Stocks continue to search for meaningful guidance. After two days of gains in New York, we see stocks trading slightly lower again with also bonds dropping causing yields to rise further putting additional pressure on stocks. Investors keep a close eye on diplomatic efforts to contain the Israel-Hamas war, including a planned visit to the region by US President Joe Biden on Oct. 18.
US stock market futures are trading around 0.5% lower despite another round of solid earnings reports from Bank of America, Goldman Sachs and Johnson & Johnson. The nervousness is already visible at the start of the day, despite a solid Asian session and a good start for European stocks (now trading flat).
Investors are also nervous about worsening forecasts from companies – the first important (tech) reports will come from Netflix and Tesla – both stocks that have been struggling since the very strong H1 performance and two stocks that are considered expensive (very expensive Tesla). I expected this nervousness to come a bit later, but we see it already at the start of today's trading session. We will see mixed markets and likely worsening risk sentiment in the second half of the US session.
The concerns about weak outlooks and signs of slowing demand also increased today after Swedish 5G-equipment maker Ericsson slumped more than 9% following a warning of persisting weak demand.
Yields of US Treasuries continued to rise. The USD steadied after some weakness yesterday. The GBP is under some pressure after cooling UK wage growth reduced pressure on the Bank of England to raise interest rates further.
We see gold prices as well as other “safer” assets rising – with also oil prices benefiting from concerns that the conflict in the Middle East intensifies. Israel Defense Forces international spokesperson, Lieutenant Colonel Jonathan Conricus, stated earlier today that US President Joe Biden's upcoming visit to Tel Aviv will not impede or postpone the potential operation in the Gaza Strip further increasing expectations that the Israel ground offensive is imminent.
👁 ROB'S MARKET OVERVIEW:
October 17, 2023
🇺🇸 US Markets ↕️/↘️ (selling to return likely to further accelerate in second half of US trading)
Cyclical Stocks ↕️/↘️
Tech/Growth Stocks ↕️/↘️
Financial Stocks ↗️/↕️ (benefiting from more resilient/strong bank earnings)
Defensive Stocks ➡️
Energy Stocks ➡️/↗️ (extending recent gains with oil / fuel remaining supported)
Materials Stocks ➡️/↘️
USD ↗️ (trimming some of yesterday's losses)
CHF, JPY, CAD ➡️/↗️
GBP, AUD, NZD ➡️/↘️
⚒ Commodity Markets ➡️/↗️
Oil prices ➡️/↗️
Natural Gas prices ➡️/↗️
Metal prices ↕️
⚡️Cryptos ↘️ (as markets become increasingly nervous; cryptos remain unattractive)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)