The State of Markets

A brief review of all key upcoming events across the major regions of the globe & an overview of key recent market trends.

Oct 26, 2024

The State of Markets: Sharp Back-Up In Bond Yields

Despite encouraging earnings reports from various S&P500 companies like Tesla and UPS, the global equity market struggled last week. Indeed, in most parts of the globe, key equity markets were lower. In Asia, Japanese, Korean and Taiwanese equity markets were all down (with the Nikkei 225 index 2.1% lower). In Europe, key equity markets (including the DAX, CAC and MIB) rolled over; while in the US, small and mid-caps performed poorly (approx. 2.5 – 3% lower on the week), the S&P500 was 1% lower, while tech (NDX100 & Philly SOX) was one of the few areas to (just) post a positive weekly return.

Rising 10-year bond yields acted as a brake on equity markets. The US 10-year Treasury yield reached a high of 4.26% on Wednesday, up sharply since its mid-September lows (3.63%) – see chart. As a result, bonds are now oversold (while equities were overbought earlier this month). The breadth of the recent equity advance (up to the start of this past week) has also narrowed as the sector and single stock participation has dwindled. Our views on the drivers of this latest bond move, and what to expect next, are laid out in yesterday’s ‘Longview on Friday’ publication.

This coming week, major macroeconomic and earnings data is set to be released that is likely to be important for the market. That includes US consumer confidence and JOLTS job openings (Tuesday), GDP reports for major Eurozone economies and the US (Wednesday), and US nonfarm payrolls (Friday). Alongside that, all eyes will be on the upcoming earnings reports from 5 of the Magnificent 7 companies (Apple, Microsoft, Alphabet, Amazon and Meta); while in the UK the long awaited first budget of the new Labour government will be announced on Wednesday. A full list of key events is laid out below.

Key Chart: US 10-year bond yields shown with key moving averages

(All in London time BST)

Events: Japanese general election voting (Sunday 27^th October).

Data: N/A

Earnings: N/A

Events: N/A

Data: UK net consumer credit, mortgage approvals, mortgage lending & M4 money supply (Sept, 9:30am); US JOLTS job openings (Sept, 2pm); US Conference Board consumer confidence (Oct, 2pm).

Earnings: Alphabet, Visa, AMD, McDonald's, Pfizer.

Events: N/A

Data: GDP for France (6:30am), Spain (8am), Germany (9am), Italy (9am), Eurozone (10am) & US (12:30pm) - all Q3 first estimates; US ADP employment change (Oct, 12:15pm).

Earnings: Microsoft, Meta, Eli Lilly, Caterpillar.

Events: BOJ policy decision (4am).

Data: Chinese manufacturing & service sector PMIs (Oct, 1:30am); Eurozone headline & core CPI (October first estimate, 10am); US Challenger job cuts (Oct, 11:30am); US personal income & spending including headline & core PCE (Sept, 12:30pm); US Chicago PMI (Oct, 1:45pm).

Earnings: Apple, Amazon, Mastercard.

Events: N/A

Data: US nonfarm payrolls, hourly earnings & unemployment (Oct, 12:30pm); US ISM manufacturing (Oct, 2pm).

Earnings: Exxon Mobil, Chevron.

Monthly Global Asset Allocation No. 52, 23^rd October 2024:

“Return of the ‘PIIGS’ A.k.a. More on Europe’s (growing) ‘North-South’ Divide”

Two key macro themes are emerging in the Eurozone.

In particular, at the ‘EZ economy wide’ level, the ingredients for a housing and consumption boom are falling into place. That is, a phase of strong, above trend economic and earnings growth is likely over coming years, driven by: (i) significant monetary stimulus from the ECB; (ii) wealth effects from rising house prices as housing markets ‘re-open’; (iii) rising commercial bank risk appetite; and, linked to that (iv) a phase of household re-leveraging. That should create a strong backdrop for the Euro and Eurozone equities in general. The ‘noughties’ is therefore a key template for today.

Events: N/A

Data: US Dallas Fed manufacturing sector activity (Oct, 2:30pm).

Earnings: Waste Management, Welltower, Cadence Design, Ford Motor.

Events: N/A

Data: US wholesale and retail inventories (Sept, 12:30pm); US FHFA house price index (Aug, 1pm); US S&P/Case-Shiller 20-city & national house prices (Aug, 1pm); US JOLTS job openings (Sept, 2pm); US Conference Board consumer confidence (Oct, 2pm); US Dallas Fed service sector activity (Oct, 2:30pm).

Earnings: Alphabet, Visa, AMD, McDonald's, Pfizer, Stryker, Chubb, American Tower, Mondelez, PayPal.

Events: N/A

Data: US ADP employment change (Oct, 12:15pm); US GDP (Q3 first estimate, 12:30pm); US pending home sales (Sept, 2pm).

Earnings: Microsoft, Meta Platforms, Eli Lilly, AbbVie, Caterpillar, Amgen, Booking, ADP, UBS Group.

