Daily Markets: Traders Wrap First Quarter

Today’s Big Picture

Asia-Pacific equity markets finished the day up across the board. Taiwan’s TAIEX advanced 0.12%, China’s Shanghai Composite gained 0.36%, Hong Kong’s Hang Seng rose 0.45%, Australia’s ASX All Ordinaries added 0.83%, and Japan’s Nikkei and South Korea’s KOSPI were up 0.93% and 0.97%, respectively. India’s SENSEX closed 1.78% higher as these markets played catch up with global sentiment after yesterday’s holiday with energy name Reliance Industries making a 4.29% move. European markets are up across the board in midday trading except for Austria and Turkey and U.S. futures point to a positive open.

Today’s inflation data and the market’s response could shape how stocks close out this last day of the quarter. At 8:30 AM ET, the Fed’s preferred inflation metric, the PCE Price Index, will see its February readings published. Ahead of the data, yesterday at a National Association for Business Economics event, Boston Fed President Susan Collins commented inflation remains too high and there is “more work to do,” adding she sees “some modest additional policy tightening, and then holding through the end of this year.” Should the February PCE data come in warmer than anticipated, the market may need to reconsider how it sees the fed funds rate playing out between now and the end of 2023.

Also too, following this morning’s reported uptick in February core inflation for the eurozone, markets will be listening to what European Central Bank President Christine Lagarde may say about the path ahead for monetary policy. At 11 AM ET, European Central Bank President Christine Lagarde will be participating in “Nuovi incontri per il Futuro – Future-oriented meetings” organized by Osservatorio Permanente Giovani-Editori in Florence.

Data Download

International Economy

Japan is restricting exports of 23 types of equipment used to make semiconductors in a move that will likely impact companies like Advantest (ATEYY), Nikon (NINOY), Screen Holdings (DINRF), and Tokyo Electron (TOELY).

China’s NBS Manufacturing PMI declined to 51.9 in March from February’s near 11-year high of 52.6 but above market estimates of 51.5. Output (54.6 vs 56.7 in February), new orders (53.6 vs 54.1), and export sales (50.4 vs 52.4) all rose at softer paces while buying activity stayed strong (at 53.5). China’s NBS Non-Manufacturing PMI for China climbed to 58.2 in March from 56.3 a month earlier, pointing to the highest reading since May 2011, boosted by the removal of a zero-COVID policy, alongside the effects of local government’s measures to promote consumption.

Retail Sales in Germany decreased 7.10% YoY in February.

The preliminary March read on consumer price inflation rate in the Euro Area came in at eased to 6.9% YoY, its lowest reading since February 2022, and was slightly below the consensus forecast for 7.1%. However, the preliminary data also showed core consumer prices increased 5.7% YoY in March vs. 5.6% in February and 5.3% in January.

The seasonally-adjusted unemployment rate for the Euro Area stood at a record low of 6.6% in February, unchanged from January and slightly below market estimates of 6.7%.

Finland is one step closer to becoming a NATO member after Turkey’s parliament approved a bill to expand the military alliance.

Domestic Economy

At 8:30 AM ET, the February Personal Income & Spending report and the February PCE Price Index data will be published. Personal Income is expected to rise 0.2% MoM, a slower pace than January’s 0.6% gain. Personal Spending is expected to fall dramatically to 0.3% MoM vs. 1.8% in January. However, given the disparity between the Fed’s latest forecast and what the market expects, the February core PCE Price Index is likely to be the focal point of today’s data. On a MoM basis, that line item is expected to rise 0.4% compared to 0.6% in January, however, on YoY basis the February figure is forecasted to remain unchanged vs. January, coming in at 4.7%.

At 10 AM ET, we’ll get the final March reading for the University of Michigan Consumer Sentiment Index. It’s expected to come in at 63.2 vs. 67 the prior month.

Markets

While equities haven’t hit full risk-off mode, it seems like any immediate banking meltdown-related fears have been put to rest and traders are back to focusing on the ongoing tug of war between the Fed and the Fed Fund Futures markets over the path for interest rates. The Russell 2000 closed 0.18% lower, but the Dow gained 0.43%. the S&P 500 rose 0.57% and the Nasdaq Composite closed 0.73% higher. All sectors were up yesterday except for Financials (-0.22%) with the biggest gains coming from Real Estate (1.30%) and Technology (1.16%). Banking stock issues may be on the back burner but shares of Charles Schwab Corp (SCHW) fell 4.96% after analysts as Morgan Stanley (MS) moved the firm to Equal-Weight from Overweight and reduced its target price by roughly a third, to $68.

Here’s how the major market indicators stack up year-to-date:

Dow Jones Industrial Average: -0.87%
S&P 500: 5.50%
Nasdaq Composite: 14.78%
Russell 2000: 0.41%
Bitcoin (BTC-USD): 69.90%
Ether (ETH-USD): 49.56%

Stocks to Watch

Before U.S. equity markets begin trading today, Manchester United is expected to report their quarterly results.

February quarter results at Blackberry (BB) came in ahead of expectations with the company reporting a smaller than expected bottom line loss even though revenue for the period fell 18.4% YoY. The vast majority of the YoY revenue decline came from the company’s cybersecurity business, which saw its revenue fall ~28% compared to the year ago quarter. In aggregate, IoT segment revenue and Licensing & Other Revenue for the quarter were little changed. On the company’s earnings call, management shared it will be “focused on driving towards both profitable growth and being cash flow positive” in the coming year and targets revenue growth of 20% this year.

Nu Skin (NUS) announced CFO Mark Lawrence is resigning, effective today, and shared it has initiated a formal process to identify a permanent replacement. Alongside that announcement, the company reaffirmed its March quarter guidance for EPS of $0.25-$0.35 on revenue of $450-$490 million vs. the consensus EPS forecast of $0.33 on $476.05 million in revenue.

Nikola Corp. (NKLA) priced an offering of 29.9 million shares of common stock at $1.12 per share.

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

Well, friends, we made it to the end of the week, the end of March, and the end of 1Q 2023. As we move into 2Q 2023, be on the lookout for companies pre-announcing their March quarter results. Those looking for more on which companies are reporting when should head on over to Nasdaq’s Earnings Calendar.