Markets await US inflation test

Major US equity benchmarks fell Tuesday as disappointing quarterly results from Oracle dragged down the Nasdaq Composite and rising oil prices dampened investor enthusiasm a day ahead of a monthly consumer price update that’s sure to factor into the Federal Reserve’s interest rate policy deliberations.  The S&P 500 and Nasdaq slid by 0.6% and 1% respectively while the Dow Jones held towards the flat line.  While tech was the weakest performing sector on Tuesday, consumer discretionary and communication services shares were also lower.  Energy shares led gainers Tuesday as oil prices continued to rise.  Meantime, European equity markets also closed lower yesterday, with the Euro Stoxx 50 Index down 0.3%, driven by declines in chemical shares, which more than offset gains in autos and telecom shares. 

Summary for 13.09.2023 

• Most Asian equities moved in a flat-to-low range this morning as investors awaited key US inflation data, while Chinese property shares logged strong gains as embattled developer Country Garden clinched more extensions on its debt payments.  Shares in Australia, Japan, South Korea, Kong Kong and mainland China all declined. 
• European shares are set to fall while US equity futures were trading in a tight range ahead of US inflation data that could give clues on the Federal Reserve’s policy path. 
• Oil steadied this morning after rallying to a 10-month high yesterday on forecasts by OPEC and the US that output cuts will tighten the market in the months ahead. West Texas Intermediate traded near $89 a barrel, after rising 1.8% on Tuesday. The Organization of Petroleum Exporting Countries said it expects a shortfall of 3.3 million barrels a day in the fourth quarter, while the US Energy Information Administration predicted a more modest 230,000-barrel deficit. 

• The ZEW Indicator of Economic Sentiment for Germany increased slightly to -11.4 in September, up from the previous month’s reading of -12.3 and surpassing market expectations of -15.0. These improved economic prospects for Europe’s largest economy are in line with a notably more optimistic view of international stock market developments, driven by growing expectations of stable interest rates in the Eurozone and the US, along with anticipations of a further easing of China’s interest rate policy. However, the assessment of the economic situation saw a significant drop of 8.1 points, falling to -79.4, marking its lowest level in three years. 
• Chinese developer Country Garden has won approval from its creditors to extend the maturity of another onshore bond by three years.  The company’s shares jumped as much as 14% in Hong Kong this morning.  Country Garden, one of the few large Chinese developers that have not defaulted on debt obligations, has been facing liquidity pressure with reduced available funds as sales plunged. 
• Apple Inc. enacted its long-awaited iPhone price increase with as much subtlety as possible, part of an effort to wring more money from consumers without triggering sticker shock. On Tuesday, the company boosted the price of just one iPhone model — the top-end Pro Max, which climbs by $100 to $1,199 — while leaving the other three new versions unchanged. And even the now-costlier new phone will come with twice as much storage, letting Apple argue that it wasn’t really a price increase at all. 
• Oracle shares tumbled nearly 13% yesterday after the software and cloud computing company late Monday delivered a disappointing revenue report for the last quarter and less-rosy forecast for the current one. 
• Advanced Auto Parts shares fell 7.8% on Tuesday to a 12-year low after S&P Global downgraded the auto parts provider’s credit rating to BB+, the highest level of “junk,” or speculative, status, from BBB-, citing flat sales and declining competitiveness. 

• CVS Health shares rose about 2.6% yesterday after Wolfe Research upgraded the drugstore chain’s shares to “outperform” from “peer perform,” citing long-term earnings growth prospects and a risk/reward profile in the intermediate term “has turned positive.” 
• General Motors shares rose about 2.5% and Ford rose 2% as investors monitored talks with the United Auto Workers, whose contract with the automakers expires Thursday. 
• WestRock shares rose 2.8% following report the paper and packaging company would merge with Ireland-based Smurfit Kappa.  Smurfit Kappa was down 9.4%.