The equity market’s October shakedown resumed with renewed intensity Wednesday, as markets digested incoming earnings reports and another jump in bond yields.  The major equity average saw disparate declines on the day, with the S&P 500 losing 1.4% while the Nasdaq shed more than 2% on technology-sector weakness.  The Dow held up better, thanks to a boost from Microsoft and Boeing shares.  More broadly, interest rates remain the prominent drive for financial markets.  Ten-year Treasury yields were notably higher yesterday, moving back above 4.9% but still off the recent highs after topping 5% on Monday.  Elsewhere, European shares extended their muted momentum with mixed session on Wednesday, with Frankfurt’s Dax and the Euro Stoxx 50 closing near the flatline as markets digested a batch of economic data and corporate earnings ahead of the ECB’s policy decision later today. 

Summary for 26.10.2023 

  • Most Asian equities fell sharply on Thursday with regional technology shares tracking overnight decline in their US peers, while a spike in bond yields and uncertainty over Japanese monetary policy saw the Nikkei lead losses.  Other tech-heavy indices, such as South Korea’s Kospi and Hong Kong’s Hang Seng, also logged steep declines, losing between 0.7% and 2.2%.  The Kospi fell even as data showed third-quarter economic growth was more than expected. 
  • European shares are set to tumble as disappointing results sap investor sentiment.  Meantime, US equity futures extended losses overnight as investors will be closely monitoring a host of economic numbers scheduled for today, including core durable goods orders, preliminary GDP and PCE prices and jobless claims.  Among earnings, companies including, Intel Corporate, Merck & Company Inc. and Ford Motor Company are scheduled to report quarterly results. 
  • Oil prices were little changed this morning after jumping nearly 2% in the previous session, as the market weighted mixed drivers, eyeing tensions in the Middle East while digesting a rise in US crude stockpiles. 
  • US President Joe Biden and Israel Prime Minister Benjamin Netanyahu discussed efforts to secure the release of hostages, allow foreign nationals to leave Gaza and bolster aid deliveries.  Netanyahu told Israelis a ground invasion is being prepared, tiggering a jump in oil prices.  French President Emmanuel Macron said a “massive” ground operation would be a mistake as diplomatic efforts to avert a wider war intensify. 
  • The European Central Bank is set to keep interest rates on hold for the first time in more than a year today amid growing evidence that its unprecedented bout of hikes is helping to bring down inflation.  President Christine Lagarde on Wednesday said the battle to tame consumer-price gains isn’t over, but she has confidence they can be returned to 2%. 
  • Sales of new single-family houses in the US surged by 12.3% to a seasonally adjusted annualised rate of 759k in September, up from a revise 676k in the previous month and surpassing the market consensus of 680k.  New home sales reached their highest level since February 2022, driven by limited supplies of previously owned houses, which in turn have increased demand for new housing and homebuilding. 
  • The United Auto Workers reached a tentative labour agreement with Ford Motor on Wednesday, putting pressure on the carmaker’s two chief rivals to end a protracted strike that has cost the industry billions of dollars. Ford agreed to a record 25% hourly wage hike over the life of the contract, which exceeds four years. UAW leadership will vote on the deal Oct. 29. It then must be ratified by Ford’s 57,000 US hourly workers, a process that could take weeks 
  • In extended trading yesterday, Meta Platforms lost more than 3.0% despite an earnings and revenue beat, as the firm’s Reality Labs division lost $3.7 billion in the third quarter.  The company reported Q3 EPS of $4.39 versus $3.64 expected.  Revenues were reported at $34.15 billion versus $33.57 billion expected.  Meta Platforms also forecasted Q4 2023 revenue in the range of $36.5-$40 billion versus $36.64 billion expected. 
  • Boeing fell 2.5% yesterday after the aerospace company reported a larger-than-expected loss, though revenue was better than expected. 
  • Gap rose 5.2% on Wednesday after Wells Fargo upgraded the apparel company’s shares to overweight, citing its cost-cutting plans.