The American stock exchanges fell yesterday as weak growth and persistent inflation from the US were published. US GDP figures from the first quarter showed the country’s economy grew at the slowest pace in nearly two years, while inflation accelerated. This further lowered hopes for US interest rate cuts this year. A weak report from Meta also caused a lot of selling pressure on large-cap companies. The broad S&P 500 closed down 0.5 percent, while the Dow Jones Industrial Average and technology-heavy Nasdaq Composite Index fell 1.0 and 0.6 percent, respectively.
Commodities rose on a broad front yesterday. Oil prices climbed on increased concerns about supply problems, as Israel has stepped up airstrikes on the Gaza city of Rafah. US Treasury Secretary Janet Yellen also spoke positively about the country’s economy, commenting to Reuters that the US economy’s growth is likely to be stronger than quarterly data showed. Earlier in the day, oil prices were pressured, as a result of the weak GDP figures. At 20:35, WTI oil traded up $0.8 to $83.6 a barrel and Brent oil up $1.0 to $89.0 a barrel.
Base metals also rose above average, driven by a weaker dollar. At the top was tin with a rise of 3.4 percent at 20:35, followed by zinc and nickel which rose 2.0 and 1.7 percent respectively. Copper added 1.0 percent and lead 0.3 percent, but aluminum instead lost 0.5 percent. The price of gold climbed $16.4 to $2,332.1 an ounce.
Among individual US companies, Facebook and Instagram’s parent company Meta Platforms was one of the losers after beating expectations linked to revenue and earnings, but giving a sales forecast below estimates. The stock tumbled 10.6 percent, dragging down tech giants Alphabet, Amazon and Microsoft, which all fell around 2 percent. White goods maker Whirpool reported deteriorating sales and operating margin, which was punished by a 10.1 percent drop in shares. Southwest Airlines lost 7.0 percent after pushing back the estimated delivery time of new Boeing planes for the third time. Both Alphabet and Microsoft reported after the close yesterday and rose in after-hours trading, as the numbers beat analysts’ estimates.
The US ten-year Treasury note added 5 points to 4.70 percent.
Asian stock markets rose during the morning after Japan’s central bank statement left the policy rate unchanged. The consumer price index in the country landed both below expectations and below the 2 percent level, which is often cited as an inflation benchmark for central banks around the world. At 07:30, the Nikkei rose 1.1 percent, the Hang Seng climbed 2.1 percent and the Shanghai Composite index lifted 1.0 percent.
The reports continue to flow today. During the morning, among others, Diös, Hexatronic, SKF, Holmen, Saab and Medicover reported. During the day, reports are also expected from Beijer Alma, Electrolux, SCA, Traton and Latour at 08:30, and Autoliv and Hexpol at 12:00. Alfa Laval, Bufab, Catena, Hemnet and Wallenstam are traded excluding dividends today.
Among the updated recommendations that have landed during the morning, Pareto has lowered Cellavision to hold from buy and lowers the target price to SEK 243 (245). DNB lowers Pandox to hold to buy and has a continued target price of SEK 175. Tieto Evry has its short-term recommendation lowered to market perform from outperform by Handelsbanken. Husqvarna instead receives a buy recommendation, previously maintained, from Jefferies, which also raises the target price to SEK 105 (80). Handelsbanken raises AAK to hold from sell in the short term. The bank also raises Astra Zenica to buy from hold in the short term, but lowers Stillfront to market perform from outperform in the long term. Pareto raises Fabege to buy from hold, but at the same time lowers its target price for the company to SEK 95 (100).
The week ends with several important macro data. The Bank of Japan started the day by leaving interest rates unchanged this morning, in line with expectations. Furthermore, Sweden’s trade balance and lending growth to Swedish households are published at 08:00. At 14:30, the underlying PCE deflator is expected from the US, which is an important indicator of inflation in the country and, by extension, future interest rate developments. At 4:00 PM, Michigan consumer sentiment is expected and, in conclusion, the Commodity Futures Trading Commission publishes its weekly reports of speculative net positions in a range of commodities.
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