Stocks Rally as Strong Earnings Soothe Trade Fears: Markets Wrap
(Bloomberg) — Global stocks advanced as strong earnings reignited risk appetite in a market that’s been whipsawed for days by shifting trade-war fears. Gold touched $4,200 an ounce.
S&P 500 futures rose as a second day of big-bank results got underway, with Bank of America Corp. and Morgan Stanley climbing more than 4% in early trade after solid earnings beats. Nasdaq 100 contracts rallied 1%. In Europe, stocks were lifted by a 13% jump in LVMH following an unexpected return to growth.
Of the first 24 S&P 500 companies to report, 71% have exceeded forecasts, data compiled Bloomberg Intelligence show.
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The dollar fell against all major peers as bets on Federal Reserve interest-rate cuts grew and China stepped up support for the yuan. The People’s Bank of China set the reference rate at its strongest in almost a year, helping stem outflows and bolster confidence.
Gold rose to a fresh record, boosted by US-China frictions and expectations for Fed easing. US Treasuries climbed across the curve, with the 10-year rate falling two basis points to 4.07%
“We’re going into this earnings season with the view that it probably will validate that the corporate sector is still in relatively good shape,” Goldman Sachs Group Inc. strategist Christian Mueller-Glissmann told Bloomberg TV. “There’s a lot of uncertainty on politics and geopolitics, as always, and you want to be careful about making too many shifts in your portfolio.”
Wednesday’s advance comes as markets have been pulled in different directions for days, caught between persistent US-China trade tensions and a still-favorable macro backdrop at a time when the Fed is cutting rates. The lack of data during the government shutdown has only added to the uncertainty, clouding the outlook for monetary policy.
Derivatives markets are sending mixed signals on the path ahead. Some investors see the recent spike in near-term pricing as evidence that excess froth has been cleared, while others view the inverted VIX curve as a warning of more pain to come for equities.
Markets will hear from the Fed’s Christopher Waller, Jeff Schmid and Stephen Miran later today after Chair Jerome Powell reiterated concerns about labor-market weakness on Tuesday and signaled the central bank may stop shrinking its balance sheet in the coming months.
Strategists warn that trade headlines will remain in focus as Washington and Beijing lay the groundwork for negotiations.
Trade tensions “continue to simmer in the background, of course,” said UniCredit equity strategist Christian Stocker. “But the news that we can now be certain, or almost certain, that the Fed will cut interest rates in October has already had a positive impact.”
Corporate News:
Morgan Stanley’s stock traders soared past expectations in the third quarter, topping rivals on the surge in trading activity as US President Donald Trump’s policies kept markets on edge throughout the period. Bank of America Corp.’s third-quarter earnings beat estimates as investment-banking activity increased amid a long-awaited comeback in M&A and net interest income topped analysts’ estimates. Investors led by BlackRock Inc.’s Global Infrastructure Partners agreed to buy Aligned Data Centers in a deal that values the company at $40 billion, including debt. Billionaire Patrick Drahi’s Altice France rejected a €17 billion ($19.7 billion) bid from a trio of French phone carriers to split struggling operator SFR in a deal that would remove a major player from the market. Nscale, a data center developer focused on artificial intelligence, has agreed to build a site for Microsoft Corp. in Texas, the fourth such deal between the companies in the last two months. ASML Holding NV shares rose after it said the artificial intelligence boom is fueling demand for its cutting-edge chip-making machines. LVMH shares rose the most in almost a quarter century after the owner of Louis Vuitton and Christian Dior unexpectedly returned to sales growth, suggesting a slump in luxury demand is easing. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.7% as of 8:27 a.m. New York time Nasdaq 100 futures rose 1% Futures on the Dow Jones Industrial Average rose 0.5% The Stoxx Europe 600 rose 0.7% The MSCI World Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1626 The British pound rose 0.3% to $1.3354 The Japanese yen rose 0.2% to 151.57 per dollar Cryptocurrencies
Bitcoin fell 1.1% to $111,810.64 Ether fell 0.6% to $4,097.64 Bonds
The yield on 10-year Treasuries declined two basis points to 4.02% Germany’s 10-year yield declined three basis points to 2.58% Britain’s 10-year yield declined four basis points to 4.55% Commodities
West Texas Intermediate crude rose 0.7% to $59.14 a barrel Spot gold rose 0.9% to $4,181.75 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from James Hirai, Sagarika Jaisinghani and Jessica Menton.
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