VOT Research Desk
Oct 24,2022
Market Insights, Considerations & Analytics
Following three significant US benchmark indices posted their greatest weekly increase since June on Friday as investors digested an increasing inflow of third-quarter earnings results, December S&P 500 futures (ESZ22) are trending down -0.43% this morning. Gains in the Oil & Gas, Basic Materials, and Consumer Services sectors dominated three major U.S. stock indexes.
The possibility of a less aggressive policy approach was raised by a report on Friday that the Federal Reserve of the United States would probably debate a lesser interest rate hike in December. It’s time to discuss slowing down the rate of increases in borrowing costs, and doing so should prevent the economy from experiencing an unplanned slump by raising interest rates too quickly, according to San Francisco Federal Reserve President Mary Daly.
At the November monetary policy meeting, U.S. rate futures have priced in a 95.3% probability of a 75-basis-point rate increase and a 4.7% probability of a 50-basis-point increase.
At U.S. Bank Wealth Management in Minneapolis, Minnesota, Tom Hainlin, a senior investment strategist, said: “You had the report, and then you had some confirmation that 75 looks to really be fairly cooked in for November here, but perhaps there is potential to slow and extend… so instead of front-load that high and then having to pull off, you sorta relax.
Market participants will keep a close eye on the CB consumer confidence, goods trade balance, new home sales, orders for durable goods, PCE price index, and GDP data throughout the week. Investors will likely also pay attention to speeches by Fed official Waller and Treasury Secretary Yellen.
Investors will also be paying attention to Apple Inc. (AAPL), Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and Microsoft Corporation (MSFT)’s earnings this week.
Today, the U.S. Manufacturing Purchasing Managers Index (PMI) preliminary data in a few hours is the focus of all attention. In comparison to the previous value of 52.0, economists anticipate a figure of 51.0 in October.
The preliminary U.S. Services PMI data will also be released today. In contrast to the previous value of 49.3, economists anticipate this number to be 49.2 in October.
The 10-year interest rate in the United States is 4.213%, up +0.02%, on the bond markets.
This morning, hopes that the Federal Reserve might be able to slow down the rate at which it raises interest rates helped propel the Euro Stoxx 50 futures up +0.35%.However, as consumer confidence in the Eurozone remained close to a record low in October,
investors remained concerned about the region’s slowing growth. To combat high inflation, the European Central Bank is expected to raise interest rates by 75 basis points on Thursday. Additionally, earnings from a number of Europe’s leading investment banks will be the primary focus of investors’ attention this week.
Today, preliminary data for the Manufacturing and Services PMI (preliminary) in France, Germany, the Eurozone, the S&P Global Composite PMI (preliminary), the UK Composite PMI (preliminary), the UK Manufacturing PMI (preliminary), and the UK Services PMI (preliminary) were made available.
The manufacturing PMI for October in France was reported at 47.4, exceeding expectations of 47.1.
The Services PMI for October in France was 51.3, below expectations of 51.5.
The German Manufacturing PMI for October came in at 45.7, which was lower than the expected 47.0
The German Services PMI for October came in at 44.9, exceeding expectations of 44.7.
The Eurozone Manufacturing PMI for October came in at 46.6, below expectations of 47.8.
The Eurozone October S&P Global Composite PMI was reported at 47.1, which was lower than the 47.5 that was anticipated.
In line with expectations, the Eurozone Services PMI was 48.2 in October.
The U.K. Composite PMI fell below expectations to 47.2.
The manufacturing PMI for the United Kingdom was 45.8, below expectations of 48.0.
The U.K. Services PMI came in at 47.5, which was lower than the expected 49.6.
Today’s trading on Asian stock markets was mixed. The Nikkei 225 Stock Index (NIK) in Japan ended the day up +0.31%, while the Shanghai Composite Index (SHCOMP) in China ended the day down -2.02%
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As the yuan continued to fall, China’s Shanghai Composite closed sharply lower today, and Xi Jinping ensured a record-setting third term in power. In addition, delayed GDP data revealed that China’s second-largest economy expanded at a rate of +3.9% year-over-year in Q3, exceeding expectations of +3.4% year-over-year.
However, this growth was still among the slowest in decades, as the country was subjected to numerous lockdowns.
In September, the annual rate of Chinese industrial production was reported at 6.3%, exceeding expectations of 4.5%.
At the same time, gains in the Precision Instruments, Mining, and Electrical/Machinery sectors pushed the Japan Nikkei 225 Stock Index higher today as it closed higher. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility, which ended the day at 24.06, up 0.29 percent.
Pre-Market U.S. Stock Movers Snap Inc. (SNAP) lost about -3% in pre-market trading after Bernstein, MKM Partners, and BofA downgraded the company following the Q3 report, extending Friday’s losses.
In pre-market trading, Mullen Automotive Inc. (MULN) increased by more than 9%, extending Friday’s gains following the announcement that the company had hired John Schwegman to be its CCO.
After announcing an agreement with Amazon, Hawaiian Holdings Inc. (HA) extended Friday’s gains by rising by more than +2% in pre-market trading.
Pre-market trading saw Huntington Bancshares Incorporated (HBAN) extend Friday’s gains after the company reported positive quarterly results.
American Express Company (AXP) reported better-than-expected Q3 results but provided weak FY22 guidance, resulting in a -1 percent drop in pre-market trading.
Here are additional stock movers before the market: Today’s U.S. Earnings Spotlight:Cadence Bancorp (CADE), Medpace Holdings (MEDP), Hexcel (HXL), Kirby (KEX), Trinet Grou (TNET), AGNC Invest (AGNC), Calix (CALX), PotlatchDeltic (PCH), Simpson Manufacturing (SSD), Community Bank System (CBU), Cathay (CATY), Bank of Hawaii (BOH), Aeroportuario del Centro Norte (OMAB), Dorman (DORM), Albany
