World Markets In Holding Pattern as Rate Decisions Loom In the U.S. and Europe

Alexander Garcia
04 Nov, 2024
Miami

Market indexes on Wall Street lacked direction in tight trading as investors prepared to review the outcome of the U.S. presidential and Congressional elections.

The U.S. presidential election could impact stock trading around the world this week, but political leaders in Asia brace for higher trade barriers regardless of which party wins control. 

In addition, the U.S. Federal Reserve is set to announce its monetary policy decision, and investors are divided about the possible rate cut of 25 basis points or no change in rate.

On the earnings front, at least 500 companies are scheduled to release their quarterly results, including Toyota Motor, Ferrari, AIG, CVS, Qualcomm, and Marriott.

Last week, world stock market indexes declined in unison as investors faced a deluge of corporate earnings, a flood of economic data, and political outcomes.

World market indexes fell between 1% and 2% as investors turned cautious ahead of the U.S. presidential election on Tuesday, and in political upheaval, Japan’s ruling coalition lost its majority in the parliamentary elections.

Moreover, investors are closely monitoring which party wins control of the U.S. House of Representatives and the U.S. Senate, which could determine future tax system overhaul and trajectory of government spending. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.1% to 5,722.25, the Nasdaq Composite fell 0.01% to 18,244.20, and the Russell 2000 index rose 0.7% to 2,226.29. 

The yield on 2-year Treasury notes edged higher to 4.16%, 10-year Treasury notes inched higher to 4.29%, and 30-year Treasury bonds increased to 4.49%.

WTI crude oil increased $1.91 to $71.40 a barrel, and natural gas prices edged down 2 cents to $2.64 a thermal unit.

Gold increased by $8.58 to $2,744.84 an ounce, and silver increased by $0.27 to $32.70.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 103.74.

 

U.S. Stock Movers

Marriott International declined 2% to $255.30 after the hotel chain operator reported its quarterly results.

Revenue increased 6% to $6.3 billion from $5.9 billion, net income plunged 22% to $584 million from $752 million, and diluted earnings per share fell 18% to $2.02 from $2.51 a year ago. 

The company added a net 16,000 rooms in the quarter and indicated about 3,800 properties with 585,000 rooms were in the development stage around the world. 

The company also confirmed it acquired 4.5 million shares of common stock for $1.0 billion in the third quarter. 

Berkshire Hathaway Inc. Class B declined 0.3% to $451.0 after the diversified conglomerate reported its quarterly results. 

Total revenue in the third quarter declined to $92.99 billion from $93.21 billion, net earnings attributable to shareholders swung to a profit of $26.2 billion from a loss of $12.7 billion, and diluted earnings per Class B share were $12.18 from a loss of $5.88 a year earlier. 

The company's operating earnings from fully-owned businesses declined 6% to $10.1 billion, reflecting a weakness in its underwriting business. 

Investment in equity securities declined to $271.6 billion from $353.8 billion, and cash and equivalent rose to $325.2 billion from $276.9 billion a year ago. 

 

European Markets Flatlined In Busy of Week of Rate Decisions 

European market indexes lacked direction in a busy week of earnings and economic releases. 

Benchmark indexes in Paris, London, Milan, and Frankfurt traded in a tight range as investors prepare to review quarterly updates from leading corporations. 

The Bank of England is expected to lower its key lending rate by 25 basis points, reflecting weakening inflationary pressures. 

The central banks of Norway and Sweden are set to release their rate decisions this week, and traders are expecting both central banks to hold rates steady. 

Germany is scheduled to release its international trade data, and the country's trade deficit is likely to expand from the previous month. 

The U.S. Federal Reserve is also expected to lower its key interest rates by 25 basis points following a supersize 50 basis point cut in September. 

The Standing Committee of the People's National Congress in China kicked off its weeklong meeting that will decide the debt level increase and pave the way for additional fiscal stimulus measures. 

The meeting is closely watched by investors, as lawmakers are likely to approve additional spending between 2 trillion and 4 trillion yuan, or between €250 billion and €490 billion. 

 

Manufacturing Activities Diverged In Spain and Italy

Closer to home, a private survey showed Spain's factory activities expanded at the fastest pace in October since February 2022, driven by improving new orders and rising production. 

The HCOB Spain Manufacturing PMI increased 54.5 from 53.0 in September, S&P Global reported Monday. 

