Not a particularly great start to a new week yesterday for markets in Europe, but having just come off the back of three days of strong gains at the end of last week, markets were probably overdue a bit of a pullback.
The big question for CMC chief market Michael Hewson, chief market analyst at CMC Markets UK, now is whether that means “we are back to chopping and changing in the same broad range we’ve been in since the beginning of July, or whether we sustain the positive momentum of the last couple of weeks?”
“Yesterday’s disappointing China Q3 GDP numbers may well have been the perfect excuse for a bit of a pullback,” he said this morning.
“However, the numbers can’t have been too much of a surprise to anyone who’s been paying attention to recent events in the world’s second largest economy these past weeks,” Hewson added.
“Thus far we’ve seen companies post some fairly decent beats on the earnings front, and while it’s been notable that most have cited concerns about rising costs, as well as supply chain disruptions, we haven’t seen many significant profit downgrades yet,” he continued.
Next few days
That could change over the course of the next few days, and while the risks from rising energy prices are now starting to make themselves felt, for airlines in particular who having only just been given the all clear to start flying again, are now facing spiralling fuel costs, probably feel like they are lurching from one crisis to another.
While European stocks fell back yesterday, US stocks were slightly more resilient with the S&P500 and Nasdaq both finishing in positive territory, helped by oil prices slipping back from their peaks, and on optimism that last week’s trend of earnings beats will continue later today, when Netflix announces its latest Q3 numbers, after the close of US markets tonight, Hewson noted.
Apple’s share price also finished strongly last night after announcing a series of new upgrades for its laptops, as well as new upgraded AirPods with a higher price tag, at its latest online unveiling yesterday evening.
Two new MacBook Pros, one with a 14-inch screen and one with a 16-inch screen come with Apple’s own new M1 Pro processors, and a hefty price tag, due to start deliveries next week. Apple says the new chipsets are faster than the equivalent Intel chips.
“Today’s Asia session has seen stocks rebound and this looks set to translate into modest rebound for European markets this morning, after yesterday’s pullback,” Hewson concluded.