Stock indices of Western European countries are falling on Thursday on the hawkish statements of the head of the Federal Reserve System (Fed) Jerome Powell.
The composite index of the largest European companies Stoxx Europe 600 as of 11:38 a.m. fell by 0.73% to 457.31 points.
The British FTSE 100 lost 0.46%, the German DAX – 0.76%, the French CAC 40 – 1.02%. Italy’s FTSE MIB and Spain’s IBEX 35 fell by 1.2% and 0.7%, respectively.
The day before, the Federal Reserve expectedly left the key interest rate at 5.25-5.5% per annum.
Meanwhile, Powell said during a press conference following the meeting that the central bank is ready to raise the rate again if necessary. Powell also noted that a “soft landing” of the US economy is not his baseline scenario, although it is possible.
The dot plot of forecasts – a chart showing the individual expectations of the members of the Fed Board of Governors and the heads of the Federal Reserve Banks (FRBs) regarding interest rates – shows that 12 out of 19 US central bankers expect another rate hike this year.
Later on Thursday, the results of the Bank of England meeting will be announced. Analysts still believe that the British Central Bank will raise the base rate by 25 bps to 5.5%, although after yesterday’s data indicating an unexpected slowdown in inflation in the UK in August, the probability of keeping the rate at the same level has increased slightly.
Shares of mining companies in London are falling amid lower metal prices. Fresnillo, Rio Tinto, Glencore, and Anglo American are all down by more than 1%.
The price of CVS Group shares rises by 3.2%. The British chain of veterinary clinics reported an increase in revenue and pre-tax profit in the last fiscal year amid strong demand for animal care services. The company’s pre-tax profit amounted to 53.9 million pounds ($66.5 million), while revenue amounted to 608.3 million pounds.
JD Sports Fashion’s capitalization increased by 7.8%. The British clothing retailer recorded an increase in pre-tax profit in the first half of the year ended July 31 to 375.2 million pounds from 298.3 million a year earlier, while revenue increased to 4.78 billion pounds from 4.42 billion pounds. Both figures exceeded analysts’ forecasts.
Another clothing retailer, Next PLC, raised its full-year forecasts after a strong performance in the first half of the year. Pre-tax profit in February-July rose to 419.8 million pounds from 400.6 million pounds, while revenue increased to 2.52 billion pounds from 2.38 billion pounds. The forecast of pre-tax profit for the fiscal year was raised to 875 million from 845 million pounds.
Next shares are up 1.9%.
Shares of the Norwegian financial company Storebrand are up 0.8% on the news of the sale of a 50% stake in the insurance joint venture Storebrand Helseforsikring to Ergo International. Financial terms were not disclosed, but Storebrand expects to record a positive effect of NOK 1.1 billion ($102 million) from the deal.
The French supermarket chain Casino Guichard-Perrachon has downgraded its sales and profit forecasts in France for 2024-2028. The company’s shares fell by 4.6%.
In Germany, the leaders of the decline are Sartorius securities, which are down 2.5%, as well as Porsche AG preference shares, which are down 2.1%.
In Paris, Airbus (-2.4%) and Saipem (-3.5%) are actively declining, while in Milan, the stock is down.
Stock indices of the countries of Western Europe are changing multidirectionally at trading on Wednesday, but the overall dynamics is rather negative due to weak statistical data from the euro zone.
The composite index of the largest European companies Stoxx Europe 600 as of 11:47 a.m. fell by 0.16% and amounted to 459.09 points.
British indicator FTSE 100 added 0.13%, Italian FTSE MIB – 0.26%. Meanwhile, Germany’s DAX lost 0.3%, France’s CAC 40 lost 0.25% and Spain’s IBEX 35 lost 0.23%.
The composite index of business and consumer confidence in the eurozone in August fell to 93.3 points from 94.5 points a month earlier. The index fell for the fourth consecutive month, and its value became the lowest since November 2020.
Meanwhile, inflation in Spain accelerated to 2.6% in August from 2.3% in July, preliminary official data showed. Excluding energy and food prices, consumer prices rose 6.1% in August after rising 6.2% in July.
Prices of goods imported into Germany collapsed 13.2% in July, the fastest pace since January 1987, due to falling energy costs, the country’s Federal Statistical Office (Destatis) said.
Producer prices in Austria fell 1.3% year-on-year in July, declining for the first time in two and a half years.
Shares of British insurer Prudential Plc. are rising 3.3% on data showing operating profit rose 6% in the first half of the year to $1.46 billion.
Meanwhile, ASR Nederland’s securities are getting cheaper by 0.5%. The Dutch insurance company posted an operating profit of €460 million in the first half of the year against a revised €454 million in the same period a year earlier.
Quotes securities Rio Tinto in London are up 0.7%, while the market value of Anglo American, Glencore and Antofagasta declines by 0.1-1%.
The price of securities of British banks Barclays, Standard Chartered and Lloyds increases by about 0.8%.
