MORNING BID-Earnings vs Rates | Nasdaq

October 19 (Reuters)A preview of the day ahead in US and global markets by Mike Dolan.

Market tension is mounting between the surprising positivity still emerging from the current corporate earnings season and anxiety in interest rate markets and macroeconomic gloom.

A rebound from low to high of 6-8% in global equities .MIWD00000PUS and on Wall Street .SPX Over the past week – the third such rally since the start of last month – many investors have been wondering if the one-year funk in global assets is coming to an end and the pervasive pessimism is overdone.

Bulls were buoyed by third-quarter earnings forecasts from major U.S. banks, with rising net interest margins showing the flip side of rate angst and trading revenue boosted by market volatility.

But it is clearly more than the banks. Shares on Netflix NFLX.O climbed 14% after the bell on Tuesday night after the streaming giant said it had reversed customer losses that had hammered its stock this year and forecast more growth to come.

And in Europe, the region’s largest technology company, ASML ASML.AS jumped 6% on Wednesday after reporting better-than-expected sales and profits as well as record new bookings.

You’re here TSLA.O leads a newspaper loaded with US reports later Wednesday. US stock futures posted recent gains ahead of the open and European stocks were higher.

But earnings may only be a rear-view mirror for the economy, and the inflation and interest rate backdrop has shown few signs of improving in Western economies. US 10- and 30-year bond yields were now both above 4% this week for the first time in 12 years.

And the situation in Britain, the epicenter of recent fiscal policy and the earthquake in the bond market, remained volatile, with data showing that UK inflation rose back above 10% on last month, which corresponds to the highest reached in 40 years in July.

Late on Tuesday, the Bank of England dismissed reports of a further delay in the expected unwinding of its balance sheet and said it would effectively start selling some of its huge stockpile of UK government bonds next month. next – which pisses off investors as it also raises another giant interest rate. ascend.

The only consolation was that it would refrain from selling ultra-long bonds amid the recent pension fund boom and 30-year gilt yields fell to two-week lows as a result. The pound also retreated.

Meanwhile, the Financial Times reported that UK banks were prepared for a possible windfall tax as the government sought new sources of cash to shore up its finances.

Energy markets provided better news on the inflation front. Oil prices stabilized after Tuesday’s plunge as US President Joe Biden plans to release more of the strategic petroleum reserve. . The rolling year-on-year rise in Brent prices has now all but disappeared for the first time since January 2021.

Elsewhere, the Japanese yen continued to plunge to a 32-year low, ever closer to the psychologically important level of 150 to the dollar. Finance Minister Shunichi Suzuki reportedly said he was checking exchange rates “meticulously” and with more frequency and that yields on Japan’s 10-year government bonds exceeded the Bank of Japan’s policy range for the first time in four months before the BOJ meeting next week.

Key developments that should provide more direction to US markets later on Wednesday:

* US housing starts in September, Federal Reserve releases beige book on economic conditions. Inflation report for Canada in September

* Profits of American companies: Tesla, IBM, Northern Trust, M&T Bank, Procter & Gamble, Prologis, Lam Research, Equifax, PPG, Kinder Morgan, Abbott Laboratories, Travelers, Citizens Financial, Comerica, Nasdaq, Marketaxess, Baker Hughes, Elevance , Crown Castle.

* US Treasury Auctions 20-Year Bonds

* Minneapolis Fed President Neel Kashkari speaks in Minneapolis, Chicago Fed President Charles Evans speaks in Charlottesville

* Bank of England Deputy Governor Jon Cunliffe, BoE Executive Director for Markets Andrew Hauser, BoE Head of Monetary Policy Catherine Mann, BoE Deputy Governor for Prudential Regulation Sam Woods, Director Executive of the BoE’s Prudential Policy Directorate Vicky Saporta, External BoE Member of the Financial Policy Committee Carolyn Wilkins speaks in London

UK inflation rises again

Weakening investor sentiment

Bank of America chart on fund survey of cash holdings

(By Mike Dolan Editing by Susan Fenton and Peter Graff [email protected] Twitter: @reutersMikeD)

(([email protected]; +44 207 542 8488; Reuters Messaging: [email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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