Oct 18, 2022
VOT Research Desk
Market Analytics and Considerations
After three major US benchmark indices finished sharply higher during the regular session as strong earnings results from major Wall Street banks boosted sentiment on stocks, December S&P 500 futures (ESZ22) are trending up +1.13% this morning. Gains in the Technology, Consumer Services, and Industrials sectors fueled three major US stock indexes.
It is common knowledge of the catalysts that have triggered in the markets throughout the year. Investors are looking for green shoots of catalysts that can start to provide some improvement right now.
After Bank of America released upbeat quarterly results, boosting optimism regarding the corporate earnings season, all three major U.S. stock indexes finished the session 1.9% to 3.4% higher. However, analysts anticipate S&P 500 companies’ earnings to rise by 3% in the third quarter, down from 4.5 percent at the beginning of the month.
Additionally, expectations for a Fed shift were raised by weaker-than-expected manufacturing data in the New York region. In the meantime, U.S. rate futures have priced in a 96.5 percent probability of a 75 basis point rate increase and a 3.5 percent probability of a super-sized 100 basis point increase at the monetary policy meeting in November
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Right now, the Fed owns the market Fed policy is the key driver they are implementing the most aggressive tightening in the shortest amount of time that we have seen in our generation, and it is important to remember that Fed policy, it works with a lag.
In the coming hours, all eyes will be on the U.S. Industrial Production data. In comparison to the previous value of -0.2% m/m, economists anticipate that September Industrial Production will increase by +0.1% m/m.
Investors will likely also keep an eye on Canada’s Housing Starts data, which showed 267.4K in August.The U.S.
TIC Net Long-Term Transactions data will also be reported today, and economists anticipate the new figure to be 263.0K.In comparison to July’s figure of 21.4 billion, economists anticipate this figure to rise to 28.2 billion. The 10-year interest rate in the United States is currently 4.031%, an increase of +0.41%.
After Britain’s new finance minister Jeremy Hunt scrapped almost all of Prime Minister Liz Truss’s previously announced tax and spending measures on Monday, sentiment improved after weeks of turmoil, and the Euro Stoxx 50 futures are up +0.76% this morning. Moreover, the dramatic U-turn may result in a Bank of England interest rate hike in November that is lower than anticipated. The more than +3% rise in Publicis Groupe (PUB.FP) following the company’s increase in its full-year revenue outlook is another factor that has helped European stocks.
Today saw the release of data on Germany’s ZEW Current Conditions, Germany’s ZEW Economic Sentiment, and the Eurozone’s ZEW Economic Sentiment.
The German ZEW Current Conditions in October came in at -72.2, which was lower than the expectations of -68.0.
The German ZEW Economic Sentiment for October came in at -59.2, exceeding expectations of -65.7.
The Eurozone ZEW Economic Sentiment for October was -59.7, exceeding expectations of -61.2.
Today’s trading on Asian stock markets was mixed. The Shanghai Composite Index (SHCOMP) of China ended the day down -0.13%, while the Nikkei 225 Stock Index (NIK) of Japan ended up +1.42 percent.
Today, the Shanghai Composite in China closed a little lower as concerns about the Chinese economy continued to affect the stock market. President Xi Jinping indicated that the nation has no intention of easing its strict zero-COVID policy. However, the plans for additional stimulus spending were made public by the government, and the People’s Bank of China also upheld its pledge to encourage economic expansion.
At the same time, Japan’s Nikkei 225 Stock Index recovered from sharp losses in recent sessions to close in the green today. Gains in the Transport, Railway & Bus, and Shipbuilding sectors fueled the index’s upward momentum. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility, which ended the day at 25.02, up 1.21 percent.
