Daily Markets: Markets react to Walmart’s strong earnings and inflation data

The big picture today

Asia Pacific equity indices finished today’s session up across the board, with the exception of Australia’s ASX All Ordinaries, which closed 0.70% lower. Japan’s Nikkei was up 0.10%, South Korea’s KOSPI was up 0.23%, India’s Sensex by 0.40%, China’s Shanghai Composite by 1.64% and TAIEX Taiwan by 2.62%. Hong Kong’s Hang Seng set the pace, up 4.11% on another large rally, once again led by financial and technology service names lagging behind in Communications and Energy Minerals.
Mid-day trading, major European equity indices are mixed and US futures indicate a positive opening later this morning with the Nasdaq eMinis signaling some technological strength today.
We may see expectations change as we receive quarterly earnings from Home storage (HD) And Walmart (WMT) as well as the October producer price index. Earnings at Home Depot and Walmart often act as a barometer of consumer spending and an indicator of how well retailers are doing at handling bloated inventory. Investors will look to see the impact of those efforts on profit margins, as well as the comparison between corporate guidelines regarding the holiday shopping season and the National Retail Federation’s + 6% -8% YoY forecast.
The question that the October Producer Price Index (PPI) has not yet answered is whether it confirms the October Consumer Price Index (CPI) which showed that inflationary pressures have started to ease. The main October figure is expected to drop to 8.2% yoy from 8.5% in September, while the core reading is expected to remain unchanged at 7.2%. If the PPI data joins the October CPI to be weaker than expected, the idea that the Fed will raise interest rates by a smaller amount at the December monetary policy meeting than the latest rate hikes is likely. will solidify. If not, we estimate that the FedWatch CME tool will again show a greater likelihood of another 75 basis point rate hike in December.

Previously, we shared that there are several weeks left before the Fed concludes its next meeting on Dec 14 with much more inflation data to release. Until we see a clear pattern of slowing inflation emerge, each of these data is likely to bring with it some degree of uncertainty and market volatility. We also need to remember that just because the Fed eventually scaled back the magnitude of its rate hikes doesn’t mean it caused rates to hike overall. Federal Reserve Governor Christopher Waller sent a clear message over the weekend when he said, “We still have a long way to go. This won’t end in the next meeting or two. ”The question we’re struggling with is to what extent expectations have accounted for the full impact of still rising interest rates on the economy and earnings expectations for 2023.
And at some point today the world population is projected to reach 8 billion people, with the last billion added over the past 12 years. For those wondering how quickly it will reach 9 billion, it is not expected until 2037.

Data download

International economy
Preliminary data showed that the Japanese economy unexpectedly shrank 0.3% quarterly in Q3 2022, missing the market consensus of 0.3% growth and reversing from a 1% increase. 1% revised upwards in Q2 2022.
The impact of rising COVID infections and tight restrictions impacted October retail sales in China, which fell by 0.5% yoy compared to the 2.5% yoy gain of September. Chinese industrial production increased 5.0% yoy in October, less than the market consensus of a 5.2% increase and slower than the 6.3% rate in September.
The UK unemployment rate rose to 3.6% in the three months to September 2022 from 3.5% in the previous period, which was a new low since 1974.
The Eurozone economy grew 2.1% YoY during the September quarter, in line with the first estimate. While it marked the sixth consecutive quarter of expansion, it was also the weakest. On a quarterly basis, the Eurozone economy grew by 0.2% in the September quarter, also matching the first estimate.

The ZEW economic sentiment indicator for the euro area improved to -38.7 in November from -59.7 in October. By context, the November reading was the highest reading since June. The indicator of the current economic situation increased by 5.5 points to -65.1, while inflation expectations decreased by 16.4 points to -52.2.
OPEC cut its forecast for global oil demand for the fifth time since April, saying the world economy has entered a period of “significant uncertainty and growing challenges” for global crude oil supplies. Citing downside risks that include high inflation, monetary tightening by major central banks, high levels of sovereign debt in many regions, tightening labor markets and persistent supply chain constraints, the OPEC + now sees this year’s growth at 2.55 million barrels per day (bbl / day), down 100,000 barrels / day from the previous forecast. Next year, he sees oil demand increase by 2.24 million barrels / day, even 100,000 barrels / day lower than his previous forecast.
Domestic economy
In addition to the October Producer Price Index report, the November Empire State Production Index will also be reported at 8:30 am ET in November. The November figure is expected to rebound to -5.0 versus the October -9.1 print.
Markets
Markets lost ground slightly due to the changing macroeconomic environment. The Dow fell 0.63%, the S&P 500 fell 0.89%, and the Nasdaq Composite and Russell 2000 closed down 1.12% and 1.14% respectively. Sectors are down across the board with the exception of the healthcare sector which remained broadly flat with a nominal gain of 0.03%. The real estate sector took the biggest hit yesterday, down more than 2.60%, followed by consumer discretionary and financials, each down more than 1.50%. Netflix (NFLX) it continued to catch up after losing 14.72% between October 26 and November 9 as yesterday’s 3.15% gain puts it slightly ahead of the closing price on October 26.
Here’s how the top market indicators stack up from the start of the year:

