Today’s Big Picture
Equity indices in Asia finished mostly higher today led by the 1.5% gain in Hong Kong’s Hang Seng and the 0.7% move higher for both Japan’s Nikkei and China’s Shanghai Composite. By mid-day trading, European equity indices were higher almost across the board and U.S. futures point to a continuation of the recent rally in equities. Powering stocks higher is the continued string of better-than-expected 3Q 2021 earnings reports. While we are encouraged, we’d remind readers that we are still in the early innings of the 3Q 2021 earnings season and won’t be until we exit October that just over half of the S&P 500 constituents will have reported their quarterly results. In other words, there’s a lot to be reported and a lot to be learned in the coming days.
Data Download
International Economy
Team Transitory can count France’s central bank amongst its ranks with François Villeroy de Galhau, governor of the French central bank, telling listeners today in a radio interview that he is confident eurozone inflation will drop below the ECB’s 2% target next year, arguing that there is no reason to raise rates.
Australia’s central bank kept its cash rate unchanged, as expected, at a record low of 0.1% during its October meeting. Plans to trim purchases of government bonds are to continue by A$4 billion per week until at least mid-February next year.
Construction output in the Eurozone fell 1.6% YoY in August from an upwardly revised 3.5% increase in July. This was the first monthly contraction since the recovery started in March 2020, falling 1.3% MoM after rising 0.1% in July.
Domestic Economy
Yesterday Industrial Production surprised to the downside, falling 1.3% MoM in September versus expectations for an increase of 0.1%. Manufacturing declined 0.7%, driven by auto, versus expectations for a 0.1% expansion. The production of cars (excluding pickups and SUVs) in the U.S. dropped to a record low in September with truck production also down significantly.
Today brings the September report for Building Permits and Housing Starts.
Markets
Yesterday the S&P 500 rose for the fourth consecutive day, adding 0.3% to close at the highest level since September 9th, with usual mega cap tech stocks drove nearly 290 basis points of the gains over the past three days. The Nasdaq 100 added 1.0%, the Nasdaq Composite 0.8%, both also enjoying their fourth consecutive day of gains. The Russell 2000 rose just 0.1%, while the Dow fell 0.1%. Consumer Discretionary outperformed, rising 1.2% while the defensive sectors such as Utilities and Consumer Staples closed in negative territory.
Stocks to Watch
Earnings Announcements & Guidance
Before U.S. equity markets open this morning, BNY Mellon (BK), Johnson & Johnson (JNJ), Kansas City Southern (KSU), Philip Morris International (PM), Procter & Gamble (PG), and Synchrony Financial (SYF) are among the companies expected to report their quarterly results.
Alibaba (BABA) announced that it has developed a new server chip, named Yitian 710, that rivals the most advanced ones developed in the west. The chip, which was developed using infrastructure provided by UK semiconductor and software ARM, will be deployed in Alibaba’s in-house servers at its data centers.
Ericsson (ERIC) reported September quarter EPS that came in stronger than expected despite missing the consensus revenue forecast. While 5G outside of China was a positive factor in the company’s results, it noted that “late in Q3 we saw some impact on sales from disturbances in the supply chain, and such issues will continue to pose a risk.”
M&A Activity
Banc of California (BANC) completed its acquisition of Pacific Mercantile Bancorp (PMBC)
Avalara (AVLR) acquired CrowdReason to help businesses manage property tax compliance.
After Today’s Market Close
Interactive Brokers (IBKR), Intuitive Surgical (ISRG), Netflix (NFLX), and United Airlines (UAL) are slated to report their quarterly results. Those looking to get a jump on the earnings reports to be had in the coming days should visit Nasdaq’s earnings calendar page.
On the Horizon
- October 21: Weekly Jobless Claims, Philly Fed Manufacturing Index, Existing Home Sales
- October 22: Markit Service and Marketing PMIs (flash)
- October 25: Chicago Fed National Activity Index, Dallas Fed Manufacturing Index
- October 26: S&P/Case-Shiller Home Price Index, New Home Sales, CB Consumer Confidence
- October 27: Durable Goods Orders, Wholesale Inventories, Durable Goods, Goods Trade Balance
- October 28: Q3 GDP (advance estimate), Weekly Jobless Claims, Pending Home Sales
- October 29: Personal Income & Spending, PCE Price Index, Employment Cost Q3, Chicago PMI, Michigan Consumer Sentiment
Thought for the Day
“We are not what happened to us, we are what we wish to become.” ~CG Jung
Disclosures
- Ericsson (ERIC) is a constituent of the Tematica BITA Digital Payments & Fintech Sustainability Screened Index
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Stocks Economy Earnings Coronavirus Smart Investing
Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Lenore Elle Hawkins
Lenore Elle Hawkins has, for over a decade, served as a founding partner of Calit Advisors, a boutique advisory firm specializing in mergers and acquisitions, private capital raise, and corporate finance with offices in Italy, Ireland, and California. She has previously served as the Chief Macro Strategist for Tematica Research, which primarily develops indices for Exchange Traded Products, co-authored the book Cocktail Investing, and is a regular guest on a variety of national and international investing-oriented television programs. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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