US equities extend November rally

US markets extended their winning streak on Tuesday, with the S&P 500 up for the seventh consecutive day, driven by optimism that the Fed’s rate hikes may have peaked. Tech shares, particularly large-cap companies, led the gains, while concerns lingered about market breadth, as gains were concentrated in specific sectors, and lower-quality segments experienced outsized gains. Treasury yields declined, and energy prices fell due to concerns about global economic growth, impacting the Russell 2000 Index and energy shares. Meanwhile, European equity markets saw a slight decline, with Deutsche Boerse and Amadeus IT rising on strong revenue expectations, Daimler Truck Holding falling due to disappointing Q3 results, and UBS reporting a Q3 loss mainly attributed to expenses related to its acquisition of Credit Suisse. 

Summary for 08.11.2023 

• Asian equities markets were mostly flat to slightly lower on Wednesday as concerns over potential interest rate hikes by the Federal Reserve and uncertainties surrounding China’s economy dampened investor sentiment. The Nikkei edge up, with the Hang Seng saw gains driven by Chinese property shares. However, the Kospi and ASX 200 both experienced declines, reflecting cautious investor sentiment awaiting further guidance from the Fed and China’s economic data. 
• European markets are set to open lower this morning as negative momentum continues from the start of the week, while US equity futures are flat after recent winning streaks. 
• Oil prices hit a more than two-month low this morning as a significant increase in US crude inventories, signs of rising OPEC production, and weaker Chinese economic data raised concerns about supply and demand in the market. Additionally, a rebound in the US dollar and hawkish comments from Fed officials added to the downward pressure on oil prices. 
• Recent high-level meetings between China and the US have positively influenced their relationship, raising international expectations for further improvements, according to Vice President Han Zheng, ahead of a planned meeting between Xi Jinping and Joe Biden next week. These discussions followed visits by top officials from both nations and rare talks on nuclear arms control. 
• In Q3, total household debt in the US reached a new record high of $17.29 trillion, with increases in mortgage, credit card, student loan, and auto loan balances. The rise in credit card balances was attributed to strong consumer spending and economic growth, while delinquency rates increased for most types of debt. 
• In September, the US trade deficit widened to $61.5 billion, exceeding market expectations and reaching the third-highest level since 2021. The increase was drive by higher imports, particularly in cell phones, household goods, and passenger cars, while exports also rose, led by other petroleum products, soybeans, and crude oil. 
• Industrial producer prices in the Euro Area declined by 12.4% year-on-year in September, the steepest on record, driven by falling energy and intermediate goods costs, while inflation slowed for various categories. Excluding energy, producer price inflation decelerated to 0.5% year-on-year, with a 0.5% monthly increase. 
• The Q3 earnings season for S&P 500 companies is nearing its end, with a majority of companies beating expectations and showing positive year-over-year earnings growth of around 3.9%, signalling improvements in profit margins and earnings momentum. However, forecasts for Q4 earnings growth have been revised down to 3.4%, reflecting a more realistic expectation given economic uncertainties as we approach year-end. 
• Occidental Petroleum reported Q3 profits that exceeded analysts’ expectations due to strong US oil production, despite a decline in energy prices and weaker results in its chemical and pipeline segments. The company’s results were boosted by asset sales but still fell significantly below the same quarter last year, and it repurchased a portion of Berkshire Hathaway’s preferred shares used to fund its acquisition of Anadarko Petroleum. 
• Uber’s Q3 results showed slower revenue growth than expected, impacted by accounting changes, but the company is optimistic about strong holiday-quarter demand. While the revenue missed estimates at $9.29 billion, Uber expects a robust Q4 and predicts adjusted core profit above analyst estimates, resulting in a 3.7% increase in its share price in Tuesday’s session. 
• TripAdvisor reported better-than-expected Q3 results with adjusted earnings per share of $0.52 and revenue of $533 million, surpassing consensus estimates. The company’s strong performance, driven by its Viator tourism experiences service and robust hotel search offering, contributed to a 16% year-over-year growth in sales, dispelling concerns about a post-pandemic travel demand slowdown. Shares rallied by 11% in yesterday’s trading session. 
• Gilead Sciences reported Q3 results that exceeded expectations, with earnings rising 21% mainly due to lower taxes. Although the company’s sales remained relatively unchanged year-over-year, its robust performance in core products like HIV drug Biktarvy and better-than-expected sales of the Covid drug Veklury did not prevent its shares to decline by 1.25% shares during after-hours trading. 
• EBay provided Q4 guidance that fell short of analyst expectations, with lower expected net revenue and earnings per share, leading to a more than 6% drop in its shares in after-hours trading. Despite reporting better-than-expected adjusted EPS and meeting revenue estimates for Q3, eBay’s weaker holiday sales forecast led to the market’s negative reaction. 
• Rivian Automotive’s Q3 revenue of $1.34 billion surpassed estimates, while its EPS came in slightly lower than expected. The company raised its 2023 production target to 54,000 electric vehicles and terminated its exclusivity deal with Amazon for its electric delivery van. In after-hours trading, shares were up nearly 2%.