World Markets Rest Near Record Highs Ahead of Earnings and Elections

Alexander Garcia
21 Oct, 2024
Miami

Stock market indexes turned lower in Monday's trading after popular benchmarks closed at record highs in Friday's trading. 

The S&P 500 index and the Dow Jones Industrial Average traded at new highs after advancing about 0.9% in the previous week and extending the rally to the sixth consecutive week. 

The S&P 500 index and the Dow Jones Industrial Average have reached multiple new highs in 2024 as investors cheered resilient economic data and grew more confident about the Fed's ability to engineer a so-called soft landing—keeping the economic growth intact while lowering inflation. 

Cautious optimism has prevailed on Wall Street as earnings roll in from leading banks, financial services companies, and transportation services providers. 

This week investors are looking forward to quarterly results from at least 450 companies as the earnings season picks up momentum. 

3M, AT&T, Amazon.com, Baker Hughes, Hilton Worldwide, Moody’s Corp, Pulte Homes, Tesla, Xerox Corp, and Verizon are on tap to release results this week.

Investors are also anticipating the release of U.S. durable goods orders on Friday and U.S. new home sales data on Thursday.

Crude oil prices rebounded amid rising tensions in the Middle East as Israel prepares to strike Iran's crude oil infrastructure over the next two weeks. 

Middle East experts anticipate Israel's expected strike is likely to disrupt crude oil supplies in the Middle East, which could spike crude oil prices by more than 10%.

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.4% to 5,840.32, the Nasdaq Composite fell 0.2% to 18,452.43, and the Russell 2000 index declined 1.5% to 2,242.32. 

The yield on 2-year Treasury notes edged lower to 3.99%, 10-year Treasury notes inched up to 4.13%, and 30-year Treasury bonds inched higher to 4.44%.

WTI crude oil increased $1.29 to $70.51 a barrel, and natural gas prices edged up 6 cents to $2.32 a thermal unit.

Gold rose by $0.62 to $2,722.71 an ounce, and silver increased by $0.06 to $33.77.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.58.

 

U.S. Stock Movers

Boeing increased 3.9% to $161.09 after the company and its machinists' union agreed on a new wage contract that could be ratified as early as Wednesday. 

The new wage proposal includes several incentives, including a 35% wage increase over the next four years, a higher signing bonus, a guaranteed annual minimum bonus, and contributions to retirement plans. 

Energy complex companies traded higher after crude oil prices rebounded amid rising tensions in the Middle East and growing worry of supply disruptions. 

Exxon Mobil increased 0.1% to $120.06, Chevron Corp. advanced 0.4% to $151.31, and Marathon Oil decreased 0.3% to $26.71. 

Artificial intelligence-linked stocks advanced as investors returned to add more exposure to advanced chipmakers. 

Nvidia increased 2.5% to $141.42, AMD advanced 0.2% to $155.86, and Broadcom jumped 0.3% to $180.45. 

 

European Markets Hover Near Record Highs In Cautious Trading, Germany's Producer Price Deflation Extends to 15th Month 

European markets struggled to rise above the flatline after advancing in the previous two consecutive weeks. 

Benchmark indexes in Paris, London, and Frankfurt lacked direction amid elevated tensions in the Middle East and election uncertainty in the U.S. and Japan. 

On the economic front, investors are looking forward to the release of business surveys in France and Germany and producer price inflation data in Spain. 

Germany's producer prices slipped 1.4% in September after falling at 0.8% in the previous two months, the Federal Statistical Office, or Destatis, reported Monday. 

Producer prices fell for the 15th consecutive month in a row, largely driven by the ongoing decline in energy prices. 

Producer prices, excluding energy prices, rose 1.2% from a year ago in the month. 

Moldova narrowly voted for European Union membership according to the preliminary results published by the election commission. 

About 50.17% of voters preferred to join the European Union, far fewer than predicted by polls in the run-up to the voting. 

Incumbent president Mai Sandu received 42% of votes cast in the first round of the presidential election held on October 20, trailed by Alexsandr Stoianoglo with 26% of votes. 

Sandu and Stoianoglo advanced to the second and final phase of the election to be held on November 3. 

 

Europe Indexes and Yields

The DAX index decreased by 1.0% to 19,461.19; the CAC-40 index fell by 1.0% to 7,536.25; and the FTSE 100 index decreased by 0.5% to 8,318.24. 

The yield on 10-year German bonds edged lower to 2.24%, French bonds inched higher to 2.97%, the UK gilts edged up to 4.12%, and Italian bonds increased to 3.44%.

The euro edged lower to $1.08; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 86.42 Swiss cents.

Brent crude increased $1.15 to $74.21 a barrel, and the Dutch TTF natural gas rose by €0.68 to €40.03 per MWh. 

 

Europe Stock Movers

Resource stocks advanced in Monday's trading after commodity prices rose in Asian and European trading. 

BP plc increased 1.9% to 407.35 pence, Shell PLC advanced 1.1% to 2,564.50 pence, Antofagasta rose 0.6% to 1,839.50 pence, Anglo American inched higher 0.1% to 2,381.50, and Glencore added 0.7% to 411.49 pence. 

FirstGroup plc added 0.4% to 139.90 pence, and the company confirmed the acquisition of the London-based coach operator Anderson Travel. 

