Global Markets View - Nov 12, 2021
2-min read to stay updated on global markets and become better investors
US
* The S&P 500 and Nasdaq recovered partially from two days of falls as semiconductor chipmakers led gains. Shares of commodity producers gained as investors bet on sustained inflation. Mining company Freeport-McMoRan ran up 9% and steel producer Nucor rose 2.7%. Tech names recovered some ground Thursday with Nvidia, AMD, Alphabet and Facebook gaining. Walt Disney dropped 7% as it reported the smallest rise in Disney+ subscriptions since the service's launch and posted downbeat profit at its theme park division. The small-cap Russell 2000 index was 0.9% higher, after falling more than 2% in the previous two sessions. VIX declined to 17.7.
* Equities are hovering near all-time highs as strong earnings and economic growth prospects have propelled the stock market higher. However, higher-than-expected consumer prices are dealing a blow to arguments inflation is transitory. Persistently high inflation could force the Federal Reserve to taper at a more substantial rate or hike interest rates faster than anticipated.
* So far, companies have been able to preserve their profit margins in the face of rising input costs. However, high inflation could also impact margins and create demand destruction in the economy, both of which are headwinds to earnings. Rising inflation pressures are blamed in part on supply bottlenecks exacerbated by surging demand for goods following the pandemic-induced global economic shutdown.
* As a hedge against inflation, Investors are moving into gold, the dollar and cryptocurrencies. Gold approached a five-month high of $1,864, Dollar index has crossed 95 and Bitcoin is hovering near $65,000.
* Brent crude was flat at 82.6. OPEC on Thursday cut its world oil demand forecast for the last quarter of 2021 as high energy prices curb the recovery from COVID-19, delaying the timeline for a return to pre-pandemic levels of oil use until later in 2022.
Europe
* European stocks closed higher on Thursday. Siemens beat sales and profit expectations for the quarter and projected further profitable growth as it expects supply chain bottlenecks to ease in 2022.
* EU Commission has raised the 2021 eurozone growth forecast. After a 6.4% recession in 2020, EU Commission has upgraded the 2021 GDP growth forecast to 5.0% from 4.3% earlier. It forecast growth of 4.3% in 2022 and 2.4% in 2023. The Commission said inflation would reach 2.4% in 2021, up from 0.3% in 2020, before slowing to 2.2% in 2022 and 1.4 in 2023.
* U.K. GDP grew by 0.6% in September, while figures for the previous months were revised downward, leaving the economy still 0.6% smaller than it was in February 2020 before the country’s first Covid-19 lockdown.
Asia
* Chinese equities rallied on speculation the government will ease the struggle with property developers.
* Japan's wholesale inflation hit a four-decade high in October as supply bottlenecks and rising commodity costs threatened Asian corporate profits. The corporate goods price index (CGPI), which
measures the prices companies charge each other for their goods and services, surged 8.0% in October from a year earlier, exceeding market expectations for a 7.0% gain.
India
* India markets fell for a third straight day on Thursday, amid weakness across global markets that were spooked by fears of policy tightening after a surge in U.S. inflation. Among sectors, barring metals all the sectors were in the red with real estate correcting the most, down 2.5%. Bank, Auto, IT and pharma indices were down over 1%. Late stage recovery was seen in IT stocks from the lows of the day. The broader markets too were weak, with the Mid/Small cap indices down a per cent and Smallcap index down 0.7 per cent.
* Capital goods and infrastructure stocks were in focus with Capital Goods index hitting a new high in an otherwise weak market on expectation of improved outlook.
Thank you for such quality posts Mr. Bhat