July 25, 2024

Costaalegre Restaurant

Learn marketing business

Daily Markets: Solid Economic Data Pushes Markets Higher

8 min read

Today’s Big Picture

Better-than-expected economic data out of Asia and Europe have markets in a positive mood today, the first day of trading for the second quarter, and the last day for the week due to tomorrow’s Good Friday holiday. That means U.S. equity markets will be closed tomorrow even though the March Employment Report will still be published. Consensus expectations call for 620-680K jobs to have been created during the month, reflecting the continued easing of lockdowns and rebounding economy.

No doubt, the details of that report, as well as weekend conversations on President Biden’s infrastructure plan and potential corporate tax hikes, will set the tone for how trading begins next week. We aim to have digested all of our Easter chocolate and report for Daily Markets duty on Monday to break it all down.

Shares in Asia-Pacific started the second quarter off with gains across the board as Hong Kong’s Hang Seng rose 2.0%, South Korea’s Kospi rose 0.9%, Japan’s Nikkei 225 added 0.7%, Australia’s S&P 500/ASX 200 rose 0.6%, and China’s Shanghai Composite gained 0.7% while the Shenzhen Component added 1.5%. The major equity indices in Europe were also solidly in the green by midday trading after eurozone manufacturing activity grew at its fastest pace on record in March and U.S. futures indicate positive moves at the open.

Data Download

Coronavirus

Covid-19 was the third leading cause of death among Americans in 2020, following heart disease and cancer, according to the CDC. The virus was responsible for more deaths than strokes, diabetes, influenza, pneumonia, Alzheimer’s, and kidney disease. Covid-19 replaced suicide among the top 10 causes of death in the U.S. – that is one bad bug.

Abbott (ABT) received FDA Emergency Use Authorization (EUA) for over-the-counter, non-prescription, asymptomatic use of its BinaxNOW COVID-19 Ag Self-Test for detection of the coronavirus.

Germany will allow GPs to provide vaccination shots starting next week in an effort to speed up the rollout, having lagged far behind the U.S., UK, and Israel, with only 5% of its population having received two doses versus 16% in the U.S. and 55% in Israel.

The Peace Corps is prepping for its second-ever domestic deployment to help with the U.S.’s vaccination campaign, which is great news given that yesterday we learned that one of Johnson & Johnson’s (JNJ) manufacturing facilities in Baltimore, MD, that makes its one-shot coronavirus did not meet quality standards. The facility did not have the FDA’s approval to make the vaccine, and there are reports that the mixup in ingredients ruined up to 15 million doses. Thankfully this is not expected to delay any current shipments.

International Economy

Today brings a slew of March Manufacturing PMIs from around the world, which overall came in stronger than expected.

  • Australia fell slightly to 56.8 from 56.9.
  • Japan rose to 52.7 from 51.4, from which it was expected to increase slightly to 52.0.
  • South Korea remained steady at 55.3.
  • China fell unexpectedly to 50.6 from 50.9, from which it was expected to increase to 51.3.
  • Spain came in stronger than expected at 56.9, the strongest level since December 2006, from 52.9, from which it was expected to increase to 55.9.
  • Italy rose more than expected to 59.8, a 21-year high, from 56.9, from which it was expected to increase to 59.6.
  • France was also stronger than expected at 59.3 from 56.1, from which it was expected to increase to 58.7.
  • Germany rose as expected from 60.7 to 66.6.
  • The Eurozone overall was slightly stronger than expected at 62.5, which represents its fastest pace on record, from 57.9, from which it was expected to increase to 62.4.
  • The UK beat expectation, rising to 58.9 from 55.1, from which it was expected to rise to 57.9.

Japan’s Tankan Large Manufacturer’s Index in Q1 rose more than expected to 5 from the prior -10, from which it was expected to increase to just 0.

South Korea’s exports, which are a good metric for global trade, rose 16.6% YoY in March from 9.5% YoY in February, beating expectations for a 16.2% increase.

