China property stocks rally for second day, hit near four-week highs
China property investment slid nearly 8% in the first half of the year, official data showed Monday, pointing to a deepening decline in investment for a sector that accounts for about a quarter of the world's second-largest economy.
Future Publishing | Future Publishing | Getty Images
China's property stocks extended gains on Friday, with the CSI 300 real estate sector hitting a near four-week high.
The index was last up 2.5% in morning trading, after rising nearly 6% on Thursday. It has gained nearly 12% in the last four sessions.
China's real estate stocks jumped in the previous session after the People's Bank of China along with the Ministry of Finance announced measures that would help boost the liquidity available to property developers.
The new measures will be valid until the end of 2024.
Shares of Hong Kong-listedCountry Gardenrose 1.4%,Logan Groupgained 1.6% andCK Asset Holdings added 1.5%. Hong Kong's Hang Seng Mainland Properties index rose 0.3% after climbing 4.3% in the last session.
— Shreyashi Sanyal
Bank of Japan in no hurry to change monetary policy stance, meeting minutes show
Japan's central bank will not terminate its negative interest rate and yield curve control policy based on "specific numerical values" including negotiations around wage increases.
According to minutes of the BOJ's December meeting, several board members said exiting from the NIRP and YCC will be "decided at each future meeting based on various data and information obtained at each point in time."
At the meeting, some members also expressed the view that the bank was currently not in a situation where it would "fall behind the curve" if it did not rush to raise policy interest rates.
The members added even if the BOJ made a decision once the labor-management wage negotiations conclude in spring 2024, "it would not be too late."
— Lim Hui Jie
Tokyo inflation softens for third straight month; core inflation lower than expected
The inflation rate in Japan's capital city of Tokyo fell to 1.6% in January, down from 2.4% in December.
Tokyo's inflation rate is widely considered to be a leading indicator of nationwide inflation trends in Japan.
Tokyo's core inflation rate, which strips out prices of fresh food, also came in at 1.6%, lower than the 1.9% expected by economists polled by Reuters and also lower then December's 2.1%.
The so called "core-core" inflation rate, which strips out fresh food and energy prices and is watched by the Bank of Japan, fell to 2.2% in January from 2.7%.
— Lim Hui Jie
Want to buffer your portfolio from a downturn? Step away from cash and into bonds, UBS says
Proactive investors will want to switch out of their cash-heavy positions now and get into bonds before the Federal Reserve begins cutting rates, said UBS's Mark Haefele.
The 100 largest money market funds are still yielding well over 5%, but those rates will come down as the Fed trims rates. Haefele, global chief investment officer for wealth management, said that in its base case UBS expects 8.5% returns for high-quality medium duration bonds, compared to 4.3% for cash.
Another reason to go for longer-term fixed income: In a hard landing situation, portfolio losses would be cushioned by those bonds. In a recession scenario, UBS anticipates equity markets could tumble more than 15% on a total return basis, but those losses would be curbed by a 16% rally in bonds.
A portfolio that is allocated 60% toward stocks and 40% in bonds would see just a 3% decline in this circumstance, Haefele said.
"Investors holding excessive cash would not be as well insulated in this scenario – cash does not 'rally, and the returns on rates would likely fall in this scenario,'" he wrote.
-Darla Mercado
Transportation stocks poised to catch a bid, MRB Partners says
With the downturn in freight shipments poised to reverse in 2024, partly due to low inventories spurring a revival in manufacturing output, transportation stocks should similarly rebound, according to a Thursday note from MRB Partners. Increased global trade should also give the stocks a boost, the researcher said.
Within the industry, MRB recommends air freight and logistics companies, saying, "the recent upswing in air freight revenue ton miles bodes well for the relative forward earnings of air freight stocks, which are also attractively valued."
Railroads and truckers, meanwhile, are being held in check by "muted growth in non-intermodal rail traffic, subdued pricing trends, and elevated relative valuations," MRB strategist Salvatore Ruscitti wrote.
The Dow Jones Transportation Average is higher by 2.3% so far this week and up 0.34% for the year thus far, exactly matching the S&P 500 this week but lagging the S&P's 2.6% gain in 2024.
— Scott Schnipper, Michael Bloom
Intel, AMD, Nvidia drag Nasdaq 100 futures lower
Shares of major semiconductor stocks dragged Nasdaq 100 futures lower on Thursday evening. The index sank by 0.5%, losing about 90 points in after-hours trading.
Semiconductor manufacturer Intel lost about 10% after reporting disappointing first-quarter guidance.
Shares of another semiconductor company, Advanced Micro Devices, sank more than 3%, while software and manufacturing equipment provider Applied Materials lost 2.3%. Semiconductor company KLA also shed 6% after posting lower-than-expected guidance for the fiscal third quarter, and Nvidia shed 1.7% on the back of the sector's declines.
