Some negatively received corporate earnings and weak economic data weighed on investor sentiment on Wall Street on Thursday and caused losses on the stock markets in Asia at the end of the week. As a result, economic concerns and the next monetary policy decisions of the Fed, the ECB and the Bank of Japan increasingly became the focus of investors.
The Dow Jones Industrial closed 0.33% lower than the previous day at 33,786.62 points. The Dow was unable to defend gains it had built up at the beginning. The broad market S&P 500 fell by 0.6% to 4,129.79 points and on the Nasdaq the indices lost around 0.8%. At the individual stock level, Tesla, among others, caused a bad mood with disappointing business figures. The shares of the electric car manufacturer fell by almost 10%. The sentiment was furthermore weighed down by weaker-than-expected economic data from the US. Initial jobless claims rose more than expected and the Philly Fed index signalled a deterioration in business sentiment in the Philadelphia region in April, while analysts had expected an improvement. Leading indicators and existing home sales also fell short of expectations in March. The Federal Reserve is expected to closely monitor recent economic developments and factor them into its next interest rate decision on May 3.
In the bond market, the yield on ten-year US government bonds fell from just under 3.6% to 3.53%. The US dollar suffered from the weaker-than-expected US economic data and traded just below the 1.10 mark against the euro.
Stock exchanges in the Asia-Pacific region trended lower on Friday. The Nikkei 225 in Tokyo fell by 0.35%. Meanwhile, in Japan, core inflation in March was unchanged from February for the second month in a row at 3.1%. In January, the core rate had reached 4.2%, the highest level since 1981. South Korea's Kospi slipped 0.8%. In Hong Kong, the Hang Seng Index fell around 0.6%, while the Hang Seng Tech Index lost 1.75%. Markets in mainland China also traded weaker. The Shanghai Composite fell 0.6% and the Shenzhen Component lost 1.2%. Yesterday, China's central bank said it expects consumer prices to rise this year in a U-shaped trend, following its interest rate decision (key rates were unchanged again). In March, the annual inflation rate in China reached 0.7%, the lowest level in 18 months. The world’s second-biggest economy has no basis for an inflationary or deflationary trend in the medium to long term, the People's Bank of China said in its commentary.
Europe's stock markets continued to consolidate on Thursday, remaining more or less unchanged from the previous day's close. ECB Governing Council member Klaas Knot currently sees no scope for an interest rate pause soon. The Dutch central bank chief said in an interview that this would require a convincing reversal of the underlying inflation dynamics. The ECB's next policy decision is scheduled for May 4.
Corporate news in focus: Holcim Q1 trading update, Vontobel, Investor, SAP, Procter & Gamble and Schlumberger with Q1 figures.
Economic data in focus: UK retail sales March (08:00 CET), manufacturing purchasing managers surveys from France (09:15), Germany (09:30), eurozone (10:00), UK (10:30) and the US (15:45).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.