Week 03 in brief
North America
US stocks closed higher on Friday as quarterly earnings from Netflix and Alphabet announcing job cuts drove their respective stocks higher, driving a more than 2% rise on the Nasdaq. Netflix Inc shares jumped 8.46% as the streaming company added more subscribers than expected in the fourth quarter and said co-founder Reed Hastings was stepping down as chief executive.
The Friday rise broke a three-session losing streak for the S&P 500 and Dow. These gains were however not enough to offset losses from earlier in the week as both indices ended the week in losses.
How did the major indices perform? On Friday:
- The Dow Jones Industrial Average rose 330.93 points, or 1%, to 33,375.49,
- The S&P 500 gained 73.76 points, or 1.89%, to 3,972.61
- The Nasdaq Composite added 288.17 points, or 2.66%, to 11,140.43.
For the week:
- The Dow lost 2.7%,
- The S&P 500 shed 0.66%
- The Nasdaq gained 0.55%.
What drove the U.S. market?
- On Friday, Fed Governor Christopher Waller said the central bank may be pretty close to a point where rates are sufficiently restrictive to cool inflation, which gave an additional boost to equities. The Fed is largely expected to raise rates by 25 basis points (bps) at its Feb. 1 policy announcement.
- Gains on the Dow on Friday were curbed by a 2.54% fall in shares of Goldman Sachs Group Inc after the Wall Street Journal reported the Fed was probing the company’s consumer business.
- Alphabet Inc was the most recent company to announce job cuts as it said it was cutting 12,000 jobs, sending shares 5.34% higher.
- The top performers on the S&P 500 were SVB Financial Group which rose 16.56% to 291.44, Synchrony Financial which was up 8.62% to settle at 35.39 and Netflix Inc which gained 8.46% to close at 342.50.
- The worst performers were Goldman Sachs Group Inc which was down 2.54% to 341.84 in late trade, Everest Re Group Ltd which lost 1.73% to settle at 338.52 and Williams Companies Inc which was down 1.50% to 31.45 at the close.
How did the European markets perform?
- European markets tracked Wall Street higher as stocks attempted to rebound from Thursday’s selloff, with the outlook for monetary policy still firmly in focus.
- The pan-European Stoxx 600 index closed 0.35% higher, with travel and leisure stocks adding 1.2% to lead gains as most sectors settled in positive territory. But overall the pan-European Stoxx 600 index fell through the week, by around 0.3%, failing to make back gains from Thursday’s sell-off as weak earnings and U.S. economic data as well as hawkish remarks from central bankers soured sentiment.
- Spanish telecoms firm Cellnex rose to the top of the Stoxx 600 index in afternoon trade.
- Germany’s DAX index rose 0.76%, France’s CAC 40 was up 0.6% and the U.K.’s FTSE 100 nudged up 0.3%.
- The European blue chip index closed lower in the previous session as global market sentiment soured after disappointing December retail sales figures out of the United States, which resurfaced concerns about a possible recession.
How did Asian markets perform?
- Major Asian stock markets ended Friday with gains ahead of the lunar new year holidays.
- The Asia Dow, which includes blue-chip companies in the region, rose 0.60% to 3,487.46.
- Tokyo’s Nikkei 225 stock exchange increased 0.56% to close at 26,553.53.
- Japan’s core inflation has hit 4%, the highest in 41 years, according to data from the Statistics Bureau of Japan on Friday.
- The Hang Seng, the benchmark for blue-chip stocks trading on the Hong Kong stock exchange, saw the largest hike on Friday, up 1.82% to 22,044.65 points.
- The annual consumer inflation rate in Hong Kong hit 2% in December 2022, up from 1.8% in November.
- China’s Shanghai stock exchange, meanwhile, climbed 0.76% from the previous close to 3,264.81 points.
- China on Friday kept its benchmark interest rates unchanged for the fifth consecutive month, in line with the market forecast.
- The Singapore benchmark index added 0.54% to 3,293.71 points while the Indian Sensex benchmark fell 0.39% to 60,621.77.
Bonds and Commodities
- Gold prices edged lower on Friday as the dollar firmed, although hopes of slower rate hikes from the U.S. Federal Reserve kept bullion on track for its fifth straight weekly gain.
- Spot gold fell 0.2% to $1,928.06 per ounce, after rising to its highest since April 22 at $1,937.49 earlier in the session. Prices are up 0.4% so far this week.
- U.S. gold futures settled up 0.2% at $1,928.2.
- Silver rose 0.3% to $23.90 per ounce. Platinum gained 0.8% to $1,040.50, while palladium dipped 1.7% to $1,725.04, with both metals en route to a second consecutive weekly fall.
- U.S. Treasury yields climbed as investors a weighed the outlook for the U.S. economy and remarks from Federal Reserve speakers.
- The benchmark 10-year Treasury was trading at 3.488% after rising by 8 basis points. The yield on the 2-year Treasury was last up by more than 6 basis points at 4.177%.
- Oil prices rose and registered a second straight weekly gain as China’s economic prospects improved.
- Brent crude settled at $87.63 a barrel, up $1.47, or 1.7%. U.S. crude settled at $81.31 a barrel, gaining 98 cents, or 1.2%.
Currencies
- The dollar shot up against the yen after the BOJ governor’s Haruhiko Kuroda, who addressed the World Economic Forum in Davos, Switzerland, said the central bank will maintain its “extremely accommodative” monetary policy to achieve its 2% inflation target in a stable, sustainable manner.
- The dollar rose as high as 130.60 yen and was last up 0.9% at 129.51. The greenback had its biggest percentage gain since early January.
- The euro was up 0.1% at $1.0843, while sterling was flat at $1.2392, after UK data showed a surprise drop in retail sales in December, as British shoppers bought less, but spent more.
Next week
In the coming week, earnings season could enter one of its busiest weeks with reports from some of the largest companies in the world. We can expect earnings from Microsoft, Johnson & Johnson, Tesla, AT&T, Verizon, Boeing, IBM, Visa, and Mastercard, among others. On Tuesday, S&P Global will release its Composite PMI for January, gauging business activity across the U.S.
On Thursday, the Bureau of Economic Analysis (BEA) will issue the advance estimate for fourth-quarter gross domestic product (GDP), followed by its Personal Consumption Expenditures (PCE) Price Index for December on Friday. The latest updates on the housing market will include new and pending home sales for December.