— Pia Singh
Intel, Levi Strauss among companies moving in after-hours trading
Check out the companies making headlines in after-hours trading:
- T-Mobile— The telecommunications stock shed 2.9%% after T-Mobile missed on earnings expectations for the fourth quarter, but beat on revenue. The company posted $1.67 per share in earnings, while analysts polled by LSEG expected $1.90 per share. Revenue came out at $20.48 billion for the period, higher than the expected $19.64 billion according to LSEG.
- Intel— Shares of the chip manufacturer lost nearly 8% in after-hours trading after the company posteddisappointing first-quarter guidance. Intel expects adjusted earnings of 13 cents per share for the first quarter of 2024, while analysts surveyed by LSEG called for 33 cents per share. Anticipated revenue of $12.2 billion to $13.2 billion also came short of analysts' expectations of $14.15 billion in revenue for the period.
- Levi Strauss— Shares of Levi Strauss declined nearly 1% after the apparel company said Thursday it willcut at least 10% of its global corporate workforcethrough restructuring efforts. The job cuts will happen in the first half of 2024, the company said. Fourth-quarter earnings also came out Thursday, with Levi's adjusted earnings per share beating estimates, but falling short on expectations for revenue.
For the full list, read here.
— Pia Singh
Stock futures open in the red
Futures tied to theDow Jones Industrial Averagewere lower on Thursday, down 67 points, or 0.18%.
S&P 500 futuresshed about 0.15%. Nasdaq 100 futuresdropped 0.4%, led by declines from Intel after a disappointing first-quarter guidance.
— Pia Singh
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China Property Stocks Rally
China's property stocks have rallied for the second day, reaching near four-week highs. The CSI 300 real estate sector index has gained nearly 12% in the last four sessions. This surge in real estate stocks follows the announcement of measures by the People's Bank of China and the Ministry of Finance to boost liquidity available to property developers. These measures will be valid until the end of 2024.
Bank of Japan Monetary Policy Stance
The Bank of Japan (BOJ) has indicated that it is not in a hurry to change its monetary policy stance. The minutes of the BOJ's December meeting revealed that the central bank will not terminate its negative interest rate and yield curve control policy based on specific numerical values, including negotiations around wage increases. The decision to exit from the negative interest rate policy and yield curve control will be made at each future meeting based on various data and information obtained at each point in time. The BOJ believes that it is not currently in a situation where it would "fall behind the curve" if it does not rush to raise policy interest rates. The bank also stated that even if a decision is made after the labor-management wage negotiations conclude in spring 2024, it would not be too late.
Tokyo Inflation Softens
The inflation rate in Tokyo, Japan's capital city, has softened for the third straight month. In January, the inflation rate fell to 1.6%, down from 2.4% in December. Tokyo's inflation rate is considered a leading indicator of nationwide inflation trends in Japan. The core inflation rate, which excludes prices of fresh food, also came in at 1.6%, lower than the 1.9% expected by economists. The "core-core" inflation rate, which excludes fresh food and energy prices and is monitored by the Bank of Japan, fell to 2.2% in January from 2.7% in the previous month .
UBS Recommends Bonds Over Cash
UBS, a global wealth management firm, suggests that proactive investors should switch out of cash-heavy positions and invest in bonds before the Federal Reserve begins cutting rates. UBS expects high-quality medium duration bonds to provide 8.5% returns, compared to 4.3% for cash. Longer-term fixed income investments can help buffer portfolios from downturns. In a hard landing situation or recession scenario, losses in equity markets could be curbed by a rally in bonds. A portfolio allocated 60% toward stocks and 40% in bonds would see a smaller decline in such circumstances.
Transportation Stocks Poised to Rebound
MRB Partners, a research firm, predicts that transportation stocks will rebound due to a potential reversal in the downturn of freight shipments in 2024. Low inventories are expected to spur a revival in manufacturing output, and increased global trade should also benefit transportation stocks. MRB recommends air freight and logistics companies, citing the recent upswing in air freight revenue ton miles. However, railroads and truckers are being held back by muted growth in non-intermodal rail traffic, subdued pricing trends, and elevated relative valuations.
Semiconductor Stocks Drag Nasdaq 100 Futures Lower
Shares of major semiconductor stocks, including Intel, Advanced Micro Devices (AMD), Applied Materials, and KLA, dragged Nasdaq 100 futures lower. Intel reported disappointing first-quarter guidance, leading to a 10% decline in its stock. Other semiconductor companies also experienced declines due to lower-than-expected guidance. These declines in the semiconductor sector contributed to a 0.5% drop in the Nasdaq 100 futures.
After-Hours Trading Highlights
In after-hours trading, several companies made headlines. T-Mobile's stock declined after missing earnings expectations for the fourth quarter but beating revenue expectations. Intel's stock lost nearly 8% after the company posted disappointing first-quarter guidance. Levi Strauss announced job cuts and saw its stock decline. These are some of the notable movements in after-hours trading.
Stock Futures Open in the Red
Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 opened lower. The Dow Jones futures were down 67 points, or 0.18%. S&P 500 futures shed about 0.15%, and Nasdaq 100 futures dropped 0.4%, primarily due to declines in Intel's stock following its disappointing guidance.
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