Events: N/A

Data: Canadian CFIB business barometer (Oct, 11am); US Challenger job cuts (Oct, 11:30am); US employment cost index (Q3, 12:30pm); Canadian GDP & employment change (Aug, 12:30pm); US personal income & spending including headline & core PCE (Sept, 12:30pm); US weekly jobless claims (1:30pm); US Chicago PMI (Oct, 1:45pm).

Earnings: Apple, Amazon, Mastercard.

Events: N/A

Data: US nonfarm payrolls, hourly earnings & unemployment (Oct, 12:30pm); Canadian S&P manufacturing sector PMI (Oct, 1:30pm); US S&P manufacturing sector PMI (October final estimate, 1:45pm); US construction spending (Sept, 2pm); US ISM manufacturing (Oct, 2pm).

Earnings: Exxon Mobil, Chevron, Enbridge.

Fig B: US real GDP (Q-o-Q %, annualised rates)

Events: Speech by the ECB’s Wunsch in Slovenia (9am).

Data: Spanish retail sales (Sept, 8am).

Earnings: N/A

Events: N/A

Data: German GfK consumer confidence (Nov, 7am); Italian wages (Sept, 9am).

Earnings: Santander, Saint Gobain.

Events: Speeches by the ECB’s Schnabel in Frankfurt (3pm) & Nagel in Frankfurt (6pm).

Data: French GDP & consumer spending (Q3 first estimate, 6:30am); Spanish GDP and headline & core CPI (Q3/October first estimate, 8am); German unemployment change (Oct, 8:55am); German & Italian GDP (Q3 first estimate, 9am); Eurozone consumer confidence (October final estimate, 10am); Eurozone GDP (Q3 first estimate, 10am); Italian headline PPI (Sept, 10am); German headline CPI (October first estimate, 1pm).

Earnings: Airbus Group, AXA, Schneider Electric.

Events: Speech by the ECB’s Panetta in Rome (9am).

Data: French headline CPI (October first estimate, 7:45am); French headline PPI (Sept, 7:45am); German retail sales (Sept, 8am); Italian unemployment rate (Sept, 9am); Eurozone headline & core CPI (October first estimate, 10am); Eurozone unemployment rate (Sept, 10am); Italian core CPI (October first estimate, 10am); Italian industrial sales (Aug, 11am).

Earnings: Shell, TotalEnergies SE, Anheuser Busch Inbev, BNP Paribas, BBVA, ING Groep, Universal Music NV, Caixabank.

Events: N/A

Data: N/A

Earnings: Macquarie.

Fig C: Eurozone headline & core CPI (Y-o-Y %)

Events: N/A

Data: Lloyds business barometer (Oct, 12:01am); CBI distributive trades survey (Oct, 11am).

Earnings: N/A

Events: N/A

Data: BRC retail prices (Oct, 12:01am); Net consumer credit, mortgage approvals, mortgage lending & M4 money supply (Sept, 9:30am).

Earnings: HSBC, BP.

Events: Chancellor of the Exchequer Rachel Reeves presents annual budget to Parliament (12:30pm).

Data: N/A

Earnings: GSK plc, Glencore, Standard Chartered.

Events: Speech by the Bank of England’s Breeden at the Hong Kong Monetary Authority and Bank for International Settlements joint conference (1:35am).

Data: N/A

Earnings: British American Tobacco PLC, Haleon.

Events: N/A

Data: Nationwide house prices (Oct, 7am); S&P manufacturing sector PMI (October final estimate, 9:30am).

Earnings: N/A

Fig D: UK Nationwide house prices (Y-o-Y %)

Events: Japanese general election voting (Sunday 27^th October).

Data: Chinese FDI (Sept, time tentative); Japanese jobless rate (Sept, 11:30pm).

Earnings: Bharti Airtel, Sun Pharma.

Events: N/A

Data:N/A

Earnings: China Petrol, Keyence.

Events: N/A

Data: Australian headline CPI (Sept, 12:30am); Japanese ESRI consumer confidence (Oct, 5am); Japanese retail sales & industrial production (Sept, 11:50pm).

Earnings: PetroChina, China Merchants Bank, Hitachi.

Events: BOJ policy decision (4am).

Data: Australian building approvals, retail sales, & private sector credit (Sept, 12:30am); Chinese manufacturing & service sector PMIs (Oct, 1:30am); Japanese housing starts (Sept, 5am); Australian Judo Bank manufacturing sector PMI (October final estimate, 10pm).

Earnings: ICBC, China Construction Bank Co, Agricultural Bank China Ltd, China Life Insurance Co Ltd, Bank of China Ltd, China Yangtze power Ltd, Midea Group, Daiichi Sankyo, Japan Tobacco, Hoya Cor, Takeda Pharmaceutical.

Events: N/A

Data: Japanese Jibun Bank manufacturing sector PMI (October final estimate, 12:30am); Australian household spending (Sept, 12:30am); Australian PPI (Q3, 12:30am); Australian home loan value (Sept, 12:30am); Chinese Caixin manufacturing sector PMI (Oct, 1:45pm).

Earnings: Mitsubishi Corp, KDDI Corp, Mitsui.

Fig E: Chinese manufacturing & service sector PMIs (NBS)