Markets entered a holding pattern as the busiest week for U.S. corporate earnings commenced, highlighted by Alphabet Inc., Google’s parent company, set to report its results on Tuesday. Investors are keenly anticipating outcomes from companies that account for nearly 42% of the S&P 500’s market capitalization this week. This includes five of the seven major tech firms that have fueled the year’s market rally. In addition, market participants are preparing for a series of crucial economic indicators that will inform the Federal Reserve’s upcoming interest rate decisions, coinciding with the U.S. presidential election just one week away.
The Stoxx Europe 600 index experienced a modest increase of about 0.2%, while futures for the S&P 500 and Nasdaq 100 showed little change following Monday’s gains on Wall Street. Treasury yields dipped, and the dollar index remained stable. Oil prices steadied after experiencing their most significant drop in over two years on Monday, as the market focused on easing tensions in the Middle East.
“Near-term focus is shifting to megacap earnings that kick off today with Google,” stated Charu Chanana, chief investment strategist at Saxo Markets. “There is still an expectation that AI spending will be maintained, which could continue to drive broader equity momentum.”
Investor sentiment is increasingly positioning for a potential return of Donald Trump to the White House, as major polls indicate a tight race with Vice President Kamala Harris. Cryptocurrency companies also saw a surge, with Bitcoin surpassing $71,000 for the first time since June, reflecting perceptions of Trump as a supporter of digital currencies.
A Trump victory is viewed as more favorable for stocks and Bitcoin compared to his Democratic opponent. In a Bloomberg Markets Live Pulse survey, 38% of respondents believe equities will accelerate under a Republican administration, in contrast to 13% for a Democratic one. Phillip Wool, head of portfolio management at Rayliant Global Advisors, noted, “Trump’s chances of victory are increasing, and that’s seen as good for U.S. stocks in the short run. Deficits will rise, inflation could return, and it may slow Fed rate cuts. All of this would put upward pressure on the dollar.”
As Federal Reserve policymakers prepare to meet and assess the pace of potential rate cuts, data is expected to reveal underlying resilience in the U.S. economy alongside a temporary slowdown in job growth.
In Europe, individual stock movements included HSBC Holdings Plc leading banking stocks higher after announcing a multibillion-dollar stock buyback alongside better-than-expected earnings. Conversely, Novartis AG experienced a decline after beating earnings expectations but disappointing analysts with a lack of clarity on its 2025 outlook.
Across Asia, benchmark indexes in Tokyo, Australia, Hong Kong, and South Korea rose, while stocks in China saw a downturn. In the currency market, the Japanese yen strengthened after Prime Minister Shigeru Ishiba vowed to restore political stability following his coalition’s failure to secure a majority in the lower house. Traders are also awaiting a Bank of Japan policy decision later this week, with recent data indicating a tightening labor market in September, placing pressure on companies to increase wages ahead of the BOJ meeting.
Key Economic Events This Week:
- U.S. Job Openings and Conference Board Consumer Confidence – Tuesday
- Alphabet Earnings – Tuesday
- Eurozone Consumer Confidence and GDP – Wednesday
- U.S. GDP, ADP Employment, Pending Home Sales – Wednesday
- Meta Platforms and Microsoft Earnings – Wednesday
- U.S. Treasury Department Bond Auction Plans – Wednesday
- China Manufacturing and Non-Manufacturing PMI – Thursday
- Bank of Japan Rate Decision – Thursday
- Eurozone CPI and Unemployment – Thursday
- U.S. Personal Income, Spending, and PCE Inflation Data – Thursday
- Amazon and Apple Earnings – Thursday
- China Caixin Manufacturing PMI – Friday
- U.S. Employment and ISM Manufacturing – Friday
Market Summary:
Stocks:
- Stoxx Europe 600 rose 0.2% (as of 8:14 a.m. London time)
- S&P 500 futures remained steady
- Nasdaq 100 futures unchanged
- Dow Jones Industrial Average futures unchanged
- MSCI Asia Pacific Index rose 0.1%
- MSCI Emerging Markets Index fell 0.3%
Currencies:
- Bloomberg Dollar Spot Index stable
- Euro at $1.0815
- Japanese Yen at 153.23 per dollar
- Offshore Yuan fell 0.2% to 7.1612 per dollar
- British Pound at $1.2979
Cryptocurrencies:
- Bitcoin rose 2% to $70,974.12
- Ether increased 4% to $2,616.27
Bonds:
- 10-Year Treasury yield stable at 4.29%
- Germany’s 10-Year yield up two basis points to 2.30%
- Britain’s 10-Year yield up two basis points to 4.27%
Commodities:
- Brent Crude rose 0.5% to $71.75 per barrel
- Spot Gold increased 0.3% to $2,751.22 an ounce
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