The American stock markets closed in the red after Thursday’s trading session. Two members of the Federal Reserve took the spotlight, hinting that monetary policy will remain restrictive in the future as inflation moves towards the 2 percent target. Raphael Bostic, the Fed chief in Atlanta, indicated that he expects two more rate cuts before the end of the year but flagged risks that could affect both directions, emphasizing that his opinion may differ in six months. Alberto Musalem, the Fed chief in St. Louis, agreed, suggesting that the interest rate may start to decrease again towards a neutral level once inflation convergence is secured. On the macro front, the labor report showed a minor increase in jobless claims last week, but did not include the figures for the layoffs of government employees that Trump announced, as they are categorized differently. The broad S&P 500 index fell by 0.4 percent, while the Dow Jones Industrial Average dropped by 1.0 percent. The Nasdaq composite index, heavy with technology stocks, declined by 0.5 percent.
Commodities performed well across the board. Oil traded above zero yesterday as the market awaited new signals from peace talks between the US and Russia on the Ukraine conflict. This week, Trump’s Ukraine envoy initiated peace talks with Russia to negotiate peace in Ukraine, which has kept a lid on oil prices that have climbed in recent days due to a Ukrainian drone attack on a Russian oil station. The attack has resulted in a 30 percent decrease in Kazakh exports, equivalent to 380,000 barrels per day, and is expected to take over two months to restore. In the American market, crude oil inventories rose slightly more than expected last week, while fuel inventories decreased due to seasonal maintenance. WTI oil rose by 0.3 dollars to $72.5 per barrel, while Brent oil increased by 0.5 dollars to $76.5 per barrel.
Base metals rose broadly, with tin being the top performer, climbing by 2.0 percent, followed by aluminum and nickel, which rose by 1.9 percent. Zinc lifted by 1.7 percent, copper advanced by 1.2 percent, and lead, which increased the least, traded up by 0.6 percent. Gold continued to build on this week’s gains and traded at new record levels yesterday. The price increase is due to increased demand for the metal among investors seeking it as a safe investment in turbulent times exacerbated by Donald Trump’s administration’s trade policies. Since the beginning of the year, gold has risen by over 12 percent, climbing by 4.2 dollars to $2,937.4 per ounce.
Among listed American companies, Palantir dropped by 5.9 percent due to the White House’s announcement on Thursday evening that they want to reduce defense spending by 8 percent over the next 5 years. Walmart decreased by 6.8 percent after failing to impress the market with its quarterly report, while the burger chain Shake Shack reported better than expected results, leading to an 11.3 percent increase in its stock. Yesterday, Microsoft announced the development of its first quantum computer chip, driving the sector up significantly, with Rigetti increasing by 4.0 percent, D-Wave by 12.8 percent, and Quantum Computing by 1.6 percent. Among the “magnificent 7,” Meta declined for the third consecutive day by 1.3 percent, while Tesla and Amazon both dropped by 1.7 percent.
The US ten-year yield decreased by 3 points to 4.51 percent.
Asian markets started the Friday morning above zero, with the Hong Kong stock market reaching a three-year high. The index has performed strongly this week following a tech rally, with Alibaba leading the charge after releasing its quarterly report on Thursday, showing a significant profit increase, causing the stock to surge by over 10 percent on Friday morning. In Japan, the mood is somewhat gloomier after core inflation in January rose more than expected by 3.1 percent compared to the previous month and 2.5 percent compared to the same period last year, while PMI figures were in line with expectations. At 07:45, the Chinese Shanghai index is up by 0.8 percent, while the Hang Seng index rises by 3.3 percent. The Japanese Nikkei 225 index climbs by 0.3 percent.
On the Stockholm stock exchange, several companies have reported this morning, including Elon, which reported an operating profit of 23.0 million SEK, down from 62.5 million SEK from the same period last year, and a net turnover of 1,415 million SEK, resulting in an organic growth rate of -1.4 percent (-3.8). Björn Borg also reported a decrease in its operating profit on an annual basis, landing at 16.8 million SEK (20.2), while net turnover increased to 235 million SEK (198). Synsam reported a net turnover of 1,631 million SEK, equivalent to an organic growth of 10.1 percent, and an EBITDA result of 387 million SEK (348), while Electa reported an adjusted operating profit of 548 million SEK for the third quarter of the company’s fiscal year, below expectations of 603 million SEK. Revenue also came in lower than expected, at 4,695 million SEK compared to the anticipated 4,797 million SEK, with an order intake of 5,418 million SEK, showing an organic growth of 21 percent. Later in the day, companies such as Ablivia, Byggmästare Ahlström, Ovzon, Engcon, and Oscar Properties will also report.
In the morning’s newly arrived recommendations, Handelsbanken upgrades Astra Zeneca from hold to buy, while Jefferies removes its buy rating for Better Collective and downgrades it to hold with a target price of 120 SEK (275). Pareto Securities lowers its target prices for Catena and Lundin Mining to 575 (644) and 172 SEK (185), respectively, while reiterating buy ratings for both. Morgan Stanley raises the target price for Getinge to 197 SEK (187) and reiterates equal weight, while DNB raises the target price for Lundberg Companies to 555 SEK (540) and reiterates hold.
On the macro front, Friday is a quiet day that began with Japanese CPI figures at 00:30, which came in at 3.1 percent compared to the previous month and 2.5 percent compared to the same month last year, followed by the UK retail sales figures at 08:00. The day continues with the French Purchasing Managers’ Index for February at 09:15, the German PMI figures at 09:30, and the Eurozone’s at 10:00. The US then takes over with PMI figures for February at 15:45, existing home sales at 16:00, along with Michigan and Eurozone consumer confidence indices. The day concludes with Baker Hughes’ weekly rig count at 19:00.
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