Mike Dolan talks about the future outlook for the US and global markets
The S&P 500's all-time high is on track to break the 5,000-point hurdle for the first time on the back of another strong earnings season and calm in the bond market. This comes at a time when China's worrying deflation is intensifying as the Lunar New Year holiday approaches.
The S&P 500 is up 21% since late October as the U.S. economy grows above 3%, unemployment below 4% and annual gross profit growth above 8%.
Excluding the sluggish Chinese market, the MSCI World Index of developed market stocks also hit a record on Thursday, topping its January 2022 high earlier this week. MSCI's U.S. index is at a two-year high.
This week, turmoil over regulatory controls and personnel changes managed to push mainland Chinese stocks off five-year lows, even as they posted their best week in more than a year before closing the week starting Friday. , which also took into account the underlying economic hardship.
China's consumer prices fell at the fastest pace in more than 14 years in January, and producer prices also fell, prompting policymakers to try to revive an economy facing deflation risks as confidence wanes. pressure is increasing.
The consumer price index fell 0.8% in the year to January, following a 0.3% decline in December, beating economists' expectations of 0.5%.
Additionally, Hong Kong's Hang Seng shares suffered a relapse, falling 1.3%, also pushing down Alibaba's 6.1% decline after the internet giant missed quarterly revenue expectations.
Returning to Wall Street, the recent stock market rally was helped by a calming bond market that had recently been depressed, with a modest rally on Wednesday for a record $54 billion in 10-year Treasury bonds. Demand led to a calming of horses.
Approximately $25 billion in 30-year bonds will be issued later today.
The 10-year bond yield stabilized at 4.10%, helped by the fact that oil prices remain low, down more than 5% year-on-year.
The subsequent weekly unemployment numbers will be closely monitored. Notably, last week's spike in jobless claims came as the numbers surged in the face of January's jobs data shake-up that disrupted market thinking about the Federal Reserve's interest rate cuts this year.
A series of Fed officials' speeches this week indicated that policymakers remain in “wait-and-see” mode and are in no particular hurry to ease.
But Fed Director Adriana Kugler, in her first public comments since taking office last September, suggested the game was over.
“March, May, June, from now until the end of the year, and all future meetings will be held live,” she said.
Currently, Fed futures are 80% priced in for a quarter-point rate cut by May, with a one-in-fifth chance of a rate cut as early as March, resulting in 120 basis points of easing over the year. is expected to be seen.
Wall Street stock futures and the dollar index remained stable through Thursday's opening.
This week's alarming swings in local bank stocks are one reason to be cautious, and perhaps why some still see a March Fed rate cut as an outside possibility.
However, New York Community Bancorp stock rebounded in late trading Wednesday, ending an early drop of more than 13% to close 6.7% higher. The company's newly appointed executive chairman, Alessandro Dinero, has vowed to reduce exposure in the troubled commercial real estate sector, where loans have been written off.
Walt Disney shares rose nearly 7% in after-hours trading following the earnings announcement, with CEO Bob Iger announcing a huge investment in Fortnite maker Epic Games and plans to launch ESPN. Walt Disney shares rose nearly 7% in after-hours trading as the company hit back at activist investors with a number of announcements. Streaming services in 2025.
After Disney's board approved a $3 billion stock repurchase program for this fiscal year, Iger unveiled the plan, calling for a dividend of 45 cents per share, a 50% increase from the dividend paid in January. declared.
But developments reminiscent of the Red Sea shipping woes were also evident in Europe, where shipping giants reported lower-than-expected fourth-quarter results and said they expect 2024 profits to fall below last year's levels due to an oversupply of container ships. As a result, Maersk shares fell 12.7%.
Here are the key diary items that could give direction to US markets later on Thursday:
*Weekly U.S. unemployment claims
*Lecture by Thomas Barkin, President of the Richmond Federal Reserve Board. Philippe Lane, chief economist of the European Central Bank, and ECB policymakers Pierre Wunche and Frank Elderson gave speeches.Bank of England policymakers Catherine Mann and Swati Dhingra give speeches
*U.S. Treasury sells $25 billion of 30-year bonds
* U.S. corporate earnings: Expedia, Motorola Solutions, Conocophilips, Duke Energy, T Rowe Price, Intercontinental Exchange, Mowhawk, Tapestry, Hershey, Ralph Lauren, Zimmer Biomet, Verisign, S&P Global, Borgwarner, Philip Morris, DTE Energy, First Energy, Interpublic, Regency Centers, Dexcom, Mettler-Toledo, Healthpeak Properties, Illumina, Baxter, Kimco Realty, Kenvue, Kellanova, TransDigm, Masco
(Written by Mike Dolan; Edited by Christina Fincher; mike.dolan@thomsonreuters.com)
