U.S. Retail Sales Surge 0.7% in March

According to data released by the US Department of Commerce, retail sales in March increased by 0.7% MoM, higher than expected. Core retail sales, excluding auto sales, rose 1.1% MoM, exceeding market expectations of 0.4%, the largest increase in 14 months. A rise in gas prices helped push the headline retail sales number higher, with sales up 2.1% on the month at service stations. However, the biggest growth area for the month was online sales, up 2.7%, while miscellaneous retailers saw a MoM increase of 2.1%. Some categories’ sales declined for the month. Sporting goods, hobbies, musical instruments and books posted a 1.8% decrease, while clothing stores were off 1.6%, and electronics and appliances saw a 1.2% drop.

The recent recovery in the job market and the continued resilience of consumer spending, with retail sales in March exceeding expectations, have further weakened investor confidence in the Federal Reserve’s anticipated interest rate cuts this year. Meanwhile, with efforts of bringing high inflation down stalling, the prospects of a soft-landing for the U.S. remains uncertain. In terms of the US stock market, stocks have struggled amid concerns that inflation is no longer cooling and the Federal Reserve could dial back interest rate cuts. S&P 500 slid for a 5th straight day, its longest losing streak of the year. We expect the S&P 500 to fluctuate between 4,800-5,100 points in the near term.

In terms of industry, large U.S. banks remain solid with sound liquidity and decent asset quality. As consumption demand rebounds, cash card and personal loan business strengthens. Investors can pay attention to related companies.

Goldman Sachs(GS.US) has shown strong financial performance, reflecting the continued strategic execution and the strength of its diversified business model. Net revenues reached US$14.21 billion in Q1FY24, up 16% YoY and 26% QoQ. Net earnings amounted to US$4.13 billion, up 28% YoY.

In terms of the business segment, net revenues of Global Banking & Markets (GB&M) reached US$9.73 billion, up 15% YoY and 53% QoQ, driven by strong performances in Investment Banking fees, FICC, and Equities. Notably, the firm had record quarterly net revenues in FICC, reaching Us$4.3billion, up 10% YoY. The Net revenues of Asset & Wealth Management amounted to UD$3.79 billion, up 18% YoY but down 14% QoQ. Assets under supervision increased US$36 billion during the quarter to a record $2.85 trillion. The Net revenues of Platform Solutions were US$698 million, with a significant increase in Consumer platforms net revenues, reflecting higher average credit card and deposit balances. It is recommended to buy at US$392.0, target at US$457.0, and stop loss at US$376.0.

Citigroup(C.US)’s revenue in Q1 amounted to US$21.1 billion, down 2% YoY. Excluding divestment impacts of US$1 billion, revenues were up 3% YoY, driven by growth across Banking, USPB and Services, partially offset by declines in Markets and Wealth. Net income stood at US$3.4 billion, compared to US$4.6 billion in 1Q23.

In terms of business segment, Services revenues reached US$4.8 billion, up 8% YoY. Markets revenues decreased by 7% YoY to US$5.4 billion mainly due to rates and currencies on lower volatility and high base last year. Banking revenues increased by 49% YoY to US$1.7 billion, driven by Debt Capital Markets and Equity Capital Markets, as improved market sentiment led to an increase in issuance. Wealth revenues amounted to US$1.7 billion, down 4% YoY, due to a 13% decrease in net interest income on lower deposit spreads and higher mortgage funding costs. It is recommended to buy at US$57.50, target at US$67.00, and stop loss at US$55.00.