Analytics, 21 May 2023
Week 20 in Brief
How did the US market perform?
- The Dow Jones Industrial Average fell by 109.28 points or 0.33%, settling at 33,426.63. The S&P 500 also slipped by 0.14% to reach 4,191.98, while the Nasdaq Composite experienced a 0.24% decline, reaching 12,657.90.
- Despite the US indices decline on Friday, losses were limited due to Federal Reserve Chairman Jerome Powell’s statement that interest rates might not need to rise as much as initially anticipated to control inflation.
- Walmart’s shares fell by 1.03% on Friday, as it reported better-than-expected profit and revenue as it attracted price-conscious shoppers who are dealing with inflation. The company saw increased market share in groceries, including among higher-income customers.
- Home Depot dropped by 1.45% on Friday as it expects a decline in annual sales for the first time since 2009, reflecting a slowdown in spending on home improvement projects. It was noted that consumers have reduced their purchases of big-ticket items like grills, patio furniture, and appliances, as well as scaled back on remodelling projects.
- During Tesla’s annual shareholder meeting, Elon Musk assured investors that he has no plans to step down from his position at the company. He also teased the introduction of two new Tesla models but cautioned that the coming year could be challenging due to higher interest rates impacting car buyers. Following the shareholder meeting, Tesla’s shares rose by 4.4% on Wednesday, and 1.84% on Friday.
- Western Alliance Bancorp (WAL) jumped by 10% on Wednesday as it shared positive news about its deposits, leading to a recovery in bank stocks. The bank reported a growth of approximately $2 billion in deposits during the second quarter. Conversely WAL plunged by 2.44% on Friday close.
- Micron Technology jumped by 4.1% on Thursday and rose by 0.89% on Friday with notable YTD gain of 36.39% - as it announced its plan to invest around $3.6 billion in advanced memory-chip production in Japan, with support from the Japanese government.
- Foot Locker’s shares plummeted by 27.24% as it reported weaker-than-expected earnings and revised its guidance for the year, citing a slowdown in sales over the past few weeks. CEO Mary Dillon noted a significant softening of sales since March, prompting the company to take more aggressive markdowns to stimulate demand and clear inventory.
How did the European markets perform?
- FTSE 100, FTSE MIB, Dax all elevated by 0.19%, 1.05% and 0.69% respectively.
- Additionally, CAC 40 Index and IBEX 35 increased by 0.61% and 0.42% respectively.
- Tesco down 0.63% on Friday as it announced that its Chairman, John Allan, would be resigning in June due to allegations of inappropriate behavior towards multiple women.
- German stocks maintained their upward momentum, with the DAX index rising by 0.69% to reach a new record high of 16,275.38.
How did Asian markets perform?
- In the Japanese stock market, the Nikkei 225 index rose by 0.77% and closed at 30,808.35, recording its best week since October. The index continued to reach levels not seen since 1990.
- The Topix index also experienced a 0.18% increase, reaching 2,161.69, marking its sixth consecutive week of gains. In April, Japan’s core inflation rose by 3.4% year-on-year, remaining above the target set by the country’s central bank.
- In contrast to other markets, Greater China markets displayed a different trajectory. The Hang Seng index in Hong Kong experienced a decline of 1.5%, while the Shanghai Composite in mainland China slid by 0.42%, closing at 3,283.54.
- However, the Shenzhen Component saw a slight increase of 0.12% and closed at 11,091.36.
Bond Market
- The yield on the 2-year US Treasury rose by 2 basis points, reaching 4.279%.
- Simultaneously, the yield on the 10-year Treasury experienced a rise of 3.4 basis points, reaching 3.682%.
- UK 10-year GILT up 0.014 reaching 4.009%.
- Similarly, Bund 10 year rose by 0.034 reaching 2.457%
Commodities Market
- Gold Futures increased by 1.03% closing at 1979.90.
- Similarly, Spot Gold against USD gained 1.04% on Friday.
- Brent futures, a benchmark for global oil prices, concluded the day at $75.59 per barrel, representing a 0.36% decrease. Meanwhile, West Texas Intermediate (WTI) U.S. crude for July delivery declined by or 0.25%, settling at $71.67.
- Nymex Crude Oil fell by 0.26%. However, Nymex RBOB Gasoline inched up by 0.46%.
- The British government revealed its intentions to prohibit the importation of Russian diamonds, copper, aluminium, and nickel.
Currencies
- The value of the U.S. dollar experienced a decline on Friday following remarks from Federal Reserve Chair Jerome Powell.
- US Dollar Index slipped by 0.38% on Friday close.
- USD JPY and GBP JPY dropped by 0.54% and 0.26% respectively amid the debt ceiling negotiations.
- EUR USD inched up by 0.34% on Friday. However, EUR USD dropped by 0.63% for the week as Market sentiment shifted as expectations for interest-rate cuts by the Federal Reserve decreased, leading to various impacts.
Next week
- The upcoming week is expected to bring a series of earnings reports from the retail sector, including companies such as Lowe’s, AutoZone, Dick’s Sporting Goods, BJ Wholesale Club, Urban Outfitters, Costco, Dollar Tree, Best Buy, and The Gap.
- In addition to the retail sector, notable earnings announcements are anticipated from Zoom Video Communications, Nvidia, and TD Bank.
- On Wednesday, the Federal Reserve will release the meeting minutes from its most recent FOMC meeting, where a 25-basis point increase in interest rates was implemented.
- The Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index for April, which is the Federal Reserve’s preferred inflation gauge.
- The University of Michigan will report on consumer sentiment, providing insights into the overall mood of consumers.
- Updates on the housing market will include data on new and pending home sales for the month of April.