Wall Street finished mixed on Friday, while Treasury yields rose ahead of key economic data this week as well as Q1 U.S. earnings on Thursday.
The S&P500 weakened -0.27% on Friday in mixed breadth with 53% of stocks higher with energy +2.76% and financials +1.0% outperforming while technology -1.43% and consumer discretionary -0.97% underperformed. The Dow Jones rose +0.40% while the Nasdaq Composite retreated -1.34% along with the Russell 2000 -0.76% with the VIX -1.81% lower at 21.16. For the week, all major benchmarks finished lower, led by the Russell 2000 -4.62%, Nasdaq Composite -3.86%, S&P500 -1.27%, and Dow Jones -0.28% as investors reposition following the Federal Reserve’s plan to aggressively tighten monetary policy.
The 2-year Treasury yield rose +5.3 basis points to 2.516%, as did the 10-year +4.5 basis points to 2.705% and 30-year +3.9 basis points to 2.720. Ahead for the week, Tuesday will bring inflation data for the year to March expected to rise to +8.5% from +7.9% previously with core inflation also forecast to increase to +6.6% from +6.4%. Wednesday will see the release of producer prices for March, forecast to rise to +1.1% from +0.8% in February followed by retail sales expected to increase by +0.6% for March with several members of the Federal Reserve due to give speeches throughout the week. Overnight Thursday we’ll see the consumer sentiment for April which is expected to weaken to 58.8 from 59.4 previously with JP Morgan reporting Q1 earnings, followed by Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley on Friday. Earnings are expected to rise by +14% from a year earlier to 50.49 although edge lower on a quarterly basis by -0.50% with U.S. banks expected to post a sharp reversal following a year ago when dealmaking and trading surged.
European equities rose on Friday although indices finished the week mixed ahead of a busy week of economic data. The Euro Stoxx 600 rose +1.31% lifted by financials +1.65%, health care +1.28%, and energy +3.30% with all sectors positive and 76% of stocks higher. The DAX also rose +1.46%, paring a weekly loss to -1.13%, as did the CAC +1.34% but finishing -1.04% lower for the week, and the FTSE100 climbed +1.56% extending a weekly gain to +1.75%. Tuesday will bring the final reading of German inflation for March expected to rise +7.3% over the year from +5.1% previously as well as the ZEW economic sentiment indices for April are expected to show declines. Thursday night will see the conclusion of the ECB policy meeting at 21:45 with a press conference scheduled for 22:30. While no changes to monetary policy are expected at this meeting, analysts expect ECB President Lagarde to continue to signal the central bank will normalize monetary policy although unlikely to provide clarity as to the exact timing with market expectations for a move in the second half of the year with futures pricing suggesting the first rate hike will come in July.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX looks set to open higher this morning with ASX200 futures up +0.36% or 27 points to 7,480. The index rose +0.47% on Friday, paring a weekly loss to -0.21% with materials +1.25% and financials +0.21% the biggest contributors to gain on Friday while real estate -0.34% and technology -0.24% underperformed. Uranium stocks were notable performers after the spot price rose to $61.60 a pound, the highest level since 2011 with PDN up +13.1%, as was BOE +8.4% and DYL +5.6%. GrainCorp was also a notable performer, rising +5.8% to a record high after issuing its second profit upgrade in two months amid bumper growing conditions and global demand amid Russia’s war in Ukraine. Ahead for the week, investors will focus on the Westpac consumer confidence for April on Wednesday along with an interest rate decision by the Reserve Bank of New Zealand, followed by unemployment data for March on Thursday forecast to show +30k jobs were added and the unemployment rate edging lower to 3.9% from 4.0%. The Australian dollar finished -0.29% lower on Friday at 0.7458 while the yield on 10-year government bonds rose +5 basis points to 2.964%.
Oil prices climbed on Friday with both WTI and Brent crude +2.32% and +2.19% higher at US$98.26 and US$102.78 a barrel. Iron ore futures in Singapore weakened -0.94% on Friday and are a further -2.46% lower this morning at US$151.25. Gold rose +0.81% to US$1,947.54 an oz, with silver also gaining +0.71% to US$24.77 with Bitcoin -1.75% lower on Friday although has partially reversed those losses over the weekend trading +1.60% higher at US$43,125.
Economic data:
- Chinese Inflation (YoY Mar) 11:30
- U.K. GDP (YoY Feb) 16:00
- Fed Bostic Speech 23:30
- Fed Bowman Speech 23:30
- Fed Evans Speech 02:40
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
