What Moved The Markets This Week 📈
W18 - Fed Hikes Rates Quarter Point, Shopify Cuts 20% Of Staff, JPMorgan Acquires First Republic, Venmo Adds On-Chain Crypto Transfers, IBM To Replace Jobs With AI, and Apple + Shopify + Uber Earnings
Sunday Morning Markets
Trading Week 18, covering Monday, May 1 through Friday, May 5. Your weekly financial markets update, in less than 5 minutes.
The Week In Review ⏪
Fed & ECB hike interest rates again
Mixed labor market data
Economy adds 253K jobs (NFP)
Openings plummet 400K (JOLTS)
IBM to replace nearly 8K jobs with AI
Shopify cuts 20% of its staff
JPMorgan acquires a majority of First Republic’s assets
ECB inflation unexpectedly softens in April
Venmo to add on-chain crypto transfers
Earnings from Apple, Shopify, and Uber— see breakdowns below
US Markets 🇺🇸
Fed increases rates a quarter point to 5% - 5.25%, marking its 10th interest rate increase in just over a year. The released statement dropped a tentative hint that the current tightening cycle is coming to an end.
US economy added 253K jobs in April, beating expectations of 180K, even as the economy slows. The unemployment rate dropped to 3.4% (vs 3.6% estimate), as average hourly earnings rose 0.5% for the month.
Job openings hit multi-year low of 9.59M, down nearly 400K from February and below expectations of 9.78M. The largest decline in openings was in the transportation, warehousing, and utilities sectors (-144K).
First Republic seized by regulators and sold to JPMorgan. In the deal, JPMorgan is getting $92B in deposits, $173B in loans, and $30B in securities, of which FDIC agreed to absorb losses that arise from the real estate loan portfolio.
US manufacturing activity contracts for 6th straight month as the ISM Purchasing Managers Index comes in at 47.1% for April (46.3% prev). The last time the index was <50% for 6 months was between March ‘08 and June ‘09.
IBM pauses hiring in plan to replace 7,800 jobs with AI in the coming years. The company added that 30% of non-customer-facing roles could be replaced by AI and automation in 5 years. Shares of IBM are trading at same level as 1999.
Shopify cuts 20% of its workforce and is selling its logistics and warehouse automation businesses. SHOP 0.00%↑ shares surged 29% this week. According to layoffs.fyi, 657 tech companies have cut 191K workers so far in 2023.
Rest of World 🌏
Eurozone inflation unexpectedly slows in April as core CPI comes in at 5.6%, down from March’s 5.7% and below economists’ estimates. Headline CPI was 7%, up slightly from March’s 6.9% reading and in line with estimates.
ECB hikes interest rates 25 basis points to 3.25%, the highest level since November 2008, but a slow down in the pace of previous increases. The ECB added “The inflation outlook continues to be too high for too long.”
First Horizon merger with TD Bank is terminated, causing FHN 0.00%↑ shares to plummet 40% this week. “Because there is uncertainty as to when and if these regulatory approvals can be obtained, the parties mutually agreed to terminate the merger agreement.”
Crypto ⚡
Venmo to enable on-chain crypto transfers inside its native peer-to-peer payments app. Venmo’s parent, PayPal, believes that Web3 will have a material impact on gaming, media loyalty, and other micropayments.
Coinbase opens offshore crypto derivatives exchange based in Bermuda as part of an international expansion plan that comes as the publicly traded firm faces regulatory headwinds at home.
Earnings Reports 💰
See more breakdowns on our Twitter page
Weekly Poll 🗳️
Week Ahead 📅
Monday
Germany - Industrial Production (MAR)🇩🇪
Australia - Westpac Consumer Confidence (MAY)🇦🇺
Earnings Reports: Berkshire Hathaway, PayPal, Palantir, Lucid💰
Tuesday
UK - House Price Index (APR)🇬🇧
Earnings Reports: Airbnb, Electronic Arts, Rivian, Twilio, Toast, Rapid7, Affirm💰
Wednesday
US - CPI Inflation (APR)🇺🇸
Canada - Building Permits (MAR)🇨🇦
China - CPI Inflation (APR)🇨🇳
Earnings Reports: Disney, Toyota, Roblox, Unity, Robinhood, Plug Power💰
Thursday
US - PPI Inflation (APR)🇺🇸
UK - BoE Interest Rate Decision🇬🇧
Earnings Reports: JD.com, Softbank, TradeDesk, Polestar💰
Friday
US - UMich Consumer Sentiment (MAY)🇺🇸
UK - GDP (Q1)🇬🇧
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