On the 27th, the three major indexes in New York started on an upward trend at the beginning of the opening. As economic indicators that were stronger than expected were released one after another, the possibility of tightening slightly increased, but expectations for a soft landing also grew.
Orders for durable goods for May, released on the same day, exceeded Wall Street expectations. Although orders were expected to decline, they rose 1.7% MoM. Core durable goods orders also rose 0.6% over the month, far exceeding expectations (-0.1%). In the case of durable goods, even for discretionary spending that is used for more than three years, if orders decrease, the possibility of a recession is high.
Housing indicators were also solid. The Case-Shiller Index declined 1.7% year-over-year in April. However, the decline was smaller than the expected -2.6%. The housing price index of 20 cities also increased by 0.9% from the previous month. It is an analysis that the mortgage interest rate has risen, but the lack of sales has pushed up the house price.
The number of housing permits in May was 1.496 million, slightly above expectations. Compared to last month, housing permits increased. New home sales also came in at 763,000, significantly exceeding expectations (675,000). It increased by 12.2% from the previous month.
The CB Conference Board Consumer Index, which shows consumers’ confidence, was also higher than expected (104.0) at 109.7. It rose from the previous month (102.5). It is interpreted that consumers have a positive view of the current and future economic situation compared to the previous month.
On this day, the European Central Bank (ECB) annual forum was held in Portugal, gathering central bank governors from around the world. The vice-president of the International Monetary Fund (IMF) emphasized the need for further hikes in global interest rates, saying, “It’s taking too long to get inflation under control.” “There is no certainty that final rates have been reached in the near future,” ECB President Lagarde said, adding that “more persistent policy is needed to tackle sustained inflation.”
On Wall Street, Morgan Stanley predicted an additional 25 basis point hike in July. It changed its official stance from the viewpoint that the interest rate hike was over. The BOA changed its scenario from consecutive hikes in July and September to 25bp hikes in July and November respectively. Among stocks, Delta Air Lines, which raised its earnings forecast ahead of Investor Day, was strong. It presented annual earnings per share (EPS) at $6, and raised its guidance for the second quarter. The second quarter performance showed confidence that it could achieve an all-time high.
Baidu’s stock price rose on the news that artificial intelligence (AI) Ernie 3.5 showed an advantage over ChatGPT4 in some functions. It is an explanation that it showed high performance in the Chinese version. Snowflake’s share price was strong the previous day as it decided to develop generative AI together with Nvidia.
Rosetown (RIDE), an electric vehicle start-up, plummeted on the news that it had filed for Chapter 11 bankruptcy protection. It is an analysis that the production of electric vehicles was inevitable as cash ran out. Rosetown is known to have sued Foxconn for not fulfilling the promised investment.
Prior to the opening, the Walgreens Boots Alliance (WBA), a drugstore chain, posted results that fell short of expectations. Operating profit fell short of market expectations, and EPS guidance was also lowered. After the earnings announcement, the stock price plummeted as disappointing sales poured in.
On Wall Street, there were positive reports about Meta, Kellogg, Nike, and Disney. On the other hand, a report was published that downgraded its investment opinion on Alphabet and Alibaba.
New York = Jeong So-ram/Shin In-gyu Correspondent ram@hankyung.com
2023-06-27 15:29:50
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