Markets

Daily Markets: Will Halloween Trading Serve Up Treats for Investors?

Woman in a mask walking past decorative pumpkins and skulls
Credit: Fabrizio Bensch - Reuters / stock.adobe.com

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session up, except for China’s Shanghai Composite and Hong Kong’s Hang Seng, which fell 0.77% and 1.18%, led by Energy Materials and Health Technology names. South Korea’s KOSPI advanced 1.11%, Australia’s ASX All Ordinaries rose 1.17%, Taiwan’s TAIEX gained 1.26%, and India’s Sensex closed 1.31% higher. Japan’s Nikkei set the pace, up 1.78%, led by Technology stocks and boosted by a weak Yen, which added to exporting companies overall.

By mid-day trading, European equity indices are mixed and U.S. futures point to a lower open later this morning.

While the U.S. economic calendar is light this morning, data out of the Eurozone showed inflation pressures ramped up further in October, likely keeping the European Central Bank on the path to boost interest rates even further in the coming months. The overall economic calendar heats up this week with several October PMI reports; capping the week, we have the U.S. Employment Report for October. The earning calendar also heats up further this week with roughly 1,700 reports in the coming five days.

Amid all of that, the Federal Reserve concludes its next monetary policy meeting on Wednesday. While it is widely expected to hike interest by 75 basis points exiting that meeting, what it has to say about the potential size of additional rate hikes at its December and February meetings could encourage the current market rally or pour some cold water on it. Fueling stock market gains in the last few weeks is the thought the Fed could continue to increase the Fed Funds rate but by smaller increments. However, last week's data readings showed that the Fed could stay on its aggressive path.

The uncertainty of what lies ahead once again put the Fed’s policy statement and Fed Chair Powell’s presser comments in the crosshairs. What’s less uncertain is higher interest rates are ahead. Goldman Sachs (GS) economists now expect the U.S. Federal Reserve to raise interest rates to 5%, higher than previously predicted.

Data Download

International Economy

China’s official NBS Manufacturing PMI unexpectedly fell to 49.2 in October from 50.1 the prior month, missing market forecasts of 50.0 and pointing to the lowest reading since July. The NBS Non-Manufacturing PMI for China dropped to 48.7 in October from 50.6 in September and was the first contraction in the services sector since May.

The initial GDP reading for the Eurozone grew 0.2% QoQ in 3Q 2022. That reading matched the consensus forecast but was down sharply from 0.7% in 2Q 2022. The preliminary 3Q 2022 GDP reading for the Eurozone rose 2.1% YoY, also far slower compared to 2Q 2022’s 4.3% reading. 

The annual inflation rate in the Eurozone continued to break record-high levels and jumped to 10.7% in October from 9.9% in September. Prices of energy continue to have the biggest impact (up 41.9% vs 40.7% in September) followed by food, alcohol & tobacco (13.1% vs 11.8%), On a MoM basis, consumer prices rose 1.5% in October, the fastest increase in seven months. 

The European Union is asking Russia to reconsider its weekend decision to pull out of a U.N.-brokered Black Sea grain deal, effectively cutting shipments from Ukraine, one of the world's top grain exporters.

Domestic Economy

At 9:45 AM ET, the October reading for the Chicago PMI will be reported and the headline figure is expected to rebound to 47 from 45.7 the prior month. Soon thereafter at 10 AM ET, the Dallas Fed Manufacturing Business Index for October will be released and it is not expected to change much relative to September’s -17.2 figure.

Markets

Markets shrugged off Thursday’s Tech earnings as all major benchmarks had a strong day to close out the week. The Russell 2000 was up 2.25%, the S&P 500 gained 2.46%, the Dow advanced 2.59% and the Nasdaq Composite closed 2.87% higher. All sectors were positive but on a relative basis Consumer Discretionary (0.09%) and Energy (0.35%) lagged as almost all other sectors gained well over 2% with Technology bouncing back over 4%. Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -9.57%
  • S&P 500: -18.15%
  • Nasdaq Composite: -29.04% 
  • Russell 2000: -17.74%
  • Bitcoin (BTC-USD): -55.58%
  • Ether (ETH-USD): -57.82%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Global Payments (GPN), ON Semiconductor (ON), and XPO Logistics (XPO) will be among the companies reporting their quarterly results

Shares in Macau casino operators, including Wynn Resorts (WYNN), are under pressure today after Macau's government reinstated some tough COVID curbs over the weekend, including locking down a major casino resort.

Shanghai's Disney (DIS) Resort suspended operations earlier today to comply with COVID-19 prevention measures, with all visitors at the time of the announcement directed to stay in the park until they return a negative test for the virus.

Reports suggest production of Apple’s (AAPLcould fall by as much as 30% at Foxconn’s (FXCOF) main Zhengzhou plant in central China amid fresh covid restrictions. Foxconn is looking to boost production at other factories to make up for the expected shortfall.

Emerson Electric (EMR) is selling a majority stake in its climate-technologies business that sells compressors and other HVAC products and services used in commercial and residential heating and cooling as well as cold storage to Blackstone (BX).

Bloomberg reports Thermo Fisher Scientific (TMO) is nearing a deal to acquire Birmingham, England-based diagnostic firm Binding Site for more than £2 billion ($2.3 billion) from private equity fund Nordic Capital.

After Today’s Market Close

Acadia Healthcare (ACHC), Addus HomeCare (ADUS), American Water Works (AWK), Harmonic (HLIT), Heartland Financial (HTLF), Hologic (HOLX), IMAX (IMAX), Lattice Semiconductor (LSCC), NXP Semiconductor (NXPI), Rambus (RMBS), and Trex (TREX) are expected be among the several dozen companies reporting quarterly results after equities stop trading today. Those looking to see which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Tuesday, November 1

  • Japan: Au Jibun Bank Manufacturing PMI – October
  • China: Caixin China General Manufacturing PMI – October
  • UK: S&P Global/CIPS UK Manufacturing PMI - October
  • US: S&P Global Final U.S. Manufacturing PMI – October 
  • US: Construction Spending – September 
  • US: ISM Manufacturing Index – October 
  • US: JOLTS Job Openings Report – September 

Wednesday, November 2

  • Eurozone: S&P Global Final Eurozone Manufacturing PMI – October
  • US: Weekly MBA Mortgage Applications 
  • US: ADP Employment Change Report – October
  • US: Weekly EIA Crude Oil Inventories
  • US: FOMC Rate Decision 

Thursday, November 3

  • China: Caixin China General Services PMI – October
  • S&P Global/CIPS UK Services PMI – October
  • UK: Bank of England Interest Rate Decision
  • US: Challenger Job Cuts Report – October
  • US: Weekly Initial & Continuing Jobless Claims
  • US: Productivity – 3Q 2022
  • US: S&P Global Final US Services PMI – October
  • US: Factory Orders – September 
  • US: ISM Non-Manufacturing Index – October
  • US: Weekly EIA Natural Gas Inventories 

Friday, November 4

  • Japan: Au Jibun Bank Japan Services PMI – October
  • Eurozone: S&P Global Eurozone Composite PMI
  • Eurozone: Producer Price Index - September
  • US: Employment Report – October

Thought for the Day

“The main thing is to keep the main thing the main thing.” ~ Stephen Covy

Disclosures

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

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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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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