US markets
US equities extended their gains on Tuesday, driven by mega-cap growth stocks, as Treasury yields eased. Despite cautious comments from Federal Reserve (Fed) speakers, investors remained optimistic. The bellwether S&P 500 added 0.3 percent, the blue-chip Dow Jones Industrial Average edged up 0.2 percent, while the tech-heavy NASDAQ gained 0.9 percent.
A few Fed officials who spoke on Tuesday reiterated the need to focus on inflation. However, Treasury yields retreated as expectations grew that the monetary tightening cycle had come to an end. Investors are now turning their attention to Fed Chair Jerome Powell, who is set to speak later this week, for further clues on the interest rate path.
The S&P sectors ended mixed, with consumer discretionary and information technology leading the gains, while energy and materials declined the most. Mega-cap growth stocks provided much of the support to the markets, with Microsoft, Apple, and Amazon.com rising between 1.1 percent and 2.1 percent. However, energy stocks were negatively impacted by falling oil prices. China’s report of a worse-than-expected drop in exports for October raised concerns over global demand, while a stronger US dollar further weighed on oil prices. Among individual stocks, ride-hailing firm Uber Technologies climbed 3.7 percent after exceeding market expectations for fourth-quarter adjusted core profit. Security platform operator Datadog rallied 28.5 percent after raising its forecast for annual adjusted profit and revenue.
These price data reflect observations at market close: WTI spot crude oil fell by US$3.45 to US$77.97 while spot gold lost US$20.20 to US$1,963.85. The US dollar gained vs. major currencies. The US Treasury 30-year bond yield dropped by 10 basis points to 4.74 percent while the 10-year note yield dropped by 9 basis points to 4.57 percent.
European markets
Most European bourses closed lower on Tuesday. The Europe-wide STOXX dipped 0.2 percent, the French CAC 40 slipped 0.4 percent, the UK FTSE 100 eased 0.1 percent, while the German DAX firmed 0.1 percent. Portuguese stocks fell sharply after Prime Minister Antonio Costa quit over an investigation into alleged irregularities in handling lithium mining and hydrogen projects, increasing uncertainty in the country’s political stability and weighing on market sentiment.
Among the Europe-wide STOXX sectors, energy and materials took the hardest hit, while information technology, real estate, and consumer staples held up the best. Energy stocks came under pressure as crude oil prices fell due to global demand concerns, renewed by weak exports data from China. Sector majors Shell and BP tanked 1.9 percent and 2.1 percent. Mining stocks were also among the worst performers amid declining copper prices, with major miners Anglo American, Antofagasta, and Glencore sliding between 2.4 percent and 3.5 percent. Among single stocks, Daimler Truck sank 4.6 percent after the German truck maker fell short of third-quarter revenue and profit estimates. Conversely, UBS Group jumped 1.8 percent after posting better-than-expected underlying net profit in the third quarter and signalling that its core wealth business is stabilizing, despite a bigger-than-expected loss.
On the economic data front, industrial production in Germany fell more than expected by 1.4 percent month-on-month in September, marking the fourth consecutive month of decline.
Asia Pacific markets
Most Asian markets closed in negative territory on Tuesday.
Mainland China’s equities snapped a two-session rising streak, with the CSI 300 index ending 0.4 percent lower and the Shanghai index flat. Trade data showed imports unexpectedly rose in October, while exports contracted for a sixth consecutive month, underscoring persistent weak demand abroad. On the bright side, the International Monetary Fund upgraded its 2023 GDP growth forecast for China to 5.4 percent from 5.0 percent. Computing power stocks continued their upward trend amid expectations of price hikes due to a near-term supply-demand imbalance. Co-packaged optics (CPO) gained on news that the global optical module markets will have an average annual compound growth rate of 16 percent for the next five years. Conversely, insurers declined following disappointing third-quarter results and news that regulators are looking into insurers’ investments to strengthen risk control. Hong Kong’s equities fell after rising for three sessions in a row, with the Hang Seng index closing down 1.6 percent.
Japanese stocks pulled back as investors took some profits after five consecutive sessions of gains. The Nikkei index sank 1.3 percent, and the broader TOPIX slid 1.2 percent. Some chip-related stocks tracked their US peers lower on the back of a rise in US Treasury yields. Chip-equipment makers Tokyo Electron and Advantest lost 1.4 percent and 1.8 percent, respectively. On the earnings front, food maker Ajinomoto plunged 10.2 percent after cutting its full-year profit forecast for the health care segment, although its overall profit outlook was lifted. NTT Data Group tumbled 6.6 percent after posting weaker-than-expected earnings for the first half to September.
Taiwan’s TAIEX inched up 0.2 percent. South Korea’s KOSPI slumped 2.3 percent, lagging behind regional peers. Indian BSE Sensex closed marginally lower after gaining for three sessions in a row.
Australian shares snapped a five-session winning streak, with the All Ordinaries index down 0.2 percent. The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.35 percent to control the sticky inflation, while leaving doors open for further tightening. Financials led the decline, with Australia’s largest four banks losing between 0.4 percent and 2.4 percent. Energy stocks fell on softer oil prices, with sector giants Woodside Energy and Santos dropping 0.6 percent and 0.8 percent, respectively. Gold and mining shares fell amid weaker commodity prices, while technology and communication services shares finished higher.