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China’s economy expected to have grown 4% in first quarter: Reuters poll
China’s economy is expected to have grown 4% in the first quarter of this year, according to a Reuters poll of economists.
This comes after the fourth quarter of 2022 saw growth of 2.9% and would mark the highest growth in a year, after China’s GDP rose 4.8% year-on-year in the first quarter of 2022.
Quarter-on-quarter, the economy is forecast to have expanded 2.2% on a seasonally adjusted basis after the reading was flat in the previous period.
China is slated to release its GDP report on Tuesday. The Chinese onshore yuan slightly weakened to 6.8772 in Asia’s Monday morning trade.
— Jihye Lee
Earnings season off to best start since at least 2012, according to Bank of America
Despite persistent inflation, higher rates and fears of an impending recession, earnings season is off to one of its best starts in a little over a decade, according to data from Bank of America.
Of the 30 companies that have reported so far, 90% have beat earnings per share expectations, marking the best beat rate after week one since at least 2012, wrote Savita Subramanian in a Monday note to clients.
She added that 73% of companies that reported last week surpassed sales expectations, while 67% beat on both measures. Last quarter’s week one results showed just 46% of companies beat on both EPS and sales, while the historical average sits at just 48%.
“Fueled by bank beats, 1Q EPS is tracking a 30bp surprise,” the equity and quant strategist said. “We forecast an in-line quarter but expect more downward guidance and some commentary around changes in cash use if credit conditions deteriorate.”
Overall, consensus expectations are calling for a more than 7% decline in first-quarter earnings for the S&P 500 year over year, she noted.
Big bank earnings may have offered some relief, but the market isn’t out of the woods just yet as credit impacts emerge in areas like industrials.
“A massive, systemic financial confidence shock appears to have been averted, but tighter credit is manifesting in the real economy,” she said.
— Samantha Subin
Banks could turn to stricter lending practices and nullify need for Fed tightening, Yellen says
U.S. Treasury Secretary Janet Yellen thinks banks could become more restrictive with lending which could allow the Fed to stop hiking interest rates.
Yellen told CNN on Saturday that the threat of further fallout from the collapse of Silicon Valley Bank has been sustained thanks to successful policy actions, while outflows have substantially stabilized.
“Banks are likely to become somewhat more cautious in this environment,” Yellen said. “We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come.”
And if more of that tightening does come to fruition, Yellen added, such action could serve as “a substitute for further interest rate hikes that the Fed needs to make.”
— Brian Evans
China electric vehicle stocks jump as XPeng announces new production platform
XPeng shares surged nearly 13% on Monday after the electric vehicle maker unveiled a new production platform aimed at improving costs and production speeds.
Other China-based electric vehicle makers Nio and Li Auto rose 7.2% and 5%, respectively, on the announcement.
Shares pop nearly 13%
Financial stocks paint mixed picture as earnings roll in
Shares of Bank of New York Mellon dropped 5.7% ahead of the company’s quarterly earnings report on Tuesday. The bank stock is leading the S&P 500’s top decliners on Monday along with State Street, which was down 10.4% after its first-quarter earnings fell short of expectations, and Moderna.
“Because bank multiples are down so much, a lot of these banks are trading at March 2020 levels, so think peak-pandemic,” CFRA Research analyst Alexander Yokum said Monday on “Squawk on the Street.” “For banks that do not see a hit to profitability, for banks that do not see significant deposit outflows, especially those regionals, they could really pop on earnings.”
Shares of Charles Schwab and M&T Bank were recently trading higher after positive earnings reports. Charles Schwab added 2.3% after topping analysts’ expectations on profit, despite also reporting a 30% decline in deposits from a year ago, while M&T Bank jumped 6.5% after beating first-quarter estimates on the top and bottom lines.
The KBW Bank Index was last up 0.4%, while the SPDR S&P Regional Banking ETF was 1.6% higher.
— Pia Singh
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