Today’s Big Picture
Asia-Pacific equity markets finished the day down except for Hong Kong’s Hang Seng and Japan’s Nikkei which gained 0.14% and 0.18%, respectively. Australia’s ASX All Ordinaries and China’s Shanghai Composite both fell just under 0.10% while India’s SENSEX declined 0.18% and Taiwan’s TAIEX gave back 0.40%. South Korea’s KOSPI closed 0.46% lower on a broad decline led by Non-Energy Materials, and Consumer Durables. European markets are lower in midday trading and U.S. futures point to a lower open.
Before the market opens, we have another round of corporate earnings that will shed light on their respective industries and various parts of the overall economy. Given the strong performance of tech stocks in the March quarter, quarterly results, and end market comments for Taiwan Semiconductor (TSM) will be a likely focus.
In addition, we have five Fed officials making the rounds, providing comments on growth prospects for the economy and corporate spending. Once again, the market will be looking to see what they say about forthcoming monetary policy. With a 25-basis point rate hike looking likely in the May meeting, their comments about policy in the second half of 2023 will be the focal point. Ahead of tomorrow’s Flash April PMI data and next week’s March Personal Consumption Expenditure price index for March, we expect most if not all the officials speaking today to stick to the Fed playbook. That playbook targets a fed funds rate of 5.1% exiting 2023, which implies one more rate hike and no cuts in 2H 2023.
Data Download
International Economy
At 8:30 AM ET the latest reading on Consumer Confidence in the Eurozone will be released and the April reading is expected to come in at -18.5 vs. -19 the prior month.
Domestic Economy
If it’s Thursday, it means the weekly Initial & Continuing Jobless Claims will be published at 8:30 AM ET. Joining that report will be the April take for the Philadelphia Fed Index, which is expected to fall to -11.9 vs. March’s -8 figure.
At 10 AM ET, we get the March data for Existing Home Sales, which is expected to fall 4.2% after soaring 14.5% in February. Rounding out today’s economic calendar is the weekly EIA Natural Gas Inventories at 10:30 AM ET.
Markets
Yesterday saw equities generally start lower and grind their way higher as the S&P 500 and the Nasdaq Composite were flat on the day and the Russell 2000 closed up 0.22%. The Dow opened well but spent most of the day gaining and giving back to close down 0.23%. There was a general defensive tone in sectors as Utilities (0.77%), Healthcare (0.31%), and Financials (0.24%) posted gains while most other sectors were close to flat or down except for Real Estate which posted a 0.59% gain. In individual names, traders bid up Travelers Companies (TRV) 6.15% after the insurer posted strong Q1 profit figures despite increased Catastrophe claims.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 2.26%
- S&P 500: 8.20%
- Nasdaq Composite: 16.15%
- Russell 2000: 2.17%
- Bitcoin (BTC-USD): 73.62%
- Ether (ETH-USD): 61.72%
Stocks to Watch
Before U.S. equity markets begin trading today, Alaska Air (ALK), American Express (AXP), AT&T (T), AutoNation (AN), DR Horton (DHI), Heartland Express (HTLD), Nokia (NOK), Nucor (NUE), Taiwan Semiconductor (TSM), Union Pacific (UNP), and Xerox (XRX) are among the companies expected to report their quarterly results
Tesla (TSLA) posted March quarter results that matched consensus expectations that included revenue for the quarter rising more than 24% YoY. During the quarter, the company delivered 422,875 units, up 36%. Management shared it is planning to grow production as quickly as possible in alignment with the 50% CAGR target it set out in early 2021. For 2023, Tesla expects to remain ahead of the long-term 50% CAGR with around 1.8 million cars for the year.
Alcoa (AA) missed top and bottom line expectations for its March quarter results with revenue falling almost 19% YoY. Alumina production decreased 9% QoQ to 2.8 million metric tons. In Aluminum, Alcoa produced 518,000 metric tons, consistent with its December quarter output adjusted for fewer days in the March quarter. For 2023, the company continues to see total alumina and aluminum shipments between 12.7-12.9 million metric tons and 2.5-2.6 million metric tons, respectively.
March quarter results from F5 Networks (FFIV) topped consensus forecasts, however, the company issued weaker than expected guidance for the current quarter. March quarter revenue climbed 10.9% YoY to $703 million but its guidance for the current quarter sees that falling to $690-$710 million vs. the $748.17 million consensus. F5 is chalking its guidance up to “the persistent macro uncertainty and its impact on customer spending.”
Inter Parfums (IPAR) issued upside guidance for its March quarter with revenue of $312 million vs. the $276.25 million consensus. European operations grew sales by 26% (29% in constant currency), while the company’s U.S. operations also had a strong start, growing 19% on top of 1Q 2022’s 77% increase. This increase was driven by the addition and extension of Donna Karan and DKNY to its lineup, and double-digit growth for Ferragamo and Oscar de la Renta, following successful brand extensions. Inter Parfums boosted its 2023 EPS guidance to $4.25 from $4.00 and compares to the $4.01 consensus.
March quarter results at Las Vegas Sands (LVS) topped expectations and issued upbeat comments as “a robust recovery in travel and tourism spending across our markets is now underway.”
IPOs
Near-term the calendar for such activity looks rather thin. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
BJ Restaurants (BJRI), CSX (CSX), PPG Industries (PPG), and Valmont (VMI) are slated to report their quarterly results after equities stop trading. Those looking for more on which companies are reporting when should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Friday, April 21
- Japan: Consumer Price Index
- Japan: Flash Manufacturing & Services PMI – April
- Eurozone: Flash Manufacturing & Services PMI – April
- UK: Retail Sales – March
- US: Flash Manufacturing & Services PMI – April
Thought for the Day
“The first step towards getting somewhere is to decide that you are not going to stay where you are.” ~ John Pierpont Morgan
