US Session (10/14/2021)
Better-than-expected corporate profits and economic reports countered fears that price pressures and supply-chain snarls would stifle growth.
In the S&P 500, all of the major groups advanced. The KBW bank index, which has risen about 40% in 2021, continued to rise after results from some of the world's major financial institutions exceeded Wall Street's expectations.
Throughout the pandemic, corporate profits have been a boon to the equity market. Since March 2020, the S&P 500 has climbed every quarter, averaging a 4% gain during a six-week period. According to Mark Haefele, chief investment officer at UBS global wealth management, pent-up demand should drive revenue growth, while pricing power and operating leverage should assist in offset inflationary pressures.
Applications for state unemployment benefits in the United States have dropped to their lowest level since March 2020, indicating that firms are clinging to their employees in a tight labor market. Prices paid to American producers increased at the slowest rate of the year, owing to cooling costs of services.
Asia Session (10/14/2021)
Asian stocks pressed further Friday after a rally on Wall Street encouraged by strong corporate earnings and as China loosened checks on home loans at some of its largest banks.
Japanese shares outperformed amidst a dip in the yen, Hong Kong gained and Chinese stocks were steady. US futures rose following the S&P 500’s best day since March. Earnings from major US banks beat estimates. US producer prices advanced at the slowest pace this year and Initial Jobless Claims fell, raising sentiment.
China is loosening restraints on home loans amidst increasing worry about contamination from the debt crisis at China Evergrande. The PBoC added enough medium-term funds to maintain financial-system liquidity at current levels.
US 10-year Treasury yields advanced and the dollar was relatively unchanged. Bitcoin extended a climb with the Securities and Exchange Commission poised to allow the first US bitcoin futures exchange-traded fund to begin trading, according to sources familiar with the matter.
European equities and equity futures both gained today as traders went risk-on, despite supply bottlenecks and pricing pressures weighing on the global recovery. The Stoxx Europe 600 index rose to its highest level in almost three weeks, helped by advances in technology and mining stocks.
Futures on the tech-heavy Nasdaq 100 outperformed those on the S&P 500 as Wall Street ended a three-day losing skid. The 10-year yield stayed at 1.5%, despite treasuries reversing an overnight gain. Gold fell from its highest level in almost a month, with crude oil steadying over $80 a barrel.
Investors are continuing to assess the durability of a reopening economy to supply chain disruptions, an increase in oil costs, and the possibility of decreased central bank assistance. As of Tuesday, executives from S&P 500 firms had used the term "supply chain" on investor calls nearly 3,000 times, considerably more than last year's, then-record, number.
Friday FX Option Expiries
AUD/USD: 0.8450 (AUD485.2M), 0.7500 (AUD376.3M)
USD/CAD: 1.2500 ($1.07B), 1.2700 ($860.2M), 1.2480 ($795M)
EUR/USD: 1.1550 (EU1.04B), 1.1650 (EU738.1M), 1.1600 (EU719.8M)
USD/JPY: 111.00 ($1.09B), 113.00 ($870M), 112.65 ($740M)
USD/CNY: 6.4000 ($890.8M), 6.4500 ($770M), 7.6520 ($460M)
USD/MXN: 20.20 ($320M)
USD/KRW: 1200.00 ($450M)
NZD/USD: 0.6820 (NZD573.3M)