US "Terror Data" Impacting Asian Stock Markets as Quarterly Financial Reports Released

　　On Monday, April 15th, the US Census Bureau released March retail sales data. The data showed a month-on-month increase of 0.7% in US March retail sales, revised up from 0.6% to 0.9% from the previous figure, exceeding the market's expected 0.4%.

　　Image Source: investing

　　Specifically, online product sales increased by 2.7% year-on-year; gas station sales increased by 2.1% year-on-year; restaurant sales increased by 0.4% year-on-year; sales of building materials increased by 0.7% year-on-year; sales of health care products increased by 0.4% year-on-year; automobile and parts sales decreased by 0.7% year-on-year; sales of electronic products and appliances decreased by 1.2% year-on-year; apparel sales decreased by 1.6% year-on-year; and sales of furniture and household goods decreased by 0.3% year-on-year.

　　Analysis by multiple institutions indicates that March retail sales data show that despite facing pressures from high inflation and high interest rates, US consumer demand remains strong. The robust labor market and rising wage levels have driven consumer desire, demonstrating the resilience of the US economy.

　　Earlier data released by the US Department of Labor on April 10th showed that the US Consumer Price Index (CPI) rose by 3.5% year-on-year in March, expanding by 0.3 percentage points from February, surpassing market expectations.

　　Analysts believe that in the current environment of inflation rebounding and strong performances in personal consumption and the job market, the Federal Reserve may postpone its interest rate cut plans. Some experts predict that the Fed may begin implementing interest rate cuts in September.

　　After the release of US March retail data, the overnight US stock market experienced a decline, with all three major indices showing declines during the trading day. The Nasdaq index fell by 1.8%, and the S&P 500 index experienced a decline of over 1% for two consecutive days, reaching its largest decline since the collapse of Silicon Valley Bank. The Dow Jones Industrial Average fell for the sixth consecutive trading day.

General decline in Asian markets

　　The Nikkei 225 index opened down by 1.2%, at 38,750.67 points, and as of the time of writing, the decline had expanded to 2.11%, at 38,405.58 points; the TOPIX index in Japan opened down by 0.9%, and the decline expanded to 1.82% at 2,703.20 points. The Seoul Composite Index in South Korea opened down by 1%, and the decline expanded to 2% at 2,603.75 points. The Taiwan Stock Exchange Weighted Index fell by nearly 2% to 20,071.61 points. The MSCI Asia (excluding Japan) stock index widened its decline to 1.4%.

　　Affected by the strengthening of the US dollar and the depressed market sentiment, China has taken unexpected measures to weaken the defense of the renminbi, leading to the renminbi exchange rate nearing the policy-set bottom line. The offshore renminbi has fallen under the influence of the downward reference rate, causing the emerging market currency index to fall to its lowest level this year.

　　Investors are currently shifting their focus to a series of economic indicators to be released by China on Tuesday.

　　The yen continues to weaken against the dollar, breaking through the 154 level for four consecutive trading days, reaching its lowest level since 1990, surpassing the level at which some analysts warned that it might trigger direct intervention by Japan.

　　Image Source: TradingView

　　Senior officials in Japan's former monetary policy have recently emphasized that if the exchange rate exceeds 155, intervention may occur. Japan's finance minister also warned that the risk of intervening in the market to prevent the exchange rate from falling still exists after all available measures have been taken in the foreign exchange market in Tokyo.

Release of financial report data by major companies

S&P 500 index

　　Strategists at Morgan Stanley said that an optimistic corporate earnings season would not drive the stock market higher because most of the optimism has been absorbed after this year's record-breaking rise.

　　A team led by Mislav Matejka pointed out in a report that profit expectations for the first quarter have been lowered since the reporting period began, lowering the threshold for US companies to surpass expectations. Strategists said that excluding tech giants, profits for the S&P 500 index are expected to decline significantly.

　　UnitedHealth, as one of the constituents, suffered a cyberattack on its first-quarter earnings report. Analysts said that due to the disruption caused by the cyberattack to UnitedHealth Group's technical systems, including prescription management and medical claims systems, it is expected that UnitedHealth Group will record higher medical costs in its first earnings report.

　　TD Cowen analyst Gary Taylor Taylor said that it is difficult for UnitedHealth Insurance to distinguish between the impact of cyberattacks and the increase in healthcare usage, making it difficult to determine whether the growth in service utilization mentioned last year will continue.

　　Of course, not everyone holds such a pessimistic view. Manish Kabra, a strategist at Societe Generale, predicts that a strong earnings season will continue to drive the US stock market upwards. He said last week that although rising bond yields may pose some resistance to the S&P 500 index, “the Fed's long-term policy of maintaining relatively high interest rates may suppress yields.”

Nasdaq Index

　　The semiconductor company Nova, headquartered in Israel, performed best in the fourth quarter, with revenue of $134.2 million, a year-on-year decrease of 11.3%, but exceeding analysts' expectations of 4.8%. For Nova, this was a very strong quarter, with earnings per share exceeding analysts' expectations and inventory levels showing significant improvement.

　　Gaby Waisman, President and CEO of Nova, said, “Nova has achieved a strong quarter, exceeding our upper limits of revenue and profit expectations, closing this fiscal year with stronger performance than initially expected.”

　　Image Source: Yahoo Finance

　　Since the data was released, the stock has risen by 11.1%, with the current trading price at $174.99.

Goldman Sachs Financial Report Data

　　Goldman Sachs (GS) saw a 28% increase in profits in the first quarter, reaching the level that CEO David Solomon expected at the beginning of 2024, mainly due to a significant increase in investment banking business revenue.

　　The company's net profit reached $4.1 billion, exceeding analysts' expectations. Total revenue also increased by $14.2 billion compared to the same period last year, with investment banking business expenses increasing by 32%. Income from asset and wealth management and trading also saw significant growth.

　　Solomon told analysts on Monday, “I've said before that historically low levels of economic activity won't last forever.” He added, “It's clear that we are in the early stages of reopening capital markets.”

　　Image Source: Reuters

Morgan Stanley Financial Report Data

　　The company's revenue reached $40.1 billion in the first quarter of 2024, an 11% increase over the same period last year, with net income of $12.9 billion, a 6.1% increase, but with a profit margin of 32%, slightly lower than the 34% in the first quarter of 2023, due to increased expenses, earnings per share were $4.45, higher than the $4.11 in the same period last year.

　　Analysts expect the company's revenue to grow at an average annual rate of 3.3% over the next three years, while the expected growth rate for the US banking industry is 5.7%.