Markets were nervous as they awaited a response from the Kremlin after an explosion destroyed the only way for Russians to enter Crimea. They were heightening geopolitical tensions.
Asian trade lit the Japanese and South Korean holidays, and the Treasury market was closed.
Stock Market Futures Fall
As U.S. earnings season begins later this week, stock market futures have fallen. As a result, the futures for both the Stock price and the Nasdaq are pointing downwards.
On Monday, Nikkei futures were trading at 26,1156, down from Friday’s cash finish of 27,116. (.N225). Stocks fell on Friday after positive payrolls data seemed to cement expectations for a large rate increase from the Federal Reserve System.
According to the futures market, there is a greater-than-80% likelihood of a rate rise of 75 basis points next month. Europe’s Central Bank (ECB) (ECB) and the Bank of Britain are widely anticipated to implement rate increases of one hundred or more bps.
It is predicted that a drop in core inflation would be signaled by a decrease in the price of goods in the Preliminary September Consumer Price Index Numbers. But as long as labor markets scream tightness, the government will ignore even the faintest rumblings of inflation deceleration.
Consumer prices are predicted to drop to 8.1%, while core inflation will rise to 6.5% from 6.3%. It has been announced that on Thursday, by 8:30 am E.T., the United States Consumer Price Index will be issued (1230 GMT).
This week also sees the release of details from the Federal Reserve’s most recent policy meeting, which are expected to have a hawkish tone given the number of policymakers who increased their price estimates for rates.
Profitability Inspection
Morgan Stanley, JPMorgan, Wells Fargo, and Citi are starting the earnings season on Friday. Wall Street is also entering a challenging period in corporate results.
Goldman Sachs analysts predicted in a note that the company would have “consensus” EPS growth of 3% annually, revenue up 13%, and margins down 75% to 11.8%. The report states, “With Energy removed, we anticipate a 3% decline in EPS and a 132 bp contraction in margins.”
Our forecast shows positive surprises will be lower in the third quarter than in the first half of 2022. The fourth quarter and 2023 forecasts will be lowered. The rise of the currency, which will reduce overseas revenues, is one potential source of disagreement.
The Dollar Strength Index remained unchanged at 112.75 after three straight increases. Although it hit 146.64 yen, it hesitated to break over the 24-year high of 145.90 yen.
At $0.9764, the euro seemed weak, down from last week’s high of $0.9559. The sterling only managed to reach $1.1089. Traders fretted about the imminent conclusion of the Bank of Britain’s emergency bond purchasing operation.
Bonds with a ten-year maturity now yield 4.257%. Which is much more than the 3.36% it was before the British micro sent the market into something of a spiral. The rising value of currencies and rates has been negative for gold, which is now priced at $1,594 per ounce.
This week’s increase in oil prices follows last week’s 11% spike in Brent in reaction to an agreement on production curbs by OPEC+. Brent oil ($98.05) and U.S. crude ($91.85) rose by 21 cents.
