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Asia stocks decline as investors react to mixed Chinese economic data
https://www.cnbc.com/2022/04/18/asia-markets-investors-await-chinas-first-quarter-gdp.html
China’s first quarter GDP beats expectations to grow 4.8% year-on-year
BEIJING — China’s first quarter GDP grew faster than expected despite the impact of Covid lockdowns in parts of the country in March, according to data released by the National Bureau of Statistics Monday.
First quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago.
Fixed asset investment for the first quarter rose by 9.3% from a year ago, topping expectations for 8.5% growth. Industrial production in March rose by 5%, beating the forecast for 4.5% growth.
However, retail sales in March fell by a more-than-expected 3.5% from a year earlier. Analysts polled by Reuters anticipated a 1.6% decline.
Beginning in March, the country has struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Back then, lockdowns across more than half the country resulted in a 6.8% contraction in first quarter growth from a year earlier.
“We must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, the economic development is facing significant difficulties and challenges,” the bureau said in a statement.
The urban unemployment rate ticked higher in March to 5.8%, up from 5.5% in February. The unemployment rate for those aged 16 to 24 remained far higher at 16%.
Retail sales grew by 3.3% in the first quarter from a year ago, but the apparel, autos and furniture subcategories still posted declines for the period.
Within retail sales, jewelry declined the most and was down by 17.9% in March from a year ago. It was followed by a 16.4% decline in catering and a 12.7% decline in clothing and shoes, the data showed.
“We must coordinate the efforts of Covid-19 prevention and control and economic and social development, make economic stability our top priority and pursue progress while ensuring stability, and put the task of ensuring stable growth in an even more prominent position,” the bureau said.
Although economic figures released for January and February beat expectations, figures for March have begun to reflect the impact of stay-home orders and travel restrictions around economic centers like the coastal metropolis of Shanghai.
Exports, a major driver of China’s growth, rose by a more-than-expected 14.7% in March, but imports unexpectedly fell, down by 0.1% from a year ago, according to data released last week.
APRIL 18, 2022 Oil prices rise; weak OPEC production in focus
Oil prices moved higher in early Asian trade, with weak crude production from OPEC supporting prices, Oanda market analyst Ed Moya said in a note. Although the IEA’s oil-reserve release is weighing on sentiment, Moya says this already looks priced in. Click on Link Below
Oil prices rise; weak OPEC production in focus | Fox Business
Wells Fargo’s quarterly profit tops expectations as lower costs blunt hit from weak mortgage lending
Wells Fargo & Co’s WFC-N +0.25%increase first-quarter profit dropped 21 per cent but beat Wall Street expectations on Thursday as top boss Charlie Scharf plans to keep a tight rein on costs cushioned a drop in mortgage lending.
Overall average loans grew 3 per cent in the quarter, largely helped by credit card and auto lending. Mortgage loans, however, fell 33 per cent from a year ago on lower originations as the Federal Reserve raised interest rates to tame soaring inflation.
“Our internal indicators continue to point towards the strength of our customers’ financial position, but the Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth,” Chief Executive Charlie Scharf said.
“In addition, the war in Ukraine adds additional risk to the downside.”
Wells Fargo leans heavily on revenue from its consumer and corporate banking business, as it does not have a large capital markets division compared with Wall Street rivals Goldman Sachs Group Inc and Morgan Stanley.
Non-interest expenses fell 1 per cent on lower personnel and divestitures, in line with Scharf’s plan to turn around the bank and save about $10-billion annually over the longer term.
Net interest income rose 5 per cent during the quarter helped by higher loan balances and a decrease in long-term debt, among others. Overall average loans grew to $898-billion in the past quarter, up from $873.4-billion a year earlier.
Consumer spending has been on the rise for months, as the United States emerges from the COVID-19 pandemic and many make up for lost time travelling, shopping and dining out.
Top executives at some of the big U.S. banks had said early in the first quarter that consumer have healthy cash balances in their banks and are eager to spend and borrow.
The fourth-largest U.S. lender posted a profit of $3.67-billion, or 88 cents per share, for the three months ended March 31, compared with $4.64-billion, or $1.02 per share, a year earlier.
Cogeco’s second-quarter profit rises 7.8% to $118.8-million on revenue boost
Cogeco Inc. CGO-T -0.04%decrease says its net profit increased nearly eight per cent in its second quarter on a boost in revenues.
The Montreal-based company says its net income attributable to shareholders was $118.8-million or $2.29 per diluted share, up from $110.2-million or $2.11 per share a year earlier.
Revenues for the three months ended Feb. 18 increased 14.5 per cent to $748.1-million, from $653.2-million in the second quarter of 2021.
Cogeco was expected to earn $2.27 per share on $741.2-million of revenues, according to financial data firm Refinitiv.
American broadband services revenue increased 31 per cent in constant currency while Canadian broadband services revenue was up 2.1 per cent mainly due to the DERYtelecom acquisition in December 2020 and organic growth.
Media activities revenue was up 4.9 per cent following an easing of COVID-19 public health restrictions.
