Month: April 2024

Investing.com– Most Asian stocks kept to a tight range on Tuesday as investors digested a mixed batch of Chinese business activity readings, while Japanese markets rose sharply in catch-up trade after a long weekend. 

Broader Asian markets were mildly positive after a small overnight gains on Wall Street. But U.S. stock futures tread water in Asian trade as anticipation of a Federal Reserve meeting this week kept investors cautious. 

Chinese stocks stall after mixed PMIs 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose slightly on Tuesday as investors digested a batch of mixed purchasing managers index (PMI) readings for April. Official data showed growth in manufacturing activity slowed slightly less than expected in April from March, while growth in non-manufacturing activity slowed substantially more than expected.

While a private survey painted a rosier picture of the manufacturing sector, the overall PMI data showed some cooling in activity after a strong first quarter. 

Still, a rebound in Chinese markets largely persisted in April, with local stock indexes set to outperform their regional peers for the month. The CSI300 was up 2.5% in April, while the Shanghai Composite was trading up 2.6%. 

Hong Kong’s Hang Seng index rose 0.6% on Tuesday and was by far the best-performing Asian index in April. The Hang Seng was trading up about 7.6% in April, after racing to a five-month high on bargain buying and optimism over more stimulus measures in the mainland. 

Gains in Hong Kong also reflected improved sentiment towards China.

Asian markets ex-China set for April losses 

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Most other Asian stocks outside China were set to clock losses in April, as they grappled with profit-taking in technology and as traders largely priced out expectations for early interest rate cuts by the Fed.

Japan’s Nikkei 225 jumped 1.3% on Tuesday, while the TOPIX added 2.1% in catch-up trade after a market holiday on Monday.

But the Nikkei was by far the worst performer in Asia through April, as it was slapped with a heavy dose of profit-taking, while uncertainty over the Bank of Japan’s policies also weighed. The Nikkei was down nearly 5% in April, while the TOPIX shed 0.9%. 

South Korea’s KOSPI rose 0.6% on Tuesday, but was trading down 1.5% for April on losses in technology stocks.

Australia’s ASX 200 rose 0.2% after data showed an unexpected drop in retail sales in March, which could herald a lower inflation outlook. Weak commodity prices and concerns over China put the ASX on course for a 3.2% drop in April.

Futures for India’s Nifty 50 index pointed to a muted open after the index added 1% in the prior session. Sustained optimism over India’s economy put the Nifty on course for a 1.5% gain in April.

But investors were wary of any near-term volatility in the index, with the start of the 2024 general elections.

Investing.com– Bitcoin price moved little on Tuesday, sticking to the lower end of a trading range established in the past month as investors continued to pull out of U.S.-listed crypto investment products.

The launch of spot exchange-traded funds (ETF) in Hong Kong also sparked little immediate joy, as markets waited to see just how much Asian demand was in store for crypto. Hong Kong capital markets are also substantially smaller than the U.S.

Bitcoin rose 1.6% over the past 24 hours to $63,423.3 by 01:26 ET (05:26 GMT). 

Bitcoin ETFs see sustained outflows 

Data from digital assets manager CoinShares showed on Monday that crypto investment products saw a third straight week of capital outflows- $345 million, their biggest since March. 

Bitcoin net outflows in particular surged to $423 million, amid waning hype over the spot U.S. ETFs launched earlier this year. 

While altcoins saw some capital inflows, this was largely offset by the Bitcoin outflows. Institutional investors have also remained largely biased towards the world’s largest cryptocurrency, after the ETF launch earlier this year. 

HK spot Bitcoin and Ether ETFs gain in debut, but- 

Six spot Bitcoin and Ethereum ETFs rose in their debut on Hong Kong markets on Tuesday, indicating some enthusiasm for crypto.

But just how much these gains would translate into crypto prices remained unclear, given that Hong Kong capital markets are much smaller than their U.S. peers.

Regional markets did enter a bull market this week, as the Hang Seng index rebounded 20% from over five-year lows hit in January. But overall sentiment still remained fragile, especially in the face of weak economic conditions in the mainland.

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Still, the Hong Kong crypto ETFs are effectively the only means of crypto exposure for local and Chinese investors, after China banned all cryptocurrencies in 2021. 

Crypto price today: little moves as Fed fears grow

Sentiment towards cryptocurrencies was also quashed by growing fears of higher-for-longer U.S. interest rates, ahead of a Federal Reserve meeting this week.

