Today’s Big Picture
Asia-Pacific equity markets finished the day up across the board except for China’s Shanghai Composite, which declined 0.05%. Taiwan’s TAIEX rose 0.24%, India’s SENSEX gained 0.52%, Hong Kong’s Hang Seng advanced 0.76% while Japan’s Nikkei and Australia’s ASX All Ordinaries closed 1.05% and 1.24% higher. South Korea’s KOSPI added 1.42% on a broad rally led by Producer Manufacturing and Commercial Services names.
European markets are up across the board except for Spain and Denmark in midday trading and futures point to a positive open.
Markets are in a bit of a holding pattern ahead of several pieces of key economic data over the next few days. More than likely, we will see muted trading today as traders wait to see what tomorrow’s March Consumer Price Index says about inflation. What that data shows, especially for a Federal Reserve focused on services ex-housing inflation, will be the next key to the monetary policy puzzle. The growing consensus is the Fed will boost rates by another 25 basis points in early May, but what the market and investors are wrestling with is the path of monetary policy in the second half of 2023. That path has several unknowns on it including the risk of a recession and the impact of tighter credit following recent bank failures. As we’ve discussed in recent editions of Daily Markets, there is a wide divide between the Fed’s 5.1% year-end fed funds target and the several rate cuts the stock market sees ahead per data collected by the CME FedWatch Tool.
Speaking yesterday at an event at New York University, Federal Reserve Bank of New York President John Williams said he expects inflation pressures to gradually cool and get back to the 2% target by 2025. He expects inflation to fall to around 3.75% this year and the jobless rate will likely rise and move to 4%-4.5% over the coming months. If this is what the March CPI and Thursday’s March Producer Price Index point to then we would need to see a shift in market expectations just as bank earnings roll in.
Data Download
International Econom
China’s annual inflation rate came in at 0.7% in March compared with February’s print and the market consensus of 1.0%. This was the lowest figure since September 2021, as the cost of both food and non-food eased further on the back of an uneven economic recovery after the removal of the zero-COVID policy. China’s producer prices slumped 2.5% YoY in March, faster than a 1.4% fall in February and matching consensus forecasts. The March data was the sixth straight month of producer deflation and the steepest fall since June 2020 amid easing commodity prices.
China’s banks extended CNY 3.89 trillion in new yuan loans in March 2023, up from CNY 1.81 trillion in the previous month and above market expectations of CNY 3.24 trillion. It was also the largest amount of new bank loans for a March month since at least 2004, as policymakers pledged to step up support for the economy recently hit by weak exports and the property downturn.
Retail trade in the Euro Area dropped by 0.8% MoM in February, matching the consensus forecast and following an upwardly revised 0.8% figure for January. The February print reflected subdued domestic demand due to a combination of stubbornly high inflation, rising borrowing costs and concerns over a potential recession. Compared to a year earlier, retail trade fell 3.0% in February.
Domestic Economy
The NFIB Small Business Optimism Index in the United States edged lower to a three-month low of 90.1 in March from 90.9 in February. The March figure marks the 15th straight month the index is below its 49-year average of 98. The March index also found 43% of owners reported job openings that were hard to fill, down four points from February and remaining historically very high; the net percent of owners raising average selling prices decreased one point to a net 37%; the net percent of owners who expect real sales to be higher deteriorated six points from February to a net negative 15%; and 57% of owners reported capital outlays in the next six months, down three points from February.
Markets
While the Nasdaq Composite ended the day essentially flat, down a mere 0.03%, it started the day down 1.19% as research firm IDC reported Apple (AAPL) computer shipments falling 40% over the last quarter, putting an early damper on the name and the computer industry. The S&P 500 gained 0.10% yesterday while the Dow rose 0.30% and the Russell 2000 closed 1.02% higher. Sectors were mixed with Industrials leading the way, up 0.91% followed by Energy (0.80%). Micron Technology (MU) gained 8.04% after rival Samsung (SSNLF) announced it would be cutting production.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 1.33%
- S&P 500: 7.02%
- Nasdaq Composite: 15.46%
- Russell 2000: 0.64%
- Bitcoin (BTC-USD): 78.95%
- Ether (ETH-USD): 59.48%
Stocks to Watch
Before US equity markets begin trading today, Albertsons (ACI) and CarMax (KMX) are expected to report their quarterly results. This follows several other Chinese tech companies announcing plans for their own AI-powered chatbots, including Baidu (BIDU) and JD.com (JD).
ZeroFox (ZFOX) is partnering with Google (GOOGL) Cloud to disrupt phishing campaigns by quickly warning users of malicious URLs and fake websites.
BWX Technologies (BWXT) announced its Nuclear Fuel Services, Inc. subsidiary was awarded a $428 million contract from the National Nuclear Security Administration to provide purification and conversion services for highly enriched uranium.
Potbelly (PBPB) raised its 1Q 2023 outlook for same-store sales to “high single to low double-digit growth” vs prior guidance of “high single-digit growth.” The company also boosted its adjusted EBITDA guidance for the quarter to $5.2-$5.6 million from its prior guidance of $4-$5 million.
Brookdale Senior Living (BKD) now sees its 1Q 2023 adjusted EBITDA meaningfully above prior guidance and expects total revenue and other operating income for the quarter to exceed previous expectations driven primarily by YoY RevPAR growth of approximately 12.9%. The company also shared its 1Q 2023 weighted average occupancy of 76.3% represents a sequential 80 bp decrease compared to Q4 and a 290-basis increase YoY.
Hyundai Motor Group (HYMTF) announced plans to invest 24 trillion won ($18.14B) in South Korea’s EV industry through 2030. The company behind the Genesis, Hyundai and Kia brands also shared plans to expand annual EV production in Korea to 1.51M units and global volume to 3.64M units by 2030.
IPOs
Near-term the calendar for such activity looks rather thin. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
No companies are slated to report their quarterly results after equities stop trading, however, readers should be on the watch for earnings pre-announcements. Those looking for more on which companies are reporting when should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, April 12
- Japan: Unemployment Rate, Bank Lending, Core Machinery Orders, Producer Price Index – March
- US: Weekly MBA Mortgage Applications
- US: Consumer Price Index – March
- US: Weekly EIA Crude Oil Inventories
- US: Treasury Budget – March
Thursday, April 13
- China: Imports, Exports – March
- UK: Industrial and Manufacturing Production – February
- Germany: Consumer Price Index – March
- Eurozone: Industrial Production – February
- OPEC Monthly Report
- US: Weekly Initial & Continuing Jobless Claims
- US: Producer Price Index – March
- US: Weekly EIA Natural Gas Inventories
Friday, April 14
- US: Retail Sales – March
- US: Import/Export Prices – March
- US: Industrial Production & Capacity Utilization – March
- US: The University of Michigan Consumer Sentiment – April Preliminary
Thought for the Day
“Talent wins games, but teamwork and intelligence win championships. ~ Michael Jordan
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
