Today is Tuesday, May 24, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we put the spotlight on U.S. equities. Rising bond yields and tightening financial conditions are driving the downturn in a stock market used to cheap money and ample liquidity. At its recent low close in mid-May, the S&P 500 had shed more than 17% since the start of the year as investors fled from risk assets. While the sell-off has been broad-based, growth stocks have borne the brunt, while value sectors like energy and utilities have fared better than the wider market. Consumer discretionary stocks are the worst-performing sector of the S&P 500 index this year, amid soaring inflation, strained global supply chains and plummeting consumer sentiment.
China's four biggest banks by assets reported mid-single-digit earnings growth in the first quarter of 2022, buoyed by steady net interest margins and an average 5% growth in loans with stable asset quality. Chinese banks' earnings will likely stay steady in 2022 despite economic uncertainties facing the world's second largest economy, as the central bank's calibrated easing will help relieve pressure on margins.
A pair of proposed laws from the European Union target big tech firms, and they will affect different companies in different ways. Experts agree that the Digital Services Act is likely to have the biggest impact on companies that rely on advertising or e-commerce, while the Digital Markets Act will mostly affect companies that have a hardware component related to their software offerings, including Apple, Alphabet and Microsoft.
- In Focus: US Stock Market
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Higher bond yields pull the rug out from under the stock market
A sharp increase in bond yields has removed a key pillar of support for historically stretched company valuations, contributing to the sharp sell-off in the equities market.
—Read the full article from S&P Global Market Intelligence
Consumer discretionary stocks tumble, hit by inflation, supply chain disruptions
The S&P 500's consumer discretionary index is down 30.8% since the start of the year.
—Read the full article from S&P Global Market Intelligence
Energy, utilities join sell-off but fare better than broader S&P 500 in April
The S&P 500 Energy index saw a negative return of 1.5% in April, and the S&P Utilities index logged a negative return of 4.3%. The broader S&P 500 index lost 8.7%.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Stable interest margins to underpin Chinese bank earnings in 2022
China's four biggest banks by assets reported mid-single-digit earnings growth in the first quarter of 2022, buoyed by steady net interest margins and an average 5% growth in loans without any deterioration in asset quality.
—Read the full article from S&P Global Market Intelligence
Inflation set to curb UK banks' revenues in coming quarters
Large British banks benefited from bank rate rises, but rising inflation could affect borrowers' ability to pay.
—Read the full article from S&P Global Market Intelligence
US banks continue positive aggregate provision for loan losses in Q1
The sector recorded total positive provisions of $4.78 billion in the most recent quarter, following positive provisions of $302 million in the fourth quarter of 2021, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Real estate lending helps boost loan growth for US community banks in Q1
Banks with less than $10 billion in total assets reported a median quarter-over-quarter loan growth of 1.3% as of March 31, excluding Paycheck Protection Program loans, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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US insurers see private auto loss ratios jump YOY in Q1
A number of public insurers reported double-digit point increases in their loss and loss adjustment expense ratios within the private auto line during the first three months of 2022, according to an S&P Global Market Intelligence analysis.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Employers boost salaries to fill record openings as workers demand more
Workers want an average increase of more than $9,000 in annual salary to take a new job, a Glassdoor survey found.
—Read the full article from S&P Global Market Intelligence
Global food prices, driven higher by war in Ukraine, show no signs of falling
Wheat and corn have been particularly affected as Russia and Ukraine are major exporters of both commodities.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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What Europe's 2 pending tech laws mean for different Big Tech players
The groundbreaking twin pieces of legislation from the European Commission have the potential to significantly change how Big Tech operates in Europe, and some companies are expected to suffer more than others.
—Read the full article from S&P Global Market Intelligence
Southeast Asia's telcos to look to tower, tech deals as 5G rollout costs add up
Telcos in Malaysia, Thailand and Indonesia are looking to monetize their infrastructure and make themselves more attractive to private investors as they look to raise money for 5G rollouts, following a wave of consolidation in the sector.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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Insurance industry's diversity scores show modest improvements
In addition to posting a year-over-year increase in its S&P Global gender diversity score, the insurance industry's workforce also became more racially diverse in 2021, according to data compiled by the U.S. Department of Labor.
—Read the full article from S&P Global Market Intelligence
Big Oil's limited emissions programs pose risk to investors – Carbon Tracker
Carbon emissions reduction plans for the largest publicly traded oil and gas companies rely too much on future technologies and too little on absolute emissions cuts, a financial and environmental think tank said in a study.
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- Deep Dives: Energy and Utilities
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Most gas utilities beat quarterly EPS expectations; few post YOY profit growth
The majority of a select group of gas distributors topped consensus EPS estimates as gas utility stocks continued to outperform the market.
—Read the full article from S&P Global Market Intelligence
US utilities take cautious approach to offshore wind, while Europeans step in
European energy companies have dominated the bidding processes for recent Atlantic Coast auctions, as cost and supply chain issues reinforce some U.S. utilities' strategies to prioritize regulated returns.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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US miners laud chance at $600M boost inside Ukraine aid package
A Ukraine aid package passed by the U.S. House of Representatives includes millions of taxpayer dollars for purchases under the Defense Production Act, which Biden invoked in March to bolster U.S. production of critical minerals.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Deal Tracker: Twitter deal dominates media, telecom M&A in April
Deal Tracker: Private equity takes the wheel in April infotech M&A
European financials M&A activity falls again YOY amid market volatility
Michigan credit union strikes 7th CU-bank deal of 2022 with Florida bank buy
Bank M&A 2022 Deal Tracker: 9 deals announced in April
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Compiled by Louis Bacani