A look at the day ahead from Saikat Chatterjee.
World stocks are holding a whisker below record highs, thanks to stronger-than-expected earnings from technology giants Microsoft and Alphabet. With more than a quarter of the S&P 500 companies reporting earnings so far, the beat estimates for profits and revenues have been an impressive 80%.
That’s helping U.S. and European stock futures steady this morning despite more signs of Sino-U.S. friction and a widening regulatory crackdown on tech firms in China.
Indeed, MSCI’s index of Asia-Pacific shares outside Japan .MIAPJ0000PUS is down nearly 1%, led by a 3.5% drop on the Hang Seng tech index .HSTECH after China’s internet watchdog said it plans stricter registration rules for younger net users.
Still, with some key exceptions in emerging markets, this week has seen volatility across asset classes retreat from the lofty levels seen in September and October.
That has left traders punting on the familiar themes of ever-rising market-based inflation expectations and still-high energy prices. That’s evident on bond markets where two-year U.S. Treasury yields US2YT=RR spiked briefly above 0.5%, a level last seen in March 2020.
Euro zone inflation expectations too surged to a new seven-year high above 2.08% on Tuesday, shooting past the European Central Bank’s target.
A similar picture on currency markets, where the Australian dollar has zipped higher after a surprisingly strong reading on core inflation fuelled market wagers on early rate hikes.
Markets might look beyond that those concerns, however, as long as consumers do the same. We saw that in the United States, where October consumer confidence rebounded after a turbulent third quarter.
Key developments that should provide more direction to markets on Wednesday:
– Central bank decision corner: Brazil, Canada
– Deutsche Bank posted a better-than-expected third-quarter 7% climb in profit ; Heineken beer sales lower than expected on Asia weakness
Earnings: Automatic Data Processing, CME Group, McDonald’s, Spotify Technology, Bunge, Yandex, Bristol-Myers Squibb, Garmin, Boeing, Owens Corning, General Dynamics, Westinghouse Air Brake Tech, Coca-Cola, Boston Scientific, Kraft Heinz, General Motors.
UK Autumn Budget and Spending review.
ECB and marketshttps://tmsnrt.rs/3E5TJKL
(Reporting by Saikat Chatterjee; Editing by Sujata Rao)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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