Market Wrap: 20 April 2023

Market Wrap: 20 April 2023

US Futures, Asia Stocks Decline on Rates, Earnings: 

  • Volatility gauge falls to lowest in more than a year
  • Fed’s Williams says US inflation slowing, but still too high

US equity futures fell, European stock futures were flat and Asian shares were broadly lower as investors parsed mixed corporate earnings and the latest assessment on the US economy.

Contracts for the Nasdaq 100 and S&P 500 fell while those for the Euro Stoxx 50 were stable. A region-wide index of Asian stocks edged lower for a second day as benchmarks in China and South Korea fell, while those in Australia and Japan were flat.

The Federal Reserve’s monthly Beige Book survey released on Wednesday showed the US economy “stalled” with narrower access to credit. Fed Bank of New York President John Williams said the recent trend of slowing inflation continues but that price gains remain too high. Trader bets continue to lean toward a rate hike next month. 

The yield on the policy-sensitive two-year Treasury was steady in Asia after rising five basis points to the highest level in a month.

“Inflation is not going to go away by itself,” Marija Veitmane, senior multi-asset strategist for State Street Global Markets, said in an interview with Bloomberg Television. “It’s really a question of whether the Fed has enough resolve to break the economy to get inflation down and right now it seems that they still do.”

The drop for US equity futures followed a flat day in New York trading. The CBOE VIX index of volatility to the lowest since 2021. A Bank of America global measure of volatility spanning stocks, rates, currencies and commodities sits at the lowest level since early 2022.

In Europe, Nokia Oyj reported weaker-than-expected earnings for the first quarter while Renault SA’s sales beat estimates. US earnings were also mixed. Tesla Inc. missed profit expectations while International Business Machines Corp. and Morgan Stanley beat forecasts. 

“A recession doesn’t necessarily mean companies have to lose money,” Erin Gibbs, chief investment officer for Main Street Asset Management, said in an interview with Bloomberg Television. “Companies that have very strong free cash flows that don’t have to go to the banks and get new loans are the ones that tend to do well.”


In Asia, Taiwan Semiconductor Manufacturing Co.’s profit beat expectations while gross margin for first quarter also exceeded the upper range of the company’s previous guidance.

Bank of Japan officials are wary of tweaking or scrapping the yield curve control program when the central bank meets next week following the banking issues in the US and Europe, according to people with knowledge of the matter. The yen weakened.

New Zealand’s bond yields fell along with the currency after inflation data came in softer than anticipated. Australia’s 10-year yield was flat after the government released a review of the central bank.

Banks in China kept loan prime rates unchanged after the People’s Bank of China stayed put. An independent review of Australia’s central bank recommended setting up an expert policy board and fewer meetings followed by press conferences.

Elsewhere in markets, the dollar was steady, Bitcoin dropped below $30,000. Oil fell while gold was steady after a Wednesday decline pushed the precious metal below $2,000 an ounce.

Key events this week:

  • China loan prime rates, Thursday
  • Eurozone consumer confidence, Thursday
  • US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
  • ECB issues report on March policy meeting, Thursday
  • Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
  • Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
  • Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
  • Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
  • Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
  • PMIs for Eurozone, Friday
  • Japan CPI, Friday
  • Fed’s Lisa Cook discusses economic research at an event, Friday



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