US Session (10/26/2021)
As corporate earnings helped bolster confidence amid persisting concerns about inflation and growth, US stocks climbed to all-time highs.
As Tuesday's round of earnings began, the S&P 500 and Dow Jones Industrial Average both reached new highs, with UPS and General Electric gaining after strong results. Facebook fell after a revenue miss was mitigated by a commitment to buy back more shares and increase expenditure on digital offerings.
The Stoxx Europe 600 index also increased by 0.8% to a new high. Reckitt Benckiser Group rose as the maker of Strepsils throat lozenges raised its sales forecast, while Novartis AG rose on rumors that its generic-drug unit would be spun off.
The yield on the 10-year US Treasury note declined, while the dollar rose. The dispute over pricing pressures continues: former Treasury Secretary Lawrence Summers stated that officials will be unable to effectively deal with inflation reality unless it is properly acknowledged.
The earnings season is helping to alleviate fears that rising inflation and tighter monetary policy could stifle the recovery from the pandemic. So far, 81 percent of members of the S&P 500 have posted better-than-expected earnings, however, Citigroup has warned that profit growth may be nearing its peak.
Investors weighed the outlook for US stockpiles and prospects for talks that could help revive an Iranian nuclear agreement, allowing a pickup in crude exports. WTI crude oil traded above $84 a barrel.
Microsoft extended gains after beating revenue estimates. Alphabet fell despite beating on revenue and earnings as Cloud revenue missed estimates.
Asia Session (10/26/2021)
Asian stocks fell on Wednesday as traders considered the latest earnings reports from the US and a rise in Australian core inflation, which showed the global economy's rising pricing pressures.
In Japan, Hong Kong, and China, equities plunged after authorities instructed billionaire Hui Ka Yan to use his own riches to help China Evergrande Group's mounting debt crisis. The US has heightened tensions with Beijing by prohibiting China Telecom from operating in the US.
Futures in the US varied following a mixed reaction to earnings announced later in the day. In prolonged trade, Robinhood Markets and Texas Instruments fell, while Google Parent Alphabet remained stable and Microsoft and Twitter climbed. Earlier, the S&P 500 hit a new high, with United Parcel Service and General Electric rising on excellent earnings.
Australia's bond yields and currency rose after core inflation came in above expectations. For the first time since 2019, the three-year yield surpassed 1%. Treasury yields rose as well, especially at shorter maturities. The dollar remained stable.
Europe Session (10/26/2021)
US equity futures gained alongside markets in Europe as corporate earnings served to lift optimism amid persisting inflation and growth concerns.
Futures in the US rose, with Nasdaq 100 contracts outperforming. The tech-heavy index led to overnight advances thanks to Tesla's surge to a $1 trillion market cap. In pre-market trading, Facebook climbed on the back of strong user growth and a vow to buy back up to $50 billion in stock. After the market closes today, Twitter, Alphabet, and Microsoft will release their earnings.
The Stoxx Europe 600 index increased by more than 0.5%, closing near a new high set in September.
France's Finance Min. Le Maire: A reform of the European energy market is needed.
Goldman Sachs CEO Solomon: The likelihood of high inflation and slow development is growing.
In 2023, the German government forecasts a 1.6% increase in GDP - Sources.
The German government anticipates that inflation will rise to 2.9% in 2021, then fall to 2.2% in 2022 and 1.7 % in 2023 - source.
Wednesday FX Option Expiries
USD/JPY: 113.55 ($1.5B), 112.00 ($1.01B), 114.50 ($755M)
USD/BRL: 5.0500 ($362M)
EUR/USD: 1.1600 (EU1.45B), 1.1405 (EU595.4M), 1.1615 (EU557.7M)
AUD/USD: 0.7400 (AUD1.25B), 0.7100 (AUD884.7M), 0.7500 (AUD697.1M)
USD/CNY: 6.3500 ($850M), 6.5500 ($836M), 6.6000 ($553M)
USD/CAD: 1.2385 ($392M)
EUR/GBP: 0.8525 (EU460.9M), 0.8700 (EU343.7M)
NZD/USD: 0.7200 (NZD330.6M)