News updates from April 15: US retail sales rise more than expected; Yen falls below ¥154 per dollar

US stocks declined on Monday, continuing a sell-off from last week as Wall Street’s “fear gauge” hit its highest level since October.

The benchmark S&P 500 slipped 1.2 per cent, with 85 per cent of stocks falling. The Nasdaq Composite lost 1.8 per cent as every Magnificent Seven tech stock fell. The small-cap focused Russell 2000 fell 1.4 per cent.

The Vix — A closely watched gauge of US stock market volatility — closed at its highest level since October 30 as traders worried that persistent inflation may interfere with the Federal Reserve’s plan to cut interest rates this year.

The dollar rose for the fifth day in a row, adding 0.2 per cent against six of its peers. Gold rose 1.7 per cent to $2,383.19, on track for a fresh closing high.

Tesla stock fell by more than 5 per cent on Monday, recording its worst day since early March after it said it would cut more than 10 per cent of its workforce.

The electrics carmaker’s decision to eliminate at least 14,000 jobs comes as demand for electric vehicles slows and amid more competition from companies outside the US.

Rivian, another US electric carmaker, fell 8 per cent.

US stocks turned lower on Monday as investors assessed a blockbuster retail sales report that indicated a strong consumer in a US economy that is still running hot.

The benchmark S&P 500 slipped 1.2 per cent, with every sector in the negatives. Rate sensitive real estate stocks were the worst performers, followed by the tech sector. The Nasdaq Composite lost 1.8 per cent as every Magnificent Seven tech stock fell.

Treasury yields rose in the morning and accelerated after the retail sales report, climbing 0.13 percentage points to 4.63 per cent on the 10-year bond, a five-month high. The yield on the two-year note rose 0.06 percentage points to 4.94 per cent.

Manhattan prosecutors asked a judge to fine Donald Trump for his attacks on potential witnesses in the New York hush money case, as jury selection was set to begin in the first criminal trial against a former US president.

A lawyer for district attorney Alvin Bragg told the court on Monday morning that Trump had violated a gag order that had previously been imposed to limit what he could say about people involved in the trial, in at least three social media posts published in the past few days. They asked the judge to fine Trump $1,000 per post and warn him that further violations could result in jail time.

The case stems from the first criminal indictment brought against Trump, who was accused last year of falsifying records of payments made to buy the silence of porn star Stormy Daniels in the run-up to the 2016 presidential election.

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The US is urging Israel not to escalate as it weighs its response to Iran’s drone and missile attacks at the weekend, US Secretary of State Antony Blinken said Monday.

“We have been co-ordinating a diplomatic response to seek to prevent escalation,” he said.

The US wanted Israel be thoughtful about what comes next, Blinken said.

“Strength and wisdom need to be . . . the different sides of the same coin. I’ve been in close communication with counterparts in the region, and we will continue to do so in the hours and days ahead,” he said.

European stocks were subdued as traders shrugged off the risk of widening conflict in the Middle East, while an unexpectedly strong US retail sales report dented confidence in imminent interest rate cuts from the Federal Reserve.

The region-wide Stoxx Europe 600 closed 0.1 per cent higher as strong performance for consumer and industrial groups was offset by steep declines for energy stocks, which dropped as oil prices retreated from six-month highs.

France’s Cac 40 and Germany’s Dax both gained 0.4 per cent while London’s FTSE 100 fell 0.5 per cent.

The yen fell past ¥154 to the dollar for the first time since 1990, exceeding levels that some analysts have warned could draw direct intervention from Japan.

The currency weakened 0.7 per cent to trade at ¥154.28 as traders scaled back their bets on rapid interest rate cuts from the US Federal Reserve, strengthening the greenback.

The latest moves came after US retail sales data for March came in stronger than expected, signalling continued economic resilience in the face of high interest rates.

