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APRIL 18, 2023

GLOBAL STOCKS RISE ON POSITIVE CHINESE ECONOMIC DATA

Global stock markets rose today, with strong Chinese economic data helping investors look past disappointing earnings reports and concerns over central bank policy. The consumer recovery in China helped boost luxury brands and travel stocks in Europe. However, concerns remain over the true state and sustainability of the Chinese economic recovery, while investors continue to avoid equities in favor of bonds due to fears over an upcoming recession.

OIL PRICES DROP AGAIN

Oil prices dropped for a second day in a row as global demand is weaker than expected. However, some believe that China’s economic recovery from the pandemic will boost prices for the rest of the year, combined with upcoming supply cuts from the Organization of the Petroleum Exporting Countries (OPEC+). Investors are looking towards an upcoming economic survey from the Federal Reserve and further comments from officials for insight on the U.S. economy and monetary policy.

MORNING EARNINGS REPORTS

Goldman Sachs reported a decrease in their profit for the first-quarter of the year due to a decline in investment banking fees. The bank’s profit fell to $3.09 billion compared to $3.83 billion last year, with earnings per share dropping to $8.79 from $10.76.

Meanwhile, the pharmaceutical company Johnson & Johnson surpassed market expectations for their first-quarter revenue and earnings, with adjusted earnings of $2.68 per share for the first quarter of 2023 – an improvement from $2.67 in the same period the previous year.

UBS MAKES CHANGES AFTER CREDIT SUISSE TAKEOVER

UBS has made changes to its share buyback program of $6 billion following its takeover of Credit Suisse. The bank has received approval from the Swiss Takeover Board and has decided to use already-issued shares for the acquisition rather than issuing new ones. Under the agreement, one UBS share will be exchanged for 22.48 shares in Credit Suisse, requiring a maximum of 178 million UBS shares. The buyback program, which began last March and runs until 2024, has already purchased 298.5 million shares, equivalent to 8.47% of its stock. UBS has also agreed to assume up to 5 billion Swiss francs in losses as part of the merger plan.

KEY EVENTS HAPPENING THIS WEEK

Tuesday: U.S. housing starts and Fed’s Michelle Bowman discusses digital currency.

Wednesday: Eurozone CPI, Fed’s Beige Book release, speech from Fed’s John Williams, and Fed’s Austan Goolsbee interview.

Thursday: Fed’s Patrick Harper speaks on monetary policy and housing, Fed’s Loretta Mester discusses the economic and policy outlook, and Fed’s Raphael Bostic discusses regional and national economic conditions.

Friday: PMIs for Eurozone, Japan CPI, and Fed’s Lisa Cook discusses economic research.

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