Australia’s final estimate for Retail Sales in February saw a decline of -0.8% MoM after rising 0.3% previously, better than the expected to decline to -1.1%.

Domestic Economy

Pending Home Sales in February declined 10.6% from January according to the National Association of Realtors and were 0.5% below February 2020 levels. There were 1.03 million homes for sales at the end of February, the lowest level on record representing a 29.5% drop from February 2020.

ADP’s private payroll report for March saw an addition of 517,000 workers, slightly less than consensus estimates for 525,000. February’s job gains were revised significantly higher, to 176,000 from the initial 117,000 estimate. Even though gains were less than expected, it was the biggest month for hiring since September’s gain of 821,000, with the strongest gains coming from the sector that has been hardest hit by the pandemic, leisure, and hospitality, which added 169,000 new jobs. Friday’s nonfarm payroll report is expected to see an increase of 675,000 after Friday’s 379,000 new jobs, which will see unemployment fall to 6.0% from 6.2%.

Later today, we will get the usual weekly jobless claims report, Markit and ISM Manufacturing PMIs for March, and Construction Spending in February, which is expected to decline 0.8% MoM.

Markets

The S&P 500 set an intraday record high yesterday but gave back some of those gains to finish the day up 0.4%. The Nasdaq Composite rose 1.5%, and the Russell 2000 climbed 1.1% while the Dow Jones Industrial Average limped to the close, falling 0.3%. The close of trading yesterday shut the books on the March quarter, and for the first three months of 2021, the Russell 2000 was in the pole position, up 12.4%, with the Dow a distant second, up 7.8%, and the S&P 500 up 5.7%. Bringing up the rear was the Nasdaq Composite Index with its 2.8% increase for the March quarter. The Nasdaq 100 remains below its 50-day moving average.

The strongest performing S&P 500 sector in Q1 was Energy, up 29.3%, followed by Financials, up 15.4%, and Industrials, up 11.0%. The weakest sectors were Consumer Staples, up 0.5%, Information Tech, up 1.7%, and Utilities, up 1.9%.

The VIX closed below 19 to end a quarter in which volatility continued to fall, and the price of bitcoin rose over 100%. The 10-year US Treasury yield rose from 0.93% at the end of 2020 to 1.73% at the close of Q1, and the U.S. dollar rose 3.1%.

Yesterday the Invesco Agriculture ETF (DBA) gained more than 2%, delivering its strongest day in almost a year, after the USDA’s annual Prospective Plantings report revealed that plantings for corn were less than expected at 91.1 million acres versus consensus for 93 million and soybeans were at 87.6 million acres versus expectations for 90 million while exports of soybeans to China are at a record high.

Stocks to Watch

Taiwan Semiconductor (TSM) plans to spend $100 billion over the next three years to expand its chip fabrication capacity. This follows a recent comment it would spend $25-$28 billion this year to develop and produce advanced chips. Per the company, “We are entering a period of higher growth as the multiyear megatrends of 5G and high-performance computing are expected to fuel strong demand for our semiconductor technologies in the next several years.”

Apple (AAPL) shared plans to build a “grid-scale” battery-based renewable energy storage facility in California near its solar farm that already fills daytime energy needs for its Cupertino headquarters. The company also shared that 110 of its manufacturing partners are moving to 100% renewable energy as part of Apple’s commitment to making its supply chain and products carbon neutral by 2030.

Micron (MU) reported better than expected quarterly EPS on revenue that rose 30% YoY to $6.2 billion, matching the consensus forecast. DRAM revenue jumped 44% YoY while NAND revenue rose 9% YoY, and the company noted the “secular demand driven by AI and 5G” as well as “innovation across the data center and intelligent edge.” For the current quarter, Micron expects revenue of $7.1 billion, plus or minus $200M, and EPS of $1.62, plus or minus $0.07 vs. the consensus of $6.86 billion and $1.33, respectively.

Alongside announcing its latest North America production cuts at seven assembly plants due to the global chip shortage, Ford (F) said it would provide an update on April 28 to the expected hit to its 2021 profit.

