Earnings in focus as Middle East tensions persist

Investors capped off a whip-sawing week by sending shares lower Friday despite stronger-than-expected quarterly earnings results from a trio of major US banks, as rallying oil prices and geopolitical tension kept the market on the defensive.  The S&P 500 Index was down 0.5% on Friday but up 0.4% for the week, the Dow was up 0.1% on the day and up 0.8% for the week, while the Nasdaq Composite was down 1.2% on Friday and 0.2% lower for the week.  Meantime, European shares also ended the week in negative territory, with the DAX and Euro Stoxx 50 shedding both more than 1.5% on Friday as travel and leisure shares tumbled more than 2%.  The DAX retreated for the fourth consecutive week while the broader Euro Stoxx 50 managed to gain about 0.6%. 

Summary for 16.10.2023 

• Asian equity markets fell on Monday as the Israel-Hamas war and concerns about persistent inflation weighed on sentiment.  Investors also look ahead to China’s Q3 GDP figures and Japan’s September inflation report this week.  Shares in Australia, Japan, South Korea, Hong Kong, and China all declined. 
• European and US shares are poised for a steady start as traders assess the latest developments in the Middle East conflict and look ahead of corporate earnings reports from major US companies. 
• Oil prices fell in Asian trade this morning, reversing course after a sharp rally in the prior week as markets awaited further developments in the Israel-Hamas war.  Crude prices had settled higher after volatile swings last week, amid expectations that the conflict could cause disruptions in supply from the world’s biggest oil producing region.  But this was somewhat offset by signs of cooling US demand and higher production. 

• US President Joe Biden may visit Israel soon, adding to the US diplomatic push after Secretary of State Antony Blinken met Arab leaders about the Israel-Hamas conflict and efforts to provide humanitarian assistance to Gaza.  The exchange of fire grew more intense on Israel’s border with Lebanon, with Israeli army jets stiking Hezbollah military infrastructure.  The army estiamted more than 600,000 people left Gaza City and its surrouding for southern Gaza. 
• The University of Michigan consumer sentiment for the US fell to 63 in October from 68.1 in September, the lowest in five months, and missing market estimates of 67.2.  The gauge for current economic conditions fell to a five-month low of 63 from 68.1 in the previous month and consumers’ future expectations retreated to 60.7 from 66, also the lowest in five months.  Year-ahead inflation expectations rose to 3.8% from 3.2% in the earlier month, the highest since May 2023. 
• Shares of JPMorgan rose 1.5% on Friday after the country’s biggest bank delivered profit and revenue gains that topped Wall Steet expectations, helped by favourable net-interest income.  CEO Jamie Dimon also offered optimistic comments about the economy but sounded warnings over inflation and high interest rates.  Wells Fargo and Citigroup also reported strong results, but their share price moved in opposite direction, with the former advancing by 3% while the latter declined by 0.2%. 
• BlackRock shares fell 1.3% Friday after the world’s largest money manager posted third-quarter revenue that fell short of expectations.  Overall, the shares are down 11.9% so far this year.  
• Also, lower ended shares of Boeing which fell 3.3% following reports the aerospace company had widened the scope of an investigation into potential defects in its 737 MAX 8 aircraft. 

• UnitedHealth Group rose 2.6% of Friday, leading Dow gainers, after quarterly earnings and revenue exceeded expectations. 
• In the US, a key focus this week will be on the onset of the earnings season featuring major players like Tesla, Bank of America, Johnson & Johnson, Procter & Gamble, and Netflix.  Also, investors will be paying attention to Fed speeches, and data including retail sales, building permits, housing starts, existing home sales, and industrial production.  Internationally, inflation rates will be closely monitored in the UK, Canada, and Japan.  China will grab attention with its Q3 GDP growth rate, retail sales, industrial production, fixed asset investment, unemployment rate, and house price index.  licensed to conduct investment services business under the Investments Services Act by the MFSA. 

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