Daily Markets: Disappointing data from China weighs on stocks


The big picture today

Asia-Pacific stock indices ended today’s session on a mixed note, with Korea’s KOSPI down 0.29% and China’s Shanghai Composite down 0.34%, while the ASX All Ordinaries Australia’s and Hong Kong’s Hang Seng gained 0.25% and 0.26% respectively. The Indian Sensex increased by 0.34% and the Taiwanese TAIEX by 0.43%. Japan’s Nikkei led the way closing up 0.45% on the day. By midday, European equity indices are mixed and US futures are pointing to a weak market open.

As markets grapple with disappointing economic data out of China and the prospect of normal life not returning there until at least June 1, investors are also awaiting fallout from Russia following the week’s announcement. -End by Finland and Sweden of their intention to join NATO, marking another sea change in Europe’s security architecture. With a light calendar for U.S. economic data today and only a smattering of corporate earnings as well, investors will be digesting these international developments as they wait for New York Fed President John Williams to speak later in the day. Williams ahead of Fed Chairman Jerome Powell’s speech tomorrow, a day that also brings key pieces of economic data, including April’s retail sales report. Once again, the market will be looking for clues as to the Fed’s aggressiveness in cutting inflation at its June monetary policy meeting after last week’s consistently high inflation data.

Data download

International economy

The Eurozone trade balance in March was reported at -€17.6bn, much more lopsided than the previously reported -€11.3bn as energy continues to weigh on the region .

Over the weekend, Shanghai officials outlined plans for a phased reopening of malls, supermarkets and other businesses from today as daily cases of Covid-19 infection continue to decline. However, many restrictions are expected to remain in place at least until May 21 and from now on, June 1 is the target date to allow normal life to resume in Shanghai. China’s zero-Covid policy has weighed on its economy, as evidenced by the list of recent data: retail sales fell 11.1% year on year in April, manufacturing fell 4.6%, industrial production fell 2.9%, retail sales fell 11.1% and unemployment nationwide. China’s 31 largest cities hit a new high of 6.7% in April.

While noting that a face mask is still one of the best protections against the transmission of Covid-19, as of today, the EU Aviation Safety Agency (EASA) and the European Center of Disease Prevention and Control lifted its recommendation for the mandatory wearing of medical masks at airports. and on board flights.

Germany plans to stop importing Russian oil by the end of the year even if the European Union fails to agree on an EU-wide ban in its next round of penalties.

Domestical economy

Today we have a very light national economic calendar that features May’s reading of the Empire State Manufacturing Index. The report will be released at 8:30 a.m. ET and the May figure is expected to drop to 15.0 from April’s reading of 24.6.

As Europe was in the throes of an energy crisis, the problems experienced by the ERCOT power grid in Texas last winter managed to reappear as the grid announced that six generators went offline, knocking out 2,900 megawatts of electricity. electricity from the system and Texans were urged to save electricity by turning up thermostats and doing dishes and laundry during off-peak hours.

Markets

Late last week’s market rebound was fueled by chatter Singapore and Shanghai could ease Covid restrictions in the coming weeks, while Fed Chairman Powell and voting FOMC member Chairman of the Fed Cleveland Mester, both reiterated their support for 50 basis point rate hikes at the Fed. next two meetings after last week’s April CPI and PPI data for the United States

All 11 sectors of the S&P 500 ended higher with gains ranging from 1.1% (Utilities and Health Care) to 4.1% (Consumer Discretionary), with mega-cap stocks rebounding the most. Including Friday’s moves, here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -11.4%
  • S&P 500: -15.6%
  • Nasdaq compound: -24.5%
  • Russell 2000: -20.2%
  • Bitcoin (USD-BTC): -38.1%
  • Ether (ETH-USD): -46.9%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Tower Semiconductor (TSEM), Warby Parker (WRBY), and Weber (WEBR) are supposed to publish their quarterly results.

Shares of digital presence platform company Wix (WIX) are under pressure this morning following the release by the company of mixed quarterly results and guiding the current quarter below expectations. Wix now sees Q2 revenue of $342-346 million vs. consensus of around $356 million. For the full year, the company expects revenue to grow 10-13% year-over-year to ~$1.396-1.434 billion vs. consensus of 1.45 billion dollars.

Ryanair (RYAAY) reported a loss of 355 million euros ($369.06 million) for the 12 months ending March 2022, but said it was impossible to accurately forecast anything beyond the hope for a return to “reasonable profitability” this year. The company said it plans to increase traffic to 165 million passengers this year, up from 97 million a year ago and a pre-Covid-19 record of 149 million.

Clear Secure (YOU) posted a lower-than-expected loss for its March quarter, while revenue which rose 78.9% year-on-year to $90.5 million beat consensus guidance of $88.3 million. For the current quarter, the company is forecasting revenue of $99 million to $101 million versus consensus of $93.9 million.

JetBlue Airways (JBLU) launched a hostile takeover bid in cash on Spirit Airlines (SAVE) after the discount carrier rejected an offer to buy the company. In a letter to Spirit shareholders on Monday, JetBlue offered $30 per share and said it was prepared to “negotiate in good faith a consensual transaction at $33, subject to due diligence.”

McDonald’s (MCD) announced that it would exit the Russian market and initiated a process to sell its Russian business. This follows McDonald’s announcement on March 8 that it had temporarily closed restaurants in Russia and suspended operations in the market.

Ford engine (F) sold an additional 7 million shares of the electric car maker Rivian (RIVN) Friday for about $188 million following its sale of 8 million shares earlier in the week.

Bloomberg Private equity firm reports Carlyle Group (CG) is in advanced talks to acquire ManTech International (MANT)a government contractor who also provides IT services.

IPOs

No new IPOs are expected to start trading this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Stratasys (SSYS), Take-Two (TTWO) and Tencent Music (TME) are expected to release 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

tuesday may 17

  • Euro zone: GDP (Second Preliminary) – 1Q 2022
  • United States: Retail sales – April
  • United States: industrial production and capacity utilization – April
  • United States: Business inventories – March
  • United States: NAHB Housing Market Index – May

Wednesday May 18

  • Japan: GDP (Preliminary) – 1Q 2022
  • United Kingdom: CPI and PPI – April
  • Euro zone: CPI – April
  • US: Weekly MBA Mortgage Applications
  • United States: housing starts – April
  • United States: EIA Weekly Crude Oil Inventories

Thursday May 19

  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: Philadelphia Fed Index – May
  • United States: sales of existing homes – April
  • United States: Leading indicators – April
  • United States: EIA Weekly Natural Gas Inventories

Friday May 20

  • Japan: CPI – April
  • Germany: PPI – April
  • United Kingdom: Retail sales – April
  • Euro zone: Consumer confidence – May

Thought of the day

“People don’t decide their future, they decide their habits and their habits decide their future.” ~ Frederick M. Alexander

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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