Market Updates

Stocks Trade Higher, Focus Shifts to Earnings

Barry Adams
17 Oct, 2022
New York City

    Stocks on Wall Street opened higher and investors shifted focus to a parade of earnings after a wild week of trading. 

    After a week of wild swings the S&P 500 declined 1.5% and the Nasdaq Composite dropped 3.1% and bond yields hovered above 4%. 

    In Monday's trading, major averages advanced and the yield on Treasuries edged lower as investors shifted focus to earnings releases. 

    The S&P 500 index jumped 2.72% or 97.31 to 3,680.25 and the Nasdaq Composite index soared 3.21% or 331.26 to 10,652.31. 

    Crude oil rose 87 cents to $86.43 and natural gas declined 43 cents to $6.03 a thermal unit. 

    The Yield on 2-year Treasury notes eased to 4.41%, 10-year bonds edged lower to 3,911% and the 30-year bonds fell to 3.93%. 

    Investors await corporate results as the earnings season picks up pace and Goldman Sachs, IBM, Tesla, AT&T, Netflix and Johnson & Johnson are among the companies scheduled to release results this week. 

    Bank of America jumped 5.5% to $33.46 after the company reported better-than-expected revenues and earnings in the third quarter. 

     

    European Markets Trade Higher, Euro Stable 

    European market indexes traded higher and bond yields declined after the UK finance minister reversed unfunded tax measures proposed in the mini-budget just a few weeks ago. 

    The DAX index increased 1.4% or 172.65 to 12,609.42, the CAC-40 index advanced 1.2%or 71.57 to 6,002.63 and the FTSE 100 index added 0.9% or 60.18 to 6,918.95. 

    The euro was nearly unchanged at 97.81 U.S. cents and the British pound increased 1.4% to $1.13. 

    The yield on 10-year German bunds declined to 2.22%, French bonds fell to 2.82%, the British Gilts to 3.96%, Swiss bonds eased to 1.2% and Italian bonds to 4.64%. 

    Brent crude edged up 84 cents to $92.45 and the TTF natural gas fell 8.1% to 130.34 euros a megawatt hour. 

     

    UK Reverses Tax Proposals, gilt Yields Drop, Pound Rises  

    The U.K. bond yields rose after the recently appointed finance minister Jeremy Hunt reversed all tax proposals released in the mini-budget ahead of parliamentary approval. 

    The Pound rebounded and the Gilt yields dropped the most in decades after the government reversal but the longevity and credibility of the British government in doubts. 

    The Liz Truss government is not likely to survive the remaining term ahead of the required general election in 2024. 

    The yields fell 40 basis points for the 20-year and  the 30-year Gilts and the pound edged slightly higher but investors are concerned about how long the current government will survive. 

    The growing political chaos and the Conservative Party infighting may force the UK general election earlier than the required date in early 2024. 

     

    China Communist Party Congress In Focus 

    Asian markets generally traded higher after the Chinese government proposed to increase government spending and support economic growth. 

    China abruptly delayed the release of GDP and other economic data indefinitely without giving a reason. 

    The weeklong gathering of Communist Party is set to appoint premier Xi Jinping for the third consecutive five-year term. 

    Chinese officials continued to crack down social mobility following the strict zero-Covid policy.  Zhengzhou city in Henan province shut down parts of city to tame the spread of virus. 

    Foxconn factory located in the city with about 300,000 workers is responsible for the production of about half the iPhones production.  

    The Nikkei 225 average fell 1.16% or 314.97 to 26,775.79, the Hang Seng index increased  0.15% or 25.21 to 16,612.90 and the Sensex index added 0.85% or 491.01 to 58,410.98. 

    The yields on Japanese bonds held steady at 0.25%, Chinese bonds traded down to 2.71% and Indian bonds edged down to 7.4%.  

     

    Yen Drop Extends Yearly Loss to 30% 

    The Japanese yen dropped to a 32-year low to 149 against a dollar prompting fears of intervention from the Bank of Japan. 

    The yen has dropped nearly 30% against the U.S. dollar and the Bank of Japan conducted its largest currency market intervention and spent 2.84 trillion yen in shoring the currency with temporary success. 

     

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