Stocks in the UK wobbled on Wednesday following disappointing earnings reports and concerns over the economic outlook. Google parent company Alphabet reported a slowdown in its cloud business, causing its shares to fall by 6.9 percent. This added to the overall anxiety among investors, who have also been worried about high interest rates.
Asian stocks, however, experienced a boost as investors reacted positively to China’s approval of a trillion-yuan sovereign bond issue, which was seen as a sign of impending economic stimulus. In addition, the Australian dollar saw an increase in value after inflation figures came in higher than expected, leading to forecasts of a rise in interest rates.
In Europe, the STOXX 600 fell by 0.5 percent, with shares of French payments company Worldline experiencing a near-50 percent slump after it lowered its payment targets due to an economic slowdown in some key markets.
Bank earnings were in focus on Wednesday, with Deutsche Bank being the outlier as its shares rose by 7 percent. Overall, the financial sector remained weak.
The MSCI All-World index dipped by 0.1 percent, heading for a third consecutive monthly decline in October, primarily due to the increase in US Treasury yields.
US Treasuries experienced a bounce-back after the 10-year yield breached 5 percent earlier in the week. The benchmark yield remained firm at 4.82 percent.
In 2023, mega-cap tech companies have been highly successful for equity investors. However, Alphabet’s disappointing earnings report caused its shares to fall in pre-market trading by 6.9 percent. Meanwhile, Microsoft’s shares rose by over 3 percent.
Chris Beauchamp, the chief market analyst at IG Group, commented on the mixed start to tech earnings, particularly focusing on cloud computing, which has been a lucrative area for the sector.
The approval of a 1 trillion yuan ($137 billion) bond issue in China was reported in the media, with the funds set to be used for rebuilding disaster zones and improving infrastructure.
The yen maintained its position at 149.88, while the Australian dollar remained near two-week highs at around $0.64.
Although the annual pace of inflation in Australia slowed in the third quarter, the Reserve Bank of Australia’s preferred core measure exceeded expectations, rising by 1.2 percent. Analysts at CBA predicted that this increase in underlying inflation would prompt the RBA to act on their hiking bias at the upcoming Board meeting.
Brent crude futures fell by 0.4 percent to $87.70 a barrel. The faltering economy in Europe led traders to scale back gains made in the wake of the conflict in the Middle East.
Several nations, including the United States and Russia, called for a pause in fighting between Israel and Hamas to allow aid into the besieged Gaza Strip.
After reaching $1,997 an ounce last week, spot gold traded at $1,969.
Bitcoin saw a 15 percent increase in value this week, largely due to speculation that ETF applications from BlackRock and other companies will be successful and attract capital into cryptocurrencies. The US Securities and Exchange Commission declined to comment on these speculations.
Overall, the stock market experienced a mixed performance, with some companies reporting disappointing earnings and others surpassing expectations. Investors remain cautious due to concerns over the economic outlook and high interest rates.
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