News review - interest rates in Europe and the USA, China, corporate news of companies
ECB board member Isabel Schnabel said the central bank could cut rates in June but should be cautious about cutting borrowing costs further given the uncertain outlook, Japan's Nikkei newspaper reported.
Traders have priced in 70 basis points for the ECB's rate cuts this year, much more than 46 bps. easing provided by the Fed.
Data this week showed a decline in the US consumer price index (CPI), prompting market participants to quickly assess at least two rate cuts this year. But Fed officials said rates may have to stay higher for longer and a report showing tight labor markets led to another shift in expectations.
Markets are now fully priced in for one decline in November, with a 68% chance of a decline in September - so we are roughly back to where we were before the CPI data in terms of US rate expectations.
Global debt has again tripled the planet's total GDP - Institute of International Finance. The world lives more richly than it can afford: the states of the planet owe each other $315 trillion dollars - this is 333% of global GDP. Everything around is mortgaged, remortgaged and covered with bonds on top.
French government activity. In just one evening, the country managed to ban TikTok, declare a state of emergency and send a military unit to its colony in New Caledonia amid the killings and riots taking place there.
China sold a record amount of US government debt in the 1st quarter. In order to move away from the dollar. The share of gold in China's reserves has risen to its highest level since 2015.
The US economy is sending mixed signals. The labor market is strong, but with signs of cooling - claims for unemployment benefits are slightly worse than expected. The Manufacturing Activity Index from the Philadelphia Fed also weakened from 15.5 to 4.5. And industrial production stopped growing. But the volume of construction of new houses increased by 5.7% m/m.
Nick Timiraos: The Fed's preferred measure of inflation likely moved lower in April. That would either keep the 12-month change at 2.8%, the same as in March, or lower it slightly to 2.7%. That is, inflationary pressure is weakening.
WSJ: Microsoft has asked hundreds of China-based employees in its cloud computing and AI division to consider moving outside the country. The employees, most of whom are Chinese citizens, were offered immediate relocation to the United States, Ireland, Australia or New Zealand.
Over the past 5 years, the share of Chinese electric cars in the EU market has grown from 0 to 8%. Car manufacturers have begun to sound the alarm - the European Commission is already being asked to limit imports, just like the United States.
Biden trumps Trump on ultra-high tariffs on China. This move affecting electric vehicles has environmental implications. The Economist.
Inflows into the BTC ETF yesterday amounted to $303 million, the largest since May 3.
Investors named Bloomberg the best defensive asset - shares of Nvidia and other technology companies. They compete with gold as the best hedge against inflation, a Bloomberg survey of investors showed. Although the precious metal still leads by a wide margin, almost a third of respondents prefer securities of IT companies.
Shares of Chinese developers rose sharply. On growing expectations that Chinese government agencies are helping to buy up excess housing in an attempt to revive the struggling real estate sector.
AIG will sell 20% of Corebridge to Nippon Life for $3.8 billion. Insurance giant American International Group has entered into an agreement to sell a stake in its majority life insurance and pension division Corebridge Financial to Japanese Nippon Life Insurance.
TikTok has become the most valuable brand in China. Overtaking the Industrial and Commercial Bank of China (ICBC) and 3 other largest state-owned banks of the PRC. This is stated in the annual Brand Finance China 500 report.
Natural gas futures led gains in the energy market on Thursday. Prices hit their highest since late January after the Energy Information Administration reported slightly lower-than-expected weekly growth in U.S. supplies.
The Dow Jones Industrial Average (DJI) surpassed 40,000 for the first time in history. President Joe Biden's campaign team celebrated the Dow Jones Industrial Average breaking 40,000 on the campaign trail. And she used this moment to highlight her differences with Donald Trump.
On the corporate front:
• Walmart (WMT) reported quarterly earnings. Shares soared 7% after the low-cost retailer posted better-than-expected earnings. E-commerce sales rose and the company again attracted higher-income shoppers last quarter
• Alibaba shares rose more than 7% after peer JD.com posted better-than-expected quarterly results. Alibaba shares took a hit earlier this week after the company posted an 86 percent drop in profit for its latest quarter.
• Costco (COST). Shares of the retail warehouse company hit new highs on Thursday. The company recently posted strong e-commerce sales numbers for April. Since the beginning of the year, the company's shares have increased by 20%.
• GameStop (GME) shares fell 30% on Thursday as the meme rally continues to fizzle out.
• John Deere (DE) shares fell 5% after the report.
There is still some skepticism that April's CPI, released on Wednesday, is consistent with the idea that inflation is on a credible path to 2%. Doubts persisted as U.S. stocks continued to rise on Thursday and investors were optimistic that the economy was heading toward a golden saddle scenario.
On Thursday, Jamie Dimon, the head of JPMorgan Chase & Co., said in an interview with Bloomberg Television that he remains more concerned about inflation than markets seem to think.
The home building sector in the US is under attack. And some stocks corrected from record highs after data showed construction starts rose in April, but less than expected. The iShares US Home Construction ETF fell 1.7%, with 42 of its 44 components losing ground. Earlier on Wednesday, the ETF closed at a six-week high.
Lennar Corp. is among the ETF's most active components. fell 1.9%, and shares of PulteGroup Inc. lost ground by 1.1%. Both of these stocks closed at all-time highs on Wednesday.
TTWO shares fall 2% after the report
AMAT shares fall 1% after the report
RDDT shares rise 12% in premarket trading
The social media platform has announced a partnership with OpenAI that will give the hungry AI company access to its data. And Reddit will give users new AI functions. In addition, OpenAI will become an advertising partner for Reddit. In the modern world, not only cars and buildings have value, but also data.
Fed members say they will not rush to cut rates and investors are a little depressed. Moreover, stock indexes managed to reach historical highs at the beginning of the session.