Italy's factory activities continued to contract for the seventh consecutive month in a row in October amid deteriorating demand from the U.S., Middle East, and other Eurozone members. 

The HCOB Italy Manufacturing PMI slowed to 46.9 from 48.3 in the previous month, S&P Global said in a separate report. 

 

Europe Indexes and Yields

The DAX index decreased by 0.6% to 19,147.85; the CAC-40 index rose by 0.5% to 7,371.71; and the FTSE 100 index rose by 0.1% to 8,184.24. 

The yield on 10-year German bonds edged higher to 2.41%, French bonds inched higher to 3.15%, the UK gilts edged higher to 4.46%, and Italian bonds decreased to 3.66%.

The euro edged higher to $1.09; the British pound inched higher to $1.29; and the U.S. dollar weakened to 86.32 Swiss cents.

Brent crude increased $2.01 to $75.11 a barrel, and the Dutch TTF natural gas rose by €1.56 to €40.50 per MWh. 

 

Europe Stock Movers

Energy stocks rebounded after crude oil prices advanced following the OPEC+'s decision to delay an increase in output by a month. 

Shell PLC gained 1.2% to 2,610.50 pence, BP plc rose 1.5% to 384.0 pence, and TotalEnergies SE increased 0.8% to €58.36. 

Eni SpA increased 0.7% to €14.13 after the Italian energy company completed the sale of two upstream offshore assets. 

Burberry Group increased 6% to 860.51 pence on speculation that Italy-based Moncler could be preparing for a bid for the luxury fashion product maker. 

Skanska AB advanced 1% to SEK 219.80 after the Swedish construction company signed a contract to build office buildings in London's West End. 

Mining companies advanced following a rebound in commodities prices as China's top legislators commenced a weeklong meeting to finalize the amount of additional fiscal measures. 

Anglo American increased 1.4% to 2,428.50 pence, Antofagasta advanced 0.8% to 1,777.81 pence, and Glencore added 0.8% to 410.83 pence. 

 

China Indexes Edged Higher as Lawmakers Debate Fiscal Deficit Measures 

Stocks in China and Hong Kong advanced as investors shifted their focus to the key meeting of lawmakers that could pave the way for fiscal stimulus.

The Hang Seng index gained 0.3% and the mainland-focus CSI 300 index advanced 1.4% as the weeklong Standing Committee of the People's National Congress started.

The critical meeting of lawmakers is expected to approve the lifting of the debt ceiling limit and the sale of long-term bonds to finance fiscal measures supporting the property markets. 

Investors are anticipating that the previously pledged fiscal measures by the top political leaders and finance ministry over the last five weeks will soon be enacted. 

The legislative meeting this week is likely to provide more clarity about the amount and timing of fiscal measures and details of the plan to revive the moribund property market. 

Market participants have built up expectations of fiscal measures totaling between 2 trillion yen and 4 trillion yen and supportive financial measures for local governments to revive local residential projects in second- and third-tier cities. 

On the economic front, investors are looking forward to the release of international trade data and the survey of non-manufacturing industries. 

 

China Stock Movers 

The Hang Seng index increased 0.3% to 20,574.16, and the CSI 300 index rose 1.4% to 3,944.76. 

Property stocks edged lower and erased some of Friday's gains following the lukewarm new home sales over the weekend. 

China Vanke declined 1.6% to HK $7.29, China Resource Land decreased 0.4% to HK $26.65, and Sun Hung Kai Properties eased 0.1% to HK $85.10. 

Electric vehicle makers traded higher after October vehicle sales were ahead of market expectations. 

Steep discounts and government subsidies supported the sale of electric vehicles, and the advanced vehicle sales surpassed petrol car sales for the third month in a row in October. 

Electric vehicle sales increased to 1.12 million units in October, with a market share of 53.3%, according to CPCA, or China Passenger Car Association. 

BYD increased 3.4% to HK $287.20 after the company's vehicle sales soared 66% from a year ago to 502,757 units. 

The company reported a fifth consecutive monthly record sales of electric and hybrid vehicles, largely because of the subsidies to replace older petrol cars. 

Li Auto increased 1.5% to HK $98.55 after the company said electric vehicle sales dropped 1% from the previous month to 51,443 units. 

NIO decreased 0.3% to HK $5.23 after the company said sales fell 1% from the previous month to 20,976 units.