Markets rally as earnings seasons kicks off in the US
Stocks climbed on Friday as Wall Street closed a volatile week on a high note despite some disappointing earnings reports.
The move comes ahead of two big weeks of central bank policy decisions, and earnings. This week we see earnings from 150 S&P500 companies including Microsoft, Meta, Amazon, General Motors & Coca Cola to name a few.
The US Earnings season has offered so far some mixed takeaways and it remains to be seen whether 2023 estimates will ultimately see the market reset lower, as the more bearish strategists believe needs to happen to reflect the economic fallout from the Fed.
The Dow Jones Industrial Average gained 748.97 points, or 2.47 per cent, to close at 31,082.56. The S&P 500 rose 2.37 per cent to 3,752.75. The Nasdaq Composite added 2.31 per cent to 10,859.72. Friday’s moves extended the market’s gains for the week. The S&P 500 rose 4.7 per cent and Dow gained 4.9 per cent, while the Nasdaq rose 5.2 per cent.
Earnings reports limited gains for the market but offered important insights into the US consumer.
American Express stated that its travel and entertainment segment saw spending climb 57 per cent from a year ago with volumes in its international markets surpassing pre-pandemic levels for the first time in the third quarter. The company added that it expected the recovery in travel spending to be a tailwind but the strength of the rebound has exceeded Amex’s expectations throughout the year.
Across the sectors no real weakness to note despite mixed earnings news.
Bank stocks were once again a bright spot with Goldman Sachs gaining 4.6 per cent and JPMorgan Chase adding 5.3 per cent.
In tech, social media company Snap fell 28 per cent after reporting a quarterly revenue of $1.13 billion, below expectations. Snap is the first of the advertising-reliant social media companies to report their earnings, so investors and analysts often use Snap as a sign of what’s to come for the rest of the group. Shares of Facebook-owner Meta fell 1.2 per cent and Twitter 4.9 per cent, as advertisers continue to cut marketing budgets.
In commodity news, mining giant BHP is concerned with Chile's Mining Royalty Bill. BHP warned that the proposed mining royalty bill in Chile would affect competitiveness and encourage miners to reconsider investments. The company mentioned that the current bill would lead to a reassessment of an announced $10B investment portfolio, since it was designed without considering such an excessive tax burden increase.
In Australia, we have seen this play out with the coal royalty tax in Queensland. With the QLD government budgeting for $1.2b per annum from the royalty tax on surging coal prices, only to receive $1.2b in the first 6 weeks of the tax’s introduction. It seems like BHP lobbying is about to go into over drive across the globe.
Currencies
One Australian dollar at 7:05 AM has strengthened compared to the US dollar on Friday, buying 63.84 US cents (Fri: 62.78 US cents), 56.30 Pence Sterling, 94.13 Yen and 64.71 Euro cents.
Commodities
Iron ore futures are pointing to a 1 per cent gain.
Gold gained $19.50 or 1.2 per cent to US$1656 an ounce.
Silver added $0.38 or 2 per cent to US$19.07 an ounce.
Copper gained $6.40 or 1.9 per cent to US$347.45 a pound.
Oil added $0.54 or 0.6 per cent to US$85.05 a barrel.
Futures
The SPI futures are pointing to a 1.4 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed mixed. Paris lost 0.9 per cent, Frankfurt fell 0.3 per cent and London’s FTSE closed 0.4 per cent higher.
In Asian markets, Tokyo’s Nikkei lost 0.4 per cent, Hong Kong’s Hang Seng fell 0.4 per cent and China’s Shanghai Composite added 0.1 per cent.
On Friday, the Australian sharemarket lost 0.8 per cent to close at 6677.
Ex-dividends
New Hope Corporation (ASX:NHC) is paying 56 cents fully franked
Dividends payable
Elanor Retail Property Fund (ASX:ERF)
FOS Capital Ltd (ASX:FOS)
Nick Scali (ASX:NCK)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
