Markets rally on US corporate earnings: UK government changes course on tax cuts
US equities finished sharply higher in Monday trading, ending near best levels and more than erasing Friday's slide.
Another factor in Monday’s moves were political developments in the UK, where new finance minister Jeremy Hunt announced that almost all planned tax cuts would be scrapped. As a result the pound traded more than 1 per cent higher, and UK government debt rallied sharply. Investors will analyse UK inflation data on Wednesday.
Meanwhile, the third-quarter earnings season is in full swing. Investors are watching corporate earnings closely for signs of strain from high inflation and rising borrowing costs.
The Dow Jones Industrial Average gained 1.9 per cent. The S&P 500 jumped 2.7 per cent, and the tech heavy Nasdaq Composite surged 3.4 per cent.
The Nasdaq’s strong day was helped by some speculative tech names, with Zoom gaining 6 per cent and Chinese internet stocks outperforming.
Across the sectors, bank earnings continued to highlight the tailwind from higher rates and resilient US consumers. Bank earnings continue to beat lowered expectations.
Bank of America overnight reported better-than-expected results, sending the stock up 6 per cent. Bank of New York Mellon also posted results that beat analyst expectations and its shares jumped more than 5 per cent. Many notable technology names are also reporting this week, including Netflix, Tesla and IBM.
In M&A news, BP will buy US-based renewable natural gas (RNG) producer Archaea Energy for about $4.1 billion, as the British energy major seeks to expand its alternative fuels business. The deal will be the largest ever renewable natural gas acquisition, topping Chevron Corp's $3 billion buyout of biodiesel maker Renewable Energy Group Inc. earlier this year.
Currencies
The Dollar index was down 1.1 per cent with sterling strength the story in FX.
One Australian dollar has strengthened compared to the US dollar yesterday, buying 62.90 US cents.
Commodities
Iron ore prices are on track to end 2022 at their lowest point in the last three or four years and are expected to remain under pressure next year as well, with China and Europe cutting steel output.
Iron ore futures are pointing to a 0.5 per cent fall.
Gold added $5.80 or 0.4 per cent to US$1655 an ounce.
Silver gained $0.49 or 2.7 per cent to US$18.57 an ounce.
Copper lost $1.90 or 0.6 per cent to US$340.45 a pound.
Oil lost $0.11 or 0.1 per cent to US$85.50 a barrel.
Futures
The SPI futures are pointing to a 0.9 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris added 1.8 per cent, Frankfurt gained 1.7 per cent and London’s FTSE closed 0.9 per cent higher.
In Asian markets, Tokyo’s Nikkei lost 1.2 per cent, Hong Kong’s Hang Seng added 0.2 per cent and China’s Shanghai Composite gained 0.4 per cent.
Yesterday, the Australian sharemarket lost 1.4 per cent to close at 6664.
Ex-dividends
K&S Corporation (ASX:KSC) is paying 5 cents fully franked
WCM Global Long Short (ASX:WLS) is paying 4.8165 cents fully franked
Dividends payable
Qube Holdings (ASX:QUB)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