Japanese officials have warned on multiple occasions in recent weeks that they are ready to step in to prevent excess moves in the country’s currency, which has weakened more than 9 per cent since the start of 2024.

Facebook parent Meta will temporarily shut its Threads social media platform in Turkey this month after a row with the country’s competition watchdog. 

Meta’s decision came after the Turkish Competition Authority barred it from sharing data between short-messaging app Threads and photo-sharing site Instagram. 

The TCA said last month that the interim injunction came as part of an “investigation initiated on suspicion [Meta was] abusing its dominant position by linking Threads and Instagram applications”. 

“We disagree with the interim order, we believe we are in compliance with all Turkish legal requirements, and we will appeal,” Meta said, adding that it expected to temporarily close the Threads platform in Turkey on April 29. Its other services including Instagram, WhatsApp and Facebook would not be affected. 

US stocks opened higher on Monday, while government bonds came under pressure, as traders assessed stronger than anticipated economic data and the latest developments in the Middle East.

Wall Street’s benchmark S&P 500 added 0.7 per cent in early trading, while the technology-heavy Nasdaq Composite rose 0.4 per cent.

Goldman Sachs was among the biggest gainers, with its shares climbing more than 5 per cent after the bank posted profit growth of 28 per cent for the first quarter.

Monday’s equity moves came after US retail sales proved stronger than expected, in the latest sign of economic resilience.

Government bond prices fell, with the 10-year Treasury yield climbing 0.12 percentage points to 4.62 per cent.

Tesla is cutting more than 10 per cent of its global workforce, potentially 13,000 jobs, as the worldwide electric vehicle slowdown and brutal price war hit the US automaker.

“We have . . . made the difficult decision to reduce our headcount by more than 10 per cent globally . . . this will enable us to be lean, innovative and hungry for the next growth phase cycle”, wrote Tesla’s chief executive Elon Musk in an internal memo to employees seen by the Financial Times and first reported by the EV news and commentary site Electrek.

The job cuts come as the slowdown in sales of electric vehicles makes waves through the global car industry, with companies across the supply chain slashing jobs and cutting costs.

Revenues at CATL, the world’s largest manufacturer of EV batteries, declined in its latest quarter, with the industry under pressure to cut prices amid softening demand for electric vehicles.

The company reported lower-than-expected revenue of Rmb79.8bn ($11bn) for the January-March quarter, down 10 per cent from a year earlier.

Despite that fall, net income jumped 7 per cent year-on-year to Rmb10.5bn, following a 1.2 per cent drop in the final three months of last year.

CATL had a 38 per cent share of the global EV battery market in the first two months of 2024, according to South Korea’s SNE Research.

Goldman Sachs’ profits rose 28 per cent in the first quarter, far ahead of analysts’ estimates, boosted by its trading business and a nascent recovery in investment banking.

Goldman said net income for the first three months of the year was $4.1bn, up from $3.2bn a year earlier and almost $1bn ahead of analysts’ forecasts compiled by Bloomberg.

Investment banking had its best quarter in two years, with revenues of $2.1bn. This was up 32 per cent from a year earlier, though well below the peak during the pandemic-era boom.

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European stocks were higher in morning trading as traders shrugged off the risk of a widening conflict in the Middle East.

The region-wide Stoxx Europe 600 gained 0.4 per cent, buoyed by strong gains for industrials and consumer groups. France’s Cac 40 added 0.7 per cent and Germany’s Dax rose 0.9 per cent. 

London’s FTSE 100 was the outlier as falling oil prices weighed on the energy-heavy index. The UK’s blue-chip index fell 0.4 per cent. Heavyweights BP and Shell dropped 2.8 per cent and 1.9 per cent, respectively. 

The Kremlin said it was “extremely concerned by the escalations of tension in the region” after Iran’s attack on Israel. 

Dmitry Peskov, President Vladimir Putin’s spokesperson, said Russia was calling on “all countries in the region to show restraint” and solve the conflict diplomatically. “Further escalation is in nobody’s interest,” he told reporters on Monday.

