European equities edged higher on Monday and US stock futures fell ahead of a week of third-quarter earnings results for Big Tech companies including Meta, Alphabet and Amazon.
The regional Stoxx Europe 600 gauge was up 0.4 per cent by late-morning trading in London, while Germany’s Dax rose 0.4 per cent even as S&P Global’s flash eurozone composite purchasing managers’ index, a key measure of business activity in the region, fell to its lowest level since November 2020.
Peter Vanden Houte, chief economist at ING, said Monday’s figure “clearly confirms that the eurozone economy is already in recession”, adding that forward-looking components of the survey implied there was more bad news to come.
Futures contracts tracking Wall Street’s S&P 500 fell 0.5 per cent ahead of the New York open. The broad-based index last week recorded its biggest five-session gain since June, adding 4.7 per cent, as investors responded to reports that the Federal Reserve may begin to slow the rate at which it raises interest rates from December.
UBS analysts said US corporate earnings had so far been “mixed”, with results broadly in line with the market’s “relatively cautious expectations”. Four of the world’s biggest companies — Apple, Microsoft, Alphabet and Amazon — are due to report their latest quarterly earnings this week.
In bond markets, the yield on the benchmark 10-year US Treasury note was flat at 4.21 per cent.
In the UK, prices for 10-year gilts climbed, pushing yields down 0.17 percentage points to 3.88 per cent after Boris Johnson dropped out of the race to become the UK’s next prime minister, leaving Rishi Sunak and Penny Mordaunt as the two remaining candidates.
London’s FTSE 100 index fell 0.5 per cent, while sterling gained 0.1 per cent against the dollar to $1.131 in morning trading. It also advanced 0.6 per cent against the euro to €1.152.
Still, Derek Halpenny, head of research for global markets at MUFG Bank, warned the pound would almost certainly remain under pressure moving into the final months of the year.
“The removal of political instability in the UK is certainly a positive and could over the short-term provide some further support for the pound,” said Halpenny. “However, we suspect gains could be brief and would caution over how much further this news can lift the pound.”
Asian equities meanwhile fell sharply following the conclusion of the Chinese Communist party’s national congress meeting and the delayed release of the country’s gross domestic product figures.
The Hang Seng index dropped as much as 7 per cent, while the CSI 300 index of Shanghai and Shenzhen-listed equities fell as much as 3.3 per cent. The declines came after the publication of China’s GDP figures, which showed the world’s second-biggest economy expanded 3.9 per cent in the third quarter.
