Daily Markets: Third Quarter Inflation and Earnings Focus This Week

The big picture today

Asia-Pacific stock indices that are open today ended today’s session lower. India’s Sensex fell 0.34%, Australia’s ASX All Ordinaries fell 1.49%, China’s Shanghai Composite fell 1.66% after being closed all last week and Hong’s Hang Seng Kong closed down 2.95% on a broad decline led by consumer services names. Japanese markets are closed today on Sports Day, which commemorates the opening of the 1964 Olympics and acts as a sort of national field day for schools. South Korean markets are closed on Hangul Day, a public holiday celebrating the creation of the Korean alphabet in the 15th century. Taiwan’s markets are closed to mark the National Day, or Double Tenth Day, which commemorates the start of the 1911 Wuchang Uprising and the end of the Qing dynasty.

By midday, major European equity indices are down across the board except for the German DAX, and US futures are pointing to a soft open later this morning.

Once again, we are starting the week at a slow pace with little new economic data or earnings reports. That will change by the end of the week, as investors will not only have digested a full portion of the inflation data, but will also have started the September quarter earnings season. It is highly likely that September’s Consumer Price Index and Producer Price Index will add to the growing belief that the Fed will need to hike longer in its fight against inflation. What its past and future efforts mean for the pace of the economy, borrowing costs and currency headwinds will be determined when the companies release their September quarter results and update their guidance for the future.

With a number of factors in play for companies to address, ranging from slowing demand, ongoing supply chain issues and pricing pressures, we are likely to see current quarter expectations continue to rise. be revised downwards. As this happens, if Treasury yields continue to climb, we are likely to see more investors stay on the sidelines when it comes to equities.

Data download

International economy

After its week-long National Day/Golden Week holiday, China is being hit by another wave of rising covid cases. Yesterday, 1,939 locally transmitted cases were reported against 1,645 on Saturday, reaching the highest since August 20.

Sentix Investor Confidence for the Eurozone fell to -38.3 for October, missing the forecast of -34.7 and lower than September’s figure of -31.8.

Following French President Emmanuel Macron’s call for “energy sobriety”, the French government has asked municipalities, households and businesses to reduce their energy consumption by 10% over two years to counter Russia’s decision to cut off the flow of natural gas to Europe.

The Bank of England announced that it would increase the size and scope of its emergency bond market support. The bond buying program is still scheduled to end on Friday, but the changes will be:

  • Increased daily auction size to £10 billion, up from £5 billion for a total of £50 billion.
  • Launch of a “Temporary Extended Collateral Repo Facility. This facility will allow banks to help alleviate the liquidity pressures faced by their clients’ LDI funds through liquidity assurance operations, which will continue beyond the end of this week”.
  • Accept other types of collateral such as corporate bonds and indexed gilts.

Domestical economy

After Friday’s September jobs report, market watchers are likely waiting to hear what Chicago Fed Chairman Charles Evans and Federal Reserve Vice Chairman, Lael Brainard, have to say on the course of monetary policy, inflation and the health of the economy. Following the September jobs report, the CME FedWatchTool now sees a nearly 60% chance of the Fed Funds rate reaching 450-475 basis points (and about a 25% chance of 475-500) of exiting the February 2023 Fed monetary policy meeting against the 300 to 325 basis points current.

Nine out of ten CEOs in the United States (91%) think a recession will hit within the next 12 months, while 86% of CEOs globally agree. according to KPMG findings. In the US, half of CEOs (51%) say they are considering workforce reductions in the next six months, while globally eight in ten CEOs say the same.

With the rollout of the omicron variant-targeted booster lagging behind last year’s vaccination rate, Pfizer (PFE) and BioNTech (BNTX) will team up with Disney (DIS) Marvel Comics to promote COVID-19 vaccinations.

Markets

On Friday, markets accelerated the decline that began mid-week as all sectors, including energy, traded off, with tech and consumer discretionary names taking the biggest chunks, in down 4.15% and 3.44%, respectively. The Dow fell 2.11%, the S&P 500 fell 2.80%, the Russell 2000 closed down 2.87% and the Nasdaq Composite was the hardest hit, down 3.80% . In individual names, blood glucose monitoring developer and manufacturer DexCom (DXCM) gained 7.28% on Friday after Medicare and Medicaid Services broadened the scope of coverage criteria for glucose monitors, meaning the addressable market expanded significantly immediately. Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -19.38%
  • S&P 500: -23.64%
  • Nasdaq compound: -31.91%
  • Russell 2000: -24.19%
  • Bitcoin (USD-BTC): -27.90%
  • Ether (ETH-USD): -63.88%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, AZZ (AZZ) is the only company supposed to publish its quarterly results. Readers will want to be on the lookout for advance earnings announcements, good and bad, and what they might mean for other companies set to report in the days and weeks ahead.

Chinese electric vehicle company Nio (NIO) is entering the Netherlands, Denmark and Sweden after entering the Norwegian market last year. The company offers leases on the ET7, EL7 and ET5 models and makes them available through a subscription model designed to encourage the use of electric vehicles.

Rivian Automotive (RIVN) issued a recall for approximately 13,000 vehicles after to report a problem with its steering system.

Amazon (AMZN) plans to invest more than €1 billion in low-emission electric vans, trucks and parcel hubs across Europe over the next five years.

The Financial Times reports Black Rock (BLK) lost more than $1 billion in its asset management business in U.S. Republican states upset with the company’s green investing policies.

Citigroup (C) Treasury and Trade Solutions announced plans to launch “24/7 Clearing” as a service for its financial institution customers, beginning with 24/7 USD Clearing in Q4 2022. This service allows Citi customers to make USD payments to Citi’s 1,500 financial institution customers. worldwide 24 hours a day, 7 days a week, including holidays.

IPOs

So far, it looks like a pretty quiet week on the IPO front. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

No company is expected to report quarterly earnings after the stock halt today, but as mentioned above, readers will want to take note of any early earnings announcements and their implications. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

tuesday october 11

  • Japan: Economy Watchers Current Index – September
  • United Kingdom: report on changes in employment – ​​August
  • United States: NFIB Small Business Optimism Index – September

Wednesday October 12

  • Japan: Basic Machinery Ordinance – August
  • United Kingdom: industrial production, manufacturing production – August
  • Euro zone: Industrial production – August
  • US: Weekly MBA Mortgage Applications
  • United States: producer price index – September

Thursday October 13

  • Japan: producer price index – September
  • Germany: consumer price index – September
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: Consumer Price Index – September
  • United States: EIA Weekly Natural Gas Inventories
  • United States: EIA Weekly Crude Oil Inventories

friday october 14

  • China: consumer price index, producer price index, imports/exports – September
  • United States: retail sales – September
  • United States: import/export price – September
  • United States: Business inventories – August
  • United States: University of Michigan Consumer Confidence Index (preliminary) – October

Thought of the day

“You are taking an informed bet. If you don’t make mistakes once in a while, you’re not doing your job. ~ James Singal

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

About Troy McMiller

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