French stocks surged and European markets were broadly stronger with luxury stocks rallying after Cartier-owner Richemont beat earnings expectations, while Wall Street was more subdued after its strong Wednesday showing.
France’s CAC 40 jumped 2.1% to a three-month high led by luxury brands LVMH, Kering and Hermes International after Swiss jeweller Richemont grew sales 10% in the December quarter, ahead of analysts’ forecasts.
That comes ahead of Chinese gross domestic product figures which are to show the world’s second-biggest economy grew at an average annual pace of 4.9% in the December quarter.
China’s economic woes have been a drag on luxury brands and local exporters such as such as The a2 Milk Co who typically target consumers in Asia’s biggest economy.
Meanwhile, stock markets in the US were more subdued after Wednesday’s large gain, with the S&P 500 edging up and the Nasdaq slipping 0.3% in afternoon trading.
Bank of America and Morgan Stanley continued the trend of upbeat results for Wall Street’s financial sector, while chipmaker Taiwan Semiconductor Manufacturing’s earnings were in line with expectations.
To cut or not to cut
Government bond yields continued to come off the boil with Federal Reserve governor Christopher Waller telling CNBC that softening economic data could see three or four rate cuts this year. The yield on 10-year US Treasuries fell 4 basis points to 4.61%, below New Zealand’s equivalent at 4.69%.
“The biggest market moving event overnight was some dovish comments by Fed governor Waller which triggered a fall in interest rates after an earlier lift,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “In currency markets, Waller’s comments resulted in some mild downside pressure for the US dollar but net changes for the day have been small.”
The kiwi traded at 56.12 US cents at 7am in Auckland from 56.09 cents yesterday. It was at 90.27 Australian cents from 90.31 cents.
Brent crude oil prices slipped 0.7% to US$81.30 a barrel as the prospect of a ceasefire between Israel and Hamas is seen as leading to an end of attacks on ships in the Red Sea by Yemen’s Houthi militia. Israel’s cabinet vote to ratify the deal has been delayed amid claims by prime minister Benjamin Netanyahu that Hamas has reneged on parts of the arrangement.
Meanwhile, BP plans to shrink its workforce by about 5% as it seeks to cut costs and simplify its business structure.
Gold prices rose 1.3% to US$2,54 an ounce, while Bitcoin was up 0.3% at US$99,923.
Locally, the BNZ-Business NZ performance of manufacturing index is due for release. `
Reporting by Paul McBeth. Image from Thorn Yang on Unsplash.
