Oct 26, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
The December S&P 500 futures (ESZ22) are trending down -0.51% this morning after three major US benchmark indices increased for the third straight day. The decline follows weaker-than-expected house price data that raised expectations of more gradual interest rate increases from U.S. Federal Reserve central bankers. Three significant U.S. stock indices rose as a result of gains in the consumer goods, basic materials, and technology sectors.
For the third session in a row, all three major stock indexes in the United States increased, with the S&P 500 recovering approximately 8% from its Oct. 12 close low. Tuesday’s economic data showed signs of economic weakness, including a slowdown in the growth of home prices and a decline in consumer confidence. This raised expectations that the Federal Reserve might slow down its rate hikes after its meeting in November. Because of this, the yields on 10-year Treasuries fell, supporting the overall market rally.
There is rising rumor that there might be a chance for Fed rate increases. The dollar is feeling a little better, and long-term bond yields have modestly declined. Bill Merz, head of capital market analysis at U.S. Bank Wealth Management in Minneapolis, asserts that these elements are coming together to create space for a minor rally.
00:00 01:27 The likelihood of a 50 basis point rate rise and a 75 basis point increase at the November monetary policy meeting, respectively, are priced into U.S. rate futures at 5.5% and 94.5 percent, respectively. U.S. stock futures fell after Alphabet (GOOGL) and Microsoft (MSFT) reported earnings that were lower than anticipated in extended deals.
At the same time, analysts anticipate that S&P 500 companies’ third-quarter profits will increase by +3.3% year-over-year, as opposed to the +4.5% increase anticipated at the beginning of the month.
Today, the U.S. New Home Sales data in a few hours is the focus of all attention. Investors are likely to keep an eye on the BoC Interest Rate Decision, which was at 3.25 percent in September, as economists expect new home sales in September to average 585 thousand, down from the previous value of 685 thousand. The new interest rate is anticipated by economists to be 4.00%.
Additionally, data on U.S. crude oil inventories will be reported today. Contrast to prior week’s numbers of -1.725 million, economists anticipate this figure to be +1.029 million. Bond markets in the United States have 10-Year rates at 4.042%, down -1.65 percent.
As investors continue to digest quarterly earnings from the European banking sector, the Euro Stoxx 50 futures are up +0.06% this morning. However, Wall Street has given the European equity markets a positive signal following the disappointing earnings reports that were issued by Alphabet and Microsoft overnight in the United States.
The Eurozone M3 Money Supply and France Consumer Confidence data were released today.
In France, the Consumer Confidence Index for October came in at 82, which was higher than the predicted reading of 77.
As hopes for a less aggressive Federal Reserve policy emerge, Asian stock markets closed today in the black. The M3 Money Supply for the Eurozone in September was 6.3% y/y, exceeding the consensus estimate of 6.1% y/y. Both the Nikkei 225 Stock Index (NIK) in Japan and the Shanghai Composite Index (SHCOMP) in China finished the day in the green..
After a sharp selloff earlier this week, the Shanghai Composite in China closed higher today. The index’s recovery is hampered, however, by persistent concerns about China’s political climate and slowing economic growth. Concerns that the government will place a greater emphasis on the state at the expense of the private sector have been exacerbated by President Xi Jinping’s new leadership team.
On the back of hopes for a Fed pivot, the Nikkei 225 Stock Index in Japan closed today in the green. In addition, the Bank of Japan reiterated its intention to expand its bond-buying program, resulting in a sharp rise in the price of Japanese government bonds. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility, which ended the day at 23.87, down 4.63 percent.
Following Spotify Technology SA (SPOT)’s mixed Q3 results, pre-market U.S. stock movers lost approximately -5 percent.
After releasing a negative earnings report for the third quarter, Alphabet Inc. Class A (GOOGL) experienced a pre-market decline of approximately -6 percent.
Following Google’s results, Meta Platforms Inc. (META) lost more than -3% in pre-market trading.
After the company reported positive Q1 results but slower-than-expected growth in its cloud business Azure, Microsoft Corporation (MSFT) slid more than -5% in pre-market trading.
Texas Instruments Incorporated (TXN) reported better-than-expected Q3 results but provided a soft Q4 outlook, which resulted in a -4 percent drop in pre-market trading.
After the company announced that its third quarter earnings were better than anticipated, Enphase Energy Inc. (ENPH) saw a gain of approximately 5% in pre-market trading.
Here are additional stock movers before the market: Today’s U.S. Earnings Spotlight:ADP (ADP), Boeing (BA), ServiceNow Inc (NOW), China Petrol & Chemical ADR (SNP), General Dynamics (GD), Canadian Pacific Railway (CP), CME Group (CME), Daimler (DDAIF), Iberdrola SA (IBDRY), Boston Scientific (BSX), Ford Motor (F), O’Reilly Automotive (ORLY), Reckitt Benckiser ADR (RBGLY), Heineken NV (HEINY), Dassault Systemes
