25/04/24
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YESTERDAY IN THE U.S.A.
The S&P 500 closed near its flatline Wednesday as interest rate fears dampened the enthusiasm stemming from a strong slate of corporate earnings.
The S&P 500 eked out a 0.02% gain to close at 5,071.63, while the Dow Jones fell 42.77 points, or 0.11%, to 38,460.92. The Nasdaq Composite edged 0.1% higher to finish the session at 15,712.75. Treasury yields rose, pressuring stocks. At their highs of the day, the benchmark 10-year Treasury note yield topped 4.67%, while the rate on the 2-year note surpassed 4.95%.
Those moves came ahead of the release of key U.S. economic data. First-quarter GDP numbers are due for release Thursday morning, while the core PCE, personal consumption expenditures price index, Fed’s inflation gauge, is due out Friday. Investors have been fearful that inflation is not easing as quickly as anticipated, raising concern that the Fed may not cut interest rates.
In late trading, Meta Platforms tumbled after a disappointing revenue forecast. Equities fluctuated after their biggest gain in two months. Megacaps were mixed, with Tesla surging after Elon Musk vowed to launch less-expensive vehicles and Nvidia Corp. sliding. Treasuries remained under pressure after a $70 billion sale of notes failed to assuage concerns about more losses. IBM is nearing a deal to acquire software company HashiCorp Inc. for about $35 per share, according to people with knowledge of the matter. Boeing Chief Executive Officer Dave Calhoun said the embattled planemaker is making progress toward turning around its manufacturing and that it will hit its mid-decade cash-flow goal, even after reporting a major outflow in the first three months of the year it slows output Amazon and Microsoft’s investments into artificial intelligence startups will get deeper scrutiny from the UK’s antitrust watchdog. AT&T beat analysts’ estimates for profit in the first quarter as it added more wireless phone customers than expected. Biogen reported first-quarter profit that beat expectations as the biotech giant’s new Alzheimer’s drug Leqembi gained traction and cost cuts took hold. Visa reported a quarterly profit that beat Wall Street predictions as US credit-card spending climbed. Hasbro reported first-quarter earnings that beat estimates, a promising sign for the company’s turnaround efforts. Mattel reported a smaller-than-expected first-quarter loss, benefiting from fast sales of its Hot Wheels miniature cars and lower costs.
EARLIER TODAY IN APAC
Asia-Pacific markets, outside the Chinese space, took a breather after two straight days of rallies.
Japan’s Nikkei 225 was 1.95% lower 1.8%, while the Topix was down 1.44%. South Korea’s Kospi was 1.42% lower, while the small cap Kosdaq was down 0.36%. Markets in Australia and New Zealand are closed for a public holiday. Hong Kong’s Hang Seng was 0.55% higher, recovering from morning losses, while China’s CSI 300 was up 0.24% also rebounding from earlier weaknesses.
South Korean chipmaker SK Hynix slid almost 3% despite the company posting its highest operating profit in almost two years. The chipmaker recorded 2.89 trillion South Korean won ($2.1 billion) in operating profit for the first quarter of 2024, a 734% jump year on year, with net profit coming in at 1.92 trillion won. Revenue for the fourth quarter came in at 12.43 trillion won, an all-time quarterly high. SK Hynix explained that this was due to an increase in the sales of AI server products, “backed by its leadership in AI memory technology.” The company also added that it “believes that it has entered the phase of a clear rebound, following a prolonged downturn.”
On the Macros front, South Korea posted GDP growth of 3.4% in Q1, beating the 2.4% expected and marking its highest quarterly growth since the fourth quarter of 2021. On a quarter on quarter basis, GDP rose 1.3%, also beating expectations of 0.6%. Exports from South Korea in the first quarter rose by 0.9%, as exports of IT items, such as cellular phones, increased. Imports contracted by 0.7%, owing to decreased imports of electronic aquipment.
In FX, The Japanese yen slid past the 155 mark against the U.S. dollar, touching a fresh 34-year low. The currency last traded at 155.60 against a strengthening greenback. Japanese authorities have acknowledged the yen’s weakness for almost a month but investors are awaiting clearer steps to stem the currency’s fall. ?The Bank of Japan kicks off its monetary policy meeting Thursday as investors monitor for action against yen weakness. The Bank’s monetary policy decision on Friday will be closely monitored for any action against yen weakness as well as forecasts on inflation.
