Tag Archives: nervy

Business

Shares and bonds nervy as rate-hike week looms

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  • Fed seen hiking 25 bps, ECB and BOE by 50 bps
  • Technology giants lead host of earnings results
  • Shares edge down after robust January rally

LONDON, Jan 30 (Reuters) – Stock markets worldwide halted their January rally on Monday, pausing for breath at the start of an agenda-setting week of central bank rate hikes and data releases that will clarify if progress has been made in the battle against inflation.

Investors expect the Federal Reserve will raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a real shock.

Europe’s benchmark STOXX index fell 0.8% on Monday morning, echoing a slight dip in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), which has surged 11% in January so far as China’s reopening bolsters sentiment.

The U.S. Nasdaq index is likewise on course for its best January since 2001, a rally that will be tested by earnings updates from tech giants this week.

U.S. stocks were set to follow the nervous Monday mood with S&P 500 futures down 1% and Nasdaq futures falling 1.3%, as investors await guidance later in the week on the Federal Reserve’s policy.

Analysts expect a hawkish tone suggesting that more needs to be done to tame inflation. read more

“With U.S. labour markets still tight, core inflation elevated and financial conditions easing, Fed Chair Powell’s tone will be hawkish, stressing that a downshifting to a 25bp hike doesn’t mean a pause is coming,” said Bruce Kasman, chief economist at JPMorgan, who expects another rise in March.

“We also look for him to continue to push back against market pricing of rate cuts later this year.”

There is a lot of pushing to do given futures currently expect rates to peak at 5% in March and to fall back to 4.5% by year end.

Europe offered a brisk reminder that the fight against rising prices is far from over, as bond yields in the region rose sharply on Monday in the wake of stronger-than-expected Spanish inflation data.

The data showing inflation rose 5.8% year-on-year in January, against expectations of 4.7%, pushed up the zone’s benchmark German 10-year government bond yield 7 basis points (bps) to 2.3190%, its highest since Jan. 10.

Italian and Spanish yields also inched up.

The dollar index was flat ahead of the week’s key data, on course for a fourth straight monthly loss of more than 1.5% on growing expectations that the Fed is nearing the end of its rate-hike cycle.

APPLE’S CORE

Yields on 10-year notes have fallen 33 basis points so far this month to 3.50%, essentially due to easing financial conditions even as the Fed talks tough on tightening.

That dovish outlook will also be tested by data on U.S. payrolls, the employment cost index and various ISM surveys.

Reading on EU inflation could be important for whether the ECB signals a half-point rate rise for March, or opens the door to a slowdown in the pace of tightening. read more

As for Wall Street’s recent rally, much will depend on earnings from Apple Inc (AAPL.O), Amazon.com (AMZN.O), Alphabet Inc (GOOGL.O) and Meta Platforms (META.O), among many others.

“Apple will give a glimpse into the overall demand story for consumers globally and a snapshot of the China supply chain issues starting to slowly abate,” wrote analysts at Wedbush.

“Based on our recent Asia supply chain checks we believe iPhone 14 Pro demand is holding up firmer than expected,” they added. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs.”

Market pricing of early Fed easing has been a burden for the dollar, which has lost 1.6% so far this month to stand at 101.85 against a basket of major currencies.

The euro is up 1.5% for January at $1.0878 and just off a nine-month top. The dollar has even lost 1.3% on the yen to 129.27 despite the Bank of Japan’s dogged defence of its ultra-easy policies.

The drop in the dollar and yields has been a boon for gold, which is up 5.8% for the month so far at $1,930 an ounce .

The precious metal was flat on Monday ahead of the slew of key central bank moves and data releases.

China’s rapid reopening is seen as a windfall for commodities in general, supporting everything from copper to iron ore to oil prices.

Oil steadied on Monday after earlier losses, with prices bolstered by rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.

Brent crude rose 10 cents, or 0.12%, to $86.76 a barrel by 1200 GMT while U.S. West Texas Intermediate crude added 4 cents, or 0.05%, to $79.72.

Reporting Lawrence White and Wayne Cole; Editing by Christopher Cushing, Arun Koyyur and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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Sports

Buccaneers vs Saints: Tom Brady throws tablet to ground, involved in scuffle in nervy Tampa Bay win

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Four of those seven losses have come since Brady arrived at Tampa Bay, and those three years of frustration seemed to weigh on the seven-time Super Bowl winner.
With 10:48 remaining in the third quarter and trailing the Saints 3-0, Brady took out his anger on the sidelines by throwing a Microsoft tablet to the ground.

His frustrations simmered over into the fourth quarter and, after a third-down incomplete pass with the score tied 3-3, he came to blows with New Orleans cornerback Marshon Lattimore. Buccaneers running back Leonard Fournette and wide receiver Mike Evans intervened, sparking a skirmish that eventually led to the ejections of Lattimore and Evans.

Evans was later suspended for one game without pay by the NFL on Monday for “violations of unnecessary roughness and unsportsmanlike conduct.”

