Company / Analytics

Week 02 in brief

North America

Wall Street stocks were higher on Friday as investors digested bank earnings and bet inflation would ease in 2023. It was the second consecutive week where the S&P 500 and the Nasdaq composite posted positive weekly gains. An index that is used to measure Wall Streets market fear, the Cboe Volatility index, closed at a one-year low. In the S&P 500 index, financials were among the sectors that gave the index the most support.

On Friday:

• The Dow Jones Industrial Average rose 112.64 points, or 0.33%, to 34,302.61.
• The S&P 500 rose 0.40% to 3,999.09,
• The Nasdaq Composite advanced 0.71% to 11,079.16.

For the week:

• The tech-heavy Nasdaq was the outperformer for the week after rising 4.82%.
• The S&P advanced 2.67%,
• The Dow added 2%.

What drove the U.S. market?

• JPMorgan Chase & Co and Bank of America Corp beat quarterly earnings estimates, while Wells Fargo & Co and Citigroup Inc fell short of quarterly profit estimates.
• But shares of all four firms rose, along with the S&P 500 banks index, which ended up 1.6%. JPMorgan shares climbed 2.5%.
• Also giving some support to the market Friday, the University of Michigan’s survey showed an improvement in U.S. consumer sentiment, with the one-year inflation outlook falling in January to the lowest level since the spring of 2021.
• Among the day’s decliners, Tesla shares fell 0.9% after it slashed prices on its electric vehicles in the United States and Europe by as much as 20% after missing 2022 deliveries estimates.
• In other earnings news, UnitedHealth Group Inc shares rose after it beat Wall Street expectations for fourth-quarter profit but the stock ended down on the day.
• Shares of Delta Air Lines Inc dropped 3.5% as the company forecast first-quarter profit below expectations.

How did the European markets perform?

• Stocks in Europe tracked Wall Street higher as stocks hit a near a nine-month high on Friday, supported by healthcare and banking stocks and upbeat economic data from Britain.
• The pan-regional STOXX 600 gained 0.5%, outperforming their U.S. peers after reporting season kicked off with mixed bank earnings. The European index closed its second consecutive week higher, with gains of 1.8%.
• European banking stocks gained 0.8%.
• UK’s FTSE 100 added 0.6% after data showed the British economy eked out 0.1% growth in November, helped by a boost from World Cup drinkers and video game sales, reducing the chance that it has already slipped into recession.
• In Germany, data showed the economy likely stagnated in the final quarter of last year and grew by 1.9% over the full-year 2022, suggesting Europe’s largest economy may just escape a recession over the winter. German stocks closed 0.2% higher.
• Shares of Kindred Group plunged more than 17% in early trade to the bottom of the Stoxx 600 after the Maltese-headquartered online gambling company issued a fourth-quarter profit warning.
• At the top of the index, shares of Germany’s United Internet climbed 4% on reports that its web hosting unit Ionos might begin the IPO process before the end of the month.

How did Asian markets perform?

• It was no different in Asia for stocks as the ever-growing hopes that China will emerge from its Covid nightmare and recover strongly in the months ahead drive stocks in the region higher.
• China’s benchmark index closed at its highest in four months and Hong Kong’s main index saw a fourth consecutive weekly gain.
• The outlier was Japan where a surging yen, which touched its strongest level against the dollar since May 31, and disappointing results from Uniqlo owner Fast Retailing dragged on the Nikkei.
• Tokyo’s main share average fell more than 1%, its first losing session in six, with more than two-thirds of the decline coming from Fast Retailing, which plunged 7.95% shaving 217.36 points off the Nikkei.
• Japanese equities also came under pressure from the yen’s rise to a seven-month high, as traders bet the Bank of Japan could tweak policy further at a meeting next week, less than a month after a surprising widening of the 10-year Japanese government bond yield allowable range.
• The Nikkei share average dropped 1.25%, or 330.30 points, to close at 26,119.52, while the broader Topix was down 0.27%, or 5.10 points, to 1,903.08.
• The Nikkei managed to hold on for a weekly gain of 0.56%, having fallen for four straight weeks previously.
• China’s benchmark index was lifted as foreign investors continued to buy Chinese shares for an eighth session on optimism that the world’s second-biggest economy was set for a robust recovery in a post-pandemic era.
• China’s blue-chip CSI 300 Index ended 1.4% higher, touching its highest level since September 13, and the Shanghai Composite Index advanced too.

Bonds and Commodities

• U.S. Treasury yields ticked higher on Friday as investors digested the latest inflation report and considered the outlook for Federal Reserve interest rate hikes.
• The yield on the 10-year Treasury rose more than 5 basis points to 3.504%. The 30-year rate slipped by 5 basis points to 3.624%. The 2-year rate, meanwhile, added 8 basis points to trade at 4.224
• Germany’s 10-year yield was down 3 basis points to 2.10%. On Thursday, it spent most of the session at its lowest level in four weeks
• Italy’s 10-year government bond yield fell 8.5 bps to 3.92%, with the spread between Italian and German 10-year yields hitting its lowest since Dec. 8 at 178 bps.
• Oil prices settled more than a dollar a barrel higher on Friday, notching their biggest weekly gains since October.
• Brent crude futures settled at $85.28 a barrel, up by $1.25, or 1.5%. West Texas Intermediate (WTI) crude futures rose for the seventh-straight session to settle at $79.86 a barrel, up by $1.47, or 1.9%.
• Brent gained 8.6% this week, while WTI rose by 8.4%, recouping most of the previous week’s losses.

Currencies

• Bitcoin rose 5.58% to $21,044 at 2344 GMT on Saturday, adding $1,113 to its previous close.
• Ether, the coin linked to the Ethereum blockchain network, surged 7% to $1,552.6 on Saturday, adding $101.6 to its previous close.
• The yen surged on Friday, adding to earlier gains on speculation the Bank of Japan (BOJ) will revise its ultra-loose monetary policy, while the dollar edged up against most other major currencies, rising off of a seven-month low.
• The yen was up 1.06% against the greenback at 127.92 yen on Friday.
• The euro was last down 0.2% against the dollar at $1.0828, easing off a fresh nine-month high earlier in the session. Sterling rose 0.12% to $1.22275.
• The dollar index, which measures the greenback against a basket of currencies, including the euro and yen, edged up 0.02% to 102.22.

Next week

Next week will be a holiday-shortened one, with U.S. markets closed on Monday. However, it will still be a busy week for earnings, with more reports due from big banks and financial sector firms, including Morgan Stanley, Goldman Sachs, Charles Schwab, PNC Bank, and Discover Financial Services, among others. We’ll also get earnings from United Airlines, American Airlines, Procter & Gamble, and Netflix.

On Wednesday, the U.S. Census Bureau will report on December retail sales, while the Bureau of Labor Statistics (BLS) will issue the latest Producer Price Index (PPI). We can also expect updates on the housing market, including December housing starts, building permits, and existing home sales.