Natural gas prices rose to a 4-month high. China released mixed data :: InvestMacro

By JustMarkets

At Thursday’s close, the Dow Jones Industrial Average (US30) decreased by 0.10%, while the S&P 500 Index (US500) was down 0.21%. The NASDAQ Technology Index (US100) closed negative 0.26%. Stock indices initially set new record highs on speculation that the Federal Reserve could cut interest rates this year. But by the end of the trading day, stock indices gave up early gains. They closed lower as comments from Fed President Cleveland Mester and Richmond Fed President Barkin pushed bond yields higher when they said interest rates should remain at higher levels for a long time. In addition, signs of continued price pressures pressured stocks after the Import Price Index, excluding oil for April, rose the most in 16 months.

Cisco Systems (CSCO) closed down more than 2%, topping the Dow Jones Industrials’ list of losers, after the company projected fourth-quarter revenue of $13.40–13.60 billion, below the average consensus estimate of $13.54 billion. Meta Platforms (META) closed down more than 1% after the European Union announced an audit of the company over concerns that its algorithms illegally exploit the weakness of children to addict them to Facebook and Instagram. Walmart (WMT) closed higher by nearly 7% after reporting a 3.90% increase in US comparable sales for the first quarter, beating the consensus prognosis of 3.42%. Shares of 3M Co (MMM) closed higher by more than 3% after Vertical Research upgraded the stock to a “buy” from a “hold” rating with a $140 price target.

Overall, positive first-quarter earnings results are supporting the stock. First-quarter earnings are expected to grow 7.1% YoY, well above the pre-reporting season guidance of 3.8%.

Equity markets in Europe mostly fell on Thursday. Germany’s DAX (DE40) lost 0.82%, France’s CAC 40 (FR40) closed down 0.63%, Spain’s IBEX 35 (ES35) fell by 0.56%, and the UK’s FTSE 100 (UK100) closed negative 0.09%.

WTI crude oil prices rose above $79 per barrel on Friday, helped by a recent decline in US crude inventories and growing optimism that the US Federal Reserve will cut interest rates this year. EIA data showed that US crude inventories fell by 2.508 million barrels last week, declining in the second week and beating estimates for a 1.362 million barrel decline. The April data also pointed to a slowdown in the US consumer inflation, reinforcing expectations of a Fed rate cut that could support economic growth and energy demand.

The US natural gas futures rose more than 3% to $2.5/MMBtu, the highest in four months after the EIA reported a smaller-than-expected increase in storage inventories. The US utilities added 70 billion cubic feet of gas to storage last week, below market expectations of a 76 billion cubic feet increase. However, the report also showed that the US gas inventories are 30.8% above the 5-year average. Weather prognoses point to a shift to warmer-than-normal temperatures through May 31, which will increase gas consumption by power generators to meet electricity demand for air conditioning.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.39%, China’s FTSE China A50 (CHA50) gained 0.77% for the day, Hong Kong’s Hang Seng (HK50) added 1.59% and Australia’s ASX 200 (AU200) was positive 1.65%.

The offshore yuan slid to around 7.23 per dollar as traders reacted to mixed economic data from China. The latest data showed that industrial production rose more than expected in April, while retail sales rose less. While government incentives aimed at boosting production have shown to be effective, initiatives aimed at consumer spending, such as trade-in programs and tax cuts, have lagged behind. Further worrying is that data shows a further decline in real estate investment between January and April, raising concerns about the effectiveness of China’s real estate bailout plan. Meanwhile, China’s finance ministry auctioned its first batch of special treasury bonds on Friday, marking the start of a long-awaited economic stimulus program.

Malaysia’s economy grew by 4.2% year-on-year in the first quarter of 2024, compared to initial and market estimates of 3.9%, and accelerated from the downwardly revised growth of 2.9% in the previous three-month period. This was the fastest economic growth in exactly one year, mainly due to positive contributions from almost all sectors.

S&P 500 (US500) 5,297.10 −11.05 (−0.21%)

Dow Jones (US30) 39,869.38 −38.62 (−0.10%)

DAX (DE40) 18,738.81 −130.55 (−0.69%)

FTSE 100 (UK100) 8,438.65 −7.15 (−0.09%)

USD Index 104.51 +0.16 (+0.16%)

Important events today:

• – New Zealand Producer Price Index (m/m) at 01:45 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.