23/04/24

YESTERDAY IN THE U.S.A.

Stocks ripped higher Monday, recovering their footing after a tough week, as tech shares rebounded and tensions in the Middle East dimmed. Traders also looked ahead to the release of major earnings.

The S&P 500 closed 0.87% higher at 5,010.60. The Dow Jones added 0.67%, to settle at 38,239.98, while the Nasdaq Composite jumped 1.11% to close at 15,451.31. Both the S&P 500 and Nasdaq ended a six-day losing streak. Treasuries wavered ahead of a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024.

Chipmaker and artificial intelligence favorite Nvidia climbed 4.4%, bouncing from a nearly 14% sell-off last week, its worst since September 2022. Arm Holdings also rebounded nearly 7% on Monday.

In corporate news, Truist Financial posted lower Q1 lending profits than expected as it was forced to pay customers more for deposits with interest rates remaining elevated, and the bank trimmed its revenue guidance for the rest of the year.

Kroger and Albertsons agreed to divest more stores to C&S Wholesale Grocers, seeking to make their planned $24.6 billion merger more appealing to antitrust authorities.

Viking Holdings and its existing shareholders are seeking to raise as much as $1.1 billion in a New York initial public offering, with the cruise operator looking to go public as the travel industry rebounds from its pandemic-era slump.

ASML Holding is weighing options to expand its presence in the Netherlands, after the government committed €2.5 billion to infrastructure and education spending in the region where the company’s headquarters are located.

Tesla’s weekend move to slash prices across its range in China risks triggering a new round in the nation’s bruising price war, with Li Auto immediately responding with discounts and cash rebates on new models.

Reliance Industries, led by billionaire Mukesh Ambani, posted a lower-than-expected quarterly profit as a continued weakness in its petrochemicals business and higher taxes offset growth in its consumer unit and a large surge in other income

Hedge funds are getting back to buying global equities, shrugging off broader market volatility to gobble up tech stocks at the fastest pace in two months, according to Goldman Sachs Group Inc.’s trading desk.

New long positions outpaced short sales last week while single stocks saw “the largest notional buying in over a year,” the traders wrote in a note — marking a bullish turn in sentiment after hedge funds had been selling for the prior three weeks.

US earnings updates this week will be key to see if they can keep buoying risk appetite in a higher-for-longer rate environment, according to the BlackRock Investment Institute’s weekly commentary.

Big earnings and data ahead Companies including Tesla, Meta Platforms, American Airlines, Microsoft and Alphabet are all set to report this week.

There is some potentially bigger news in the back part of this week, with GDP due out on Thursday and a key inflation reading on Friday, when the Commerce Department reports personal consumption expenditures price index data for March. The PCE deflator is the Fed’s preferred inflation gauge.

The Fed meets again April 30 to May 1, with officials now in the quiet period ahead of the meeting.

On the Energy front, U.S. crude prices slipped after Iran said it will not escalate the conflict with Israel. Investors had been concerned higher oil prices could contribute to inflation, leading the Federal Reserve to hold off on cutting rates.

EARLIER TODAY IN APAC

Asia-Pacific markets were up this morning as investors assess PMIs in Japan and Australia

In Japan, the Nikkei 225 gained 0.38%, while the broad based Topix was up 0.19%.

South Korea’s Kospi climbed bucked the trend trading 0.06% below the flat line, while the small cap Kosdaq rose 0.19%.

Australia’s ASX 200 gained 0.38% after the PMI release.

Hong Kong’s Hang Seng led gains in the region adding 1.52%, while the CSI 300 on mainland China was the outlier, falling 0.57%. Hang Seng Tech Sub Index was up by 2.76% on optimism Big Tech will announce hefty profits. UBS upgraded shares in China and the Hong Kong to overweight, citing resilient earnings.

Shares of Chinese bubble tea chain Chabaidao, officially listed as Sichuan Baicha Baidao Industrial, opened 10% lower in early trade on its trading debut in Hong Kong, before plunging more than 30%. It is currently trading at HK$12.32, far below its IPO offer price of HK$17.50. The IPO is Hong Kong’s largest listing so far this year. The company announced it had garnered net proceeds of 2.59 billion Hong Kong dollars ($330.5 million) from its IPO, before listing expenses. Chabaidao offered 90% of its 147.7 million shares in a global offering, while the remainder 10% were offered in a public offer in Hong Kong. However, the public offer was only 0.5 times subscribed, leading the firm to reallocate the remainder of the shares to the global offer, which was 1.11 times subscribed.

On the Macros front, Japan’s business activity in April expanded at its fastest pace in eight months, according to flash figures from au Jibun bank. The country’s composite PMI climbed to 52.6 from March’s 51.7, its joint-highest level since August. Japan’s manufacturing PMI came in at 49.9, marking a softer decline from the 48.2 in March, while services PMI was at 54.6, up from 54.1 in March.

Australia’s business activity in April expanded at its fastest clip in 24 months, according to flash figures from S&P Global. The country’s composite PMI came in at 53.6, compared to 53.3 in March. Manufacturing PMI climbed to 49.9 from 47.3, just shy of the 50 mark that separates expansion from contraction, while services PMI slipped slightly to 54.2 from 54.4.

