Analytics, 12 February 2023
Week 06 in Brief
North America
Stocks on Wall Street recorded their worst week of 2023 with a notable drop in shares of ride-hailing firm Lyft Inc, which tumbled 36% after a downbeat forecast. This put investors on their toes as they came to the grips with the idea that the Federal Reserve may have to keep rates higher for longer as it wages a war against inflation.
How did the Major Indices Perform? On Friday:
- The Dow Jones Industrial Average rose 0.5%,
- The S&P 500 gained 0.22%
- The Nasdaq Composite dropped 0.61%
For the Week:
- The Dow ended the week down 0.17%.
- The S&P 500 lost 1.11%
- The Nasdaq Composite lost 2.41%.
What Drove the U.S. Market?
- Ride-hailing platform Lyft tanked more than 36% after a disappointing fiscal fourth-quarter report. Expedia also saw its shares fall by more than 8% after its earnings and revenue fell below analysts’ expectations.
- WTI closed on Friday with its best week since October. It rose 8.63% this week, marking its strongest week since Oct. 7, when WTI gained 16.54%. This was also its first positive week in three weeks.
- WTI settled up 2.13% at $79.72 and hit a session high of $80.33. This was the highest level since Jan. 30, when it traded as high as $80.49.
- Energy is the only of the S&P 500 11 sectors set to end the week up.
- The sector advanced about 4.5% this week. A notable chunk of that was from a 3.4% advance seen in Friday’s session, during which it was also the best performer.
How Did the European Markets Perform?
- European markets closed lower Friday as investors assess the economic outlook and the potential for further monetary policy tightening from the U.S. Federal Reserve.
- The pan-European Stoxx 600 index finished trading down 1%. Most sectors and major bourses closed in the red, with travel and leisure stocks leading losses, down by 3.8%. Oil and gas stocks bucked the trend with a 2.3% uptick, while telecoms stocks were 0.2% higher.
- The U.K.’s FTSE 100 ended the session down 0.3%, at 7882.45 points. France’s CAC 40 was down 0.8% and Germany’s DAX was 1.4% lower.
- The index closed higher on Thursday with the economic outlook and corporate earnings high on the agenda.
- U.K. preliminary fourth-quarter GDP figures on Friday morning showed that the economy flatlined in the fourth quarter to narrowly avoid recession, in line with consensus forecasts. The Bank of England last week projected that the country would enter a shallow but lengthy recession in the first quarter of 2023.
How did Asian Markets Perform
- In Asia on Friday, China’s Shanghai Composite index slipped 0.30 percent to 3,260.67 while Hong Kong’s Hang Seng index fell 2.01 percent to 21,190.42, dragged down by tech stocks.
- Japanese shares eked out modest gains as a slew of strong earnings reports offset investor anxiety ahead of BoJ Governor nominations.
- The Nikkei average rose 0.31 percent to 27,670.98, while the broader Topix index finished marginally higher at 1,986.96.
- Chip-making equipment maker Tokyo Electron jumped 4.4 percent after raising its earnings outlook for the year. Advantest added 1.5 percent and Screen Holdings climbed 2.7 percent.
- The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors.
- Seoul stocks ended lower amid the prospect of further rate hikes by the Federal Reserve to tame inflation. The Kospi average shed 0.48 percent to close at 2,469.73. SK Hynix and Korean Air both fell around 1 percent. Hybe dropped 1.5 percent after it agreed to acquire a 14.8 percent stake in its rival K-pop agency SM Entertainment to become its largest shareholder.
- Australian markets fell notably as the Reserve Bank of Australia boosted its forecast for core inflation and wage growth this year, and flagged further increases in interest rates.
- The benchmark S&P/ASX 200 closed 0.76 percent lower at 7,433.70, dragged down by mines and energy stocks. The broader All Ordinaries index ended down 0.84 percent at 7,631.10.
Bonds and Commodities
- The yield on benchmark 10-year Treasury notes hit a more than one-month high and the 10-year German bund posted its biggest weekly rise this year as European Central Bank policymakers warned about inflation. Germany’s 10-year bund hit 2.377% before easing at the session’s end. The Yields move opposite their price.
- Oil prices rose more than 2%, on track for weekly gains of more than 8%, as Russia announced plans to reduce crude production next month after the West imposed price caps on the country’s fuel output.
- U.S. crude futures settled up $1.66 at $79.72 a barrel, while Brent rose $1.89 to close at $86.39.
- Gold inched higher while markets awaited next week’s U.S. inflation data that could influence the Fed’s rates policy.
- U.S. gold futures for February delivery settled 0.2% lower at $1,874.50 per ounce.
Currencies
- The yen broadly moved higher after reports that the Japanese government was set to appoint academic Kazuo Ueda as the central bank’s next governor.
- The Japanese yen strengthened 0.13% at 131.42 per dollar.
- On Friday, the dollar index, which measures the greenback against six other currencies, was up 0.4% at 103.55.
- The euro fell 0.57% to $1.0675.
- The Indian rupee finished at 82.4975 per dollar, having strengthened up to 82.35 during the Friday session, as compared to Thursday’s close of 82.51.
- Bitcoin fell 0.68% to $21,653.00.
Next Week
The latest inflation reports will be in the spotlight next week, with the January Consumer Price Index (CPI) out on Tuesday, and the Producer Price Index (PPI) due on Thursday. Also on Tuesday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing on cryptocurrencies and digital assets, amid calls to regulate the industry and safeguard crypto investors.
On Wednesday, last month’s retail sales figures could offer insights into consumer confidence and willingness to spend. More updates on the housing market will arrive with January building permits and housing starts due Thursday.
Earnings season continues with reports from The Coca-Cola Company, Airbnb, DoorDash, Marriott International, Cisco Systems, and Paramount Global, among others.