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Author: kltrader   |   Latest post: Wed, 8 Dec 2021, 10:25 AM


U.S. Earnings Reporting Season Begins

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The U.S. earnings season for the third quarter typically begins during the second full week of October, with banking giants leading the releases. The S&P 500® Index (SP500), which has been on an uptrend since mid-March this year, came off from a closing high of 4,536.95 points on 2 September, moving lower in the last month and a half to close at 4,363.80 (+0.3%) yesterday. Nonetheless, the U.S. benchmark index is still 16.2% higher year-to-date.

The Hong Kong market is on holiday today in conjunction with the Chung Yeung Festival. There will be no market making for warrants over the Hang Seng Index, Hang Seng TECH Index, iShares China A50 ETF and Hong Kong shares.

SP500 Snaps 3-day Losing Streak

Last Friday, the SP500 finished slightly lower after data showed weaker than expected jobs growth in September. According to an article on the Wall Street Journal (8 Oct), the U.S. job growth fell to its slowest pace last month with 194,000 jobs added, the smallest gain since December 2020 and down from 366,000 jobs added in August, while unemployment rate dropped to 4.8% as many workers gave up the job search and exited from the labor force. The decline continued into Monday and Tuesday this week as investors await the U.S. earnings reporting season, which is expected to begin with banking giants releasing their results from today 14 October.

On Wednesday, the SP500 and Nasdaq ended higher, led by gains in tech giants like Amazon.com, Alphabet Inc and Microsoft. Minutes from the September Federal Reserve policy meeting indicated that they might begin reducing crisis-era support for the economy in mid-November, while they remained divided about how soon they may need to raise interest rates. A Labor Department data earlier indicated that consumer prices rose steadily in September, further strengthening the case for a Fed rate hike. The SP500 rose 0.3% with all sectors in the green except for financials and energy, snapping its 3-day losing streak.

Follow our overnight market wrap, which is updated daily for the latest news in the global markets that may affect your trading day.

Earnings Season

An article on CNBC (13 Oct) said that the stock market has been struggling from September as the SP500 is currently trading at a price-to-earnings ratio above its long-term average as factors such as rising commodity prices, wage inflation, general inflation, supply chain chaos and interest rate policy became headwind for the U.S. stocks.

SP500 earnings growth estimates for the third quarter have been coming down for weeks, a stark difference from the increasing estimates over the last 12 months, including in the runup to second-quarter earnings. The third-quarter earnings reporting season generally kicks off in the second full week of October, led by banking giants such as JPMorgan Chase, Citigroup and Wells Fargo (Interactive Investor, as of 14 Oct).

Source: Macquarie Research - 14 Oct 2021

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