The Fed is widely expected to keep rates steady. But Chair Jerome Powell could potentially serve up hawkish signals, especially in the wake of several hotter-than-expected inflation readings. 

This kept investors averse towards crypto, given that the sector usually thrives in highly speculative markets brought on by low interest rates. 

World no.2 token Ethereum fell 1.5%, while Solana shed 1.2%. XRP added 1.4%. 

Investing.com — U.S. stock futures inch down ahead of a fresh batch of corporate earnings, including results from tech giant Amazon (NASDAQ:AMZN). Paramount Global (NASDAQ:PARA) announces that Chief Executive Bob Bakish has stepped down even as talks continue over a possible merger between the entertainment group and David Ellison’s SkyDance Media. Meanwhile, HSBC says that boss Noel Quinn will retire following an almost five-year tenure at the helm of the bank.

1. Futures inch lower

U.S. stock futures pointed slightly lower on Tuesday, as investors awaited earnings from Amazon and looked ahead to a key Federal Reserve monetary policy decision later in the week.

By 03:26 ET (07:26 GMT), the Dow futures contract had shed 20 points or 0.1%, S&P 500 futures had slipped by 7 points or 0.1%., and Nasdaq 100 futures had dipped by 16 points or 0.1%.

The main indices on Wall Street closed higher on Monday, buoyed by steep gains in Tesla (NASDAQ:TSLA) shares after the electric carmaker said it was making progress in securing regulatory approval to roll out its full self-driving software in China. Apple (NASDAQ:AAPL)’s stock price was also boosted on a report that the iPhone manufacturer was in discussions with OpenAI about incorporating some of the artificial intelligence darling’s technology.

Looming in the background during the session was the Fed’s upcoming policy meeting on Wednesday, when traders widely expect the U.S. central bank to leave interest rates unchanged. As a result, markets are especially keen to hear how Chair Jerome Powell views the path forward for rates in the coming months, with many investors now betting that the Fed will not deliver a much-anticipated cut to borrowing costs until September.

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2. Amazon earnings ahead

Amazon is set to headline the earnings calendar on Tuesday, with the ecommerce titan due to release its latest quarterly results after the closing bell.

Investors will likely be keen to see how performance is evolving at Amazon’s all-important AWS cloud computing division. The unit, which is continuing to recover from a recent slowdown in client spending on cloud services, has been moving to fold more AI-powered features into its offerings in a bid to bolster demand.

As such, like its Big Tech peers Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) last week, Amazon could face sharp questions over how it plans to turn its major investments in AI into sustainably elevated sales and profits.

Meanwhile, for Amazon as a whole, analysts are predicting that stable online customer expenditures and the introduction of advertising into its Prime Video streaming service may have supported total returns during the first quarter. An ongoing cost-cutting push — including further layoffs at AWS — and a drive to reorganize Amazon’s U.S. logistics network could also give some lift to profit margins, they noted.

3. Paramount Global’s Bakish steps down

Paramount Global has announced that Chief Executive Bob Bakish has stepped down amid ongoing talks over a potential tie-up talks with David Ellison’s Skydance Media.

George Cheeks, CEO of CBS, Chris McCarthy, CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks and Brian Robbins, Chief Executive Officer of Paramount Pictures and Nickelodeon were appointed to the newly created Office of the CEO to “lead and oversee the company moving forward,” the company said.

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Some analysts cast doubt over the change, arguing that the Hollywood firm behind movies like “The Godfather” need stable leadership to navigate the discussions with Skydance and combat fierce competition to its crucial Paramount+ streaming service.

Various media sources reported on Monday that Skydance has sweetened its bid to take control of Paramount, offering to inject $3 billion in the combined company that can used to pay down debt and repurchase stock.

Paramount’s Class B shares were slightly higher in afterhours trading following the news.

4. HSBC CEO Noel Quinn to retire

HSBC said on Tuesday that Chief Executive Noel Quinn will retire after nearly five years in the role, where he oversaw a major transformation in the bank that drastically improved its cash position and earnings.

Quinn steps down after a 37-year career at HSBC, and will stay on as CEO until the Board finds his successor.

Quinn led a major streamlining of HSBC’s operations during his tenure, most recently overseeing the sale of its Canadian and Argentine operations. He also led the bank in shifting its focus back onto its core consumer banking segments in Europe and Asia.

