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All eyes on ECB, corporate earnings

Market participants are closely watching the European Central Bank, which is expected to announce its first consecutive rate cut in 13 years on Thursday due to stagnating euro-area economic growth and controlled inflation. Meanwhile, US stocks rebounded on Wednesday, buoyed by Morgan Stanley’s strong earnings, as investors took positions ahead of a slew of earnings reports due out on Thursday. Asian markets showed mixed results on Thursday following the next announcement of support measures from the Chinese government.

Date
Author
Shane Strowmatt, LGT
Reading time
5 minutes

Corporate earnings season
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Earnings seasons is in full gear with figures quarterly corporate figures flowing in from around the globe on Thursday. Particularly TSMC’s quarterly results, due Thursday, will be under scrutiny after chipmaking stocks plunged on Wednesday following a disappointing financial outlook at semiconductor equipment maker ASML.

Morgan Stanley's third-quarter profit, announced on Wednesday, exceeded expectations, driven by a 56% surge in investment banking revenue. The bank reported earnings of USD 1.88 per share, surpassing analyst estimates. The strong performance in IPOs and M&A activities, combined with a 21% rise in equity trading revenue, propelled its stock to a record high on Wednesday. Morgan Stanley’s stock finished Wednesday’s session 6.5% higher.

The solid earnings helped major US stock indices to recover somewhat on Thursday from losses in the previous session. The Dow Jones Industrial Average closed at 43,077.70 points, gaining 0.8%, while the S&P 500 rose 0.5% to finish at 5842.47 points. The Nasdaq-100 edged up slightly, adding 0.1% to 20,174.05 points. Small-cap stocks outperformed, with the Russell 2000 climbing 1.7%.

China increases housing project financing

China will expand its "white list" of housing projects eligible for financing and boost bank lending for these developments to CNY 4 trillion by year-end, Housing Minister Ni Hong announced on Thursday. The initiative includes accelerating urban redevelopment to absorb housing inventories, with 1 million "urban villages" slated for redevelopment. These measures aim to stabilise the housing sector, which has been in crisis since 2021. Despite heavy losses by real estate stocks following the announcement, Chinese indices were trading in positive territory on Thursday. Hong Kong’s Hang Seng Index gained 0.7%, and mainland China’s CSI 300 was slightly up by 0.1%.

Japan's exports decline on global slowdown

Japan's exports fell by 1.7% year-on-year in September, marking the first decline in ten months, due to weakening demand from China and the US, as well as the yen's recent appreciation. Imports increased by 2.1% over the same period, resulting in a trade deficit of JPY 294.3 billion. Policymakers are concerned that prolonged global demand weakness may complicate the Bank of Japan's efforts to exit its ultra-easy monetary policy. Japan’s Nikkei 225 was trading 0.5% lower. Elsewhere in the Asia-Pacific region, Korea’s Kospi was trading essentially flat and Australia’s S&P/ASX 200 was 0.9% higher.

UK inflation slows in September

Consumer price inflation in the UK decelerated in September, with the Consumer Prices Index (CPI) rising by 1.7% year-on-year, down from 2.2% in August and lower than economists’ expectations. The primary driver of this slowdown was a significant decrease in transport costs, particularly air fares and motor fuels, partially offset by higher prices for food and non-alcoholic beverages. Core CPI, which excludes energy, food, alcohol, and tobacco, increased by 3.2%, down from 3.6% in the previous month. Prices for companies were also easing, with producer input prices dropping by 2.3% year-on-year in September, down from a revised 1% decrease in August. The slowing consumer prices and falling producer prices increased expectations for a Bank of England interest rate cut in November. The pound sterling declined against the US dollar and euro after the release of the data on Wednesday. Meanwhile, European stock indices were mixed on Wednesday with the STOXX Europe 600 slipping 0.2%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from ABB, Elevance Health, Intuitive Surgical, Marsh & McLennan, Netflix, Nokia, Nordea Bank, Sartorius, Schindler, and Taiwan Semiconductor Manufacturing. Annual general meeting at Medtronic.

Economic data in focus: Swiss trade balance (08:00), Turkish Central Bank interest rate decision (13:00), European Central Bank interest rate decision (14:15), US retail sales (14:30), US weekly initial jobless claims (14:30), US Philly Fed Manufacturing Index (14:30), US manufacturing production (15:15).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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