Macro Matters

Key Fed inflation measure rose 2.8% in March from a year ago, more than expected

Annual PCE inflation in the US increased to 2.7% in March 2024, the highest in four months, compared to 2.5% in February and forecasts of 2.6%.

The US core PCE price index, the Federal Reserve’s preferred gauge to measure inflation, rose by 2.8% from the previous year. Figures came above market forecasts of 2.6%. On a monthly basis, core PCE prices advanced by 0.3% in March, matching February's reading and in line with market estimates.

Exhibit: Core PCE inflation

US new home sales rebound to a six-month high

New home sales jumped 8.8% to a seasonally adjusted annual rate of 693,000 units last month, the highest level since September, the Commerce Department's Census Bureau said.

The median price of new houses sold in March surged from $406,500 to $430,700, while the average sales price was $524,800.

Builders are constructing smaller and cheaper houses, but fewer of them are cutting prices. The NAHB survey last week showed the share of builders cutting prices fell to 22% in April from 24% in March and 36% in December. Fewer builders were also offering incentives to boost sales.

Goldman Sachs expects US PCE inflation to converge to 2% in late 2025, which could lead to a more predictable and stable economic landscape for US consumers

Smart Money Flow

Chinese stocks have staged a significant recovery this week, set to outperform the U.S. by the widest margin in nearly one and a half years, after a prolonged period of underperformance

Bitcoin Bulls Pause Leveraged Bets as Demand Cools Post-Halving

Bitcoin's bullish momentum has waned as its funding rate, a measure of market demand, turned negative on April 19 for the first time since October 2023 according to CryptoQuant, signaling a decrease in trader interest. The downturn follows the cryptocurrency's surge to all-time highs driven by the launch of U.S. spot-Bitcoin ETFs and anticipation of the Bitcoin halving event, which ultimately had little effect on its price. With recent net inflows to Bitcoin ETFs slowing and external factors such as Middle Eastern tensions and expected Federal Reserve rate cut delays contributing to risk aversion, Bitcoin has seen a 13% drop from its March peak, trading around $64,214.

Copper Close to Testing $10,000 as BHP Bid Points to Supply Risk

BHP Group Ltd., the world's largest miner, has underscored the bullish outlook for copper by making a $39 billion bid to acquire Anglo American Plc, primarily for its South American copper mines. This move, coinciding with a 16% surge in copper prices this year, highlights the aggressive strategies of major resource companies to capitalize on a metal that's essential for the transition to green industries and is anticipated to face long-term deficits and elevated prices.

Top Corporate News

Alphabet jump after first-quarter earnings beat expectations and $70bn stock buyback

Alphabet’s first-quarter revenue jumped 15 per cent, and it announced its first-ever dividend of 20 cents a share alongside a $70bn stock buyback, buoyed by a rise in earnings across its main business lines.

Shares rose as much as 13 per cent in after-hours trading, positioning Alphabet to add more than $250bn to its market capitalisation and push above $2tn, where it would join “Magnificent Seven” peers Microsoft, Apple and Nvidia.

Alphabet’s capital expenditure rose to $12bn — more than the $10bn forecast — and chief financial officer Ruth Porat said the company would spend at least that amount per quarter for the rest of the year.

Microsoft Sales, Profit Beat Expectations on AI Demand

Revenue in the third quarter, which ended March 31, rose 17% to $61.9 billion, while profit was $2.94 a share, the company said in a statement Thursday. Analysts on average estimated per-share earnings of $2.83 on sales of $60.9 billion.

Azure revenue gained 31% in the quarter, above an average prediction of 29% and picking up slightly from the 30% growth in the previous period. About 7% of that increase was attributable to AI, compared with 6% in the prior quarter.

Tesla's Shift on Low-Cost Cars Throws Mexico, India Factory Plans into Limbo

Tesla announced plans to produce new, more affordable vehicles using its current factories by late this year, putting off near-term investment in new plants in Mexico and India. The leading EV maker aims to increase production by 50% within existing capacities before expanding manufacturing facilities. Despite missing quarterly financial goals, Tesla's cautious growth strategy amidst market uncertainties led to a 12% rise in shares after hours. Investors and analysts view the decision to optimize current operations rather than aggressively expand as a positive move in response to market conditions.

Meta’s Earnings Flop Sparks $400 Billion Selloff in Tech Stocks

Meta Platforms Inc.'s weaker-than-expected sales forecast and increased capital expenditure plans have rattled technology investors, contributing to a significant sell-off that saw the Nasdaq 100 Index drop by 2%, erasing about $400 billion in market value. The poor outlook from Meta, despite its investments in artificial intelligence, has cast doubt on the potential returns from such technologies and raised concerns about the lofty expectations set for other leading tech companies.

Micron Clinches Up to $13.6 Billion in US Grants, Loans

The US government is set to provide Micron Technology Inc., the largest American memory chip manufacturer, with approximately $6.1 billion in grants and up to $7.5 billion in loans to support the construction of new semiconductor factories. This funding is part of a broader federal push to enhance advanced semiconductor manufacturing in the country. Micron has committed to a significant investment of around $125 billion to develop four new plants in New York and one in Idaho and is also seeking additional federal support for a separate project in Virginia.

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