Yesterday US stocks all closed in positive territory on confidence in debt ceiling negotiations: the DOW Jones gained 0.34% to 33,535.91, the S&P 500 +0.94% to 4,198.05, while the Nasdaq 100 +1.51% to 12,688.84.
Initially, immediately after the opening of the markets, the data relating to the claims for unemployment benefits, released by the Department of Labor, had worried the lists, which however recovered in the final.
Initial jobless claims fell to 242,000, versus an expected drop to 255,000 from 264,000 a week earlier. Also, the Philadelphia Fed’s May manufacturing index improved more than expected, according to Econoday estimates, reading -10.4 versus Street’s forecast -20.0 versus – April 31.3.
In the morning futures on Wall are positive by an average of 0.1%. US WTI oil was up 0.89% to $72.50 a barrel. I purchased the 10-year US T bond, following the positive news on the increase in US debt, with a yield that fell from 3.65% at the start of the session to 3.63%.
The US President expressed his willingness to work with Republicans on a potential compromise at the G7 conference in Japan. At a press conference, he shared his thoughts on job requirements for government assistance programs, stating strongly that healthcare must remain unaffected.
The President also made it clear that he will not accept any changes that negatively impact the medical health of Americans or job requirements that go beyond current standards. While he voted for the existing requirements years ago, he acknowledges that change is still possible.
Despite the challenges, the President remained optimistic about reaching a deal and stressed that default on the national debt is not an option. Investment banks are currently divided on the potential impact of weaker-than-expected Chinese economic data for April on full-year growth prospects.
Standard Chartered suggests that China’s poor economic performance in the previous year provides a lower basis for comparison, which could make it easier for GDP to post solid growth in 2023. The bank forecasts a 5.8% growth rate for this ‘year. However, JP Morgan revised its target from 6.4% to 5.9%, while Barclays lowered its expectations from 5.6% to 5.3%.
On the other hand, the global economy is showing fresh signs of deceleration, as China’s post-Covid recovery slows down and Germany’s struggling industrial sector puts the European powerhouse at risk of recession.
Equities in Asia ended the week mixed this morning on Japan’s start day of the G7.
The Nikkei rose 0.8%, while Hong Kong was down 1.4% after disappointing results from Alibaba, which lost 5% in New York on Thursday night. Shanghai also lost 0.4%, with lackluster Chinese macro data.
In April 2023, Japan’s trade deficit fell to 432.4 billion yen from 854.9 billion a year earlier. This result fell short of market forecasts which projected a deficit of 613.8 billion yen. The country has run a trade deficit for the past 21 months, marking the longest run since 2015.
Although exports increased 2.6% year-on-year, it was the slowest growth rate since February 2021. Imports instead decreased by 2.3%, marking the first decline in 27 months.
Price lists for Thursday 18 May 2023
DOW Jones +0.34% to 33,535.91
S&P 500 +0.94% to 4,198.05
NASDAQ 100 +1.51% to 12,688.84
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