S&P and Nasdaq leap to 14-month highs

US equities shrugged off a brief bout of bearishness following the Federal Reserve’s latest policy meeting to end broadly higher Thursday, with the S&P 500 Index climbing for a sixth consecutive session to a fresh 14-month high amid growing investor optimism that interest rates may be near a peak.  The Nasdaq Composite index closed at its highest level since April 2022 as big tech companies continued to lead, and the Dow Jones Industrial Average ended at a six-month high.  Meantime, European shares underperformed yesterday, with the Euro Stoxx 50 Index down 0.2% after the ECB raised rates by 25bps and hinted at a similar move in July. 

Summary for 16.06.2023 

• Asian equity markets rose to a near four-month high on Friday, taking cues from a strong lead on Wall Street.  Shares in Australia, South Korea, Hong Kong and mainland China advanced.  Meanwhile, Japanese shares reversed earlier losses as the BOJ maintained ultra-low interest rates and signalled no change to its quantitative easing and yield curve control policies.   
• European and US equity futures were pointing to a positive open later in the day and on track to secure a positive week. 
• Oil prices were steady this morning after gaining nearly 4% in the previous session, as interest rate cuts in China and a pause in the US Federal Reserve’s tightening campaign bolstered the demand outlook in the world’s two biggest oil consumers.  Oil markets also got a boost from a sharp decline in the dollar, as a weaker greenback makes oil cheaper for holders of other currencies and drives up risk appetite in the markets. 

• The ECB yesterday delivered another 25bps interest rate increase in its June meeting, in line with market expectations, and signalled more hikes to come, as inflation is projected to remain too high for too long.  The interest rate on the main refinancing operations is now at 4% while the deposit facility increased to a 22-year high of 3.5%.  The central bank revised higher their projections for core inflation and slightly lowered their economic growth projections. 
• Retail sales in the US unexpectedly rose 0.3% month-over-month in May, following a 0.4% increase in April, and beating forecasts of a 0.1% decline.  The data signalled consumer spending remains resilient, despite higher inflation and interest rates.    
• The number of Americans filing for unemployment benefits was at 262,000 on the week ending June 10^th, sharply above market expectations of 249,000 to match the prior week’s upwardly revised value, the highest since October 2021.  The result aligned with other recent data that reflects some softening in the US labour market after a prolonged period of stubborn tightness, as US businesses start to feel the impact of the Fed’s aggressive tightening campaign.  The four-week moving average, which removes week-to-week volatility, rose by 9,250 to 246,750. 
• Adobe shares rose more than 3% in extended-hours trading on Thursday after boosting its fiscal outlook as it reported better-than-expected quarterly results.  For fiscal year 2023, Adobe now sees adjusted EPS between $15.65 and $15.75 per share, up from a prior range of $15.30 to $15.60 per share.  For the period ending June 2, Adobe earned an adjusted $3.91 per share on $4.82 billion in revenue, topping estimates of $3.79 per share and $4.77 billion in revenue. 
• On Thursday, Kroger reported quarterly earnings and revenue that fell short of analysts’ forecasts, as company executives suggested a slowing economy is hurting spending.  Chief Financial Officer Gary Millerchip, in a statement, cited a “more challenged operating environment.”  Shares of the grocery chain fell nearly 3%. 

• Lennar late Wednesday reported earnings of $3.01 per share, about 70 cents above expectations, and increased full-year projection for home completions.  CEO Stuart Miller said housing demand has accelerated as the market continued to “normalise and recover” from the Fed’s rate hikes, according to a statement.  Shares of the homebuilder rose about 4.5%. 
• Microsoft Corp rose to a new record high close on Thursday as market optimism about the prospects of artificial intelligence has helped buoy the technology giant to a record market capitalisation of $2.59 trillion.