LATEST NEWS HEADLINES
TOP STORIES THIS MORNING
Boeing was downgraded by Moody’s to one notch from junk.
IBM slid 8.5% postmarket as weak consulting unit sales overshadowed its purchase of HashiCorp.
The UBS analyst who shocked markets with a sell call on Evergrande long before it defaulted is forecasting a recovery in China property.
Ford rose postmarket after its results beat.
ServiceNow slipped as its sales forecast missed.
Meta slumped 15% postmarket after it boosted spending projections by billions more and its second-quarter sales forecast missed. Mark Zuckerberg asked for patience. Alphabet and Microsoft may both say AI workloads boosted cloud earnings after the close today. Snap may post its biggest net loss since 2017.
Microsoft-backed Rubrik raised $752 million after it priced its IPO above a marketed range and slightly expanded the offering.
Nvidia will buy Run:ai, an Israeli startup that develops software for handling AI computing resources.
Xiaomi secured 75,723 orders for its SU7 electric vehicles since last month’s launch, posing a threat to the dominance of BYD and Tesla in China.
BHP is considering a potential takeover of Anglo American in what may be the biggest deal this year. Anglo said BHP’s unsolicited all-share proposal is conditional on it first splitting off its South African platinum and iron ore units. Anglo has a market cap of $34 billion.
KKR raised $11 billion for its latest global infrastructure fund, more than half its target, a person familiar said. The firm hasn’t yet held a first close on the fund. Separately, the buyout firm shelved a $10 billion sale of Upfield.
Upcoming earnings: Deutsche Bank’s fixed-income traders are seen doing better than their peers at other banks. The focus in Barclays’ results will be its refreshed strategy and capital markets advisory revenues.
Demand for Treasuries is holding up as the US government floods the market with more than $180 billion of new debt this week. Investors absorbed $70 billion of five-year notes yesterday and another $44 billion sale of seven-year notes is due today. Still, investors may be less receptive to the longer-dated securities ahead of the Treasury’s quarterly funding announcement and the FOMC meeting next week.
The $61 billion US military aid package for Ukraine includes the longer-range version of the ATACMS ballistic missile system. The NYT said the missiles were secretly shipped to Ukraine last week and were already used to strike an airfield in Crimea and Russian troops in the southeast. Qatar will host weekend talks on Ukraine’s proposal to end the war.
Pedro Sanchez said he may resign after a court in Spain opened an investigation into his wife, raising the possibility of a new general election. The Spanish PM canceled public appearances and said he’ll announce his decision on Monday.
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TODAY'S AGENDA
MACROS
08:00 : Germany GfK Consumer Confidence
08:45 : France Business, Manufacturing Confidence
09:00 : Spain PPI
09:00 : ECB's Schnabel Speaks in Frankfurt
10:00 : ECB Publishes Economic Bulletin
10:20 : ECB's Vujcic Speaks
11:15 : ECB's Lagarde speaks
12:00 : France Total Jobseekers
14:30 : U.S. GDP
14:30 : U.S. Personal Consumption
14:30 : U.S. Core PCE Price Index
14:30 : U.S. Wholesale Inventories
14:30 : U.S. Initial Jobless Claims
16:00 : U.S. Pending Home Sales
17:15 : Bundesbank Chief Nagel Speaks About Climate Change
19:30 : ECB's Panetta Speaks in Frankfurt
CORPORATE EVENTS
Earnings include BNP Paribas, Barclays, Deutsche Bank, AstraZeneca, Sanofi, Airbus, Merck & Co., Caterpillar, Bristol Myers, Southwest Air, Comcast, American Air, Microsoft, Intel, Alphabet, T-Mobile, Snap
AUCTIONS
17:30 : U.S. To Sell USD70 Bln 4-Week Bills
17:30 : U.S. To Sell USD75 Bln 8-Week Bills
19:00 : U.S. To Sell USD44 Bln 7-Year Notes