Daily Markets: Isn’t OPEC+ Favoring Inflation?


The big picture today

Asia-Pacific equity indices ended today’s session higher across the board except for Hong Kong’s Hang Seng which was down 0.42%. Australia’s ASX All Ordinaries was essentially flat, posting a 0.04% gain while India’s Sensex rose 0.27%, Taiwan’s TAIEX rose 0.66% and Japan’s Nikkei closed higher 0.70%. South Korea’s KOSPI led the way, up 1.02% on a broad market rally led by basic materials and technology names. Chinese markets remain closed for Golden Week.

At midday, European equity indices are down slightly and US futures point to a lower open later this morning, although it’s worth noting that the VIX is also down at the time of writing. these lines.

The further rise in Treasury yields is weighing on equity futures this morning, which is no surprise given the parade of Fed leaders over the past few days that reiterated the stated playbook. the Fed to bring inflation back to its long-term target. At the same time, OPEC+’s release of a bigger-than-expected oil production cut is reigniting inflation concerns, as September’s PMI data points to continued price pressures. These pressures lead some companies to announce a new round of price increases, such as Ford engine (F) a, which will more than likely keep the Fed on its stated path, translating into even higher borrowing costs that aim to reduce overall borrowing and dampen the economy. And with this determination from the Fed, the question of whether it will go too far in its efforts is coming back to the fore. Meanwhile, the list of companies offering downside advice to expectations grows even longer. The growing conclusion is that the market rally we saw earlier this week was yet another brief bear market rally ahead of the September quarter earnings season.

Data download

International economy

Eurozone retail sales fell 2% year-on-year in August 2022, a bigger drop from the consensus of -1.7% and which marked the third consecutive decline in the data. The European Union (EU) has approved the eighth set of sanctions against Russia, which introduces new EU import bans worth €7 billion to reduce Russia’s revenue, as well as export restrictions.

Domestical economy

At 7:30 a.m. ET, the Challenger Job Cuts report for September will be released, then an hour later at 8:30 a.m. ET, weekly data on initial and continuing unemployment claims will be released. At 10:20 a.m. ET, the Energy Information Administration will release its latest information on natural gas inventories.

Yesterday, Atlanta Federal Reserve Chairman Raphael Bostic said he was in favor of raising interest rates to between 4% and 4.5% by the end of this year and then maintaining of the tightening in place to reduce inflation, which remains close to a four-decade high. Today we have another round of speakers from the Fed, including Chicago Federal Reserve Chairman Charles Evans and Christopher Waller of the Federal Reserve Board of Governors.

Markets

Markets traded lightly on oil jitters yesterday as the latest OPEC+ meeting ended with a pledge to cut output by 2 million barrels a day, roughly double what was expected. Energy names responded with a day of more than 2%, but the only other positive sectors were healthcare and technology, both up 0.33%. The Dow Jones was down 0.14%, the S&P 500 and Nasdaq Composite closed down 0.20% and 0.25% respectively, and the Russell 2000 fell 0.74%. Apart from the energy values, Nike Inc (NKE) gained 2.78% yesterday when releasing a line of NFL-branded footwear. Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -16.69%
  • S&P 500: -20.62%
  • Nasdaq compound: -28.74%
  • Russell 2000: -21.49%
  • Bitcoin (USD-BTC): -56.55%
  • Ether (ETH-USD): -63.32%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Conagra (CAG), Constellation Brands (STZ), and McCormick & Co. (MKC) are scheduled to publish their latest quarterly results. In addition to these reports, readers will want to be on the lookout for advance earnings announcements, good and bad, and what they might mean for other companies set to report in the days and weeks ahead.

Costco Wholesaler (COST) reported total comparable sales for September that beat consensus expectations, with reported net sales increasing 10.1% year-over-year to $21.46 billion. Total comparable sales for September climbed +8.5% year-on-year, beating the consensus estimate of 6.3%; Excluding fuel and currency, Costco’s U.S. mockup sales were up 8.6% year-over-year, also beating consensus forecast of +7.3%.

Reuters reports Ford engine will increase the price of its F-150 Lightning Pro electric truck by about 11%, putting the 2023 model at nearly $52,000. Reasons for the second price increase since August include production constraints, lingering inflationary impacts and soaring material costs, along with “other market factors” cited by the company.

Cboe Global Markets (CBOE) Total options volume in the United States reported hitting a record high with volume on the four Cboe options exchanges of 309.3 million contracts in September, up 2% from the previous record high. august. Options trading on the S&P 500 Index (SPX) hit an all-time high, setting multiple records.

Ahead of Amazon’s Prime Early Access sale next week, today Target (TGT) launches its “Deal Days” event which runs until October 8th.

LGI Homes (LGIH) said it closed 574 homes in September compared to 504 in August, but for its Q3 2022 it closed 1,547 homes, down 23.7% from the 2,027 homes closed in Q2 2022.

Honda engine (HMC) announced that it would cut production by up to 40% at two Japanese factories for the rest of October compared to its earlier plans.

IBM (IBM) is expected to announce a $20 billion investment plan in New York’s Hudson Valley region over the next 10 years “to unlock new discoveries and opportunities in semiconductors, computers, cloud hybrid, artificial intelligence and quantum computers”.

Volvo Trucks (VLVLY) reached an agreement with Amazon (AMZN) Transportation Services Europe will supply 20 electric trucks to Germany by the end of the year.

Bayer (BAYRY) completed the sale of its Environmental Science Professional business to private equity firm Cinven for $2.6 billion, allowing it to focus on its core agricultural business.

IPOs

So far, it looks like a pretty quiet week on the IPO front. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Levi Strauss (LEVI) is expected to release its quarterly results after the stock halt today, but as we mentioned above, readers will want to take note of any prior earnings announcements and their implications. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

friday october 7

  • Japan: household spending, leading index – August
  • Germany: Industrial production – August
  • United States: jobs report – September
  • United States: Consumer credit – August

Thought of the day

“Every hit brings me closer to the next home run.” ~ Baby Ruth

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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