Russia’s foreign ministry said earlier that Iran had the “right to defend itself” following an Israeli strike on its embassy in Syria.

Trump trial: The trial in the first criminal case ever brought against a former US president will begin in a Manhattan courtroom. Donald Trump is charged with paying thousands of dollars to conceal an alleged affair with porn star Stormy Daniels in the run-up to the 2016 election, and then trying to cover up the transactions. Jury selection will start on Monday, with 12 New Yorkers set to decide the Republican front-runner’s fate.

Retail sales: Economists expect that US retail sales ticked up 0.3 per cent in March, a slower pace than the 0.6 per cent rise in February. The figure will give insight into the strength of the US consumer after recent data indicated that the world’s biggest economy is more resilient than observers had forecast.

Goldman Sachs: The investment bank is scheduled to release first-quarter earnings before the bell, following mixed results from other large lenders last week. Analysts expect slightly higher revenue compared with the year-ago quarter but thinner margins, in part because of an anticipated uptick in provisions for bad loans.

Broker Charles Schwab will also report earnings in the morning.

Singapore’s Prime Minister Lee Hsien Loong will step down next month after nearly 20 years in power, handing over to his deputy in what will be only the third transition of power in the city-state’s modern history.

Lawrence Wong, deputy prime minister and finance minister, will become leader on May 15. The succession will happen later than originally planned due to the pandemic and after the previous minister tipped to take over unexpectedly stepped aside in 2021.

Lee is the son of Singapore’s founder and patriarch Lee Kuan Yew. He replaced Goh Chok Tong, who served as prime minister for 14 years before the younger Lee, his deputy, took over in August 2004.

Big share price moves in Europe this morning include Swiss banking software provider Temenos, Italian cablemaker Prysmian and British oil major BP

• Temenos: shares in the software group were the biggest riser in the Stoxx Europe 600 index, gaining almost 17 per cent after a “special committee” formed by its board found that allegations by prominent short seller Hindenburg Research were incorrect and misleading. Temenos lost about a third of its market value in February when Hindenburg accused it of manipulating its earnings.

• Prysmian: shares in the world’s largest cablemaker rose 3 per cent after it announced the $4.2bn acquisition of US rival Encore Wire.

• BP: shares in the oil major fell almost 3 per cent as energy stocks led falls on the Stoxx Europe 600 following Iran’s attack on Israel at the weekend. The Brent crude price fell 1 per cent.

CVC Capital Partners, one of Europe’s largest private equity firms, is aiming to raise more than €1.25bn in an initial public offering on the Amsterdam stock exchange, ending a years-long wait to float. 

The company, which manages €186bn in assets across a range of investment strategies, is seeking a valuation of between €13bn and €15bn, one person familiar with the IPO said. Some existing shareholders will sell stock and one backer, Blue Owl, is planning to increase its stake.

The announcement demonstrates the increasing momentum across European markets for new listings, following a series of large initial public offerings in recent weeks including dermatology business Galderma and CVC-backed retailer Douglas. 

Milan-based Prysmian, the world’s largest cablemaker, is to acquire US rival Encore Wire for an enterprise value of more than $4bn.

Prysmian said it would pay $290 per share in cash for Nasdaq-listed Encore Wire, an 11 per cent premium to the US group’s closing price on Friday.

The deal comes as a surprise after Prysmian — which is due to appoint a new chief executive this week — said last year it would focus on organic growth rather than acquisitions. The company, which reported revenues of more than €15bn in 2023, was spun off from tyre group Pirelli in 2005.

Massimo Battaini, chief executive-designate, said the deal was aimed at enlarging the company’s US presence and improving its geographic mix.

European stocks rose and oil prices cooled as traders appeared to shrug off fears that the conflict in the Middle East could escalate and curb energy supplies following Iran’s military strike on Israel.

