19 Oct

Corporate earnings push stock indices higher

October 19, 2022

By JustMarkets

The US indices rose on Tuesday as better-than-expected quarterly results continued to support stock sentiment for a second straight day, although Apple’s decline from session highs held back gains. At yesterday’s stock market close, the Dow Jones Index (US30) increased by 1.12%, and the S&P 500 Index (US500) added 1.14%. NASDAQ Technology Index (US100) gained 0.77%.

Apple ordered its suppliers to cut production of its iPhone 14 family of products by 6 million units after an expected surge in demand failed to materialize. Salesforce shares increased by 4% on reports that investor Starboard Value has acquired a “significant” stake in the software maker. Netflix stock rose more than 14% after the release of its third-quarter earnings report, which showed strong earnings estimates, while the number of subscriptions also exceeded expectations.

Today, companies such as Tesla (TSLA), Procter&Gamble (PG), and IBM (IBM) will report.

According to Coalition Greenwich, the world’s largest banks will earn a total of $8.3 billion on loan trading this year, the lowest since 2012.

According to the National Association of Home Builders (NAHB), builder confidence in the US market fell by 8 points to 38 in October, half of what it was six months ago. This is the lowest confidence reading since August 2012, excluding the 2020 pandemic. High mortgage rates approaching 7% have significantly dampened demand, especially among would-be home buyers. With expectations of continued interest rate hikes due to Federal Reserve actions, construction is projected to decline further in 2023.

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Equity markets in Europe mostly rose yesterday. Germany’s DAX (DE30) gained 0.92%, France’s CAC 40 (FR40) added 0.44%, Spain’s IBEX 35 (ES35) increased by 0.72%, Britain’s FTSE 100 (UK100) closed Tuesday in plus by 0.24%.

The International Monetary Fund said the UK government’s “U-turn” on tax cuts would help deal with rising inflation. The IMF is trying to stabilize the global economy, and one of its main roles is to act as an early economic warning system.

Oil prices fell on Tuesday amid fears of increased supply in the US coupled with slower economic growth and lower fuel demand in China. China, the world’s largest importer of crude oil, indefinitely postponed the release of economic indicators originally scheduled for release on Tuesday, indicating to the market that fuel demand in the region has declined significantly. Oil prices were also pressured by reports that the US government will continue to release crude oil from reserves.

The United Arab Emirates believes OPEC+ made the right choice when it agreed to cut production, and the unanimous decision had nothing to do with politics. Kuwait’s foreign ministry on Tuesday also supported the UAE and Saudi Arabia’s position on the cuts, saying in a statement that the collective decision had a “purely economic basis.” But the US believes otherwise and points out that the cuts will increase Russia’s foreign revenues and reduce the effectiveness of sanctions imposed over its invasion of Ukraine.

Asian stock indices rose yesterday. Japan’s Nikkei 225 (JP225) gained 1.42%, Hong Kong’s Hang Seng (HK50) added 1.82%, and Australia’s S&P/ASX 200 (AU200) was up by 1.72%.

S&P 500 (F) (US500) 3,719.98 +42.03 (+1.14%)

Dow Jones (US30) 30,523.80 +337.98 (+1.12%)

DAX (DE40) 12,765.61 +116.58 (+0.92%)

FTSE 100 (UK100) 6,936.74 +16.50 (+0.24%)

USD Index 111.99 -0.05 (-0.05%)

Important events for today:
  • – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
  • – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US Building Permits (m/m) at 15:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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