02/05/24

YESTERDAY IN THE U.S.A.

Wall Street closed mixed following Fed’s rate decision.

The S&P 500 shed 0.34% to finish at 5,018.39, the Dow Jones added 0.23% to settle at 37,903.29, while the Nasdaq Composite slid 0.33% to end the session at 15,605.48.

Fed officials decided to leave the benchmark rate in a range of 5.25% to 5.5% for a sixth straight meeting. Officials also outlined plans to slow the pace at which the central bank is shrinking its asset portfolio. The Fed will cut the cap on runoff for Treasuries to $25 billion a month from $60 billion beginning in June, in a bid to reduce the risk of financial-market turbulence that struck during the previous round of balance-sheet trimming in 2019. Jerome Powell largely ruled out that the central bank’s next move could be a hike, easing investor worries that it was losing control of sticky inflation.

Treasuries climbed across the curve, with two-year yields dropping below 5%. Swap traders boosted their bets on rate cuts and projected higher odds that the first move will happen in November, instead of December.

On the Energy front, U.S. oil prices tumbled more than 3% to dip below $80 a barrel on Wednesday as crude stockpiles surged on lackluster demand. The WTI Crude June future fell $2.83 to trade at $79.10 a barrel, the lowest level in seven weeks. ICE Brent July futures lost $2.77 to trade at $83.56 a barrel. U.S. oil inventory levels have risen to the highest levels since June 2023 as refiners process less crude as demand for gasoline has softened.

In corporate news, Amazon’s cloud unit posted the strongest sales growth in a year, a sign that the retailer’s most profitable unit is recovering from a slump as businesses resume spending on technology projects, including artificial intelligence services.

Advanced Micro Devices, the second-biggest maker of computer processors, gave a lukewarm revenue forecast for the current period, weighed down by lackluster demand for chips used in video-game hardware.

Super Micro Computer reported quarterly sales that fell slightly short of estimates. The results disappointed investors who had sky-high expectations that the server maker’s business would benefit from AI-related demand.

Mastercard cut a forecast for full-year revenue growth citing foreign exchange headwinds, as first-quarter spending on the payments giant’s network fell short of estimates.

New York Community Bancorp posted results that were better than feared and executives outlined a plan for reshaping it into a more diversified and profitable bank.

Estée Lauder lowered its revenue outlook for the remainder of the year as the company faces lackluster demand for its high-end products in China.

Pinterest reported first-quarter sales and user growth that surpassed Wall Street’s expectations, bolstered by a push into shopping and a focus on Gen-Z users.

Starbucks sales fell for the first time since 2020 as half-off deals and new lavender lattes weren’t enough to entice increasingly budget-conscious consumers.

Pfizer raised full-year earnings guidance after completing its deal with the US government to take doses of its Covid pill back.

CVS Health cut its annual earnings outlook for the second quarter in a row, citing increased medical costs in its Medicare insurance business.

Johnson & Johnson will ask thousands of people suing over its allegedly tainted baby powder to vote for a settlement that would resolve all litigation for $11 billion — $2.1 billion more than the company offered last year.

After the Closing Bell

Door Dash was down by 15% in extended trading after the delivery-app company gave a forecast for adjusted Ebitda in the current quarter that trailed the average analyst estimate at the midpoint.

Qualcomm was 4.7% higher in extended trading. The world’s biggest seller of smartphone processors gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump.

ERALIER TODAY IN APAC

Asia-Pacific stock markets were mostly lower ?this morning, after the U.S. Federal Reserve opted to hold interest rates steady at the end of its two-day meeting.

At 06:55 Paris Time, Japan’s Nikkei 225 erased most declines from earlier in the session to trade down 0.15%, while the broader Topix was down by 0.06%.South Korea’s Kospi was 0.11% lower, while the smaller-cap Kosdaq was down by 0.13%. Australia’s ASX 200 was 0.38% higher .Hong Kong’s Hang Seng reversed losses to lead gains in Asia, with a 2.20% jump. The Hang Seng Tech index surged 4% after Chinese EV makers rose following April vehicle delivery updates.

Mainland China markets remained closed for the Labor Day holiday.China’s Nio surges 20%, touching their highest level in over six weeks, as EV deliveries more than double in April. The company said it delivered 15,620 vehicles in April, a 134.6% year-over-year increase. “The deliveries consisted of 8,817 premium smart electric SUVs, and 6,803 premium smart electric sedans,” Nio said in a statement on Wednesday. Nio has delivered 45,673 vehicles so far this year, 21.2% more compared with the same period a year earlier.

Meanwhile, Singaporean bank DBS Group reported a 15% jump in first-quarter net profit from a year earlier to a record S$2.96 billion ($2.17 billion). Compared to the previous quarter, net profit jumped 24%. “We are optimistic that total income and earnings will be better than previously guided and we will be able to deliver another year of strong shareholder returns,” ?DBS Chief Executive Officer Piyush Gupta said in a statement. Last year, DBS reported a record profit of S$10.3 billion. Shares of DBS rose more than 2.32% following the results.

On the Macros front, South Korea’s CPI rose at a slower pace in April from March on a year-on-year basis, according to official data. April CPI came in at 2.9% year on year, compared with a 3.1% rise in March. The reading was also lower than a 3% gain expected by. Core CPI, excluding food and energy prices, rose 2.3%. It was slightly slower than a 2.4% increase in March.

In FX this morning, all eyes were turned to the Japanese yen that traded at 155.95 against the U.S. dollar, strengthening to its strongest level in 11 days. Japanese authorities are suspected to have intervened to prop up the currency on Monday after it breached the 160 level against the greenback to touch fresh 34-year lows. Japanese authorities are yet to make an official statement about any support measures taken to boost the yen after having repeatedly warned against “excessive” moves in the currency.

