Wall Street opened Thursday's session deep in the red after a 7.5% surge in US consumer prices deepened fears that the Federal Reserve may consider a 50 bps hike in March during the next monetary policy meeting. The selloff was most pronounced in high-flying shares, particularly tech ones, as the prospect of higher interest rates threatened to undermine the valuations of those companies. Shares of Amazon and Microsoft all plunged more than 1%. Still, another slate of solid corporate results kept a floor under prices. Walt Disney added nearly 6% after the company reported a quarterly earnings beat and doubled revenue from its parks and resorts.
The Nikkei 225 Index rose 0.42% to close at 27,696 while the broader Topix Index added 0.53% to 1,963 on Thursday, posting a 3-day win streak as local technology stocks tracked a strong overnight finish among Wall Street peers. with gains from Tokyo Electron (1.82%), Sumco Corp (4.08%), Renesas Electronics (7.66%), Keyence (1.45%) and Advantest Corp (2.78%). Honda Motor also jumped 5.61% after the automaker raised its full-year operating forecast aided by cost cutting and a weak yen despite a persistent global chip shortage.
The FTSE 100 reversed early gains to trade around the flatline on Thursday. investors digest fresh earnings reports: AstraZeneca forecasts higher 2022 sales and rose its annual dividend for the first time in a decade, but also warned that the boost from its COVID-19 products would fall. Also, Unilever warned that profit margins will fall this year due to the surge in costs. Despite Thursday setback, the FTSE 100 remains close to levels not seen in 2 years, wiping out its pandemic losses.
Major bourses in Europe reversed early gains to trade flat.Traders digested fresh corporate results. Societe Generale reported a record annual profit while Credit Suisse booked a loss for 2021. Zurich Insurance business operating profit increased last year while ArcelorMittal reported its biggest annual profit in more than a decade after a historic rally in steel prices. Unilever warned that profit margins will fall this year due to the surge in costs while Siemens profit and revenue grew. Also, AstaZeneca forecasts higher 2022 sales and rose its annual dividend for the first time in a decade. Meanwhile, shares of L'Oréal tumbled more than 2.5% even after reporting record sales, with traders focusing on eroding margins.
The CAC 40 Index traded 0.6% lower at the 7,080 level, ArcelorMittal dropped 3.2% despite reporting strong earnings and increasing its EBITDA by fivefold when compared to last year's. On the other hand, Societe Generale gained 4.6% after publishing a net income of EUR 5.64 billion for the full 2021, compared to market expectations of EUR 4.4 billion.
The FTSE MIB Index trimmed earlier gains to trade slightly lower at 27,100 .Nexi (-4.6%) led the losses after a Bloomberg report indicated the payments group is considering a sale of its German subsidiary Ratepay for around EUR 1 billion. On the other hand, Telecom Italia shares jumped 2.9% after the Italian government expressed that the EUR 33 billion acquisition offer from KKR & Co. is too low. The government led by PM Mario Draghi, which owns about 10% of Telecom Italia through state-backed lenders, is amidst plans to create a single-national ultra-broadband network and values the Italian Telecom at 82 cents per share, compared to KKR’s offer of 50.5 cents per share.
The BSE Sensex ended 460.06 points or 0.79% higher to close at 58,926.03 on Thursday, gaining for the third consecutive session as investors digested the RBI’s decision to keep interest rates steady at 4% and maintain an accommodative stance as long as necessary to support economic recovery from pandemic crisis. Moreover, investors got some comfort as RBI moderated the inflation outlook to 4.3% in next fiscal year from 5.3% seen this year. Meanwhile, it retained the GDP growth at 9.2% for the current fiscal year while pegged it to 7.8% in FY23. Gains in banks and financials pulled the index higher while losses in auto and capital goods limited the upside. Among the individual stocks, top gainers included Tata Steel (+ 2.11%), Infosys (+ 1.8%) and twin stocks, Housing Development Finance Corporation (HDFC) bank (+1.77%) and HDFC (1.64%). On the other hand, Maruti (-1.64%), Ultra Cement company (-0.42%) Nestle India (-0.38%) and Reliance (-0.21%) were the only stocks that ended in red.
The Shanghai Composite rose 0.17% to close at 3,486 while the Shenzhen Component lost 0.73% to 13,432 on Thursday, as mainland stocks struggled to build significantly on the previous session’s gains, with investors jumping nimbly from sector to sector. After advancing broadly a day ago, richly-valued new energy and technology shares led the declines in China, with notable losses from Contemporary Amper (-5.32%), Longi Green Energy (-3.77%), BYD Company (-2.06%), Eve Energy (-5.93%), East Money (-1.62%) and Beijing Egova (-5.35%). Chinese biotech firm Wuxi Apptec also extended its fall by another 7.41% due to concerns over the impact of US sanctions. Meanwhile, Chinese state-backed funds intervened in the local stock market this week, buying beaten-down shares to help slow the pace of declines as the benchmark indices nurse sharp year-to-date losses.