US equities rallied late Wednesday, pushing the Nasdaq Composite index to its highest close in nearly nine months, thanks to easing concerns over the stability of regional banks and growing optimism about a potential debt ceiling deal.  President Joe Biden told journalists Wednesday he’s confident the US won’t default on its debt.  Earlier in the day, House Speaker Kevin McCarthy expressed similar sentiments, after saying Tuesday a debt ceiling deal may be possible “by the end of the week.”  These reassurances seemed to bolster the market, helping it shake off early losses triggered by a somber earnings update from Target Corp.  At the same time, regional bank shares surged after Western Alliance Bancorporation reported recent growth in deposits.  In Europe, equity markets ended mixed as investors maintained a cautious approach. 

Summary for 17.05.2023 

  • Most Asian equity markets rose on Thursday amid optimism that the US debt ceiling will be raised, while gains in Japanese conglomerate Sony boosted the Nikkei to a 20-month high.  Investors also reacted to data showing Japan posted a smaller trade deficit in April, while the Australian unemployment rate unexpectedly increased to 3.7% in April from a 50-year low of 3.5% in March.  Shares in Australia, South Korea, Hong Kong and mainland China also posted strong gains. 
  • European shares are on track for gains while US equity futures were little changed amid optimism over US debt-ceiling negotiations. 
  • Oil prices edged lower on Thursday after logging sharp gains in the prior session as markets awaited more cues on the potential lifting of the US debt ceiling, with a slew of economic and monetary policy indicators lined up for later in the week. 
  • Target reported net earnings of $2.05 per share, down from $2.19 during the same quarter a year earlier but still above Wall Street expectations.  Revenue totalled $25.3 billion, just barely above the average analyst’s estimate.  The retailer also said it was sticking with its previously reported outlook.  Nevertheless, in a statement Target referred to a “very challenging environment” and “ongoing softness in discretionary categories.”  The company plans to stress affordability and said its inventory position is healthy.  Its shares were up more than 2.6%. 
  • Western Alliance Bancorporation said in a filing with the Securities and Exchange Commission that deposits had grown by more than $2 billion so far this quarter.  It shares were up more than 11%.  Shares of fellow regional bank PacWest Bancorp were up nearly 22%, while Zions Bancorporation was up almost 12%. 
  • Cisco late Wednesday reported record Q3 revenue, buoyed by product sales while lifting its full-year profit guidance.  Revenue gained 14% annually to $14.57 billion during the three months ended 29th April, higher than the consensus view for $14.36 billion.  Adjusted EPS rose to $1 from $0.87 a year earlier, compared with Wall Street’s $0.97 view.  The company forecast 2023 adjusted EPS of $3.80 to $3.82, up from the previous outlook for $3.73 to $3.78 and ahead of analysts’ $3.75 estimate.   
  • Japanese conglomerate Sony Corp said this morning that it is considering a potential spinoff and listing of its financial services unit within the next two to three years.  The unit which offers services such as insurance, banking and venture capital investments, is likely to be listed in Japan and Sony would continue to hold a stake of slightly less than 20% in the spinoff with the remaining shares to be distributed to shareholders as dividends.