LATEST NEWS HEADLINES

ING Announces €2.5B Share Buyback

Arcelormittal 1Q EBITDA $1.96B, Est. $1.71B

StanChart Profit Tops Estimates on Trading, Wealth Business

Barclays Begins Implementing Job Cuts Across Investment Bank

Credit Suisse AT1 Litigators Hit Back at Reform Discussions

Ex-SocGen Trader Kataria Says He Was Fired for Options Bets

Rio Tinto chairman quiet on Anglo bid, eyes copper profits

Euro Stoxx 50's Stretched 13.6x P/E Takes Solace in Solid 1Q EPS

BBVA’s €12 Billion Sabadell Proposal Signals Europe Bank Shakeup

Maersk Results to Be Impacted by Red Sea Conflict

Stellantis UAW Members to Vote on Plant Strike Authorization

Senator Slams GlaxoSmithKline Over Cost of Asthma Inhalers

Worldline 1Q Organic Revenue Beats Estimates

Vestas Results Seen Showing Slower Start to Year: Preview

Pandora to Report Results; Shares Up 15.0% YTD: Preview

Shell investors will be keen to see buybacks maintained.

Shell Exited China Power Business Amid Push to Boost Returns

Monsanto Gets $185 Million PCB Verdict Tossed in Washington

Google’s Payments to Apple Reached $20 Billion in 2022, Cue Says

ICICI Bank Denies Report of CEO Sandeep Bakhshi’s Resignation

Dropbox Says Hackers Breached Digital-Signature Product

EBay dropped postmarket on a weak revenue forecast.

AIG advanced after profit beat.

Zillow slumped as second-quarter revenue missed.

Qualcomm climbed postmarket after an upbeat outlook.

DoorDash plunged on a disappointing profit guidance.

TOP STORIES THIS MORNING

Apple may attribute a sales decline to a sluggish China market. Results will offer a first look at Vision Pro sales.

A former SocGen trader said he was “fired” after the bank unearthed risky bets that went undetected by risk managers.

StanChart’s earnings topped estimates, boosted by its trading and wealth businesses. ING also beat and announced a €2.5 billion buyback.

Man Group, BlackRock and Citadel have billion-dollar mandates from Australia’s sovereign wealth fund, disclosures showed.

SK Hynix said its capacity to make high-bandwidth memory chips is almost fully booked through next year.

Citi dealmaker Edward Ruff departed after he was put on leave while the firm investigated his treatment of a junior banker, a person familiar said.

Microsoft will invest $2.2 billion over four years to build digital infrastructure in Malaysia.

Exxon is set to win FTC approval for its Pioneer deal after the companies agreed Pioneer’s former CEO won’t join the board.

US regulators won’t scrap their bank-capital plan entirely, with some officials pushing for finalization as soon as August. Meanwhile, JPMorgan expects to pay $100 million to settle a watchdog inquiry.

A push by global banking regulators to examine AT1 securities in the wake of Credit Suisse’s downfall is facing criticism from an unlikely source: representatives of aggrieved investors. They’ve been mollified by the market’s turnaround, which has generated a return of 4.6% so far this year.

Lending to UK commercial real estate dropped by a third last year to the lowest in a decade, as deal volumes tumbled and banks turned cautious. The ￡32 billion of new loans was the lowest figure recorded since 2013, according to a survey by Bayes Business School.

The yen slipped in Asian trade after spiking more than 3% in the last hour of New York trading, fueling speculation about another intervention. Japan’s top currency official declined to comment. Jim O’Neill said US officials already have a watchful eye on the yen and may resort to more “specific” and “public” rhetoric to help stabilize the currency.The yen slipped in Asian trade after spiking more than 3% in the last hour of New York trading, fueling speculation about another intervention. Japan’s top currency official declined to comment. Jim O’Neill said US officials already have a watchful eye on the yen and may resort to more “specific” and “public” rhetoric to help stabilize the currency.

TODAY'S AGENDA

MACROS

08:30 : Switzerland CPI

08:30 : Switzerland Retail Sales

09:15 : HCOB Spain Manufacturing PMI

09:30 : Switzerland PMI Manufacturing & Services

09:45 : HCOB Italy Manufacturing PMI

09:50 : HCOB France Manufacturing PMI

09:55 : HCOB Germany Manufacturing PMI

10:00 : HCOB Eurozone Manufacturing PMI

10:00 : Italy PPI

12:00 : Portugal Industrial Production

13:30 : U.S. Challenger Job Cuts

14:30 : U.S. Trade Balance

14:30 : U.S. Initial & Continuing Jobless Claims

16:00 : U.S. Factory Orders

16:00 : U.S. Factory Orders

18:00 : Italy New Car Registrations

22:15 : ECB's Lane Speaks

CORPORATE EVENTS

Earnings include Apple, Novo Nordisk, Shell, Apollo, Peloton, Moderna, Amgen, Live Nation, Coinbase, DraftKings, Booking, Block, ConocoPhillips

AUCTIONS

10:50 : France to Sell 2.5% 2043 Bonds

10:50 : France to Sell 3.5% 2033 Bonds

10:50 : France to Sell 1.25% 2034 Bonds

10:50 : France to Sell 3.25% 2055 Bonds

17:30 : U.S. To Sell USD70 Bln 4-Week Bills

17:30 : U.S. To Sell USD75 Bln 8-Week Bills

TERCHNICAL SNAPSHOTS