Analytics, 09 April 2023
Week 14 in Brief
North America
Major U.S. stock indexes ended higher on Thursday, helped by a rally in Alphabet shares as investors, worried about a slowing economy, looked to upcoming jobs data.
Adding to recent data hinting at a weak labor market, initial jobless claims fell to a seasonally adjusted 228,000 for the week ended April 1, versus expectations of 200,000 claims.
With some investors away during a shortened holiday week, volume on U.S. exchanges was relatively light, with 9 billion shares traded, compared to an average of 12.7 billion shares over the previous 20 sessions.
How did the Major Indices Perform?
On Thursday:
- The Dow Jones Industrial Average rose 0.01% to 33,485.29 points
- The S&P 500 climbed 0.36% to end the session at 4,105.02 points
- The Nasdaq Composite gained 0.76% to 12,087.96 points.
For the Week:
- The Dow added 0.6%
- The S&P 500 declined 0.1%,
- The Nasdaq lost 1.1%
What Drove the U.S. Market?
- Major U.S. stock indexes ended higher on Thursday, helped by a rally in Alphabet shares as investors, worried about a slowing economy, looked to upcoming jobs data.
- Alphabet Inc experienced a 3.8% rally, while Microsoft (MSFT.O) climbed 2.6%, becoming the primary drivers of the S&P 500’s gain during the session. According to a report by the Wall Street Journal, Alphabet’s Google unit intends to incorporate artificial intelligence features into its search engine.
- The e-commerce company Etsy’s shares rose 3.9% after Piper Sandler upgraded them to overweight from neutral. The firm said that it thinks Etsy’s marketplace strengths will “help reaccelerate active buyer growth.” Shares are down 9.6% in 2023.
- During Thursday’s trading, Caterpillar, considered a leading indicator for the industrial sector, experienced a 2% drop, resulting in a 9% loss over the past three days. This decline came as investors grew concerned about the possibility of an economic downturn.
- Following a U.S. court’s decision to reject the theater operator’s request to lift a status quo order required for its preferred shares to common shares conversion plan, AMC Entertainment Holdings Inc saw a 21% surge.
- Big banks including JPMorgan Chase & Co and Citigroup will be among companies kicking off the quarterly reporting season next week, with investors eager for updates on the health of the sector after a recent banking crisis.
How Did the European Markets Perform?
- European stock markets closed higher on Thursday ahead of the four-day Easter weekend.
- Europe’s Stoxx 600 provisionally closed 0.5% higher on Thursday ahead of the four-day Easter break, taking it to a gain for the week despite narrow losses in the prior sessions.
- The U.K.’s FTSE 100 closed up 1% after a rise in house prices boosted the economic picture and as financial, insurance and energy stocks gained.
- Germany’s DAX rose 0.5%, while France’s CAC 40 was up 0.1%.
- Exhibiting a consistent upward trend following recent volatility, banks rose by 1.8%. This week, UBS and Credit Suisse bosses faced shareholders at their annual general meetings, following UBS’s controversial acquisition of Credit Suisse in a hastily executed deal.
- The travel and leisure sector gained 1.4%, with tourism group Tui leading European stocks after reporting strong booking demand.
- Household goods stocks declined 1.3% while retail fell 0.5%.
How did Asian Markets Perform?
- Stocks in Asia traded higher on Friday in a muted session as most markets are closed for a holiday in the wider Asia-Pacific region.
- The Nikkei 225 in Japan traded up 0.17% to close at 27,518 and the Topix gained 0.21% to close at 1,965.44. In South Korea, the Kospi gained 1.27% to 2,490.41 and the Kosdaq rose 1.67% to end the session at 880.07.
- The Bank of Korea is expected to hold its benchmark interest rate steady at 3.5% again in its monetary policy decision on Tuesday, according to Reuters survey of economists.
- In mainland China, the Shanghai Composite was 0.45% higher to 3,327.65 and the Shenzhen Component rose 0.86% to 11,967.74. Australia, Hong Kong, Singapore and India were closed.
- More than two-thirds of the largest 20 banks in the Asia-Pacific region fell in market capitalization in the first quarter of the year, S&P Global Market Intelligence said in a release.
- Samsung Electronics estimated its first-quarter operating profit likely fell to 600 billion won ($455 million) according to the company’s latest earnings guidance released on Friday.
Bonds and Commodities
- Following March’s employment data, which indicated a tight labor market but met market expectations, U.S. Treasury yields rose, and U.S. index futures ended the day with modest gains.
- Gold prices saw some reduction ahead of a significant U.S. jobs report, but remained on track for a weekly increase due to weak U.S. economic data that raised concerns about a slowdown. As of 2:53 p.m. EDT (18:53 GMT), spot gold had decreased by 0.6% to $2,009.07 per ounce, and U.S. gold futures for June delivery had settled 0.5% lower at $2,026.40. Paul Wong, a market strategist at Sprott, stated that the U.S. Federal Reserve is in a bind, as higher interest rates may cause a recession, while a pause in monetary tightening may lead to embedded inflation, both of which could positively affect gold.
- Oil prices remained mostly unchanged on Thursday but still achieved a third consecutive weekly gain, as markets weighed the effects of further production cuts aimed by OPEC+ and declining U.S. oil inventories against concerns about the global economic outlook.
- Brent crude closed up 13 cents, or 0.2%, at $85.12 a barrel, while West Texas Intermediate U.S. crude ended 9 cents, or 0.1%, higher at $80.70. There will be no trading on the Good Friday holiday.
Currencies
- The Canadian dollar edged lower against its U.S. counterpart on Thursday as investors doubted that stronger-than-expected domestic jobs data would spur the Bank of Canada to abandon its pause on interest rate hikes. The Canadian dollar was trading 0.1% lower at 1.3470 to the greenback, or 74.24 U.S. cents, after moving in a range of 1.3448 to 1.3505.
- The pound hovered just below its highest level in 10 months on Thursday as investor focus turned to Friday’s U.S. jobs numbers. Sterling was last flat at $1.246, having touched its highest level since June - $1.253 - on Tuesday.
- The South African rand weakened against the dollar on Thursday as investors awaited U.S. jobs data and its implications for the Federal Reserve’s monetary policy.
- he Indian rupee moved in a narrow band, while forward premiums declined on Thursday after the Reserve Bank of India (RBI) surprised markets by holding rates steady. The rupee traded up 0.04% at 81.97 per U.S. dollar by 11:25 a.m. IST, having declined up to 82.0525 immediately after the RBI announced its decision. The currency has held a 15 paisa range so far in the session.
- Cryptocurrency exchange operator Binance will close its Australian derivatives business after relinquishing a financial services licence on Thursday amid a regulatory probe into its operations.
- Bitcoin and other cryptocurrencies edged higher after the release of the U.S. jobs report for March.
Next Week
Next week, several big banks and financial institutions, including JPMorgan Chase, Wells Fargo, Citigroup, BlackRock, and PNC Financial Services, will kick off earnings season.
Other companies such as Progressive Insurance, Delta Air Lines, and UnitedHealth Group will also report earnings. The latest inflation reports for March, including the Consumer Price Index (CPI) and Producer Price Index (PPI), will also be released.
The Federal Reserve will release the meeting minutes from its most recent policy meeting on Wednesday. The Census Bureau will provide a key update on consumer spending with their report on March retail sales on Friday. Additionally, the International Monetary Fund (IMF) and World Bank will hold their 2023 spring meetings in Washington D.C. starting on Monday.