The region-wide Stoxx Europe 600 edged up 0.1 per cent, pulled higher by gains for consumer groups and industrials. France’s Cac 40 and Germany’s Dax both added 0.6 per cent while London’s energy-heavy FTSE 100 slipped 0.3 per cent.

Brent crude, the international benchmark for oil, was 0.7 per cent lower at $89.79 per barrel. The US equivalent West Texas Intermediate dropped 1 per cent to $84.82.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq Composite were up 0.5 per cent ahead of the New York trading session.

Glencore-backed Horizonte Minerals has failed to secure financing to complete its nickel mine in Brazil after costs rose and investor concern grew that Indonesia is flooding the market for the EV battery and stainless steel ingredient.

The London-listed group is now exploring a sale or liquidation, among other options, after potential investors were unwilling to stomach the 87 per cent increase in estimated costs to more than $1bn to build the Araguaia mine.

However, the company warned that it “does not believe that any of these options are likely to recover any value for the company’s shareholders”.

The shares fell 84 per cent in early trading in London.

Britain’s foreign secretary Lord David Cameron said the focus of world attention should return to Gaza after Iran’s “massive” and “reckless” attack on Israel on Saturday night.

Cameron said Iran’s attack had been “a near total failure” and that while Israel had every right to respond, “we are urging that they shouldn’t escalate”.

“Our hope is that there won’t be a retaliatory response, and the world’s focus should shift to Hamas” to secure the return of hostages and a pause in the fighting, Cameron told Sky News.

It had been bad judgment on Israel’s part not to let more aid into Gaza, he said, but Israel had now promised to let in 500 trucks a day, “and we need to make sure that that’s delivered”.

French President Emmanuel Macron warned of the risk of a regional conflict between Israel and Iran, and called for western allies led by the US “to contain” the threat of Iran.

“We will do everything to avoid a conflagration in the region,” he said in an interview with RMC-BFMTV on Monday after attending a G7 meeting of leaders on Sunday.

Macron confirmed that France had taken part in the effort to repel the Iranian drone and missile strikes over the weekend, saying it had sent fighter jets at the request of Jordan from an air base there.

He said he would speak to Israeli Prime Minister Benjamin Netanyahu on Monday, along with other leaders involved in managing the crisis.

Recruitment company PageGroup said the tough trading conditions it encountered at the end of last year had continued in 2024.

In a trading update on Monday, the company said permanent recruitment had been more difficult than the temporary jobs market, as employers looked for flexibility.

Gross profit in the first quarter at the FTSE 250 company was 12.8 per cent below the same period last year, with continental Europe and the UK particularly hard hit.

“Conversion of final interviews to accepted offers is still the most significant challenge, as candidate and client sentiment remains subdued reflecting the general macroeconomic uncertainty in most of our markets,” said chief executive Nicholas Kirk. 

Emerging markets fund manager Ashmore suffered a $2.1bn drop in assets under management in the first three months of the year, largely owing to institutions withdrawing money.

The London-based group said net client outflows amounted to $2bn in the quarter as institutions sought to reduce risk, while negative investment performance amounted to $100mn. The company’s total assets dropped to $51.9bn.

Local currency bonds and corporate debt were among the asset classes hardest hit. However, Mark Coombs, chief executive, said the “easing of US monetary policy will further boost hard currency bonds” and noted that a “weaker dollar” would underpin returns from local currency debt and equities.

Chinese equities climbed on Monday even as the rest of Asia sold off amid increased tension in the Middle East following the Iranian strike on Israel.

China’s benchmark CSI 300 index rose 1.7 per cent, boosted by a policy document released by China’s cabinet on Friday afternoon focused on promoting “high-quality development of capital markets”. The government said it would “take multiple measures to promote an increase in dividend yield”.

Elsewhere in Asia equity markets declined. Japan’s yen dropped 0.4 per cent against the dollar to ¥153.84, its lowest level in 34 years.

