G7 EQUITY MARKET REMAIN STEADY
The Dow Jones was little changed at record levels and both the S&P 500 and the Nasdaq were in the green on Monday, after the 3 main averages ended last week with gains of more than 1%. Strong corporate results have been boosting investors' confidence on the American economic recovery despite persistent inflationary pressures and supply constraints. Of the 117 S&P 500 companies that have reported so far, 84% beat market forecasts, according to Refinitiv. Big tech companies are due to report quarterly results this week, including Facebook (today after markets close), Alphabet, Amazon, Apple and Microsoft. Boeing, Caterpillar, Coca-Cola and McDonald’s are also set to publish quarterly results this week. Meanwhile The CATSX increased 3810 points or 21.85% since the beginning of 2021, according to trading on a contract for difference (CFD) that tracks this benchmark index from Canada.
European equity markets traded mostly in the green on Monday, as investors weighed a strong third-quarter earnings season against inflation fears and prospects of tightening monetary policy by major central banks. On the corporate front, HSBC earlier reported a better-than-expected third-quarter pre-tax profit, while Michelin is set to release results. In the US, FAANG earnings get underway with Facebook reporting later today. Meanwhile, the Italian government and UniCredit failed to agree on terms over the rescue of commercial bank Monte dei Paschi di Siena.
The FTSE 100 was slightly up at 7,220 on Monday, moving towards a 20-month high hit earlier in October, as a strong third-quarter earnings season offset concerns over inflation and rising interest rates. In addition, oil and mining stocks were supported by higher commodity prices. All eyes turn to British finance minister Rishi Sunak's budget due Wednesday, which will probably include an extra £5.9 billion of spending for the health service over the next few years to drive down waiting lists.
The CAC 40 was little changed around the 6730 level on Monday, underperforming its European peers, mainly dragged down by shares of aerospace firm Safran (-2.4%), auto suppliers Faurecia (-2.1%) and Valeo (-2.1%). Traders were also cautious ahead of the earnings results from big tech companies in the US. On the other hand, ArcelorMittal rose 2.3%, despite lower steel prices.
Japanese stocks lagged Asia Pacific peers on Monday amid concerns over tech earnings and easing market outlooks, with the Nikkei 225 Index falling 0.71% to close at 28,600 while the broader Topix Index shed 0.34% to 1,995. Japanese tech stocks tracked US peers after social media giants heavily reliant on digital ads took a hit amid Apple’s iOS privacy update, while semiconductor companies were also negatively impacted by chip shortages. Softbank Group (-3.37%), Lasertec (-2.91%) and Tokyo Electron (-1.22%) led the declines, along with auto manufacturers and Uniqlo operator Fast Retailing (-3.82%) amid expectations of downward revisions. Meanwhile, Chugai Pharmaceutical jumped 10.54% after reporting upbeat earnings due to its COVID-19 antibody drug.
The FTSE MIB was higher above the 26,700 level on Monday, close to levels not seen in 13 years, and tracking a general positive mood in Europe. Investors' sentiment continued to be supported by better-than-expected earnings reports while waiting for another batch of corporate results during the week. Also, rising inflation jitters and worries over higher interest rates seem to have momentarily waned. Among single stocks, the key index was boosted by Exor (+4.9%) on news of reopening negotiations with Covéa for the sale of the stake held in PartnerRe, the American reinsurance subsidiary, valued at 9 billion dollars. Meanwhile, the banking sector was mixed as BancoBPM (+3.1%) and BPER Banca (+1.4%) booked gains, while Unicredit (-1.7%) lost on news that the negotiations for the acquisition of Mps have failed.
