(Corrects the S&P 500 hit rate from 14% to 84%)
A look ahead to the day ahead by Danilo Masoni.
A wild week for global earnings starts today seemingly cautious as earnings revisions slow as inflation and supply chain pressures risk squeezing margins in a season that could determine the direction of travel in the coming weeks.
The overall picture remains good, however, as the economy is in recovery mode, offsetting fears of central bank bond purchases slowing and interest rates hike for now.
The S&P 500 is just below its record high and the number of companies that exceeded expectations in the third quarter is now almost 84%, while the STOXX 600 in Europe is above 60% so far, according to Refinitiv I / B / E / S data.
But caution is warranted, especially as Big Tech’s results fill the calendar this week just as investors fall in love with the pandemic darlings lured by the attractions of cheap stocks.
Eyes are on Facebook, which kicks off the season for the FAANG group today after Snap shares fell 26% on Friday after the advertising firm warned of a hit from Apple’s privacy adjustments.
Meanwhile, a long-time unloved sector, banks, is finding new demand from the changing macroeconomic environment. HSBC surprised with a 74% increase in profits as concerns about bad debt related to a pandemic subsided, allowing it to announce a $ 2 billion buyback. Shares rose to a 4-month high in Hong Kong.
Futures on major European and US benchmark indices were only slightly in the red as crude oil prices continued to race to new multi-year highs and ten-year US Treasury yields hit a five-month high of 1.7% last week.
Important developments that should give the markets more direction on Monday:
Reporting by Danilo Masoni; Editing by Saikat Chatterjee