EconomyWorld stock markets and the dollar remained under pressure on Thursday, jolted by anemic U.S. growth and cautious comments from the Federal Reserve. "It looks like we could be finally be entering the correction that everyone has been waiting for," said Tobias Britschof of Meriten Investment Management. Following Asia lower, European stocks declined for a third day, heading for their first monthly drop of the year. U.S. futures are also swimming in the red.
"I think they're going to raise rates once in 2015, if only because they want to prove that they can do it," Bill Gross said in an interview, stressing the Fed's possible increase in June is definitely "off." BlackRock (NYSE:BLK), the world’s largest money manager, feels a September increase is more likely. Yesterday, the FOMC brushed off a Q1 slowdown as weather-related and transitory in its policy statement, but gave no indication whether a June rate hike is off the table.
Signs of deflation risks in the eurozone are dwindling (for now), as inflation picked up in the 19-member bloc this month, although unemployment stuck at a very high level. Against a backdrop of monetary stimulus from the ECB, the eurozone's inflation rate was flat in April from the year before (in line with market expectations), following a 0.1% fall in March. Still, the eurozone unemployment rate stood at 11.3% last month, unchanged from February. Euro +0.3% to $1.1164.
Moody's has slashed Greece's credit rating deeper into junk territory, lowering its government bond rating to 'Caa2' from 'Caa1' and assigning it a "negative" outlook. The ratings agency said a balance of economic and financial risks in the country and upcoming debt repayments slanted it "to the downside." Meanwhile, Bloomberg reports that Greece and its euro-area partners have agreed to pursue intensive negotiations which will begin today, targeting a preliminary deal by May 3 and a final accord by May 11.
The Bank of Japan maintained its massive monetary stimulus in an 8-1 vote Thursday, holding off on additional easing for now, while pushing back the timeframe for its ambitious inflation goal. Inflation is now expected to hit the 2% target around the half year from April to September 2016, the BOJ predicted, watering down its previous forecast that stated it would be met around the current fiscal year.
Stocks
Nokia -7.9% premarket after posting a 61% profit drop at its core networks business due to lower software sales, higher costs and challenging conditions in Europe and Latin America. Nokia (NYSE:NOK) reported Q1 operating profit of €85M in its networks division, down from €216M a year earlier. Operating margin declined to 3.2% from 9.3%. Chief Executive Rajeev Suri also defended the terms of the company's pending acquisition of Alcatel-Lucent (NYSE:ALU), saying that many investors have given "very strong, good feedback."
Nokia -7.9% premarket after posting a 61% profit drop at its core networks business due to lower software sales, higher costs and challenging conditions in Europe and Latin America. Nokia (NYSE:NOK) reported Q1 operating profit of €85M in its networks division, down from €216M a year earlier. Operating margin declined to 3.2% from 9.3%. Chief Executive Rajeev Suri also defended the terms of the company's pending acquisition of Alcatel-Lucent (NYSE:ALU), saying that many investors have given "very strong, good feedback."
Sony had another rough year in fiscal 2015 as it dealt with problems in its troubled smartphone business and a number of hacking attacks. The company posted a net loss of ¥126B, in line with guidance, but its sixth net loss in seven years. With CEO Kazuo Hirai spearheading a plan to rebuild the company around its Hollywood studio, videogame division and image sensor unit, Sony (NYSE:SNE) expects to post net income of ¥140B this year, although it still anticipates sales to slip.
