The major US equity indices were lower Tuesday, with a disappointing forecast from economic bellwether, Home Depot weighing down the Dow Jones Industrial Average as investors braced for another round of debt ceiling talks.  Meanwhile, data showed retail sales rose only 0.4% in April, well below market expectations of 0.8% as receipts at gasoline stations unexpectedly declined despite higher fuel prices.  European equity markets were also subdued yesterday, with the Euro Stoxx 50 Index closing around the flat line for the second day in a row. 

Summary for 17.05.2023 

  • Asian shares were subdued on Wednesday and the dollar hovered around a five-week peak as investors remained risk averse, with the US debt ceiling talks and a mixed set of economic data weighing on sentiment.  The Shanghai Composite Index and Hong Kong’s Hang Seng Index eased 0.4%, dragged by China data showing a wobbly post-Covid recovery.  Japan’s Nikkei, however, spiked 0.68% higher, scaling above 30,000 for the first time since September 2021.  
  • European shares are poised to nudge lower while US equity futures are slightly higher this morning as investors continue to weigh earnings, the outlook for interest rates and developments in US debt-ceiling talks. 
  • Oil prices moved in a flat-to-low range in Asian trade this morning as industry data pointed to an unexpected build in US inventories, while weak economic readings from the US and China also dented the outlook for demand.  Data from the American Petroleum Institute showed that US crude inventories grew by about 3.7 million barrels in the week to May 12, ducking expectations for a 1.3 million barrel drawdown. 
  • The Japanese economy grew by 0.4% quarter on quarter in Q1, after showing no growth in Q4, exceeding market estimates of a 0.1% increase, preliminary data showed.  This was the fastest pace of expansion since Q2 of 2022, with private consumption rising the most in three quarters after tough border controls were fully lifted. 
  • Retail sales in the US increased 0.4% in April, partially recovering from two consecutive months of declines but falling short of market expectations for a 0.8% increase.  While sales at motor vehicle and parts dealers increased by 0.4%, there was an unexpected decline of 0.8% in receipts at gasoline stations, despite the higher fuel prices. 
  • President Joe Biden and congressional leaders said they were optimistic a bipartisan deal to raise the debt ceiling could be possible within days even as House Speaker Kevin McCarthy warned the two sides remained far apart after a meeting Tuesday at the White House. 
  • The ZEW Indicator of Economic Sentiment for Germany declined to –10.7 in May, its lowest level in five months and significantly worse than market expectations of –5.3, partly due to expectations of future interest rate hikes by the European Central Bank.  ZEW also highlighted the possibility of the German economy entering a mild recession. 
  • Siemens raised its full-year sales and profit guidance on Wednesday after it beat sales forecasts during its second quarter.  The company now expects comparable revenue growth of 9% to 11% in the 12 months to the end of September, up from its previous outlook for an increase of 7% to 10%.  Siemens also expects to increase its underlying basic EPS to a range of €9.60 to €9.90, up from the €8.90 to €9.40 it said it expected in February. 
  • Home Depot yesterday projected sales this year to fall 2% to 5%, revising guidance from February for the year’s sales to stay flat and marking potentially the first annual sales decline since 2009.  The company said first-quarter revenue fell 4.2% to $37.26 billion and comparable sales, which strip out the effects of store openings and closings, were down 4.5%.  The results missed forecasts for revenue of $38.31 billion and a decline in comparable sales of 1.6%. 
  • Vodafone plans to axe 11,000 jobs over the next three years as new CEO Margherita Della Valle warned the telecoms group “must change” to end a period blighted by poor performance in its largest market and a slumping share price.  The cuts will come both at Vodafone’s UK headquarters and in local markets, the group said yesterday as it published full-year results that fell short of analysts’ expectations.