The Bank of Japan maintained all monetary policy settings. META boosted the tech sector

By JustMarkets

The Nasdaq Technology Index led a rally on Wall Street Thursday as a strong report from parent company Facebook (META) outweighed concerns about slowing US economic growth. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 1.57%, and the S&P 500 Index (US500) added 1.96%. The NASDAQ Technology Index (US100) jumped by 2.43%.

Meta stock soared more than 13% yesterday, hitting its highest in more than a year after the company reported quarterly earnings above estimates and CEO Mark Zuckerberg said artificial intelligence is driving traffic to Facebook and Instagram and boosting ad sales. First-quarter earnings expectations have improved sharply, with analysts forecasting a 2.4% year-over-year drop in S&P 500 companies’ earnings, compared with a 5.1% decline forecast at the start of the reporting season.

The US economic growth slowed more than expected in the first quarter of 2023. GDP data for the quarter showed growth of 1.1% compared to the forecast of 2.0%. The slowdown in GDP growth largely reflected weak inventory investment. Housing investment recorded its eighth consecutive quarterly decline, although the rate of decline slowed considerably from October through December. But the labor market remains resilient. Jobless claims came in at 230,000, less than the projected 247,000.

Equity markets in Europe were mostly up on Thursday. German DAX (DE30) gained 0.03%, French CAC 40 (FR40) added 0.23%, Spanish IBEX 35 (ES35) increased by 0.16%, and British FTSE 100 (UK100) closed yesterday down by 0.27%.

The ECB meeting will be held next week, and the main question is which rate hike the Central Bank of Europe will choose. At the moment, analysts are leaning towards 0.25%. However, it is worth realizing that the probability may change due to the new incoming data. A number of GDP and inflation statistics will be released in Europe today, and the Eurozone core inflation report will be released two days before the meeting next week. Any signs of solid inflation, especially the core indicator, will raise the odds of a 0.5% rate hike at the May meeting.

European commercial real estate investment has fallen to its lowest level in 11 years. Higher interest rates and the economic outlook spook investors. A recent JP Morgan investor survey cited commercial real estate as the most likely cause of the next financial crisis.

Oil prices stabilized Thursday, offsetting some losses from the previous session after OPEC+ indicated it saw no need to cut production further.

Asian markets were also mostly on the rise yesterday. Japan’s Nikkei 225 (JP225) gained 0.15%, China’s FTSE China A50 (CHA50) increased by 1.09%, Hong Kong’s Hang Seng (HK50) gained 0.42%, India’s NIFTY 50 (IND50) added 0.57%, and Australia’s S&P/ASX 200 (AU200) closed negative 0.32%.

Argentina is planning a sharp rate hike to 91% to stop the peso’s decline. Since Argentina’s inflation rate is above 100%, its Central Bank raised its rate last week by 300 basis points to 81%. Argentina, a major global supplier of grain and beef, is struggling with inflation, which topped 104% in March, with analysts predicting that prices will rise about 110-130% this year.

The Chinese yuan is slowly but surely being accepted for more international payments, which analysts say could set the stage for a trading system that runs parallel to the dominant US dollar. In March, there were more cross-border transactions with China in yuan than in dollars, and Argentina said it aims to pay for Chinese goods in yuan rather than dollars regularly.

The Bank of Japan left the interest rate unchanged and also did not change its yield curve control policy and is considering a comprehensive review of past monetary policy easing decisions. The policy report indicates that the abrupt move to roll back quantitative easing could create huge problems for Japan’s regional banks and exacerbate global market conditions. Tokyo’s consumer price index inflation rose more than expected in April, returning to 40-year highs. On an annualized basis, the core CPI rose to 3.5% from 3.2%. Japan’s unemployment rate rose from 2.6% to 2.8%.

S&P 500 (F) (US500) 4,135.35 +79.36 (+1.96%)

Dow Jones (US30)33,826.16 +524.29 (+1.57%)

DAX (DE40) 15,800.45 +4.72 (+0.03%)

FTSE 100 (UK100) 7,831.58 −21.06 (−0.27%)

USD Index 101.52 +0.05 +0.05%

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Australia Producer Price Index (q/q) at 04:30 (GMT+3);
• – Japan BoJ Monetary Policy Statement at 06:00 (GMT+3);
• – Japan BoJ Interest Rate Decision at 06:00 (GMT+3);
• – Japan BoJ Outlook Report at 06:00 (GMT+3);
• – Japan BoJ Press Conference at 08:00 (GMT+3);
• – French GDP (q/q) at 08:30 (GMT+3);
• – French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Spanish GDP (q/q) at 10:00 (GMT+3);
• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – German GDP (q/q) at 11:00 (GMT+3);
• – Switzerland SNB Chairman Thomas Jordan speaks at 11:00 (GMT+3);
• – Eurozone GDP (q/q) at 11:00 (GMT+3);
• – German Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US PCE Price Index (m/m) at 15:30 (GMT+3);
• – Canada GDP (q/q) at 15:30 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (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.