  • Dow Jones Industrial Average: -7.71%
  • S&P 500: -16.97%
  • Nasdaq composite: -28.44%
  • Russell 2000: -17.11%
  • Bitcoin (BTC-USD): -64.13%
  • Ether (ETH-USD): -66.33%

Actions to watch

Prior to commencement of trading for U.S.-listed shares, Energizer (ENR), Evoqua Water (AQUA), Krispy Kreme (DNUT), Home Depot, And Walmart all should report their latest quarterly results.

Apple (AAPL) offers a “very special Mac campaign”: up to 10% off its 14-inch and 16-inch MacBook Pros with M1-based chips, according to Apple retail companies and employees. Businesses that purchase 5 to 24 MacBook Pros in any combination of screen sizes and configurations will receive an 8% discount, while bulk purchases of 25 or more units will receive a 10% discount. The agreement will last until December 24th.
Paysafe (PSFE) The “paysafecard” prepaid eCash solution is now accepted as a new alternative payment option Microsoft (MSFT) Microsoft.com and Xbox.com in the United States and eight other countries in Europe.
Company of materials based on special alloys Carpenter Technology Corporation (CRS) announced that it will increase base prices by an average of 7% -12% on new non-contractual orders in most of its premium products. The increases will take effect with new orders placed after November 15th.
In response to the current macroenvironment, gene sequencing company Illumina (ILMN) announced that it is reducing its workforce by around 5%. As of January of this year, the company had 9,825 employees.
Tencent (TCEHY) It has reportedly started a new round of layoffs in its video streaming, gaming and cloud businesses.
Bloomberg relationships Credit Suisse Group AG (CS) has begun cutting jobs in senior banks in Asia as it implements plans to reduce its global headcount by 9,000.

In response to the slowdown in macroeconomic conditions that have impacted demand in recent weeks, FedEx Freight, the trading arm FedEx (FDX), will lay off an unknown number of drivers starting in early December. The leave is expected to last approximately 90 days, during which the affected workers will continue to receive health benefits and will be able to apply for unemployment benefits in their respective states of residence.
Reports indicate Estée Lauder (EL) nears a deal to buy Tom Ford for about $ 2.8 billion. Tom Ford’s beauty business is considered a prestige brand.
IPO
Defense and tactical systems manufacturer KWESST Micro Systems (KWE) is expected to start trading in the coming week. Readers looking to delve into the upcoming IPO calendar should visit Nasdaq’s latest and upcoming IPOs page.
After the close of the market today
Advance Auto (AAP) and Varex Imaging (VREX) are expected to report quarterly results after the shares stopped trading today. Those looking for more on which companies are reporting when, head to the Nasdaq Earnings Calendar.

On the horizon

Wednesday 16 November

  • Japan: Core Machine Orders – September
  • United Kingdom: Consumer Price Index, Producer Price Index – October
  • United States: Weekly MBA Mortgage Applications
  • USA: retail sales – October
  • USA: Import / Export Prices – 8:30 October
  • WE; Industrial Production and Capacity Utilization – October
  • USA: trade stocks – September
  • WE; NAHB Real Estate Market Index – November
  • USA: Weekly stocks of EIA crude oil

Thursday 17th November

  • UK: car registrations – October
  • Germany: car registrations – October
  • Eurozone: Consumer Price Index – October
  • United States: Initial and ongoing weekly claims for unemployment benefits
  • United States: start of housing and building permits – October
  • United States: Philadelphia Fed Index – November
  • USA: weekly EIA natural gas stocks

Friday 18th November

  • UK: retail sales – October
  • USA: Existing Home Sales – October

Thought for the day

“Stay calm when things don’t go according to your expectations! Beautiful things always meet friction. “- Ernest Agyemang Yeboah

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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