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Stocks rise amid earnings optimism, dollar gains: markets wrap

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Asian stocks and European equity contracts advanced, following Friday’s gains in the US amid optimism over corporate earnings. The dollar climbed as traders positioned for another large interest rate hike by the Federal Reserve this week.

An index of Asian equities climbed for the fourth time in five days on Monday. Apple Inc.’s earnings report on Friday had buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. Tech equities in Hong Kong jumped, with gains also seen from Japan to Australia. US futures declined.

The yen fell against greenback, with economists expecting the Fed to raise rates by another 75-basis-points, widening the policy divergence with the Bank of Japan. A core gauge of US inflation accelerated in September, bolstering the case for more tightening.

The euro and the pound also fell.

Meanwhile, wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments.

The yield on the 10-year Treasuries hovered around 4% after surging by nine basis points on Friday. Yields were little changed in Australia ahead of a policy decision by the country’s central bank on Tuesday.

Fed Chairman Jerome Powell “should be a bit less hawkish”at his press conference on Wednesday compared to after the last meeting, according to Yardeni Research. With the expectation that another 75 basis points is penciled in this week, “Powell will have to acknowledge that the federal funds rate is now further into restrictive territory and will be even more so come the FOMC’s December meeting,” it said in a note.

Economists surveyed by Bloomberg expect Fed officials will maintain their hawkish stance, laying the groundwork for interest rates reaching around 5% by March 2023, potentially leading to a US and global recession.

Brazilian assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede as a contested election would likely trigger larger losses.

Oil edged lower as weak economic data from China fanned concerns about energy demand, but it was still set for the first monthly advance since May on OPEC+’s planned supply cuts.

Gold headed for its seventh straight month of declines, the longest losing streak since at least the late 1960s.

Key events this week:

  • Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.
  • Eurozone CPI and GDP, Monday
  • Reserve Bank of Australia policy decision, Tuesday
  • US construction spending, ISM manufacturing index, Tuesday
  • EIA crude oil inventory report, Wednesday
  • Federal Reserve rate decision, Wednesday
  • US MBA mortgage applications, ADP employment, Wednesday
  • Bank of England rate decision, Thursday
  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
  • ECB President Christine Lagarde speaks, Thursday
  • US nonfarm payrolls, unemployment, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.3% as of 6:49 a.m. London time. The S&P 500 rose 2.5% Friday
  • Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 3.2%
  • Euro Stoxx 50 futures rose 0.4%
  • Japan’s Topix index rose 1.6%
  • South Korea’s Kospi index rose 1.1%
  • Hong Kong’s Hang Seng Index fell 0.6%
  • China’s Shanghai Composite Index fell 0.9%
  • Australia’s S&P/ASX 200 Index rose 1.2%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.2% to $0.9948
  • The Japanese yen fell 0.2% to 147.84 per dollar
  • The offshore yuan fell 0.5% to 7.3001 per dollar
  • The British pound fell 0.1% to $1.1601

Cryptocurrencies

  • Bitcoin fell 1% to $20,492.88
  • Ether fell 0.6% to $1,585.04

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 4.02%
  • Australia’s 10-year yield advanced two basis points to 3.76%

Commodities

  • West Texas Intermediate crude fell 1% to $87.04 a barrel
  • Spot gold fell 0.1% to $1 642.41 an ounce

© 2022 Bloomberg

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