Asian shares and US futures edged higher this Monday ahead of a week packed with earnings reports, as investors weigh inflation risks and China’s outlook. Turkish lira slid to a record low amid a diplomatic spat. Global equities are remaining resilient despite risks from price pressures caused by supply-chain disruptions and higher energy costs. This week brings earnings reports from several tech giants including Amazon and Apple. HSBC and Facebook will both publish quarterly results on Monday. There are also some key economic reports this week, including US third quarter GDP on Thursday. The ECB will hold its next policy meeting on Thursday as well amid persistent inflation pressures. China Evergrande had resumed work on more than 10 projects in six cities, while Bitcoin hit an all-time high last Wednesday of $67,016 and is currently trading near the highs at $62,000.
US equities finished mixed on Friday with Dow Jones gaining 0.2%, while S&P 500 lost 0.1% and Nasdaq Composite lost 0.8%. They did manage to bring the third winning week, with both the S&P500 and the Dow reaching new record highs. Earning season remained in full force with both American Express and Intel bearing the expectations last week. The preliminary Markit US Manufacturing PMI Index for October published declined to 59.2 from September’s 60.7 but remained in the expansion territory above 50. Fed Reserve Chair Jerome Powell on Friday flagged inflation could stay higher for longer. He made clear the Fed will soon start tapering bond purchases but will stay patient on rate hikes. As tapering looms, US yields have been rising and yields on 10-year Treasury notes hit five-month high of 1.7064 last week. In early Asia they were trading at around 1.6421% The dollar index was last at 93.521, down 0.15% on the day, heading towards its month low of 93.455 hit last week. US third quarter GDP on Thursday is expected to come out weak and weigh on the dollar.
European stocks have opened flat with DAX trading 0.1% lower, CAC 40 losing 0.1% and FTSE 100 rising 0.4%. HSBC, one of the largest banks in Europe, beat expectations with a 74% rise in third quarter profits. Michelin will be in the spotlight with its earnings, while Italian banking sector will be in focus after the Italian government ended talks with UniCredit over the rescue of commercial bank Banca Monte dei Paschi di Siena. Germany’s IFO institute will also release its October business climate survey today with 98.2 expected. This week ECB will hold a policy meeting on Thursday. At its last meeting in September policymakers deferred tapering to December, but since then euro area inflation hit 13-year high. The post meeting press conference will give investors a clue into December’s decision.
Asian shares traded higher this Monday with MSCI’s broadest index of Asia-Pacific shares outside of Japan rising 0.26%. Australian shares rose 0.47%, supported by miners, while South Korea was up 0.5%. The news of trials of a property tax in China weighed on Hong Kong and mainland Chinese markets. Chinese blue chips were flat, while Hong Kong benchmark gained 0.18%, despite a 2.6% fall in an index of Hong Kong listed mainland property firms. The property stocks have declined following China’s announcement of a pilot real estate tax in some regions. China Evergrande group last week appeared to avert a costly default with a last-minute bond coupon payment.
Oil prices climbed this Monday with WTI rising 1% to $84.63, touching its highest since October 2014 earlier in the session of $84.76. Brent rose 0.8% to $86.24 a barrel. The contract earlier hit its highest since October 2018 of $86.43. Oil prices have been hitting multi-year highs as global supply remained tight amid solid demand in the US and world economies picking up after pandemic.