Today’s Big Picture
Asia-Pacific equity markets finished the day down across the board, except for Japan’s Nikkei, which gained 0.51% on continued earnings optimism, and China’s Shanghai Composite, which closed 0.23% higher. South Korea’s KOSPI declined 0.19%, Australia’s ASX All Ordinaries fell 0.27%, India’s SENSEX gave back 0.31%, Taiwan’s TAIEX lost 0.59%, and Hong Kong’s Hang Seng closed 0.63% lower led by Electronic Technology names. European markets are up across the board in midday trading and U.S. equity futures point to a positive open later this morning.
The market is digesting the growing number of quarterly earnings reports out this morning as well as stronger-than-expected economic data for China, and continued inflation pressures in the UK. With the volume of earnings reports stepping up further throughout the week, we could see some volatility in equities depending on how companies and their guidance are contending with persistent inflation, rising interest rates, and a slowing economy.
Data Download
International Economy
China’s economy rose 4.5% YoY in Q1 of 2023, accelerating from 2.9% growth in Q4 and topping market estimates of 4%, due to efforts from Beijing to spur the post-pandemic recovery. China’s industrial production increased by 3.9% YoY in March, faster than the combined 2.4% rise in January-February but a tick below the market consensus of 4%. Nevertheless, the March figure was the fastest growth in industrial production since last October. China’s retail sales increased by 10.6% YoY in March, a sharp jump from the 3.5% gain registered for February, and well ahead of the expected 7.4% increase. This was the fastest growth in retail trade since June 2021.
The ZEW Indicator of Economic Sentiment for the Euro Area declined by 3.6 points to 6.4 in April vs. the 10 reading for March. This marked the second month of deterioration in sentiment after five consecutive months of increases with the fall reflecting lingering uncertainty about the outlook for inflation, growth, and interest rates.
Average weekly earnings excluding bonus payments in the UK rose 6.6% YoY for the three months ending in February, the same as the prior period and higher than forecasts of a 6.2% rise.
The Group of Seven countries will keep a $60/bbl price cap on seaborne Russian crude oil despite rising global crude prices and calls by some countries for a lower price cap to restrict Russia’s revenues.
Domestic Economy
At 8:30 AM ET, March Housing Starts and Building Permit data will be published. Starts are expected to be little changed, coming in around 1.458 million vs. 1.45 million the prior month, but permits are thought to fall to 1.407 million in March vs. 1.524 in February.
With Congress returning from a two-week recess, debt ceiling talks are reaching a crucial stretch in nearing a deal to avoid a default. So far both sides have taken their respective corners with little indication either side is willing to budge just yet.
Markets
Yesterday saw traders get a little more comfortable with the current state of the markets and economy as the Dow, S&P 500, and Nasdaq Composite all rose about 0.30% and the Russell 2000 closed 1.22% higher. Sectors were generally positive except for Healthcare (-0.08%), which was dragged down by Moderna (MRNA) [-8.36%] and United Healthcare Group (UNH) [-1.26%] which combined to tip the balance toward a lower close. Also declining were Communication Services (-0.57%) and Energy (-1.18%). Sector leaders included Financials (1.16%) and Real Estate (2.27%). In individual names, State Street Corp (STT) closed down 9.18% after reporting a 20% earnings per share decline from the previous quarter despite revenues increasing on strong net interest income growth.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 2.53%
- S&P 500: 8.12%
- Nasdaq Composite: 16.16%
- Russell 2000: 2.36%
- Bitcoin (BTC-USD): 77.38%
- Ether (ETH-USD): 73.08%
Stocks to Watch
Before U.S. equity markets begin trading today, Bank of America (BAC), BNY Mellon (BK), Ericsson (ERIC), Goldman Sachs (GS), Johnson & Johnson (JNJ), and Lockheed Martin (LMT) are expected to report their quarterly results.
JB Hunt (JBT) reported March quarter EPS of $1.89, missing the $2.03 consensus as revenue fell 7.4% YoY to $3.23 billion, missing the $3.42 billion consensus. Per the company, the decline in revenue was primarily driven by volume declines of 25% in Integrated Capacity Solutions, 5% in Intermodal, and 17% in Final Mile Services; and a 17% decline in revenue per load in Truckload. JB also noted rises in wages, maintenance, and equipment costs, as well as insurance payments, hit its bottom line.
Deadline reports WGA members voted overwhelmingly to authorize a strike. The vote, which was approved by nearly 98% of the eligible voting members, authorizes the WGA West Board and the WGA East Council to call a strike if a fair deal for a new film and TV contract isn’t reached by May 1, when the current pact expires. Investors in Comcast (CMCSA), Warner Brothers Discovery (WBD), Disney (DIS), Netflix (NFLX), and others will want to mark their calendars accordingly.
Chinese EV company Li Auto (LI) shared it wants to extend its lineup to 11 models by 2025, up from four presently, targeting the market for vehicles priced at 200,000 yuan ($29,100) and more.
Madison Square Garden Entertainment (MSGE) agreed to sell its Tao Group Hospitality unit to Mohari Hospitality for $550 million.
GSK (GSK) will acquire Canadian biotech Bellus Health (BLU) for $14.75 per share, for a total deal size of ~$2 billion. The acquisition is expected to strengthen GSK’s specialty medicines and respiratory pipeline.
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
First Horizon (FHN), Interactive Brokers (IBKR), Intuitive Surgical (ISRG), Netflix (NFLX), United Airlines (UAL), and Western Alliance Bancorp (WAL) are slated to report their quarterly results after equities stop trading. Those looking for more on which companies are reporting when should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, April 19
- Japan: Industrial Production & Capacity Utilization – February
- UK: Car Registration, Consumer Price Index, Producer Price Index – March
- Eurozone: Consumer Price Index – March
- US: Weekly MBA Mortgage Applications
- US: Weekly EIA Crude Oil Inventories
- US: Fed Beige Book
Thursday, April 20
- Eurozone: Consumer Confidence
- US: Weekly Initial & Continuing Jobless Claims (8:30 AM ET)
- US: Philadelphia Fed Index – April (8:30 AM ET)
- US: Existing Home Sales – March (10:00 AM ET)
- US: Leading Indicators – March (10:00 AM ET)
- US: Weekly EIA Natural Gas Inventories
Friday, April 21
- Japan: Consumer Price Index
- Japan: Flash Manufacturing & Services PMI – April
- Eurozone: Flash Manufacturing & Services PMI – April
- UK: Retail Sales – March
- US: Flash Manufacturing & Services PMI – April
Thought for the Day
“A man generally has two reasons for doing a thing. One that sounds good, and a real one.” ~ John Pierpont Morgan
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