“For our radio business, our revenue has grown despite a weaker advertising market due to sudden lockdowns brought on by the Omicron variant, however signs have been positive for the economy as public health measures are being lifted,” stated CEO Philippe Jette in a news release.
Goldman Sachs tops analyst estimates as trading desks crush expectations amid surging volatility
Goldman Sachs first-quarter earnings blew past expectations as its traders effectively navigated a surge in markets volatility from the war in Ukraine.
Here’s are the numbers:
“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” CEO David Solomon said in the release. “The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill. Despite the environment, our results in the quarter show we continued to effectively support our clients.”
Goldman’s traders made the best of that turbulent environment as revenue from fixed income, currency and commodities was up 21% from a year ago to $4.72 billion in the first quarter. That was far more than the $3.04 billion estimate for FICC trading from analysts polled by FactSet. Equities trading revenue came in at $3.15 billion, 15% lower than the first quarter of 2021, but much better than expectations as well.
Goldman Sachs has been one of the big beneficiaries of a torrid two years of Wall Street deals activity, putting up record revenue figures and blowing past performance targets.
The results showed the bank’s trading side stepped in to make up for a slowdown in mergers, IPOs and debt issuance slowed in the first quarter.
Goldman Sachs is the world’s biggest mergers advisor by revenue and is the most Wall Street-dependent firm among the six biggest U.S. banks. One of Solomon’s biggest priorities has been to diversify the firm’s revenue streams, boosting consumer banking, wealth and asset management operations.
Analysts will be keen to ask Solomon how the deals pipeline looks for the remainder of 2022, and if mergers and IPOs are being killed, or merely pushed back into future quarters.
Another area of concern for the bank is trading, where spikes in volatility and market dislocations caused by the Ukraine war may have benefited some traders, while leaving others holding losses. It remains to be seen whether the quarter’s tumult led to the type of volatility that encouraged clients to trade, or it left them on the sidelines.
In February, Solomon increased the bank’s guidance for returns and targets in wealth and asset management divisions after handily exceeding goals set in early 2020.
Goldman shares have fallen 15.8% this year through Thursday, compared with the 10.5% decline of the KBW Bank Index.
On Wednesday, JPMorgan Chase said first-quarter profit slumped 42% as it posted losses tied to Russia sanctions and set aside money for future loan losses.
Citigroup tops earnings estimates on better-than-expected trading revenue
Here are the numbers:
How big of a hit will Citigroup take on its exposure to the Russian invasion of Ukraine? That will be one question posed to Citigroup CEO Jane Fraser, who took over the New York-based bank a year ago. In that time, she’s announced plans to exit more than 13 markets outside the U.S. in a bid to improve the bank’s returns.
Citigroup, the most-global of big U.S. banks with operations in more than 100 countries, likely has the most significant exposure to the Ukraine conflict. Analysts will be keen to understand the various impacts of the war on the firm, including on its planned sale of a Russian consumer banking unit.
Last month, Fraser gave analysts a new set of financial targets, including a medium-term goal for returns on tangible common equity, a key banking industry metric, of about 11% to 12%. The event was a chance for the bank to reset expectations after years of underperforming peers including JPMorgan Chase and Bank of America.
Like the rest of the industry, Citigroup is expected to experience a slowdown in investment banking revenue, somewhat offset by a benefit from rising interest rates.
Despite already trading at the lowest valuation among peers, Citigroup shares have lost 17% this year, compared with the 10.5% drop of the KBW Bank Index.
On Wednesday, JPMorgan said first-quarter profit slumped 42% as it posted losses tied to Russia sanctions and set aside money for future loan losses. After the report, its shares fell and hit a 52-week intraday low.
Elon Musk offers to buy Twitter, take it private
Musk’s best and final offer was to pay $54.20 per share for 100% of Twitter, and said that if his offer was not accepted he’d have to reconsider his position as a shareholder, according to an SEC filing. “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.” Musk said the takeover attempt is “not a threat, it’s simply not a good investment without the changes that need to be made.
Banks Raise Prime Rate to 3.20%
Royal Bank of Canada and TD Bank were among the first big Canadian lenders to announce Wednesday that they were following the Bank of Canada and hiking their prime rates by 50 basis points. Bank of Nova Scotia and Canadian Imperial Bank of Commerce also said they’d raise their prime rates.
The move comes just hours after the central bank raised its key rate by half a percentage point for the first time in 22 years.
The prime rate of the banks will rise from 2.70 per cent to 3.20 per cent starting Thursday, April 14.
The Bank of Canada raised its key rate to 1 per cent from 0.5 per cent.
Bank governor Tiff Macklem said Wednesday even with the rise, rates were still far below the neutral rate, which the bank calculates at somewhere between 2 and 3 per cent.
“If demand responds quickly to higher rates and inflationary pressures moderate, it may be appropriate to pause our tightening,” Macklem said. “On the other hand, we may need to take rates modestly above neutral for a period to bring demand and supply back into balance and inflation back to target.”
