Daily summary: Global stocks waver ahead of earnings season

6:59 PM October 12, 2021
  • European equities finished session mostly lower
  • IMF lowers global growth forecasts 
  • WTI crude hovers at 7-year highs

European indices finished today's session mostly lower amid stagflation concerns and disappointing economic data. German ZEW index dropped for the 5th month to the lowest since March 2020, suggesting economic recovery is losing steam. Also, the IMF lowered its global growth forecast and raised the inflation outlook while urging policymakers to stand ready to take swift response if necessary. Elsewhere, investors continued to worry about China Evergrande which failed to make a third bond payment.

US indices are trading slightly lower as rising inflation and energy crisis continue to weigh on market sentiment. The IMF expects the US economy will expand only 6%, below 7% in July and said central banks like the Federal Reserve should be prepared to tighten monetary policy if inflation runs too hot. Investors also await the earnings season to kick-off tomorrow. Earnings growth is expected to grow about 30% year over year this quarter following a 96.3% expansion in the second quarter, according to Refinitiv. On the data front, the number of job openings in the US dropped to 10.439 million in August, from an all-time high of 11.098 million in July and below analysts' estimates of 10.925 million. It was the first month of decline since December 2020. Tomorrow investors will focus on the minutes of the FOMC September policy meeting and the US CPI reading.

Oil prices are hovering around the flat line, remaining close to Monday's high's as traders weighed the effect that higher energy costs could have on the global economic recovery. Also oil prices continued to enjoy support from other parts of the energy market, with fresh flooding in China stopping production at more coal mines, pushing the cost of alternatives to oil even higher. Mixed moods can be spotted on the precious metals market. Gold price rose 0.30% to $1760.00 while silver fell 0.20% and is trading around $22.50. Meantime, the dollar index hovered at levels not seen in a year, which limited the upward movement of precious metals prices. Cryptocurrencies traded mostly lower today. Bitcoin price failed to stay above major support at $57,000 and Ethereum price slipped below $3500 level, despite strong institutional inflows recorded last week. 

EURUSD pair bounced offf the downward trendline on Monday and sell-off accelerated during today's session.  Pair is currently testing major support at 1.1530. Should break lower occur, declines could deepen towards 1.12 level. Source: xStation5

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