Daily Markets: Has Inflation Peaked?

Today’s Overview

Asia-Pacific stock indices ended today’s session mixed as Korea’s KOSPI fell 0.17%, Taiwan’s TAIEX fell 0.35% and India’s Sensex fell 0.51%, while Japan’s Nikkei rose 0.18%, Australia’s ASX All Ordinaries gained 0.26% and China’s Shanghai Composite advanced 0.75%. Hong Kong’s Hang Seng led the way today closing 0.97%. By midday, the major European stock indices are up across the board and US futures point to another strong market opening later this morning.

Before US stock markets start trading, we will get April’s reading for the consumer price index, which is expected to print +8.1% y/y overall and +6.0% for your core reading, which excludes food and energy. Excluding food and energy from “core” inflation, given the impact they have on consumers’ finances, is rather suspect, but today’s focus will be not just on the reported figures, but how they compare to their respective readings of 8.5% and 6.5%. in March.

The growing narrative is that inflation peaked in March; today’s data could begin to confirm this. Based on this morning’s futures, the stock market would not only welcome that news, but expect it. However, if April’s CPI data comes in higher than expected, equities are likely to see another volatile session as questions about the pace of Fed monetary policy tightening continue to filter through. In addition to food and energy prices, one of the factors behind the impact of stickers on the CPI earlier this year was rising used car prices, given the contraction in new car production. . Offering some hope that the CPI may have peaked in March is the downward movement in used car prices during April, which according to some reports fell 1% mom, marking the fourth consecutive month of such declines. . While today’s CPI result will boost trading today, we will have a “wash, rinse, repeat” day tomorrow when the April producer price index is reported.

data download

International economy

April CPI YoY (+2.1%) and PPI (+8.5%) were released last night for China, with the CPI slightly higher than the 1.9% expected and higher than the 1.5% previously reported and a reading of the PPI higher than expectations of 7.8%, but slightly lower than the 8.7% previously reported. April marks the first time BLS will incorporate real-time car price data from JDPower.com, using reported car sales prices.

This morning we saw the preliminary release of Japan’s March Leading Index at 101.0, which beat expectations of 99.0 and the 100.1 previously reported.

The final year-on-year German CPI for April was confirmed at the same pace as the flash figure of 7.8%, which marked another 10-year high, as high energy costs continue to put pressure not only on energy prices, but but about almost all aspects of manufacturing and distribution.

Domestic economy

As mentioned above, at 8:30am ET, April’s CPI YoY will be released. Expectations are that headline inflation has moderated somewhat to 8.10% annualized from the previous reading of 8.5% and the core CPI (excluding food and energy) has eased slightly to 6.0% from the previous figure of 6.5%. Final annual hourly earnings growth and the current status of the average work week in hours will also be released at 8:30 am ET. Preliminary figures printed at 5.5% and 34.6 hours, respectively.

The House of Representatives passed a bill (368-57) that will provide approximately $40 billion in funding for Ukraine. The bill now heads to the Senate, where it is expected to pass later this week.

markets

In a trading session that can best be compared to a playground seesaw, the S&P 500 was up 0.3% yesterday, while a rally in growth stocks led the Nasdaq Composite to end the day 1% higher. . Both the Dow Jones Industrial Average and the Russell 2000 lagged, falling 0.3% and 0.02%, respectively. Including yesterday’s moves, here’s how the leading market indicators stack up so far this year:

  • Dow Jones Industrial Average: -11.5%
  • S&P 500: -16.1%
  • Nasdaq Composite: -25.0%
  • Russell 2000: -21.5%
  • Bitcoin (BTC-USD): -33.5%
  • Ether (ETH-USD): -35.4%

Actions to watch

Before trading in US-listed stocks begins, Krispy Kreme (EVENING), Wendy’s (WEN) Y Yeti Holdings (YETI) will be among the companies that report their quarterly results.

Actions of Roblox (RBLX) were under pressure last night after the company reported first quarter results that missed consensus expectations for its top and bottom lines, as well as expected bookings for the quarter. Average daily active users (DAUs) increased 28% to a record 54.1 million, and hours spent rose 22% to a record 11.8 billion. The average reservation per DAU was $11.67.

currency basis (CURRENCY) Shares also came under pressure in the aftermarket last night as the company posted a surprising loss of $1.96 vs. expected EPS of $0.86. Revenue for the quarter also fell short at $1.17 billion against the consensus of $1.48 billion. Trading volume during the quarter fell 7.8% year-over-year and 43.5% sequentially, with Coinbase stock seeing sequentially lower total trading volume in the current quarter.

Drive Software (you) it also reported a miss in its March quarter results, causing its shares to also drop in the secondary market last night. The company issued downward guidance for both the current quarter and all of 2022, primarily due to challenges with monetization products. The company expects sales between $290 million and $295 million for the current quarter compared to the consensus of $359.7 million. For the full year, Unity sees its top line in the $1.35-$1.425 billion range vs. the $1.49 billion consensus.

all the birds (BIRD) reported a higher-than-expected net loss for its March quarter despite revenue rising 26.4% year-over-year to $62.8 million vs. consensus of $62 million. The failure was due to the decline in gross margin that was attributed to higher logistics and distribution center costs, lower international sales mix and unfavorable exchange rates. Allbirds issued downward guidance for both the current quarter and 2022 with revenue of $75-79 million for the current quarter and $335-$345 million for the full year. That compares with consensus expectations of $88.2 million and $362.35 million.

In a more positive quarterly result in Global Foundries (GFS) it beat revenue and EPS expectations and drove revenue for the current quarter up modestly on a quarterly basis. The company shared that its smart mobile devices segment posted 28% year-over-year revenue growth, while its communications infrastructure business saw strong customer demand, and its industrial IoT end-market grew 55% year-over-year. .

Reuters reports alphabet (GOOGLE) The Google unit has signed deals to pay more than 300 publishers in Germany, France and four other EU countries for their news and will launch a tool to make it easier for others to sign up as well.

IPO

Readers who want to delve deeper into the upcoming IPO schedule should visit Nasdaq Latest and Upcoming IPO Page.

After today’s market close

Beyond Meat (BYND), Dutch Bros (BROS) and Walt Disney (DIS) are scheduled to report their latest quarterly results. Investors should keep an eye out for companies that pre-announce their March quarter results. Those looking for more information on which companies are reporting when, head over to Nasdaq Earnings Calendar.

on the horizon

Thursday, May 12

  • China: Foreign Direct Investment – ​​April
  • UK: construction production, industrial production, manufacturing production, March
  • United Kingdom: GDP – Q1 2022
  • US: Initial and continuing weekly jobless claims
  • US: PPI – April
  • US: EIA Weekly Natural Gas Inventories

Friday, May 13

  • Eurozone: Industrial Production – May.
  • USA: Import/Export Prices – April
  • US: Michigan Sentiment Index (Preliminary) – May

Thinking of the day

“The point is that it is very easy to be different, but very difficult to be better.” ~Jony Ive

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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