This saw HSBC log bumper earnings over the past two years, while the cash and capital positions of the bank improved substantially.

5. Oil choppy

Oil prices hovered around the flatline in European trade on Tuesday as focus remained on any progress in ceasefire talks between Israel and Hamas.

Media reports said that Israel had offered a 40-day ceasefire offer to Hamas, as delegates from the two met in Egypt for renewed talks. The Hamas delegation left Cairo, and will return with a written response to the proposal, reports said. A ceasefire represents a potential de-escalation in the conflict between the two, which could see traders attach a lower risk premium to oil.

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Elsewhere, growing expectations of higher-for-longer U.S. interest rates prior to a Federal Reserve meeting this week threatened to weigh on sentiment.

Brent oil futures expiring in June rose 0.1% to $88.45 a barrel, while West Texas Intermediate crude futures edged up 0.1% to $82.72 per barrel by 03:29 ET.

On Monday, the Wall Street Journal reported that Tesla (NASDAQ:TSLA) has received preliminary approval from Chinese regulators to introduce its advanced driver assistance software, known as Full Self-Driving (FSD), in China.

This approval came following an unexpected visit by CEO Elon Musk to Tesla’s biggest market outside of the United States.

TSLA stock surged over 15% on Monday.

According to the report, Tesla will utilize mapping and navigation technology from Baidu (NASDAQ:BIDU), a leading Chinese technology firm, to implement its FSD solution in the country.

“Tesla has historically focused its FSD R&D on North America. While we believe a lot of the engineering that Tesla has done would be applicable globally, we believe the company would need local enhancements for the product,” analysts at Goldman Sachs said in a note.

“Importantly, Tesla will also need to navigate government rules on data access, localization, and AI which could complicate technology sharing within/outside of China,” they added.

Analysts at Goldman Sachs also believe that the speed and extent of Tesla’s improvements to its FSD product will be crucial in determining its impact on the company’s business in China. This includes direct sales of FSD, its role in boosting auto sales, and the potential for licensing.

They note that while FSD is not yet a fully unsupervised product, Tesla’s application of end-to-end neural networks “could allow it to develop the product faster than our base case view.”

Analysts at Wells Fargo, on the other hand, shared more cautious remarks on the FSD update. They believe the “timing is poor” for the EV giant “as the company’s more aggressive FSD push & robotaxi will likely only increase the concerns of regulators.”

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Last week, it was reported that the National Highway Traffic Safety Administration (NHTSA) is probing Tesla’s December 2023 recall of over 2 million vehicles concerning autopilot updates after 20 crashes with the new software.

Meanwhile, analysts at Citi think that the tentative FSD approval in China is a positive development for the automaker, as it could improve the company’s competitive position in the world’s largest auto market.

“Given recent pressures Tesla has faced in China, this is a welcomed development,” analysts wrote.

“That said, the impact on future demand is debatable given the number of competing L2+ systems that already exist in China (unclear how FSD will benchmark against those) and it remains unclear when FSD can actually deploy given the reported conditions that must be met,” they added.

Last week, equities witnessed a relief rally, as major indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, recovered following a three-week dip from their year-to-date highs.

But generally, it was a tumultuous week for the stock market, with indices struggling to stabilize below their 50-day moving averages.

Meanwhile, investor sentiment continued to decline, with levels of bullishness falling below the historical average for the first time, according to the AAII Sentiment Survey.

Piper Sandler analysts said their proprietary breadth measures “remain in confirmed sell positions.”

“Our M.A.C.E trend research confirms this, as 62.4% of stocks are in some form of a downtrend,” they wrote.

Analysts suggest that their 2024 prediction for a High-Level Trading Range (HLTR) is starting to materialize, as major stock indices have dropped below their 50-day moving averages, broken their five-month uptrends, and declined over 5% from their year-to-date highs.

“We expect the SPX to fluctuate between 4,800-4,600 on the low end and around 5,100 on the high end for several months to come,” Piper Sandler’s team predicted.

“With the major indices below their 50-day MAs and the “Sell in May” mantra looming, we favor being more tactical during another busy earnings week ahead of Friday’s unemployment report,” they added.

In the coming days, earnings announcements are expected to take center stage, analysts said, as the Federal Open Market Committee (FOMC) will likely maintain the Fed Fund rates steady at 5.25%-5.50%.

As the week concludes, investors will be keenly awaiting new unemployment data.

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