Today’s Big Picture
Asia-Pacific equity indexes ended today’s session down sharply across the board, prompted by the effects of China’s zeal in combating the latest Covid outbreak. Some feel that the impacts of the zero-policy lockdowns of 2020 were economically and psychologically devastating, and were not as effective at taming the spread as first envisioned. Should China announce additional extensions or expansions of the current lockdown, it’s very possible that the markets will respond even more violently. Leading the way down was China’s Shanghai Composite closing 5.13% lower, followed by Hong Kong’s Hang Seng posting a 3.73% decline, Taiwan’s TAIEX closing off 2.37% while Japan’s Nikkei and Korea’s KOSPI fell 1.90% and 1.76%, respectively. India’s Sensex was not as impacted but still closed down 1.08% on the day. Australia’s markets were closed today marking Anzac Day, Australia’s Memorial Day equivalent. By mid-day trading, European equity indices are down, and U.S. futures point to a rough market open later this morning.
Even though Treasury yields are slumping this morning, investors are increasingly focused on the speed of the global economy, as evidenced by the morning’s move lower in oil prices. In addition to Beijing reporting a spike in Covid cases over the weekend despite Shanghai remaining under a prolonged lockdown, reports indicate European Central Bank policymakers are keen to end bond purchases and raise interest rates as soon as July. Coupled with the Federal Reserve’s increasing likelihood of front-loading interest rate hikes to tame inflation, investors and economists are puzzling through the impact on demand and global growth. The stock market is no fan of uncertainty, and it’s currently staring at a rising wall of it. What this more than likely means is once again, equities will be trading day today based on the latest headlines while investors use the barrage of quarterly earnings this week and economic data to be had this week to fine-tune their near-term expectations.
Today saw the release of a number of April German sentiment indexes with the Ifo Current Assessment (97.2), Business Climate (91.8), and Expectations (86.7) figures all coming in slightly above the March reading, indicating that German businesses are starting to see the light at the end of the tunnel regarding the overall economic environment. Our take is that as the rest of the world continues to support Ukraine this confidence will grow not just in Germany but across the continent.
Speaking of support for Ukraine, the EU is reportedly preparing the sixth round of sanctions against Russia focusing on oil imports which will be designed to have a maximum mid- to long-term impact on Russia without creating unmanageable short-term issues for Europe.
According to Black Knight’s “First Look” into March 2022 month-end mortgage performance, the national mortgage delinquency sank to a record low in March, as a robust labor market, continued student loan deferrals, strong post-forbearance performance, and millions of refinances at record-low interest rates helped household balance sheets.
Before U.S.-listed equities begin trading, we’ll receive the March edition of the Chicago Fed National Activity Index, which fell to a reading of 0.51 in February from 0.59 in January. Soon after the market open, we’ll get the April reading on the Richmond Fed Manufacturing and Services indices and the same from the Dallas Fed as well.
All the major U.S. equity indices dropped more than 2.5% on Friday with the S&P 500 down 2.8%, and the Dow Jones Industrial Average fell 2.8% while both the Nasdaq Composite and the Russell 2000 fared somewhat better closing down 2.6% on the day. All 11 S&P 500 sectors closed lower with losses ranging from 1.6% (consumer staples) to 3.7% (materials), and all 30 Dow components closed lower. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -7.0%
- S&P 500: -10.4%
- Nasdaq Composite: -17.9%
- Russell 2000: -13.6%
- Bitcoin (BTC-USD): -19.3%
- Ether (ETH-USD): -25.1%
Stocks to Watch
In an interesting turn of events and with its March quarter earnings set to be reported this coming Thursday, The Wall Street Journal reports Twitter (TWTR) is in discussions to sell itself to Elon Musk and could finalize a deal as soon as this week.
Shanghai reported 39 covid deaths Sunday, its highest daily toll despite weeks of lockdowns, while China’s capital Beijing warned of a “grim” situation with rising infections. Yet, Foxconn Technology’s (HNHAF) plant in central China, its biggest assembler of iPhones for Apple (AAPL), continues to operate amid a government Covid lockdown of the area. Apple will report its quarterly results later this week and we expect its comments on iPhone production for both the March quarter as well as the current one will be have many an investor waiting with bated breath.
Tata Motors (TTM) announced an average price increase of 1.1% across its passenger vehicles, to partially offset the rise in input costs.
European lawmakers approved the Digital Services Act that will compel companies like Meta (FB), Twitter (TWTR), and Google (GOOGL) to inform regulators what they are doing to combat misinformation online and quickly rid their platforms of illegal content.
The initial public offerings for Tenon Medical (TNON) and SaverOne (SVRE) are slated to price this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Alexander Re (ARE), Ameriprise Financial (AMO), Calix Networks (CALX), Crane (CR), Heartland Financial (HTLF), O-I Glass (PI), Packaging Corp. (PKG), PepsiCo (PEP), and Whirlpool (WHR) are on tap to report their latest quarterly results. Investors should remain on watch for companies that pre-announce their March quarter results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Tuesday, April 26
- US: Durable Orders – March
- US: FHFA Home Price Index – February
- US: Consumer Confidence – April
- US: New Home Sales – March
Wednesday, April 27
- Germany: Gfk Consumer Confidence – May
- France: Consumer Confidence – April
- US: Weekly MBA Mortgage Applications
- US: Pending Home Sales
- US: Weekly EIA Crude Oil Inventories
Thursday, April 28
- Japan: Japan Policy Rate
- Eurozone: Business Climate, Consumer Confidence and Economic Confidence – April
- Germany: CPI – April
- US: Weekly Initial & Continuing Jobless Claims
- US: GDP – 1Q 2021
- US: Weekly EIA Natural Gas Inventories
Friday, April 29
- Korea: Industrial Production – March
- China: Markit/Caixin PMI Manufacturing – April
- France: CPI – April
- Eurozone: GDP – 1Q 2021
- Eurozone: CPI – April
- US: Personal Consumption & Expenditures – March
- US: Chicago PMI – April
- US: Michigan Sentiment Index (Final) – April
Thought for the Day
“This is your Monday morning reminder that you can handle whatever this week throws at you.” ~Unknown
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.