Shares rose on October 15, buoyed by stellar corporate earnings results. However, strong oil prices, as well as stalling car sales in Europe, were a reminder of headwinds for the world economy.
The STOXX index of 600 European shares surged 0.2% at three-week peaks. Meanwhile, Britain’s FTSE 100 also surged 0.2%. The U.K. blue-chip index recovered all ground lost since the COVID-19 pandemic started in March last year.
Asian shares increased on Friday. The rise was driven by Taiwan’s Taiex index, which rose more than 2%, whereas Taiwan Semiconductor Manufacturing Company surged by over 4.5% following its earnings release a day earlier.
This followed a rally on Wall Street which witnessed the S&P 500 rise around 2% for its best day since March. Stronger-than-anticipated earnings led to the surge from heavyweights Bank of America, Morgan Stanley, and Citigroup.
According to Mike Hewson, a chief markets analyst at CMC Markets, the markets are concerned about whether inflation is transitory. Moreover, investors worry whether supply chain disruptions will translate into higher costs.
Hewson added that this week’s earnings from multiple firms are assuaging some of those worries that businesses won’t be able to pass on some of these cost increases to consumers. He says that that’s the reason we see the rise in risk.
Strong earnings from major U.S. banks lifted the S&P 500 index on Wall Street
Strong earnings from top U.S. banks on Thursday supported the S&P 500 index on Wall Street to witness its biggest daily percentage rise since early March. Remarkably, it will also send European lenders higher in early trading.
However, the return of confidence in markets will be tested by next week’s expected weaker growth data from China.
European car registrations dropped by more than a quarter in September. In November, Toyota Motor Corp announced it would cut global output as chip shortages and supply chain problems continued to dog the sector.
So far, 83% of S&P 500 members that have reported Q3 results have beat EPS expectations. According to The Earnings Scout, considering these results and estimates for those yet to report, Q3 profit growth rose 25%.
A better-than-anticipated employment reading increased sentiment on October 14. As we know, weekly jobless claims for the prior week totalled 293,000. Notably, it was the first time the reading came in below 300,000 since the pandemic’s start.
The gains came despite hot inflation readings, which were likely to derail the economic recovery. According to data from the labor department, the CPI gained 0.4% in September and 5.4% year over year.
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