the 20th month in a row, after imports rose faster than exports, the Ministry of Finance reported Thursday.
Trade deficit advanced to ¥754.7 billion in March from ¥464.9 billion a year ago and stretched the longest stretch of deficit since 2015.
Imports increased 7.3% to ¥9,578.8 billion and exports increased 4.3% to ¥7,654.7 billion.
Exports increased for the 25th month in a row and imports advanced 26th month in a row on rising commodities and energy prices.
Higher energy prices expanded the trade deficit in the first quarter to ¥5,151.2 billion from ¥3,375.9 billion a year ago.
If commodities and energy prices continue to remain elevated, Japan is likely to record its third annual trade deficit in a row following the shortfall of 19,971.3 billion in 2022.
- Brian Turner
- 20 Apr, 2023
- New York City
Japan reported a rise in its trade deficit for the 20th month in a row, after imports rose faster than exports, the Ministry of Finance reported Thursday.
Trade deficit advanced to ¥754.7 billion in March from ¥464.9 billion a year ago and stretched the longest stretch of deficit since 2015.
Imports increased 7.3% to ¥9,578.8 billion and exports increased 4.3% to ¥7,654.7 billion.
Exports increased for the 25th month in a row and imports advanced 26th month in a row on rising commodities and energy prices.
Higher energy prices expanded the trade deficit in the first quarter to ¥5,151.2 billion from ¥3,375.9 billion a year ago.
If commodities and energy prices continue to remain elevated, Japan is likely to record its third annual trade deficit in a row following the shortfall of 19,971.3 billion in 2022.