Daily Markets: Bond Yields, Inflation and Recession Worries Persist


The big picture today

Asia-Pacific equity indices ended today’s session lower across the board except China’s Shanghai Composite which gained 0.09%. India’s Sensex fell 0.67%, Korea’s KOSPI 1.27% and Australia’s ASX All Ordinaries 1.47% while Taiwan’s TAIEX and Japan’s Nikkei closed 2.19% lower % and 2.53%, respectively. Markets in Hong Kong are closed today to mark the day after Buddha’s birthday. By midday, European equity indices are down across the board and US futures are pointing to a sore market open later this morning. Rising bond yields are again weighing on equities and leading some investors to reassess the valuations placed on technology and growth stocks.

We are starting the week on a relatively quiet data note, but the next few days will bring the April reports for the consumer and producer price index. Investors will be watching these reports for signs that inflation may have peaked, but if the data beats expectations, we are likely to see renewed concerns that the Fed may need to do more. President Biden will also address the United States tomorrow to discuss inflation and outline his plans to deal with it.

The Russian-Ukrainian war is back in the spotlight as Russia marks Victory Day today to commemorate its victory over Nazi Germany in World War II. Over the weekend, leaders of the Group of 7 nations pledged to ban or phase out Russian oil, take steps to halt the supply of key services on which Russia depends and toughen sanctions on elites financial institutions and their family members who support President Vladimir Putin. Additionally, over the weekend, the White House announced new sanctions against three Russian state television stations and said it would bar Americans from providing accounting or consulting services to anyone in Russia. The UK said it would offer an additional £1.3 billion in aid and military support to Ukraine, nearly doubling the £1.5 billion in support already provided.

Data download

International economy

Last night saw the release of the April services PMI for Japan which came in at 50.7, showing the first signs of expansion this year thanks to the easing of Covid-19 restrictions.

China’s exports for the April period year-on-year rose 3.9%, which surprised 0.70% from expectations, but fell significantly from the previous 14.7% growth announced. Imports showed signs of growth of 0.00% which, while better than the previously reported contraction of 0.10%, was well below expectations of +3.40%. As with virtually all figures coming out of China in recent months, these have also been impacted by the implementation of the country’s Zero Covid policy.

Taiwan’s April year-on-year exports posted a surprising 18.80% growth of 4.40% compared to expectations, but lower than the previously reported 21.30%. The April figure is the third-highest growth on record and was driven by the country’s increased tech trade.

Saudi Arabia has slashed oil prices for buyers in Asia as China’s coronavirus shutdowns weigh on demand, with Saudi Aramco lowering prices with next month’s shipments $4.40 a barrel above its benchmark rate from $9.35 in May.

Domestical economy

10:00 a.m. ET will see the release of ending wholesale stocks which are expected to maintain the 2.30% growth rate published in the preliminary figures. Although a step away from the previous growth of 2.57% in February, these levels still represent a significant increase compared to the 10-year average of between 0.40% and 0.50% excluding the last two years of the pandemic.

Markets

The stock market ended the first week of May on a painful week that saw the Nasdaq Composite Index down 1.4% while the S&P 500 fell 0.6%, leading them to close the week down 1.5% and 0.2%, respectively. The Russell 2000 fell 1.7% on Friday, leading it to drop 1.3% for the week. Including Friday’s market moves, here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -9.5%
  • S&P 500: -13.5%
  • Nasdaq compound: -22.4%
  • Russell 2000: -18.1%
  • Bitcoin (USD-BTC): -29.8%
  • Ether (ETH-USD): -35.0%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Coty (COTY), Palantir Technologies (PLTR)and Tyson Foods (TSN) are supposed to publish their quarterly results.

With the expiration of the insider lock-in period for Rivian Automotive (RIVN) shares, Ford engine (F) is expected to sell 8 million of the 102 million shares he owns.

Honda engine (HMC) shared its April sales in China fell 36.3% to 95,216 units due to the country’s zero-COVID policies. Honda isn’t alone in feeling the pain as more than half of 121 companies surveyed by the American Chamber of Commerce in China either cut or delayed investment in the country, while nearly 60% lowered their forecasts. income for this year following the latest epidemics. .

Hyundai engine (HYMPIE) plans to announce a new electric vehicle manufacturing plant in the United States and has been in talks to build a plant in Georgia, near existing factories for Hyundai and Kia (KIMTF) brands.

Toyota (TM) engine plans to invest 48 billion rupees ($624 million) to manufacture electric vehicle components in India.

Reports indicate Uber (UBER) cut marketing and incentive expenses and treat hiring as a “privilege,” CEO Dara Khosrowshahi said in an email to staff on Sunday.

Faced with rising wages for nurses, some hospitals, including HCA Health (HCA) and Universal Health Services (OHS) seek to raise prices by 7.5% to 15%, potentially triggering contract disputes with health insurers. If successful, price increases would likely result in higher premiums for employers and workers.

IPOs

Readers interested in learning more about the timing of upcoming IPOs should visit Nasdaq’s Most Recent and Upcoming IPOs page.

After today’s market close

Blink Charging (BLNK), GoodRx (GDRX), International Flavors & Fragrances (IFF), Ritchie Bros. (RBA) and Simon Properties (SPG) are due to publish their latest quarterly results. Investors should be on the lookout for companies that announce their March quarter results in advance. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

Monday May 9

  • Japan: PMI Services – April
  • China: growth in imports and exports and growth in loans – April
  • Eurozone: Sentix Economic Index – May
  • United States: Wholesale inventories – March

tuesday 10 may

  • Japan: Real household consumption expenditure and real household income – March
  • Italy: Industrial production – April
  • Germany: ZEW Current Situation and Economic Sentiment – May
  • United States: NFIB Small Business Index – April

Wednesday May 11

  • China: CPI and PPI – April
  • Japan: Leading indicators – March
  • Germany: CPI – April
  • US: Weekly MBA Mortgage Applications
  • United States: CPI – April
  • United States: EIA Weekly Crude Oil Inventories

Thursday May 12

  • China: Foreign direct investment – ​​April
  • United Kingdom: construction output, industrial output, manufacturing output – March
  • United Kingdom: GDP – 1Q 2022
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: PPI – April
  • United States: EIA Weekly Natural Gas Inventories

Friday May 13

  • Euro zone: Industrial production – May.
  • United States: import/export prices – April
  • United States: Michigan Sentiment Index (preliminary) – May

Thought of the day

“The best teams deal with meteors. Meteors that don’t hit you create opportunities. ~John Malloy

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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