In FX, the yen gained after Japan’s finance minister said the environment is in place for intervention if needed, his strongest remarks since the currency touched a 34-year low against the dollar. Kazuo Ueda also offered support by reiterating the BOJ would raise its rates if underlying inflation rises toward the bank’s target.

LATEST NEWS HEADLINES

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Renault 1Q Revenus EU11.71B, Est. EU11.43B

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Kuehne + Nagel 1Q Ebit Meets Estimates

Randstad 1Q Revenue Meets Estimates

Bayer Gains; JPMorgan Expects Solid First Quarter Results

Sanofi to Pay $100 Million to Settle Zantac Cancer Lawsuits

UBS to Open Menlo Park Office, Hires Lynch for Tech Deals

StanChart Facing ￡1.5 Billion UK Claim in Iran Sanction Case

TotalEnergies to Buy Sapura Energy Gas Assets for $530 Million

Adidas China Gains at Risk as Nike, Anta Jump on Euro-Paris 2024

Novartis May Boost Forecast With Key Drugs in Focus: Preview

Santander’s Nordic Unit Requests Bondholder Meeting

HSBC Shares Rise After KBW Upgrades on Higher-For-Longer Rates

Chip Toolmakers' Tightening Delayed Despite Gen AI Tailwinds

Equipment Tops EU Health Care Scorecard as Pharma Trends Mixed

First Sentier will close four funds totaling $9 billion in a retreat.

Gold extended losses after its biggest drop in almost two years.

Citigroup Sells Maple Bonds in First Sizable Deal Since 2015

Marko Kolanovic cautioned the US stock slide isn’t over yet.

Sichuan Baicha Baidao Industrial, Hong Kong’s biggest IPO this year flopped.

Goldman senior banker Dirk Lievens relocated to Paris.

ADM ex-CFO Vikram Luthar will resign.

Jefferies fintech co-heads Kegan Greene and Rob Freiman left.

Millennium hired former Balyasny merger-arbitrage specialist Matthew Lubman.

TOP STORIES THIS MORNING

UBS plans to open a Menlo Park office and hired Barclay’s Sean Lynch.

Goldman is exiting its retail robo-investing business in a deal with Betterment.

China’s Noah will hire as many as 100 wealth managers in Hong Kong and Singapore.

Carlyle-backed Crescent Midstream is exploring a potential sale after receiving takeover interest, people familiar said.

Hedge funds are snapping up Japanese traders from brokerages including Morgan Stanley and Citi, luring them with higher pay.

Tesla kicks off Big Tech earnings after the market close. Investors will look at margins and guidance, as well as plans for its robotaxi. Texas Instruments analysts expect a weaker automotive business to be a potential headwind. Price increases will be a point of focus for Spotify.

Gucci’s struggle to maintain its position in high fashion and a disorganized management strategy has led to heavy discounts, unthinkable at its thriving rivals LVMH and Hermès. Some are questioning whether Fran?ois-Henri Pinault is the right man to overhaul Gucci’s parent Kering.

The FTC sued to stop Tapestry’s $8.5 billion takeover of Capri. Antitrust enforcers alleged the deal between the owners of Coach, Michael Kors and Versace would raise prices on handbags and accessories.

Calamos is launching ETFs that will bet on markets without, the pitch says, going down. The catch: investors looking for full protection will need to buy it on launch day of May 1 and hold it through April 30, 2025.

The US is drafting sanctions against some Chinese banks to cut off them from the global financial system, the WSJ reported. That comes ahead of Antony Blinken’s visit and will give him leverage to stop Beijing’s support of Russia’s military production, the newspaper said.

Stocks got a jolt of optimism thanks to signs of algo buying, according to MLIV. That’s evident in the TICK index, which climbed to its highest in more than a month. Such a move can inspire more buying on the notion that momentum stocks can keep rising.

The euro-area composite PMI will indicate whether the economy continued to strengthen going into the second quarter. The UK gauge is seen dipping.

TODAY'S AGENDA

MACROS

08:00 : UK March Public Finances

09:15 : France April HCOB PMIs

09:30 : Germany April HCOB PMIs

10:00 : Euro-area April HCOB PMIs

10:00 : BOE’s Haskel speaks

10:30 : UK April S&P Global PMIs

10:30 : ECB’s Panetta speaks

13:15 : BOE’s Pill speaks

14:30 : ECB’s Nagel speaks

14:30 : Philly Fed NBOS General Business Activity

15:45 : US PMIs

16:00 : US New Home Sales

CORPORATE EVENTS

Earnings include Novartis, Tesla, Spotify, UPS, Texas Instruments, Visa, Nidec, GE, GM, PepsiCo, Danaher, Deutsche Boerse

AUCTIONS

11:00 : Italy to Sell Up to EU1.25 Billion of 1.8% 2036 Linkers.

11:00 : Italy to Sell Up to EU2.5 Billion of 3.2% 2026 Bonds

11:00 : Italy to Sell Up to EU1.25 Billion of 1.5% 2029 Linkers

11:30 : Germany Calls for Bids on Auction of EU5 Billion 2.9% 2026

17:30 : U.S. To Sell USD65 Bln 42-Day CMB

19:00 : U.S. To Sell USD69 Bln 2-Year Notes