Wall Street edged higher on Thursday, with the Dow Jones adding around 100 points and both the S&P 500 and the Nasdaq nearly 0.3% each, after US producer inflation slowed in December, with gasoline costs dropping sharply compared to November, and adding to further evidence the Fed will not need to raise rates at a faster pace than early announced. At the same time, initial jobless claims rose in the first week of the year when the omicron spread started to disrupt activity, but remained within a level consistent with a healthy job market. On the corporate front, earnings from Delta Air Lines beat forecasts. Stocks of Boeing jumped 2% after Bloomberg reported the 737 MAX jet is poised to resume commercial flights in China as soon as this month.
European stock markets traded flat to lower on Thursday, with market sentiment largely reflecting the uneasiness regarding inflation and the outlook for unwinding monetary stimulus. The FTSE 100 was little changed around near 2-year highs on Thursday, in line with its European peers. Meanwhile, retailers Tesco and Marks & Spencer released trading updates, with the former saying it is expecting higher operating profits than stated in earlier outlooks amid better-than-expected sales to date. Also, a survey done by the Recruitment and Employment Confederation and KPMG showed job creation in the country slowed from near record levels last month, with job vacancies at an eight-month low and the hospitality and construction industries struggling the most in hiring new staff.
The FTSE MIB Index extended yesterday’s gains by 0.2% to trade around 27,760 on Thursday, after closing 0.7% higher in the prior session, supported by industrial and technology stocks. Tech stocked edged 1.1% higher, led by STMicroelectronics (2.2%) after Credit Suisse raised its target price to EUR 60 with an “outperform” label. Stellantis gained 1.5% after Jeffries improved the auto-manufacturer’s target price from EUR 22-26 to EUR 25-29. On the other hand, DiaSorin led the losses to fall 1.9% after the pharmaceutical announced a new Covid molecular test for research use that detects the Omicron variant. On the data front, domestic industrial production grew 1.9% month-on-month, well above expectations of a 0.5% increase.
The Nikkei 225 Index fell 0.96% to close at 28,489 while the broader Topix Index shed 0.68% to 2,006 on Thursday, as investors grew concerned after Japan’s daily Covid cases exceeded 13,000 on Wednesday for the first time in over four months, spurred by the fast-spreading omicron variant. This prompted a Japanese minister to allay public concerns, saying that he is confident the country can co-exist with the virus while achieving growth. Major sectors of the market declined including technology, retail, healthcare, consumer and manufacturing firms, with notable losses from Lasertec (-1.75%), SoftBank (-2%), Recruit Holdings (-4%), Fast Retailing (-1.92%), Keyence (-2.1%), Olympus Corp (-5%), Aeon (-5.7%), Hoya (-4.8%), Seven & I Holdings (-3.3%) and Fanuc Corp (-2.4%). Meanwhile, financial and commodity-related stocks mostly advanced.
The BSE Sensex ended little changed at 61,235.3 on Thursday, with gains in capital goods offsetting the losses in technology and banks. Investors digested slower than expected domestic retail inflation data (5.6% vs 5.8% expected) for the month of December, which still was a 5-month high. Moreover, domestic sentiment remained muted as India’s November industrial production growth slowed to 1.4%, below market estimates of 3% and compared to 4% recorded last month. Among the individual stocks, Tata Steel (+6.4%); Sun Pharmaceuticals (+3.53%), Larsen and Toubro (+2.3%), Mahindra and Mahindra (+1.66%), Power Grid (+1.49%) were the top gainers. On the other hand, Wipro slumped the most (-6%) after it posted almost flat profit in Q3 compared to a year ago, while stating that demand conditions continue to be robust. Besides this, Asian Paints (-2.47%), Housing Development Finance Corporation (-1.81%), IndusInd Bank (-1.55%) and Kotak Bank (-1.46%) were among the other draggers.
The Shanghai Composite fell 1.17% to close at 3,555 while the Shenzhen Component lost 1.96% to 14,138 on Thursday, as mainland stocks gave up gains from the previous session amid growing concerns over China’s Covid situation. The country has locked down a third city this week, raising the number of people confined to their homes to about 20 million. China’s strict zero-Covid approach has turned investors cautious over its economy, with Goldman Sachs slashing its 2022 forecast for Chinese economic growth to 4.3% from 4.8% previously. Major sectors of the market declined including consumer, new energy, healthcare and high-end manufacturing firms, with notable losses from Kweichow Moutai (-4.6%), Tianqi Lithium (-6.4%), Wuliangye Yibin (-4.1%), Jiangsu Hengrui (-4.3%), Tianjin Chase (-5.7%) and Goertek Inc (-6%).