Global markets focused on the Fed’s next move

written on November 1, 2022

The war in Ukraine has tended to increase uncertainty regarding inflation and growth prospects. When and with what consequences this war will end is pure speculation, but capital markets are expected to build a certain immunity to the headline risks in the coming weeks. The medium- to long-term consequences, on the other hand, could be significant. It is possible that we are at the beginning of a new bloc formation or a new Cold War. This would put a significant damper on globalization and further fuel higher structural inflation. 

US equities ended Monday’s session in the red after failing to extend last week’s positive momentum. This came amid a quiet day on the economic and earnings fronts, but both are set to heat up as the week progresses. The Dow Jones Industrial Average decreased 0.4%, the S&P 500 Index fell 0.8%, and the Nasdaq Composite lost 1.0%. In the meantime, shares in Europe were marginally higher, with the Euro Stoxx 50 Index up 0.1%. 

Summary

  • Asian shares rose on Tuesday with the Hang Seng in Hong Kong soaring by over 6% after concluding the month of October with a loss of more than 14%.    
  • European shares are set to track gains in Asia and positive future markets overnight in the US. 
  • Oil prices rose in early trading, paring losses from the previous session, as a weaker US dollar offset widening Covid-19 curbs in China that have stoked fears of slowing fuel demand in the world’s second-largest oil consumer. 
  • The Reserve Bank of Australia raised the cash rate by 25bps to 2.85% earlier this morning, matching market forecasts. The move marked the seventh straight rate hike, with the board mentioning further rate hikes will be needed as inflation in Australia is too high. The committee added that it now saw inflation peaking around 8% this year, compared with its previous forecast of 7.75%. 
  • The Caixin China General Manufacturing PMI came in at 49.2 in October, recovering from September’s 4-month low of 48.1 and compared to market estimates of 49. Still, the reading pointed to the third straight month of fall in the manufacturing sector. 
  • BP this morning reported stronger-than-expected third quarter profits. The British energy major posted a net profit of $8.2 billion compared with a net profit of $3.3 billion over the same period a year earlier and analysts’ expectations of $6 billion. 
  • Sony Group Corp said on Tuesday that operating profit in the second quarter rose 8%, above analysts' estimates. Sony booked a profit of 344 billion yen in the third quarter. That compared with a 300-billion-yen average estimated by analysts. 
  • Toyota Motor Corp this morning posted a 25% drop in second-quarter operating profit and missed expectations as soaring parts and materials costs outweighed a boost in overseas revenue from the plunging Japanese yen, as well as a rebound in production. 
  • Billionaire Elon Musk said on Monday he would be the chief executive officer of Twitter, the social company he recently acquired for $44 billion.  
  • Tesla engaged in discussions with Glencore about taking a stake in the Swiss-based miner and commodities trader, the Financial Times reported on Monday. The electric car maker was seeking to secure supplies of battery materials, such as cobalt, lithium, and nickel. However, no deal was reached, partly over Tesla’s concern that Glencore’s coal mining operations conflicted with its environmental message and partly over reluctance to take a minority stake of about 10% to 20%. 
  • Foxconn is likely to see a 30% drop in its November shipments for Apple’s iPhone due to the impact of Covid-19 restrictions at its facility in Zhengzhou, China. Workers reportedly fled the Zhengzhou facility over the weekend due to discontent over strict Covid-19 measures. In response, the company is planning to increase iPhone production at its factory in Shenzhen in order to lower the impact of the reduced output. 

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Redefine the way you grow and manage your money today!

Life’s full of mysteries. Your money shouldn’t be one of them.