US markets
US equities finished mixed with little movement on Tuesday. Solid economic figures pushed Treasury yields higher, putting pressure on stock markets. The ongoing conflict in the Middle East also kept investors on edge. The bellwether S&P 500 and the blue-chip Dow Jones Industrial Average closed roughly flat, while the tech-heavy NASDAQ lost 0.3 percent, dragged down by semiconductor shares.
On the economic data front, retail sales and industrial production easily beat market expectations in September. Retail sales in the US grew 0.7 percent month-on-month, as households stepped up purchases of motor vehicles and spent more at restaurants and bars. This data suggests that consumer spending remains strong despite higher prices and borrowing costs. Meanwhile, industrial production surprisingly went up 0.3 percent month-on-month, despite strikes at major automobile factories.
Among the S&P sectors, rate-sensitive information technology, real estate, and utilities took the hardest hit, while materials, energy, and financials held up the best. Chipmakers fell as the Department of Commerce announced its plan to prevent the sale of more advanced artificial intelligence chips to China. Industry leader NVIDIA fell 4.7 percent, weighing on technology stocks. On the corporate earnings front, Johnson & Johnson lost 0.9 percent despite upbeat results and outlook. Goldman Sachs fell 1.6 percent after reporting lower profit than the previous year. Conversely, Bank of America added 2.3 percent as the lender topped market forecasts for revenue. Defence contractor Lockheed Martin firmed 0.2 percent after posting better-than-expected third-quarter revenue and profit.
These price data reflect observations at market close: Spot gold gained by US$5.25 to US$1,926.15. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose by 9 basis points to 4.95 percent while the 10-year note yield rose by 14 basis points to 4.85 percent.
European markets
Major European bourses closed mixed on Tuesday. A slew of disappointing earnings, rising government bond yields, and lingering concerns over the Middle East conflict remained overhangs on the markets. The Europe-wide STOXX dropped 0.1 percent, while the UK FTSE 100 rose 0.6 percent, the French CAC and the German DAX edged up 0.1 percent each.
Across the Europe-wide STOXX sectors, health care, consumer-related and energy led the gains, while materials, real estate, industrials and information technology fell the most. Construction and material shares led the decline as the European Commission said it was carrying out unannounced antitrust inspections in the construction chemicals sector in several member states. Conversely, energy shares maintained their rising trend amid higher crude oil prices, with sector majors BP and Shell rising 1.1 percent and 0.4 percent, respectively. On the corporate earnings front, Ericsson tanked 5.9 percent after the network equipment provider reported a drop in third-quarter revenue and said it expected the uncertainty affecting its mobile networks business to persist into 2024. Nordic Semiconductor plunged 20.1 percent as the chipmaker’s fourth-quarter revenue forecast fell short of expectations.
Economic data released on Tuesday surprised on the upside. A monthly survey conducted by the Centre for European Economic Research (ZEW) showed indicators of economic sentiment for euro area and Germany unexpectedly rebounded to positive territory, marking the highest readings since April. This was mainly driven by the prospect of further easing in inflation and a stable outlook for short-term interest rates in the eurozone. Elsewhere, regular wage growth in the UK slowed in the three months to August, which supported the view that the Bank of England may refrain from further interest rate hikes.
Asia Pacific markets
Asian equities mostly rebounded amid cautious trade on Tuesday. Optimism around the upcoming earnings season and the resilience of the US economy lifted sentiment. Meanwhile, diplomatic efforts to ease tensions in the Middle East provided some relief to the markets.
Mainland China’s equities recouped morning losses to end higher, boosted by share repurchase plans from several companies in China following authorities’ efforts to boost the capital market. China’s CSI 300 added 0.4 percent, and the Shanghai index inched up 0.3 percent. However, gains were capped by caution ahead of the release of third-quarter GDP growth data, due on Wednesday, which is expected to show a slowdown as demand remained sluggish at home and abroad. Hong Kong’s equities rebounded after a choppy trading session, with the Hang Seng index closing up 0.8 percent.
Japanese stocks bounced back after two consecutive sessions of losses as investors bought up beaten-down shares. The Nikkei index jumped 1.2 percent, and the broader TOPIX gained 0.8 percent. Investors expected to see a stronger earnings season both in the US and Japan. Semiconductor stocks mirrored overnight gains in their US peers, with Tokyo Electron and Advantest climbing 2.4 percent and 1.2 percent, respectively. Energy and financials were among other notable sectoral winners.
Taiwan’s TAIEX edged down 0.1 percent. South Korea’s KOSPI rose 1.0 percent. Indian equities gained for the first session in four, with the BSE Sensex up 0.4 percent, lifted by banking stocks following positive quarterly results from HDFC bank.
Australian shares snapped a two-session losing streak, with the All Ordinaries index up 0.4 percent, led by gains from banking and mining stocks. Minutes of the Reserve Bank of Australia’s October meeting showed further rate hikes may be needed as inflation was not easing as expected. Focus shifted to the unemployment report due later this week, which would also play an important role for the next monetary policy decision. Mining shares outperformed, with major miner Rio Tinto advancing 1.2 percent after reporting a rise in its iron ore shipments in the third quarter. Peers BHP Group and Fortescue Metals Group gained 0.9 percent and 1.4 percent, respectively. Financial stocks regained ground, with the country’s four largest banks closing up between 0.6 percent and 1.1 percent. However, gold stocks tracked bullion prices lower.