US equities rebounded on Tuesday, supported by lower bond yields and positive earnings reports after a challenging October. Small-cap and cyclical sectors performed well, with the S&P 500 up 0.7% for the day but down 2.2% for the month, the Dow Jones gaining 0.4% while falling 1.4% in October, and the Nasdaq Composite rising by 0.5% but remaining 2.8% lower for the month. European equities also saw gains yesterday, influenced by lower Eurozone inflation and an unexpected GDP contraction, signalling a cautious monetary policy approach by the European Central Bank, while the Euro Stoxx 50 Index had its weakest monthly performance since September 2022. 

Summary for 01.11.2023 

  • Asian shares were generally subdued on Wednesday, with some positive cues from Wall Street, while the Nikkei in Japan surged after the Bank of Japan indicated it would maintain its ultra-dovish policy. Weak Chinese economic data and anticipation of the Federal Reserve rate decision kept overall sentiment fragile in the region. 
  • European equity futures rose, while US futures dipped as investors awaited the Federal Reserve’s expected decision to maintain interest rates. 
  • Oil prices saw a slight recovery in Asian trade, bouncing back from their worst month in five, with the focus shifting to the Fed’s interest rate decision. Prices were impacted by reduced risk premium from the Israel-Hamas conflict, mixed US oil inventory data, and concerns over global economic and Chinese demand, but some bargain buying supported the market. 
  • In October, China’s manufacturing sector contracted for the first time since July, with the Caixin China General Manufacturing PMI falling to 49.5, below market expectations. This decline was primarily driven by decreased output, declining foreign sales, reduced buying levels, the highest input cost inflation in nine months, and a pessimistic sentiment about the global economic outlook, highlighting ongoing fragility in the country’s economic recovery. 
  • In Q3 2023, the Euro Area economy contracted by 0.1%, falling short of expectations and marking its first decline since 2020. Germany’s GDP shrank by 0.1%, Italy stagnated, while France and Spain saw modest growth of 0.1% and 0.3%, respectively. Year-on-year growth was only 0.1%. The ECB expects a slow recovery with 0.7% growth in 2023 due to various economic challenges. Growth is anticipated to pick up in 2024 and 2025, reaching 1% and 1.5%, respectively. 
  • The inflation rate in the Euro Area fell to 2.9% year-on-year in October, slightly below market expectations of 3.1%. The core inflation rate also dropped to 4.2%. Energy costs decreased significantly, and inflation rates eased for food, alcohol, tobacco, and non-energy industrial goods. Services inflation remained relatively stable. Monthly consumer prices inched up by 0.1% in October. 
  • China Evergrande has proposed a new debt restructuring plan, offering offshore bondholders a 30% equity stake in each of its two Hong Kong-listed subsidiaries. However, bondholders holding approximately $19 billion of debt are expected to face significant losses if they agree to the new terms. 
  • Advanced Micro Devices forecasted $2 billion in sales by 2024 for its AI chip, the MI300, aimed at competing with Nvidia. Despite a weak quarterly outlook that missed expectations and caused an initial drop in share price, AMD’s shares recovered after announcing this chip’s sales projection and its potential adoption by large hyperscale customers. Meantime, Nvidia lost 0.9% in regular trading yesterday after reports that the company may be forced to cancel up to $5 billion worth of advanced chip orders to China in compliance with new restrictions. 
  • BP’s third-quarter earnings fell short of market expectations despite increased oil and gas production and higher refining margins. Weaker-than-expected gas trading results contributed to an underlying replacement cost profit of $3.29 billion, prompting the company to announce a $1.5 billion share buyback and a dividend increase of 7.27 US cents a share. Shares fell by 4.6% yesterday. 
  • Pfizer reported its first quarterly loss since 2019 on Tuesday. The loss was mainly because of charges related to its COVID products like Paxlovid and the Comirnaty vaccine it made with BioNTech. In the same period last year, they had made a profit of $1.51 per share, but this time they lost 42 cents per share. 
  • Caterpillar fell 6.8%, making it the biggest Dow decliner yesterday, after the machinery maker’s forecast that revenue for the current quarter may increase only “slightly” from the year-earlier period appeared to disappoint the market. Otherwise results for the previous quarter surpassed expectations. 
  • Shares of Anheuser-Busch InBev rallied by 5.3% after the beer company’s third-quarter earnings topped analysts’ expectations, though revenue was slightly below forecasts. 
  • JetBlue Airways tumbled 10.5% in yesterday’s session after the airline’s third-quarter results fell short of analysts’ expectations. It also projected losses for the fourth quarter and full year. 
  • Pinterest 19% after the image-sharing service’s third-quarter results topped expectations. 
  • V.F. Corporation dropped 14% after the apparel and footwear company on Tuesday withdrew its full-year profit and revenue forecasts and cut its dividend. The company said its Vans brand faces particular challenges.