A preview of the day ahead at the Sujata Rao markets
The bad news does not stop. Russia has upped the ante on European gas buyers, cutting off flows to Poland and Bulgaria for failing to pay in roubles. If extended to Germany and elsewhere, energy rationing, factory shutdowns and a blow to economic growth await.
Then markets were rocked by big falls on Wall Street, where results for Google’s parent company Alphabet Inc were disappointing, sending its shares down 6.5%, even after the board authorized an additional $70 billion in buyouts.
Tesla’s 12% drop – $126 billion in market capitalization – could meanwhile raise questions about whether boss Elon Musk will actually be able to acquire Twitter.
Still, as the Nasdaq’s 4% drop on Tuesday sent Asian markets into the red, US and European futures are trying to recoup some losses.
But the earnings season, while beating forecasts, highlights the pressure companies are under – due to rising costs and consumers starting to tighten their belts.
Take General Electric’s gripes about inflation fueled by supply chain disruptions. And listen to UPS package delivery service’s warnings about bleak e-commerce prospects.
Indeed, the American Conference Board’s consumer confidence index eased further in April. And barely – German consumer confidence fell to a record low in April, according to GfK who warned that “high inflation rates are melting consumers’ purchasing power”.
The beating of the inflation drum also continues. Australia’s first-quarter reading hit 20-year highs, bolstering the idea that interest rates could rise as soon as next week.
A few more bright spots. Profits for Chinese industrial companies rose faster in March compared with a year earlier. Earnings for European banks (mostly) beat forecasts.
Can it last? China’s COVID lockdown policies are sure to impact the economy and corporate profits. Banks, including Deutsche, have warned of lower annual results if the war with Russia drags on.
Future Earnings Outlook: Facebook owner Meta is out later today and expectations are for a 24% decline.
Key developments that should further guide markets on Wednesday:
-Joint two-day virtual conference of BIS, BoE, ECB and IMF
-US 30-Year Mortgage Rate/Inventory/Pending Home Sales
– Auction of 5-year US Treasury bonds; FRN 2 years
-Croatia Central Bank Policy Meeting
-European results: Credit Suisse, SEB, Mercedes, Handelsbanken, LSEG, Puma, WPP, Glaxo Smith Kline, Persimmon, Atos, STM, Dassault, Aéroports de Paris, Deutsche Bank, Delivery Hero, Saint Gobain
– US results: Boeing, Harley Davidson, CME, Kraft Heinz, Mattell, Ford, Qualcomm, Facebook
(Reporting by Sujata Rao; editing by Dhara Ranasinghe)
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