US indices faded into red as strong earnings failed to reassure investors. Europe rose, propped by strength in luxury goods. Asian indices fell following Wall Street's Tuesday dive.
Wall Street opened strong but quickly returned to the red. Several strong earnings results failed to keep the positive momentum as investors traded warily ahead of suspected rate hikes. The US 10-year Treasury bond slid -3bp to 1.84%. December housing starts increased +1.4% m-o-m in December, driven by demand for multi-unit dwellings; single-unit starts were down -2.3%. Seven of the 11 sectors rose, led by gains in consumer staples (+1.0%); financials (-0.6%) and energy (-0.5%) lagged. The Dow (-0.1%) flattened, S&P 500 inched down -0.2%, and Nasdaq slipped -0.4%. Recovery in Microsoft (+1.6%), Meta Platforms (+1.3%), Netflix (+0.2%), and Alphabet (+0.1%) balanced losses in Tesla (-2.9%) and Amazon (-1.1%). Banks Morgan Stanley and Bank of America both added +1.5% after posting above-expected earnings, ignoring disappointing results from Goldman Sachs (-1.4%), Citigroup (-1.0%), and JPMorgan Chase (-0.8%). Procter & Gamble (+4.1%) raised its sales forecast. UnitedHealth (+1.2%) beat market profit estimates.
The Stoxx 600 steadied +0.3% as strong earnings updates countered pressure from heighted US and German bond yields. Retail stocks leapt +2.2% and household stocks gained +1.9% on encouraging earnings updates. Richemont surged +5.1% after it cited strong demand in the Americas and Europe; other luxury stocks LVMH (+3.2%), Hermes (+2.2%), and Kering (+2.0%) also rose. ASML Holdings (+2.0%) projected sales growth of +20% in 2022. The FTSE 100 inched up +0.2% as inflation worries offset positive earnings. British consumer price inflation jumped +5.4% in December to a 30-year high. Burberry swelled +6.4% after it announced full-price sales accelerated in the third quarter, citing a material improvement in Asia and Europe. Pearson (+5.8%) raised its full-year profit forecast. WH Smith bounced +7.0% on expectations of recovery in the travel market.
Asian indices continued to retreat, following Wall Street’s selloff on Tuesday. China’s Shanghai Composite slid -0.3% and CSI 300 lost -0.7%. Hong Kong’s Hang Seng (+0.1%) finished flat. Japan’s Nikkei 225 dived -2.8% as exporters Sony Group (-12.8%) and Toyota (-5.0%) led losses. South Korea’s Kospi skidded -0.8%. The ASX 200 diminished -1.0%, with all sectors bar energy (+0.6%) and utilities (+0.2%) trading lower. Financials (-1.3%) sunk in the wake of sharp losses by US banks on Tuesday; Macquarie (-3.7%), Commonwealth Bank (-1.5%), and National Australia Bank (-1.2%) slumped. Strong iron ore output from BHP (+0.3%) was balanced by weak performance from its copper and coal operations. HUB24 (+2.1%) posted a strong earnings update. A broker downgraded its recommendation on Carsales.com (-2.7%), citing uncertain longer-term competitive dynamics. Afterpay lost -2.2% on its last day of trading. The NZX 50 slid -1.6%; losers included Rakon (-8.6%), Fisher & Paykel Healthcare (-3.2%), and Mainfreight (-2.3%).
WTI crude jumped +2.1% to US$87.22/bbl, gold gained +1.5% to US$1,840.60/oz, iron ore added +1.0%) to US$127.48/MT.
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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your financial adviser.