In Germany, the leader of growth are the shares of Commerzbank, rising in price by 1.3%, the leaders of the decline – the securities of RWE and Siemens Energy, falling in price by 3.4% and 2.6%, respectively.
At the auction in Milan actively growing quotations of securities Banca Monte dei Paschi di Siena (by 2.3%), in Paris – shares Capgemini (by 1.3%), and in Madrid falls in the price of shares Iberdrola (by 2.5%).
The stock indices of the largest countries in the Asia-Pacific region are rising on Thursday, with the exception of the South Korean stock market.
Investor sentiment was supported by the news that the US House of Representatives had overwhelmingly approved a bill on the debt ceiling, as well as strong statistics.
China’s manufacturing purchasing managers’ index (PMI), calculated by Caixin Media and S&P Global, rose to 50.9 points in May, up from 49.5 points a month earlier. This came as a surprise to analysts, who had not expected any change in the indicator. The value of the indicator above the 50-point mark indicates an increase in activity in the industrial sector, while below it indicates a decline.
The Chinese Shanghai Composite index by 8:33 a.m. increased by 0.4%, the Hong Kong Hang Seng by 1%.
On the Hong Kong Stock Exchange, the most significant increase is shown by the shares of Internet companies Meituan, Baidu Inc. and Tencent – by 6.1%, 4.7% and 4.1%, respectively, retailer JD.com Inc. by 5.3%, and oil company PetroChina Co. by 3.2%.
Meanwhile, the securities of developers Longfor Group Holdings Ltd. and Country Garden Holdings are falling in price – by 2.3% and 1.4%, respectively.
Japan’s Nikkei 225 index was up 0.7% by 8:29 a.m. on Thursday.
Among the leaders of the growth of quotations are shares of investment and technology SoftBank Group (+4.7%), electric power Tokyo Electric Power Co. (+3.7%), Mitsubishi UFJ Bank (+3.5%).
Also rising in price are the shares of technology companies Renesas Electronics (+4%) and Advantest Corp. (+0.3%), consumer electronics manufacturer Sony (+0.5%), automotive Toyota Motor (+0.7%), and game console manufacturer Nintendo (+1.7%).
The Australian S&P/ASX 200 index added 0.3% by 8:29 a.m.
The capitalization of the world’s largest mining company BHP decreased by 0.1%, while the value of rival Rio Tinto increased by a similar amount.
The South Korean Kospi index has fallen by 0.2% since the start of the trading session.
Share prices of one of the world’s largest chip and electronics manufacturers, Samsung Electronics Co. fell by 0.3%, and automaker Hyundai Motor – by 1%.
European stock indices generally show moderate growth during trading on Tuesday, with the exception of the region’s composite index and the French indicator.
The Stoxx Europe 600 composite index of the region’s largest companies was down 0.04% at 11:06 a.m. to 466.50 points.
The British FTSE 100 index rose by 0.15% during the session, while the German DAX rose by 0.1%. Italy’s FTSE MIB and Spain’s IBEX 35 added 0.3% and 0.2%, respectively. Meanwhile, the French CAC 40 fell by 0.06%.
Market participants are waiting for revised data on the eurozone’s GDP for the first quarter, which will be released later on Tuesday. The currency bloc’s economy grew by 0.1% in January-March compared to the previous three months and by 1.3% in annual terms, preliminary data showed. Analysts surveyed by Trading Economics expect the initial estimate to be confirmed.
In addition, on Tuesday it became known that unemployment in the UK in March rose to 3.9% from 3.8% a month earlier, while analysts generally did not expect a change in the figure.
The average weekly salary in the country, including bonuses, increased by 5.8% in January-March compared to the same period a year earlier, to 642 pounds. Excluding bonuses, the figure rose by 6.7% to 598 pounds.
Inflation in Italy, according to the final data, was 8.7% in April against 8.1% in March. Preliminary data indicated an increase in consumer prices by 8.8%, and analysts did not expect a revision.
Shares of Imperial Brands Plc fell by 0.7%, although the British concern, which includes the tobacco company Imperial Tobacco, increased pre-tax profit and revenue in the first half of fiscal year 2023, as well as raised dividends.
The price of Vodafone Group Plc shares is down 3.1%. The British mobile operator more than tripled its pre-tax profit in FY2023 due to the sale of Vantage Towers, but its EBITDA decreased by 1.3%.
Vodafone’s management also announced that it plans to cut 11,000 jobs as part of a three-year plan.
The capitalization of the British online retailer Boohoo Group PLC increased by 12%. The company reported a pre-tax loss for the last fiscal year and an 11% decline in revenue, but gave strong forecasts for the current fiscal year.
The market value of Bouygues SA is down 2.3%. The French conglomerate increased its quarterly revenue by one and a half times, to €12.01 billion, but slightly increased its net loss to €134 million.
Stock indices of the largest Asia-Pacific countries are declining after the similar dynamics on the US stock market a day earlier.
The important events this week will be the publication of data on changes in consumer prices in the U.S. and China in April. They will be released on Wednesday and Thursday respectively.
