Wall Street stocks opened higher Thursday as traders shook off disappointing US growth data to focus on a flood of strong earnings reports.
The blue-chip stock index S&P 500 and the tech-driven Nasdaq Composite both gained 0.6 percent in early New York deals, aided by positive numbers from Caterpillar – widely regarded as business leaders – before the bell.
Many more US companies are due to report in the next week, with tech giants Apple and Amazon both expected to deliver numbers after the market closes on Thursday.
That positive sentiment offset the numbers showing the US economy expanded at an annualized rate of 2 percent in the third quarter, up from 6.7 percent in the previous three-month period. Economists surveyed by Refinitiv had forecast a growth rate of 2.7 percent.
Meanwhile, the European stock markets showed little concern about the decision of the European Central Bank to throttle its bond purchase program.
The regional Stoxx 600 index stagnated in trading in the afternoon after the ECB announced its emergency purchase program for the pandemic of 1.85 billion. The key interest rate remained stable at minus 0.5 percent despite persistently high inflation.
The London FTSE 100 lost 0.2 percent.
Government bond yields were volatile on Thursday afternoon. The price of the 10-year German Bund fell sharply as investors increased their bets on rate hikes, despite ECB President Christine Lagarde insisting that an increase is not expected before the end of 2022.
In return, the yield – which is the opposite of the price of a bond – rose by 0.06 percentage points. This shift was then slightly reversed, so that the Bund yield remained at minus 0.12 percent.
New data from Thursday showed that German inflation beat expectations to hit 4.5 percent in October. Analysts at Commerzbank said that a further hike in energy prices, which have soared in the last few weeks due to a supply crisis, “will likely push the inflation rate up again in November” before price hikes slow down significantly next year .
The UK 10 year gilt yield rose to 1.01 percent in afternoon trading. A day earlier, the benchmark good currency’s rate had seen its biggest one-day rally since March 2020 after the government increased its planned debt sales by nearly $ 60 billion.
“Variants of the stagflation theme are still dominating the markets,” said Will Hobbs, chief investment officer at Barclays Wealth and Investments – pointing to a combination of rising inflation and slowing economic growth.
In addition to the ECB, a number of other central bank meetings for the Reserve Bank of Australia (Tuesday), the Federal Reserve (Wednesday) and the Monetary Policy Committee of the Bank of England (next Thursday) are due in the coming days.
Officials are expected to outline how they will address inflationary pressures caused by the surge in demand for the pandemic coupled with supply shortages.
What can be seen in markets today
Apple and Amazon: The two largest publicly traded companies in the world report their profits after the bell. Analysts expect Apple’s fourth-quarter revenue to exceed $ 84.8 billion thanks to solid demand for its laptops and phones, while Amazon’s revenue is expected to be around $ 111.6 billion. Comments on supply chain issues, particularly with the busy Christmas season, will be of particular interest.
Biden’s spending plan: The US president has a busy morning ahead of him before heading off to a meeting of G20 heads of state and government in Italy. As negotiations over his $ 2 trillion spending package become particularly difficult, Joe Biden is expected to attend the House Democratic House of Representatives session at 9 a.m. east to secure support from progressive lawmakers. The White House said the president would make remarks on Thursday morning, likely after that meeting and before flying to Rome. Biden will be attending the COP26 climate summit in Glasgow, which starts on Sunday.