United States
Favorable earnings news and progress on US fiscal spending plans helped equities rise, with growth stocks leading. The Dow Jones industrial average gained 0.7 percent, the S&P 500 rose 1.0 percent, and the NASDAQ was up 1.4 percent.
Apple rose 2.5 percent and Amazon gained 1.5 percent as the market expects both to report upbeat results after the US close. Positive earnings news lifted Caterpillar, up 4.1 percent, Ford, up 8.6 percent, and A.O. Smith, the HVAC manufacturer up 10 percent. Ford's comment that chip shortages were easing added to risk appetite. On the downside, Ebay fell 6.8 percent on declining value of sales from the prior quarter. Altria, the tobacco giant, dropped 6.2 percent after an earnings and revenue miss.
President Biden's announcement that agreement had been reached on a framework for his Build Back Better plan bolstered cyclicals. Among sectors, consumer discretionary fared best on strength in autos, retail, and homebuilders. Pharma got a lift from an earnings beat at Merck, up 6.1 percent. Financials outperformed while materials and industrials matched the market. Energy lagged with oil prices down. A retreat in Google, down 0.2 percent after its recent gains, weighed on communications stocks.
In US economic news, the advance estimate of third-quarter GDP showed growth slowed even more than expected, with the annual growth rate slowing to 2.0 from 6.7 percent in the second quarter, the weakest showing since the 31.2 percent plunge at the beginning of the pandemic in the second quarter of 2020. The headline is below the median expectation of 2.7 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 19 cents to US$84.33 while spot gold rose 80 cents to US$1,798.35. The US dollar fell vs. most major currencies. Yields on the US Treasury 30-year bond rose 1 basis point to 1.97 percent, and the 10-year note was up 2 basis points at 1.57 percent.
Europe
Divided earnings news left equities narrowly mixed. The Europe-wide STOXX 600 firmed 0.2 percent, the German DAX eased 0.1 percent, the French CAC rose 0.8 percent, and the UK FTSE 100 was down 0.1 percent.
Among sectors, best were food & beverage, with Anheuser-Busch up 10 percent after an earnings beat, plus technology. Capgemini, the IT services provider, rose 6.0 percent after topping earnings expectations and raising its guidance, and STMicroelectronics gained 6.3 percent on a revenues beat and upbeat guidance.
On the downside, lagging were telecom, oil & gas, travel & leisure, and autos & parts. Among companies in focus, VW fell 4.5 percent and TotalEnergies slipped 0.8 percent after earning misses. Royal Dutch Shell, the oil supermajor, lost 2.3 percent after a big earnings miss.
Markets were generally unmoved by news that the European Central Bank left policy on hold, as expected, and after ECB President Christine Lagarde defended the bank's view that inflation is likely to cool next year, despite market pressure to boost rates.
Asia Pacific
Asian equities slipped with lower oil prices weighing on energy stocks and mainland China lagging again.
Commodity price weakness depressed mainland Chinese energy and materials stocks. China's CSI 300 index declined 0.7 percent and the Shanghai composite fell 1.2 percent. Tech stocks and consumer staples held up best. Coal miners were hit as Chinese authorities acted to contain rising prices.
Hong Kong's Hang Seng index fell 0.3 percent. Health care and biotech lagged while property and real estate held up better amid reports of progress in China Evergrande debt restructuring talks. Separately, South Korea's KOSPI fell 0.5 percent and Taiwan's Taiex benchmark slipped 0.2 percent.
A weak US showing and Chinese market losses spilled over to Japanese markets with value stocks off the most. The Nikkei 225 index dropped 1.0 percent and the broader Topix lost 0.7 percent. Losses were nearly across the board with natural resources and iron & steel lagging, followed by banks and transportation equipment.
Australian equities edged down in a mixed sector showing with the All Ordinaries index down 0.2 percent. Rising Australian bond yields amid expectations for faster rate increases in response to the global inflation scare weighed on sentiment. Commodity producers lagged with liquefied natural gas, coal, and iron ore producers down. Tech and consumer staples were also weak. On the positive side, building materials rose, with Boral, the construction materials company, up 4.6 percent. Retailers got a lift from strong quarterly results from JB Hi-fi, the retailer, up 3.3 percent.
In economic news, Japanese retail sales fell a preliminary 0.6 percent on the year in September after a 3.2 percent fall in August, which was caused by a resurgence in coronavirus cases and stormy weather. The latest figure was stronger than the median economist forecast for a 2.3 percent drop. Separately, the Bank of Japan said it is maintaining its stimulative policy, as expected. The bank said it remains optimistic about the medium-term outlook for steady recovery following short-term weakness, but also called for a close watch over supply chain constraints that have delayed production and shipments of automobiles and electronic appliances among others.
Looking ahead*
In Asia/Pacific, South Korean industrial production, South Korean retail sales, Japanese unemployment, Japanese industrial production, Australian PPI, and Australian retail sales figures are scheduled. In Europe, French GDP flash, French consumer manufactured goods consumption, French CPI, KOF Swiss leading indicator, Taiwan GDP, German GDP flash, UK M4 money supply, Eurozone GDP flash, Eurozone HICP flash, Italian CPI, and Italian GDP reports are due. In North America, reports on Canadian monthly GDP, Canadian industrial product prices, US employment cost index, US personal income and outlays, Chicago PMI, and US consumer sentiment are on tap.
