Stocks get reality check from earnings, central banks in focus
28 October, 2021, 10:15 pm
Global stocks eased from record peaks as a stark reminder of supply chain snags in corporate earnings reports stalled their rally, while investors also looked to whether central banks may consider tightening monetary policy earlier than thought.
MSCI’s gauge of world stocks, ACWI, dipped 0.05% <.MIWD00000PUS> in early Thursday trade, with Japan’s Nikkei (.N225) leading the loss with fall of 1.1%.
On Wall Street overnight, the S&P 500 (.SPX) lost 0.51% from all-time high hit on Tuesday though the Nasdaq (.IXIC) ended little changed, thanks to strong earnings from Microsoft (MSFT.O) and Google parent Alphabet (GOOGL.O).
GM lost 5.4% following their earnings release on Wednesday. read more
“The working assumption in the market has been that the impact of a chip shortage will fade by the end of year. But if it remains a problem next year, investors will surely feel less confident about the outlook,” said Masayuki Murata, general manager of balanced portfolio investment at Sumitomo Life Insurance.
The Bank of Canada ended its quantitative easing sooner than expected and signalled it could hike interest rates earlier than previously thought, as soon as April 2022.
The Fed is almost unanimously expected to announce tapering of its bond purchase at its policy meeting next week.
In contrast, longer-dated yields fell in part as a tighter monetary policy is likely to tame inflation down the road.
Also helping to drive global bond yields lower was a plunge in UK Gilts yields after Britain’s government cut its borrowing forecasts more than expected. read more
In foreign exchange markets, the Canadian dollar held firm at C$1.2362 per dollar following the BoC’s surprise.
The yen stood at 113.73 per dollar , off its four-year low of 114.695 touched last week while the euro changed hands at $1.1600 .
The bigger-than-expected rise in U.S. crude stocks gave some investors an impetus to unload long positions after strong gains in recent weeks brought both the Brent and U.S. crude benchmarks to multi-year highs.
Brent fell 1.8% to $83.07 per barrel , off Monday’s seven-year high of $86.70 while U.S. crude fetched $81.25 per barrel , down 1.7% and off Monday’s peak of $85.41, a seven-year high.