While the suspension will not be welcome news to Tampa Bay, the incidents seemed to galvanize the Bucs on Sunday as Brady connected with wide receiver Breshad Perriman for a 28-yard touchdown in the team’s next series to put Tampa Bay up 10-3.

After a 47-yard Ryan Succop field goal to extend the lead with 5:50 left in the game, the Bucs sealed it when Mike Edwards picked off Saints QB Jameis Winston and returned it 68 yards for a touchdown.

“It’s an emotional game,” Brady told reporters afterwards. “A little bit of execution helps all the way around. I thought the defense played well again and the offensive line fought hard.

“It’s a really tough team, really well coached — a team we really struggle with, so it feels good to win.”

“And sorry for breaking that tablet,” he added on later on Twitter. “I think that’s gonna be another Twitter meme or something like that.”

It had been a closely fought game, dominated by both teams’ respective defenses as New Orleans held Brady to 14/24 passing with 142 yards and shut Tampa Bay out until a field goal from Ryan Succop tied the scores at 3-3 late in the third quarter.

But, after the fight and Perriman’s touchdown, momentum swung towards the Bucs.

“We lost a good player and they lost a good player. It was a physical ballgame,” Tampa Bay coach Todd Bowles said, according to ESPN. “I don’t know if it was a turning point … It could have gone either way. We knew we had to make some plays.”

Although the Saints had several chances late in the game, the Tampa Bay defense held firm, intercepting Winston three times — including the game-sealing pick-six — in the last 12 minutes.

New Orleans secured a touchdown of its own through a Winston pass to Michael Thomas with 1:08 remaining, but it was too late as the Bucs held on to seal their first regular season win over the Saints since September 2018, snapping the seven-game losing streak.

The Bucs remain atop the NFC South with a 2-0 record and will host Aaron Rodgers and the Green Bay Packers on Sunday.



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Business

Nasdaq braces for nervy fortnight as investors fall out of love with tech | Technology sector

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Tech stocks have been nursing a new year hangover, pushing the Nasdaq into correction territory. Momentum is building against companies with exciting promises to reshape the world, as investors turn to “value” alternatives such as oil and banking.

The tech sector now faces a crunch fortnight as its biggest names report results, including Microsoft on Tuesday, Tesla on Wednesday and Apple on Thursday. They must prove they can thrive in a post-lockdown world where the cost-of-living squeeze is leaving people with less money for tech products and services.

“The outlook for the Nasdaq 100 will be much clearer in two weeks,” says Matt Weller, global head of research at Forex.com and City Index. Soft earnings reports or weak guidance could see the index make one of its worst starts in over a decade.

Although a hesitant return to normal life has now been jolted by Omicron, smaller growth stocks such as the pandemic winners Peloton and Zoom have been under pressure for months. A near-record number of tech stocks have recently plunged at least 50% from their all-time highs.

The technology giants’ shares have had an incredible run, helping the S&P 500’s IT index to deliver blockbuster returns of 33% in 2021. But the sector lost about 10% in January.

Anxiety over US interest rate rises hurts the unprofitable tech firms promising big earnings in the future. The Federal Reserve, which meets this week, is likely to raise rates several times this year to tame US inflation, now at its highest since 1982.

The year 1982 was also when Time magazine presciently chose the personal computer as its person (or machine) of the year. Then, the notion of a company being worth 3 trillion dollars would have been staggering. Apple soared to the $3tn mark in early January (but has fallen 7% since) and must overcome the problems in global supply chains to continue justifying such a hefty valuation.

Analysts predict Apple’s revenue rose 6% year-on-year in the last quarter, beating last year’s record earnings of $111.4bn. Profits could be up 13%. But it still faces a risk of a marked slowdown in momentum, warn Russ Mould and Danni Hewson of AJ Bell – “due to the tough base for comparison caused by huge spike in demand for iPhones, iPads and iMacs in 2020-21 as people worked from home, sought to stay in touch with people they could not meet or fought boredom by looking for things to do and watch online”.

After smashing production targets in the last quarter, Tesla could have more to say about the future, with investors and customers keen to hear when long-awaited models such as the Cybertruck pickup and Roadster sports model will hit the road. Interest in both is high, but Tesla’s shares dropped this month after references to the Cybertruck entering production this year vanished from its website.

And even if the tech giants hit their numbers, they still face scrutiny. Meta, owner of Facebook, which reports on 2 February, is being targeted by regulators who want to break it up, and the chair of the Federal Trade Commission, Lina Khan, is vowing not to back down.

Khan is a competition law expert who published a seminal paper, “Amazon’s Antitrust Paradox”, while still a student. It argued the traditional competition-law framework wasn’t fit to assess the digital giants, so a more expansive one was needed. Amazon and Facebook claim Khan should be removed from antitrust probes because she’s not impartial. But her expertise could be just what’s required to keep Big Tech in check.

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