Today’s Big Picture Asia-Pacific equity indexes that are open today ended today’s session down.India’s Sensex declined 0.34%, Australia’s ASX All Ordinaries fell 1.49%, China’s Shanghai Composite dropped 1.66% after being closed all last week, and Hong Kong’s Hang Seng closed 2.95% lower on a broad decline led by Consumer Services names.Japan’s markets are closed today marking Sports Day, which commemorates the opening of the 1964 Olympics and acts as a kind of national field day for schools.South Korea’s markets are closed marking Hangul Day, a holiday celebrating the creation of the Korean Alphabet in the 15th century.Taiwan’s markets are closed to mark National Day, or Double Tenth Day, which commemorates the start of the Wuchang uprising in 1911 and the end of the Qing Dynasty.
By mid-day trading, major European equity indices are down across the board except for Germany’s DAX, and U.S.futures point to a soft open later this morning.
Once again, we start the week off at a slow pace with little in the way of fresh economic data or earnings reports.
That will change by week’s end as investors will have not only digested a full serving of inflation data but will have also started the September quarter earnings season.
The likelihood is high that the September Consumer Price Index and Producer Price Index will add to the growing conviction the Fed will need to go bigger for longer in its fight against inflation.
What its previous and future efforts mean for the pace of the economy, borrowing costs, and currency headwinds will be sussed out as companies report their September quarter results and update guidance going forward.
With a number of factors at play for companies to contend with, ranging from slowing demand, continued supply chain issues, and pricing pressures, we are likely to see expectations for the current quarter continue to be revised lower.As that occurs, should Treasury yields continue to creep higher, we are likely to see more investors sit on the sidelines when it comes to equities.
Data Download International Economy
Following its weeklong National Day/Golden Week holiday, China is being hit by another wave of rising covid cases.Yesterday, 1,939 locally transmitted cases were reported up from 1,645 on Saturday, hitting the highest since August 20.
The Sentix Investor Confidence for the Eurozone fell to -38.3 for October, missing the -34.7 forecast and lower than the September figure of -31.8.
Following French President Emmanuel Macron’s call for “energy sobriety,” the French government has asked municipalities, households, and companies to reduce their energy consumption by 10% over two years to counter Russia’s decision to cut the flow of natural gas to Europe.
The Bank of England announced it will be increasing the size and scope of its emergency support for the bond market.The bond-buying program is still scheduled to end on Friday, but the changes will be:
Boosting the daily auction size to 10 billion pounds from 5 billion pounds for a total of 50 billion pounds.Launching a “Temporary Expanded Collateral Repo Facility.This facility will enable banks to help to ease liquidity pressures facing their client LDI funds through liquidity insurance operations, which will run beyond the end of this week.” Accepting other types of collateral such as corporate bonds and index-linked gilts.
Domestic Economy
After Friday’s September Employment Report, odds are market watchers will be waiting to hear what Chicago Fed President Charles Evans and Federal Reserve Vice Chair Lael Brainard have to say about the course of monetary policy, inflation, and the health of the economy.Following the September Employment Report, the CME FedWatch Tool now sees an almost 60% probability of the Fed Funds rate hitting 450-475 basis points (and about a 25% chance of 475 – 500) exiting the Fed’s February 2023 monetary policy meeting vs.the current 300-325 basis points.
Nine in ten CEOs in the U.S.(91%) believe a recession will arrive in the coming 12 months, while 86% of CEOs globally feel the same way according to findings from KPMG .In the U.S., half of the CEOs (51%) say they’re considering workforce reductions during the next six months, while on a global basis eight in ten CEOs said the same.
With the booster rollout targeted at the omicron variant lagging last year’s vaccination pace, Pfizer ( PFE ) and BioNTech ( BNTX ) will team with Disney’s ( DIS ) Marvel Comics to promote COVID-19 vaccinations.
Markets
Friday saw markets accelerate the dip that started in the middle of the week as all sectors, including Energy, traded off with Technology and Consumer Discretionary names taking the biggest lumps, down 4.15% and 3.44%, respectively.The Dow dropped 2.11%, the S&P 500 fell 2.80%, the Russell 2000 closed down 2.87% and the Nasdaq Composite was impacted most, down 3.80%.In individual names, glucose monitoring developer and manufacturer DexCom ( DXCM ) gained 7.28% on Friday after Medicare and Medicaid Services expanded the scope of coverage criteria for glucose monitors meaning that the addressable market expanded significantly immediately.
Here’s how the major market indicators stack up year-to-date:
Dow Jones Industrial Average: -19.38% S&P 500: -23.64% Nasdaq Composite: -31.91% Russell 2000: -24.19% Bitcoin (BTC-USD): -27.90% Ether (ETH-USD): -63.88% Stocks to Watch Before trading kicks off for U.S.-listed equities, AZZ ( AZZ ) is the only company slated to report its quarterly results.Readers will want to be on the lookout for earnings pre-announcements, both good and bad, and what they could mean for other companies poised to report in the coming days and weeks.
Chinese EV company Nio ( NIO ) is entering Netherlands, Denmark, and Sweden following its entry into the Norwegian market last year.The company is offering leases on the ET7, EL7, and ET5 models and making them available through a subscription model designed to encourage EV use.
Rivian Automotive ( RIVN ) issued a recall for about 13K vehicles after flagging a problem with its steering system.
Amazon ( AMZN ) is looking to invest over €1 billion in electric vans, trucks, and low-emission package hubs across Europe over the next five years.
The Financial Times reports BlackRock ( BLK ) has lost more than $1 billion in asset management business in U.S.Republican states upset with the company’s green investing policies.
Citigroup’s ( C ) Treasury and Trade Solutions announced its intent to launch “24/7 Clearing” as a service to its financial institution clients, beginning with 24/7 USD Clearing in Q4 2022.
This service enables Citi’s clients to make USD payments across Citi’s 1,500 financial institution customers globally 24 hours a day, 7 days a week, including holidays.
IPOs
As of now, it looks like a rather quiet week on the IPO front.Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page .
After Today’s Market Close
No companies are expected to report quarterly results after equities stop trading today, but as we mentioned above, readers will want to take note of any earnings pre-announcements to be had and their implications.Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar .
On the Horizon Tuesday, October 11
Japan: Economy Watchers Current Index – September UK: Employment Change Report – August US: NFIB Small Business Optimism Index – September Wednesday, October 12
Japan: Core Machinery Order – August UK: Industrial Production, Manufacturing Production – August Eurozone: Industrial Production – August US: Weekly MBA Mortgage Applications US: Producer Price Index – September Thursday, October 13
Japan: Producer Price Index – September Germany: Consumer Price Index – September US: Weekly Initial & Continuing Jobless Claims US: Consumer Price Index – September US: Weekly EIA Natural Gas Inventories US: Weekly EIA Crude Oil Inventories Friday, October 14
China: Consumer Price Index, Producer Price Index, Imports/Exports – September US: Retail Sales – September US: Import/Export Prices – September US: Business Inventories – August US: University of Michigan Consumer Sentiment Index (Preliminary) – October Thought for the Day “You take an educated gamble.If you don’t occasionally make a mistake, you’re not doing your job.” ~ James Sinegal
Disclosures Nio (NIO), Rivian (RIVN) are constituents of the Tematica BITA Cleaner Living Index Nio (NIO), Rivian (RIVN) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index .
