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Earnings season continues to give equities a breather


U.S. equities rose for the third consecutive session. The Dow Jones Industrial Average rose 1.07% to close at 31836.74. The S&P 500 rose 1.63% to close at 3859.11. The tech-heavy Nasdaq Composite soared 2.25% to close at 11199.12. Equities were buoyed by the falling U.S Greenback and the retreating U.S. short-term treasury yield. The benchmark U.S. 10-year treasury yield has retreated from recent highs of above 4.2% to below 4.1%. The yield was last seen trading at 4.086%. The policy-sensitive 2-year treasury yield sits at 4.449%.

Earnings season continues to provide much-needed breathing room for equities. Coca-Cola and General Motors both reported earnings that were better than analyst estimates. Coca-Cola reported $0.69 EPS, beating the $0.64 EPS estimate. Revenue to the beverage giant came in at 11.1 billion Dollars for Q3. General Motors recorded $2.25 EPS, a 19.63% surprise from the analyst estimated $1.88 EPS. More importantly, GM did not adjust guidance for the year, providing a confidence boost to GM investors.

On the earnings calendar, Apple, Exxon Mobile, Ford Motor, and Credit Suisse are scheduled to release earnings this week.

U.S. GDP(QoQ) for Q3, 2022 will be announced on Thursday, Oct 27, given the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, also the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar index dropped 0.99% throughout yesterday’s trading. The U.S. Greenback faced strong selling pressure amid the retreating 10-year treasury yield and better risk sentiment. Recent rumours regarding a more dovish Fed heading into the next FOMC interest rate decision have also triggered some selling amid the recent highs of the Dollar index.

EURUSD gained 0.9% throughout yesterday’s trading. The shared currency advanced against a weaker Dollar; however, strong economic headwinds still loom over the European economy and market participants’ optimism for a dovish Fed could be all but fictional.

GBPUSD gained 1.69% throughout yesterday’s trading. The British Pound surged as Britain welcomed its latest Prime Minister, Rishi Sunak. Personnel changes in the British government seem to have stabled the volatile Gilt market and thus the Pound.

Gold rose 0.21% throughout yesterday’s trading. The non-yielding metal took advance against the Dollar as treasury yields retreated.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDCPI (QoQ) (Q3)08:301.6%
USDNew Home Sales (Sep)22:00585K
CADBoC Monetary Policy Report22:00 
CADBoC Interest Rate Decision22:004.00%
USDCrude Oil Inventories22:301.029M
CADBOC Press Conference23:00