Inflation in New Zealand updates records. Stock markets rise on expectations of good quarterly results

The US stock market increased on Monday. Quarterly reports from Wall Street's biggest banks mostly exceeded analysts' expectations, which gave investors a positive outlook. Bank of America continued the trend of upbeat quarterly results from other Wall Street banks after reporting better-than-expected results for the third quarter. As the stock market closed yesterday, the Dow Jones Index (US30) added 1.86%, and the S&P 500 Index (US500) increased by 2.65%. Technology Index NASDAQ (US100) gained 3.65% on Monday.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) gained 1.70%, French CAC 40 (FR40) added 1.83%, Spanish IBEX 35 (ES35) jumped by 2.37%, British FTSE 100 (UK100) closed up by 0.90% on Monday.

Joachim Nagel, ECB representative and President of Deutsche Bundesbank, indicated in his speech that inflation in the Eurozone is approaching its peak and is likely to decline gradually in 2023. Nagel also added that the monetary policy stance in the euro area remains adaptive at the current stage. This means that the ECB continues to stimulate the economy and, therefore, inflation. Obviously, the ECB should withdraw this stimulus. And if that is not enough to bring the medium-term price outlook in line with the 2% target, the ECB will have to move policy into restrictive territory. Therefore, investors should expect further rate hikes at the next ECB policy meetings.

According to analysts from the Financial Times, the Bank of England is likely to postpone the sale of billions of pounds worth of government bonds in an attempt to encourage greater stability in securities markets after the failure of the British "mini-budget."

Russia continues to launch missile strikes against critical infrastructure in Ukraine. According to military experts, the terrorist country wants to destroy much of the energy infrastructure ahead of winter. The Russian command is already openly fighting against civilians.

WTI and Brent each lost 7% last week after rising 13% the previous two weeks. Oil was declining despite OPEC+ plans to cut oil production by 2 million BPD. Analysts believe the decline is due to new restrictions in China, the largest importer of crude oil, which will reduce demand. But the medium-term outlook for oil remains upward.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) decreased by 1.16%, Hong Kong's Hang Seng (HK50) added 0.15%, and Australia's S&P/ASX 200 (AU200) decreased by 1.40%.

Industrial production in Japan rose by 3.4% in August compared to 0.8% in July. This was also higher than the market estimate of 2.7% and represented the third consecutive month of growth. On an annualized basis, industrial production increased to 5.8% in August, up from a 2% decline the previous month.

On Monday, China's Central Bank extended its medium-term loans' maturity, leaving its key interest rate unchanged for a second month, signaling that its monetary policy remains soft.

China decided to postpone its GDP report until after the Party Congress. Experts believe China is deliberately delaying its GDP data because of bad numbers.

The New Zealand dollar rose after better-than-expected inflation data pushed up expectations of further interest rate hikes. The consumer price level increased from 1.7% to 2.2% y/y in the last quarter. The OCR is now expected to peak at 5%.

S&P 500 (F) (US500) 3,677.95 +94.88 (+2.65%)

Dow Jones (US30) 30,185.82 +550.99 (+1.86%)

DAX (DE40) 12,649.03 +211.22 (+1.70%)

FTSE 100 (UK100) 6,920.24 +61.45 (+0.90%)

USD Index 112.13 -1.18 (-1.04%)

• – New Zealand Consumer Price Index at 00:45 (GMT+3);
• – Australia RBA Meeting Minutes at 03:30 (GMT+3);
• – China GDP (q/q) at 05:00 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

by JustMarkets, 2022.10.18

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.