Flat European Markets, Tech Earnings & Soft Price Surge
European markets open flat after lacklustre Monday.
Weak flash data across the board held back markets on Monday with all countries showing contraction in manufacturing with only the US ahead of estimates. Data is light today with US consumer confidence the main driver with markets potentially tentative ahead of tomorrow’s FOMC meeting. The rating agency Fitch has forecast that the UK will spend ￡110bln on debt interest payments in 2023 due to persistently high inflation. Sunak’s target of halving inflation by end of year looks less and less likely and with 25% of the debt in the form of inflation linked gilts this is an issue which seems likely to rumble on and on.
Asian markets rally off Politburo pledge.
The overnight announcement from China’s Politburo promising more assistance to their property market and a proactive fiscal policy pushed the Hang Seng forwards by 340bp with the CSI300 following suit up 265bp. Asian property developer stocks rallied sharply as the support will address local debt risks through a comprehensive debt resolution plan. Chinese state banks were seen to be supporting the yuan overnight which is priced at 7.14 with state-sponsored finance media expecting upcoming rate and tax cuts.
Tech earnings season starts tonight.l
Heavyweights Microsoft, Alphabet and Snap lead off the tech earnings season after market close today. Although new AI features have spurred investor enthusiasm the market will be looking to see if Microsoft’s sales growth can bounce back from two sluggish quarters. Alphabet’s second-quarter earnings will have investors focussed on how the company’s core search advertising business is staying ahead of rivals utilising AI technology, such as Microsoft.
领英推荐
Soft prices surge
The price of wheat shot up 8% yesterday after the bombing of a key Ukrainian port sent prices surging to a five-month high. The attack on the port of Reni comes a week after Russia pulled out of the Black Sea Grain Initiative. Corn priced followed rallying 12%, admittedly off their lowest price level since mid-2021.