Hollywood Bowl PLC jumped 2.5% to 334.50 pence after the company estimated adjusted earnings in fiscal 2024 are likely to surpass market expectations. 

Forvia SE advanced 6.5% to €8.50 after the automobile parts maker reported better-than-expected third quarter sales. 

JDE Peets jumped 16.7% to €22.14 after the company reiterated its annual outlook and appointed a new chief executive officer. 

Nokia Oyj gained 1.5% to €4.34 after the Finnish telecom company announced a new partnership with Vietnam Posts and Telecoms Group to deploy 5G networks. 

DNB Bank ASA increased 0.5% to €18.57, and Norway's largest bank agreed to acquire all shares of Carnegie Holding AB for SEK 12 billion. 

 

Japan Indexes Struggled Ahead of Earnings and National Election Uncertainty 

Investors turned cautious in Monday's trading in Tokyo ahead of the national election this weekend. 

The Nikkei 225 stock average and broader Topix index declined a fraction as investors hoped that the ruling LDP party would return to power amid widespread dissatisfaction with the government. 

Investors also reviewed the People's Bank of China's decision to lower loan prime rates by 25 basis points over the weekend. 

The move is widely expected to support local residential property market transactions, but the latest monetary measure did not go far enough to bolster market sentiment. 

Market indexes in China extended weekly losses as investors looked forward to a meeting of the parliament committee later this month, where lawmakers are expected to increase the government's borrowing limits. 

Closer to home, market indexes in Tokyo extended weekly gains in cautious trading ahead of the national election this week. 

Prime Minister Shigeru is facing widespread voter discontent following a political fund-raising scandal where lawmakers of the ruling LDP party failed to make appropriate disclosures. 

On the economic front, Japan is expected to announce its manufacturing and service sector surveys and Tokyo-area inflation data later in the week.

Gold traded at a new high of $2,727.70 an ounce in international trading as the People's Bank of China continued to increase its exposure to the yellow metal. 

Moreover, steady retail demand from India, China, and the Middle East also supported the precious metal's advance in recent weeks. 

Moreover, investors looked forward to the release of quarterly results from at least 30 leading corporations this week.

 

Japan Movers 

The Nikkei 225 Stock Average decreased 0.1% to 38,954.60, and the broader Topix index declined 0.3% to 2,679.91. 

The yen edged slightly higher to 149.35 against the U.S. dollar, keeping the stock market advance in check. 

Mitsubishi UFJ Financial declined 1.9% to ¥1,613.0, Sumitomo Mitsui Financial decreased 1.9% to ¥3,202.0, and Mizuho Financial fell 0.8% to ¥3,180.0. 

Semiconductor equipment stocks advanced following a rise in advanced chip companies in Friday's New York trading. 

Tokyo Electron increased 0.9% to ¥23,720.0, and Advantest Corp. rose 2.6% to ¥8,181.0. and Disco Corp. jumped 3.2% to ¥39,540.0. 

Toyota Motor decreased 0.4% to ¥2,541.50, Honda Motor Co declined 0.5% to ¥1,525.50, and Nissan Motor Co added 0.9% to ¥399.10. 

Nippon Yusen KK jumped 1.9% to ¥5,238.0, Mitsui O.S.K. Lines added 1.2% to ¥5,055.0, and Kawasaki Kisen Kaisha Ltd. added 3.9% to ¥2,161.0. 

Panasonic Holdings jumped 0.4% to ¥1,276.0, Nidec Corp advanced 0.7% to ¥2,889.0, and Fanuc Corp decreased 0.6% to ¥3,958.0. 

Seven & I increased 1.2% to ¥2,237.50, Fast Retailing decreased 0.8% to ¥53,120.0, and Isetan Mitsukoshi decreased 3.9% to ¥2,215.50. 

 

PBoC Lowers Loan Prime Rates, Hang Seng Index Extends Weekly Losses 

Stock market indexes in Hong Kong and China traded down amid growing worry that fiscal stimulus measures are likely to fall short of market expectations. 

The Hang Seng index dropped 1.5% and the CSI 300 index advanced 0.3% in volatile trading after the central bank lowered its key lending rates over the weekend. 

The People's Bank of China lowered its loan prime rate for one year and five years by 25 basis points to 3.1% and 3.6%, respectively. 

The move was widely anticipated, but the latest monetary step is going to provide little fillip to the property market. 

Investors shifted their focus to a meeting of the National People's Congress later in the week. 

The docile parliament is widely expected to approve the increase in government spending and borrowing limit as China's finance ministry and the central bank prepare to inject more money into the economy through the banking system. 

The China market rally since mid-September has been losing steam as investors dial down their expectations of additional fiscal stimulus to revive the property market and consumer confidence. 

Investors are also eyeing the release of earnings from leading insurance and technology companies this week, including results from Ping An Insurance, Hong Kong Stock Exchanges and Clearing, and Sands China. 

 

China Stock Movers 

The Hang Seng index decreased 1.5% to 20,492.13, and the CSI 300 index advanced 0.5% to 20,492.13. 

Ping An declined 1.9% to HK $49.0, Sands China Ltd. decreased 3.4% to HK $18.14, and Galaxy Entertainment dropped 3.4% to HK $33.80. 

Tencent Holdings decreased 2.5% to HK $419.80, Alibaba Group fell 3.4% to HK $96.95, and JD.com Inc. dropped 2.8% to HK $154.30.