Chinese stocks rose on Monday morning while other Asian markets dropped amid rising tensions in the Middle East following an Iranian missile attack on Israel.

The country’s benchmark CSI 300 index climbed 0.9 per cent while equities in Japan, Hong Kong and South Korea sold off.

Japan’s exporter-heavy Nikkei 225 index led losses as it dropped 1.3 per cent. The yen fell 0.18 per cent against the dollar to ¥153.55, its weakest level since 1990.

Despite the geopolitical uncertainty, futures for Brent crude, the global benchmark, edged down 0.1 per cent to $90.37 a barrel. West Texas Intermediate shed 0.2 per cent to $85.51 a barrel. Gold, a haven asset, gained 0.5 per cent to $2,356.09 a troy ounce.

Events: China is expected to hold its one-year medium-term lending facility, the rate at which lenders borrow from the central bank, at 2.5 per cent. OpenAI opens its first Asia office in Tokyo.

Economic data: India announces wholesale price inflation data, while New Zealand publishes travel and migration figures.

Corporate results: Chinese battery manufacturer CATL announces quarterly earnings.

Apple’s global iPhone shipments declined 9.6 per cent in the first three months of 2024 compared with the same period in 2023, according to a report from the International Data Corporation.

The IDC said South Korea’s Samsung managed to take Apple’s place as the leading global smartphone supplier in the first quarter of 2024.

Global smartphone shipments meanwhile increased 7.8 per cent year over year, according to preliminary data, suggesting a broader industry recovery.

Apple has experienced a slump in iPhone sales in China, facing resurgent competition from rival Huawei as well as a state crackdown on the use of its devices by government employees.

US President Joe Biden has urged Israel to show restraint after Iran’s drone and missile attack, as Washington seeks to de-escalate Middle East tensions and reduce the risk of a full-blown regional war.

Israel’s war cabinet met on Sunday to consider the Jewish state’s response to Iran’s attack, but had not yet made a decision on what action it would take, an Israeli government insider said.

The person added it was clear that Israel had to respond, “but just unclear when and how big”. 

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Activity on China’s equity capital markets on the mainland and beyond has slumped to multi-decade lows, highlighting how the loss of momentum in the world’s second-largest economy has weighed on investor confidence.

Chinese companies have raised just $6.4bn in mainland IPOs, follow-on and convertible share offerings so far this year — the lowest level on record, according to Dealogic data.

Their fundraising in offshore markets including Hong Kong is $1.6bn, the lowest year-to-date since 2003. China’s outbound M&A of $2.5bn is the lowest recorded amount over the same period since 2005.

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A growing number of health-conscious consumers rejecting beer, wine and spirits represents “a big opportunity”, said the chief executive of Japan’s biggest brewer Asahi, who forecast zero- and low-alcohol drinks would generate half of the company’s beverage sales by as early as 2040.

Atsushi Katsuki, whose group produces beers including Asahi Super Dry, Peroni Nastro Azzurro and Pilsner Urquell, said the company was planning to expand its line-up of alcohol-free beverages in the US, one of the world’s biggest drinks markets, through investments in start-ups.

“It’s a big opportunity as long as we can go down the premium path,” Katsuki told the Financial Times. “Among global players, we have a strong advantage since we have capabilities in both beer and alcohol beverages as well as soft drinks.”

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Hello and welcome to the working week.

It’s set to be an exciting few days for economists. The IMF and the World Bank kick off their joint spring meeting on Monday in Washington. There’s a packed agenda with some interesting reports and meetings to dig into, including the IMF’s World Economic Outlook on Tuesday and a gathering of the G20 finance ministers on Thursday.

It’s also a notable week for democracy, with several countries holding elections, the biggest being India. The country begins its 44-day parliamentary election process on Friday. Narendra Modi’s Bharatiya Janata party looks set to secure another five years in power but the election will be closely watched by those worried about the erosion of Indian democracy.

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