China’s Shanghai Composite Index was down 1.4% by 8:36 a.m. and Hong Kong’s Hang Seng was down 0.7%. Both indicators are down for the second consecutive session.
Significant declines in Mainland China were posted by financial sector stocks including China Galaxy Securities (-10%), Bank of China (-5.7%), Agricultural Bank of China (-5.5%), Citic Securities (-3.1%) and ICBC (-4.7%).
On the Hong Kong Stock Exchange, the most significant drop in price was posted by real estate developer Longfor Group Holdings Ltd. – by 3.9% and China Life Insurance Co. (SPB: 2628) by 2.8%.
In addition, computer maker Lenovo went down by 2% as well as Anta Sports Products Ltd. and Li Ning Co. – by 1.9% and 1.8%, respectively.
At the same time, the share price of Internet giant Tencent (SPB: 700) is up 0.5%, retailer Alibaba (SPB: BABA) by 0.9%, carmakers BYD and Geely by 3.7% and 3.6% respectively and chipmakers Sunny Optical Technology Group Co. and Semiconductor Manufacturing International Corp. – by 3.7% and 1.6%, respectively.
The value of Japanese Nikkei 225 index by 8:31 a.m. Moscow timeframe decreased by 0.4 percent.
Among the leaders of falling quotes are shares of metal producers Pacific Metals Co. (-11.2%), Nippon Steel Corp. (-8.2%) and Kobe Steel Ltd. (-3.7%) as well as automobile producer Mitsubishi Motors Corp. (-9.5%).
Moreover, console producer Nintendo (-0.5%) and Sony Group, producing consumer electronics (-0.9%) are also shedding their prices.
South Korea’s Kospi index was down 0.5% by 8:32 MSK.
Shares of the world’s biggest chip and electronics maker Samsung Electronics Co. fell 0.9%, steelmaker Posco – 0.5%.
Meanwhile, stock quotes of Hyundai Motor rose by 2.9%.
Value of Australian S&P/ASX 200 index fell by 0.2%.
Capitalization of the world’s largest mining companies BHP and Rio Tinto declined by 0.2% and 0.8% respectively.
Papers of Australia’s leading wine producer Treasury Wine Estates Ltd. lost 2.1% in price.
Also, following the decline in oil prices, shares of representatives of this industry Woodside Energy and Santos became cheaper – by 0.7% and 1.1% respectively.
Asia-Pacific stock indexes are mostly rising on Friday, the exception is the South Korean indicator.
Traders are assessing the statistical data and the results of the Bank of Japan meeting.
The Japanese Central Bank left unchanged the main parameters of the monetary policy (MP) on the results of the two-day meeting that ended on Friday, which became the first for the new head of the Central Bank Kazuo Ueda.
The short-term interest rate on commercial bank deposits at the Central Bank remained at minus 0.1% per annum, the target yield on ten-year government bonds – about zero, according to a statement from the Japanese Central Bank.
Bank of Japan also retained the range within which the yield of ten-year government bonds may fluctuate – plus/minus 0.5%.
At the same time, the phrase about the Central Bank’s intention to keep the rate at the current level or lower was missing from the text of the statement on the results of the meeting. This is a phrase the Bank of Japan has been repeating since October 2019.
At the same time, the central bank reiterated that it is ready to keep its stimulative policy until inflation stabilizes at the 2% target level.
In addition, the Bank of Japan announced its intention to revise its monetary policy, the results of which will be published in 12-18 months.
Statistics released Friday showed a 13th straight month of improvement in the country’s retail sales, as well as an increase in industrial production and an unexpected jump in unemployment.
Japan’s Nikkei 225 stock index gained 1% in trading. Toyota Motor gained 1.3 percent, SoftBank Group gained 2.3 percent and Denso Corp. – Denso Corp. by 4.3%, Daikin Industries by 2.8% and Ana Holdings by 2.2%.
China’s Shanghai Composite stock index added 0.7 percent in trading Friday, while Hong Kong’s Hang Seng gained 0.6 percent.
The leaders of the growth both in mainland China and Hong Kong are shares of technology companies, rising due to strong quarterly reports of U.S. IT-giants.
Kunlun Tech soared almost 20% in trading in Shenzhen. Shares of BlueFocus Intelligent gained 17%, Dawning Information Industry gained 5.2%, and 360 Security Technology gained 4.8%.
In Hong Kong, shares of BYD Electronic (+6.7%), Haier Smart Home (+5.9%), Semiconductor Manufacturing International (+2%), NetEase Inc. (SPB: NTES) (+3.2%) gained.
The value of China Tourism Duty Free Corp. securities fell 0.15% during trading. The company’s net income fell 10% in the first quarter as its expenses grew faster than revenue.
Australia’s S&P/ASX 200 is adding 0.24% and South Korea’s KOSPI is losing 0.02%.
South Korean industrial production fell 7.6% in March compared to the same month last year. In February the index decreased by 8%.
