A look at the day ahead in the US and global markets by Mike Dolan
Markets took a break Thursday as the white heat of corporate earnings season dealt a blow to megacap Tesla, sending its shares up 12% before the bell, while bond yields outpaced a pullback on soft business surveys abroad.
There was also some caution that recent pre-election bets on a win for Republican Donald Trump in next month’s race for the White House might be a bit premature. There are still no clear indications from polls on how the close battle will play out, as nearly 25 million early votes have already been cast, according to tracking data.
With US flash surveys for October and weekly jobless benefits data due later, last week’s brutal rise in Treasury yields appeared to be cooling off, with the 10-year yield falling below 4.2% after stock prices on Wall Street during the previous session had collapsed.
Although the Federal Reserve’s easing projections for the coming year have been reversed by as much as 50 basis points over the past month, rate-cutting fever continues to rage abroad.
The Bank of Canada cut its key interest rate by 50 basis points on Wednesday and partial Eurozone business survey forecasts for October continued to show the regional economy there contracting this month, keeping speculation alive about accelerated easing from the European Central Bank.
Business surveys also showed contracting activity in Japan this month, and Bank of Japan Governor Kazuo Ueda indicated on Wednesday he was in no rush to further “normalize” rates there – even as he remained wary of excessive weakness of the yen.
Japanese Finance Minister Katsunobu Kato then warned against currency speculation on Wednesday, expressing concern about “one-sided, rapid” moves in the currency market.
With that, and as a result of falling government bond yields, the dollar largely retreated from its highest level in almost three months, falling below 152 yen.
For stocks, however, it’s been difficult to see beyond the flood of incoming earnings updates.
And Tesla’s beat stole the show overnight, sending stock futures on Wall Street up by half a point or more ahead of Thursday’s open.
Shares of the electric car giant rose nearly 12% in pre-market trading after it forecast rising car sales growth and CEO Elon Musk reassured investors that he was still looking to expand the company’s core electric car business .
The stock jump allowed the company to add about $80 billion to its market cap and is likely to wipe out almost all of its year-to-date losses when trading resumes today.
But it wasn’t all sweet and light on the corporate front and Boeing shares fell 4% overnight on news that factory workers had voted to reject a contract offer and called a strike of more than to continue for five weeks.
The strike news added to the previous day’s dismal earnings news, which saw the plane maker post losses of nearly $8 billion in a torrid year that also included a quality crisis following January’s mid-air panel blowout.
Boeing CFO Brian West said he expects the company to continue burning cash throughout 2025 and the final three months of 2024, sending shares down nearly 2% on Wednesday.
However, European and UK shares advanced early today amid more positive updates from UK indicators Unilever, Anglo American and Barclays, which each rose 4%.
The euro received a boost on Wednesday from comments from ECB President Christine Lagarde that policymakers should remain cautious about further easing.
In contrast to Europe, Chinese and Hong Kong stocks fell and the mainland posted a four-day winning streak as investors turned cautious about domestic stimulus and weighed the potential impact of the US election.
Back on Wall Street, the battle for attention between robust growth, tempered Fed expectations, election risks and a heavy profit agenda with big industrial names on the agenda should make for another noisy session.
The Fed’s latest Beige Book on economic conditions, released Wednesday, shows that U.S. economic activity changed little between September and early October, while companies saw a jump in hiring.
Key developments that should give more direction to US markets later on Thursday:
* October flash business surveys for the United States and the rest of the world from S&P Global, weekly unemployment claims, September new home sales, October business surveys from the Kansas City Federal Reserve
* International Monetary Fund and World Bank annual meetings in Washington, speakers include Bank of England Governor Andrew Bailey, BoE policymaker Catherine Mann and European Central Bank Chief Economist Philip Lane
* Cleveland Fed Chair Beth Hammack speaks
* US Corporate Earnings: Dow, Honeywell, UPS, Northrop Grumman, Valero, DTE, Capital One, KKR, Nasdaq, S&P Global, Principal Financial, Cincinnati Financial, CBRE, Allegion, Textron, Western Digital, L3Harris, VeriSign, Hasbro, Keurig Dr Pepper, Universal Health, Southwest Airlines, Mohawk, Weyerhauser, Dexcom, Edwards Lifesciences, Dover, Union Pacific etc.
* The US Treasury is auctioning 5-year inflation-protected securities
* German Chancellor Olaf Scholz meets Indian Prime Minister Narendra Modi in New Delhi
(By Mike Dolan,; mike.dolan@thomsonreuters.com)
