Bassanese Bites: Grinding on – October 21 2024
Global markets
Global equities moved higher again last week largely reflecting ongoing good US earnings reports. Declining oil prices – due to weak Chinese demand and the continued absence of long-feared Middle East supply disruptions – also supported sentiment.
There was little in the way of major global economic news or events last week, allowing equities to continue to grind higher under the comforting ‘soft landing’ scenario.
The US market is still clinging to the expectation of another 0.25% rate cut next month, despite the recent upside CPI inflation surprise and still solid economic growth. Case in point: US retail sales surprised on the upside last week, while weekly jobless claims surprised on the downside.
The US earnings reporting season also rolls on, with so far encouraging results. Netflix on Friday surged 11% alone, following reports of stronger than expected subscriber growth. Bank of America analysts also reckon there’s another 40% upside to Nvidia’s share price.
Outside of the US, UK inflation surprised on the downside, paving the way for another rate cut at the next Bank of England policy meeting. The European Central Bank followed through with back-to-back rate cuts last week.
Meanwhile in China, annual Q3 GDP growth edged lower to 4.6% – from 4.7% in Q2 – which still failed to impress markets despite the result being a touch higher than the 4.5% market expectation. Markets are baying for yet more Chinese stimulus, which officials seem reluctant to provide – possibly because they reckon the economy is still chugging along reasonably well and they don’t want to just reflate the property bubble.
Global week ahead
In a still data-light environment, a major global focus should be the ongoing US earnings reporting season, with Tesla, IBM, Coca-Cola and GM among the major companies stepping up to the plate.
