Last week, the geopolitical tension generated by this conflict was noticed in the markets, especially in the bond market, which is “setting the pace” for equities. Although the sharp increase in the price of crude oil is a clear inflationary factor, a fact that usually punishes the behavior of these assets, the high uncertainty created by the conflict causes the bonds to return the their role as “safe assets” sometimes, causal and timely in their returns, all these fluctuations also create high volatility, in this market and in the variable income markets.
We understand that this fluctuation will continue in the coming days, at least until the progress of the conflict in Gaza becomes clear. However, even if investors and, therefore, the markets, continue to pay close attention to this factor, the beginning of the period for the publication of quarterly business results, a period that begins to take run this week, will also focus their attention.
Thus, and in various European markets, in the coming days companies that have a great deal to do with their sectors of activity will announce their figures for the last quarter, such as the Swiss food company Nestlé (NESN-CH), the Dutch semiconductor production equipment manufacturer. ASML Holding (ASML-NL), French luxury company L’Oreal (OR-FR), Swiss pharmaceutical company Roche (ROG-CH) and German software company SAP (SAP-OF). In the Spanish stock market, the publication on Wednesday of the quarterly numbers of Cie Automotive (CIE) and Vidrala (VID) and on Thursday of the results of Bankinter (BKT) and Atresmedia (A3M) stood out.
Also on Wall Street, quarterly results have a relevant role, with companies of importance in Tesla (TSLA-US), Procter & Gamble (PG-US), Johnson & Johnson (JNJ-US), AT&T (T -US) , Netflix (NFLX-US), Bank of America (BAC-US) and Taiwan Semiconductor (TSM-US) releasing their numbers in the coming days.
As we always point out, as important or more than the results achieved by companies is what their managers say about the future of their businesses in the coming quarters. Markets act based on expectations, so the estimates of the results released by these companies will determine how their actions will react in different markets.
In this sense, it is worth noting that in recent weeks companies that “disappointed” investors by changing their earnings expectations downwards have been punished by the stock market, with a significant drop their prices. On the contrary, and as can be seen on Friday after the publication of the three major American banks in their quarterly figures, if the results and expectations are “similar”, investors usually choose to “reward” the companies, even in complex moments like the current one. about.
For others, note that the macroeconomic agenda this week brings important events, such as the publication TOMORROW of the US retail sales and industrial production for September; on Wednesday a battery of Chinese economic figures, including GDP for 3Q2023, as well as the reading of the United Kingdom CPI for September and the final reading of this variable in the Eurozone for the same month. In addition, on Thursday the 19th, the president of the Federal Reserve (Fed), Jerome Powell, is scheduled to speak, where this will be his last intervention before the meeting to be held by the Federal Open Market Committee (FOMC) in beginning in November.
The markets will be very attentive to what Powell said to know if the Fed ends the process of raising rates or if, on the contrary, it leaves “the door open” to new action before the end of the year – the The probability that the markets give that the Fed will raise its rates in November is low, although the probability that it will do so at the FOMC meeting in December has increased to 50%.