By Mike Dolan
-What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Gold’s stellar climb this year has hit the buffers and streaming giant Netflix disappointed Wall Street with its latest earnings, stopping stock markets in their tracks as trade and geopolitical jitters mounted again.
Despite being on course for the best year since 1979 and with no ostensible trigger, gold prices turned tail on Tuesday and plunged 5% – the biggest one-day drop in five years. The recoil extended on Wednesday, bringing it close to breaking back below $4,000 per ounce before steadying.
The size of the gold drop suggested that speculative fervor has driven the latest run-up as much as safe-haven demand and a firmer dollar – largely driven by the yen’s fall on reports of another big Japanese fiscal boost.
With the S&P500 stalling on Tuesday and futures flat ahead of today’s bell, Netflix fumbled overnight – dropping almost 6% in out of hours trading after its third-quarter update missed targets on a Brazilian tax dispute. Netflix had risen 39% this year up to that release.
Tesla and IBM and a host of other big names are due out later, with the overall U.S. earnings season so far marginally ahead of expectations and tracking 9% annual profit growth.
With Friday’s U.S. inflation report and Wednesday’s 20-year Treasury bond auction on the radar, the long-bond yield eked out another 6-month low.
British government bonds were one of the big market movers in Europe and 10-year gilt yields hit their lowest since April after UK September inflation unexpectedly held steady at 3.8% – encouraging bets on another Bank of England rate cut this year. Sterling slipped back against the dollar and euro.
Barclays stock jumped 5% after it announced a surprise share buyback and upgraded a key profitability target for the year.
Meantime, hopes for an end to the Washington shutdown this week were knocked back somewhat- as was speculation of separate meetings soon between President Donald Trump and both China’s leader Xi Jinping and Russian President Vladimir Putin over the U.S.-China trade standoff and Ukraine war, respectively.
In today’s column, I take a look at Friday’s U.S. inflation report and how the U.S. has likely moved into an above-target inflation regime – whatever you think about the tariff impact.
Today’s Market Minute
* A planned summit between U.S. President Donald Trump and Russian President Vladimir Putin was put on hold on Tuesday, as Moscow’s rejection of an immediate ceasefire in Ukraine cast a cloud over attempts at negotiations.
* Japan’s new Prime Minister Sanae Takaichi is preparing an economic stimulus package that is likely to exceed last year’s $92 billion to help households tackle inflation, government sources familiar with the plan said on Wednesday.
* British inflation and a key underlying measure of price growth both unexpectedly held steady in September, official figures showed on Wednesday, offering some relief to finance minister Rachel Reeves ahead of her November budget.
* Global oil prices are signalling that the market is tipping into a protracted period of oversupply, but the huge disparity in forecasts for OPEC’s production will likely limit the selloff, argues ROI energy columnist Ron Bousso.
* Is the U.S. equity market near the peak scaled in the lead-up to the dotcom bubble? Comparing current pricing with the late 1990s indicates that – far from reaching a summit – U.S. equities may only be at “base camp”, argues Stephen Jen, CEO of Eurizon SLJ asset management, in his latest piece for ROI.
Chart of the day
Argentina’s central bank sold $45.5 million from its reserves on Tuesday to support the exchange rate, after the peso reached the upper limit of the central bank’s floating band despite U.S. support and a $20 billion currency swap to guarantee payment of the next public debt maturity. The intervention came as uncertainty in the market ahead of Sunday’s legislative elections spurred a shift toward dollar assets.
Today’s events to watch
* Federal Reserve Board Governor Michael Barr speaks; European Central Bank President Christine Lagarde, ECB Vice President Luis de Guindos and ECB board member Claudia Buch all speak; Bank of England’s Deputy Governor for Prudential Regulation Sam Woods speaks
* US corporate earnings: Tesla, IBM, Lam Research, Northern Trust, CME, Moody’s, Boston Scientific, Kinder Morgan, Thermo Fisher Scientific, Teledyne, Amphenol, Molina Healthcare, Westinghouse, AT&T, Packaging Corp of America, Hilton Worldwide, Globe Life, GE Vernova, United Rentals, Avery Dennison, First Energy, Las Vegas Sands, Raymond James, Crown Castle, Lennox, O’Reilly Automotive,
* US Treasury sells $13 billion of 20-year bonds
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Kirsten Donovan)
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