USA AND ASIA EQUITY APPARENTLY IN CONSOLIDATING MODE
US stocks lacked direction on Wednesday but remained near fresh record highs hit the day before, as traders digest mixed corporate results. Earnings from Coca-Cola, McDonald’s and GM came better-than-expected while losses from Boeing were way bigger than forecasts. Also, Microsoft and Alphabet were in the green after posting a record quarterly revenue, along with Twitter after stating that Apple’s privacy updates had less of an impact on its results. Ford and eBay are due to report today after the closing bell. Meanwhile The S&P/TSX Composite index was down around the 21,000 level, with a negative performance from all sectors, while the energy (-0.7%) sector extended losses for the second session as oil prices fell back to below $84 a barrel. the BoC ended its quantitative easing programme and pushed back rate hike forecasts to the middle quarters of 2022, while cutting growth forecasts for both 2021 and 2022 and expecting high inflation.
The Nikkei 225 Index shed 0.03% to close at 29,098, while the broader Topix Index declined 0.23% to 2,013 on Wednesday, as investors await policy outlook guidance from the Bank of Japan’s ongoing monetary policy meetings and as the October 31 general election looms. The ruling Liberal Democratic Party is favored to retain a majority in the lower house, but analysts were looking ahead to next year’s upper house election as a source of uncertainty for the ruling party should it start losing seats in this election. Index heavyweights Softbank Group (-3.37%), Canon (-5.89), Fujikura (-8.33%), Tokyo Electric Power (-6.23) and Nidec (-2.9) dragged the market, along with a slew of shipping and financial stocks.
The Shanghai Composite Index lost 0.98% to close at 3,562 on Wednesday, while the Shenzhen Component fell 1.09% to 14,394 as China’s latest crackdown on coal storage sites dragged coal mining stocks and the market down. The coal sub-index and the energy sub-index declined 4.2% and 3.2%, respectively, after China’s state planner said that the government would conduct a ”clean up and rectification” work on unlicensed coal storage sites to prevent hoarding of the commodity already in tight supply. Meanwhile, environmental protection-related companies continued to surge amid China’s long-term pivot towards clean energy and carbon neutrality. Elsewhere, industrial profits in China surged 16.3% year-on-year for September despite rising costs and supply bottlenecks.
The BSE Sensex lost 206.93 points or 0.34% to close at 61,143.33 on Wednesday snapping a 2-day gaining streak, tracking the weak Asian market. Metals, banks and capital goods were the main draggers. S&P BSE Metal fell 1.82% as easing supply concerns weighed on the prices of the metal, which in turn also hurt the capital goods industry. Among the individual stocks, Axis Bank slumped the most (-6.52%) amid heavy profit taking by the investors after the private lender reported 86% jump in its net profit for Q3 yesterday, followed by Bajaj Finance (-4.7%), Bajaj Finserv (-1.85%) and IndusInd Bank(-1.69%).
Meanwhile, the yield on the benchmark 10-year Treasury note declined below 1.6% at the end of October, as investors weighed a strong earnings season against concerns over slowing economic growth, inflationary pressure and ongoing supply chain issues. Still, the yield remained close to a recent five-month high, as investors believe the Fed will start reducing stimulus as soon as next month. On Friday, Fed Chair Powell reiterated the central bank would soon begin tapering although high inflation and pressure on wages will likely last into next year but will abate. Fresh GDP growth figures for Q3 due this week will be keenly watched for an update on the US economy.
