A look at the day ahead in markets from Sujata Rao
The bad news doesn’t stop. Russia has upped the ante on European gas buyers, halting flows to Poland and Bulgaria for failing to pay in roubles. If expanded to Germany and elsewhere, energy rationing, factory stoppages and an economic growth hit await.
Then, markets have been jolted by big falls on Wall Street where results from Google parent Alphabet Inc underwhelmed, sending its shares 6.5% lower, even after the board authorised another $70 billion in buybacks.
Tesla’s 12% plunge — $126 billion in market cap — meanwhile may raise questions on whether boss Elon Musk will actually be able to acquire Twitter.
Still, while the 4% Nasdaq slump on Tuesday sent Asian markets in the red, U.S. and European futures are attempting to claw back some losses.
But earnings season, while still beating forecasts, highlights how much pressure companies are under — from higher costs as well as consumers’ starting to tighten their belts.
Take General Electric’s grumbles about inflation fuelled by supply chain disruptions. And listen to parcel delivery service UPS’ warnings of the dimming outlook for e-commerce.
Indeed, the U.S. Conference Board’s consumer confidence index eased further in April. And just out — German consumer confidence tumbled in April to a record low, according to GfK which warned that “high inflation rates are melting away consumers’ purchasing power.”
The inflation drum beat continues too. Australia’s first-quarter reading came in at 20-year highs, bolstering the view that interest rates could rise as early as next week.
Still some bright spots. Profits at China’s industrial firms grew faster in March from a year earlier. Earnings at European banks are (mostly) beating forecasts.
Can it last? China’s COVID lockdown policies are bound to impact the economy and company profits. Banks, notably Deutsche, have warned of a hit to full-year results if the Russia war drags on.
Looking ahead on the earnings: Facebook-owner Meta is out later in the day and expectations are for a 24% decline.
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Key developments that should provide more direction to markets on Wednesday:
-Joint BIS, BoE, ECB and IMF virtual two-day conference
-U.S. 30-year mortgage rate/inventories/pending home sales
-U.S. 5-yr Treasury note auction; 2-year FRN
-Croatia central bank policy meeting
-European earnings: Credit Suisse, SEB, Mercedes, Handelsbanken, LSEG, Puma, WPP, Glaxo Smith Kline, Persimmon, Atos, STM, Dassault, Aeroports de Paris, Deutsche Bank, Delivery Hero, Saint Gobain
-U.S. Earnings: Boeing, Harley Davidson, CME, Kraft Heinz, Mattell, Ford, Qualcomm, Facebook
(Reporting by Sujata Rao; editing by Dhara Ranasinghe)