Wingstop (WING) announced its March quarter domestic same-store sales increased +20.7% YoY, and its system-wide sales increased 30.0% to approximately $558.9 million. Digital sales during the quarter increased to 63.6% of total sales, up from 43.3% in the year-ago quarter. Wingstop will report full Q1 results on April 28.

Guess? (GES) crushed January quarter EPS expectations despite revenue for the quarter falling 23% YoY to $648.5 million, missing the $659.9 million consensus. While the company opted not to provide formal guidance, it shared expectations for its April quarter revenue to be down in the high-single digits YoY as pandemic-related shutdowns, and traffic declines are partially offset by continued momentum in its global e-commerce business.

Dave & Buster’s (PLAY) reported a January quarter loss of $1.19 per share vs. the -$1.26 consensus. Revenue for the quarter fell 66.3% YoY to $116.82 million beating the $102 million consensus. Overall comparable store sales declined 70% YoY while sales at fully operational comparable stores came in at 52% of 2019 sales. The company guided April quarter revenue in the range of $210-220 million vs. the $157 million consensus with positive enterprise-level EBITDA.

Nio (NIO) delivered 7,257 vehicles in March, an increase of 373% YoY and 30.1% MoM from 5,578 vehicles in February. XPeng (XPEV) delivered a total of 5,102 Smart EVs in March, up 384% YoY and 130% MoM.

Microsoft (MSFT) won a contract to build more than 120,000 custom HoloLens augmented reality headsets for the U.S. Army. According to the Army, the headsets enable soldiers to fight, rehearse and train in one system.

Reports suggest both Micron (MU) and Western Digital (WDC) are considering making separate bids for Japanese chip maker Kioxia Holdings that could value the company near ~$30 billion.

Yesterday’s IPO of Deliveroo (ROO) is being called the worst IPO in London’s history with sharing falling 26%, erasing nearly £2 billion from its opening market cap, despite the best efforts of its lead bankers Goldman Sachs (GS) and JPMorgan (JPM).

The education technology company Coursera (COUR) started trading at $39 a share, above its target IPO prices of $33. The company raised nearly $520 million with an implied market cap of $4.3 billion, but with shares up 18% after the open, its market cap rose to $5.13 billion versus its prior private market valuation of $3.6 billion.

Frontier Group Holdings (ULCC) priced its IPO of 30 million shares at $19.00 per share, the low end of the expected range of $19-$21 per share.

Shares of French IT consulting firm Atos (AEXAF) fell sharply in trading today following the company’s disclosure that its auditors found accounting errors at two of the firm’s U.S. units “leading to several accounting errors.”

After today’s market close, there are no companies slated to report their quarterly results. Investors looking to get a jump on those reports to be had next week should visit Nasdaq’s earnings calendar page.

On the Horizon

  • April 2: Nonfarm Payrolls
  • April 5: Markit Services PMI, ISM Non-Manufacturing PMI, Factory Orders
  • April 6: JOLTS Job Openings, IBD/TIPP Economic Optimism, API Crude Oil Stocks
  • April 7: Balance of Trade, EIA Energy Stocks, FOMC Minutes
  • April 8: Weekly jobless claims
  • April 9: PPI, Wholesale Inventories
  • April 12: Monthly Budget Statement for March
  • April 13: Inflation, API Crude Oil Stock report
  • April 14: Import/Export prices, EIA energy stock reports
  • April 15: Retail Sales, NY Empire State Manufacturing, Philadelphia Fed Manufacturing, weekly Jobless Claims, Industrial Production, Business Inventories, NAHB Housing Market Index, Net Capital, and TIC flows, Foreign Bond Investment
  • April 16: Housing Starts, Building Permits, Michigan Consumer Sentiment

Thought for the Day

“Spring is nature’s way of saying, “Let’s party!” – Robin Williams

Disclosures

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

costaalegrerestaurant.com | Newsphere by AF themes.