
Please try another search
By Geoffrey Smith
Investing.com -- China's latest Covid-19 outbreak spreads and Goldman Sachs (NYSE:GS) cuts its growth forecasts for the world's second-largest economy next year. Facebook (NASDAQ:FB) will report earnings after the closing bell, at a time of heightened market and regulatory scrutiny of the social media giant. Stocks are set to inch higher despite reports of the Democrats implementing a wealth tax. Europe's economy is slowing and Itlian Prime Minister Mario Draghi's efforts to offload a problem bank get derailed. Oil prices continue to be squeezed higher. Here's what you need to know in financial markets on Monday, 25th October.
1. China's Covid-19 outbreak spreads
China said its latest Covid-19 outbreak had spread to 11 of its 23 provinces, raising the specter of fresh lockdowns as it continues with its ‘zero tolerance’ approach to the disease.
China is one of few remaining countries to stick with an approach that routinely imposes economically damaging lockdowns to stop the spread of the disease. Most other countries have switched to allowing a controlled spread within the community, mitigated by social distancing and vaccination regulations.
Case numbers remain low in the current outbreak, but the summer outbreaks in China pushed much of the economy back into contraction. Goldman Sachs over the weekend cut its forecast for Chinese growth next year to 5.2% from 5.6%.
Chinese markets remained broadly positive on Monday in the wake of China Evergrande’s suspiciously miraculous avoidance of default on Friday.
2. Facebook to report under harsh spotlight
Facebook will report earnings after the closing bell, at a time of heightened scrutiny from both markets and regulators.
Facebook stock has fallen 15% in the last two months amid concerns about both its governance and its near-term revenue outlook. The latter is in especially sharp focus after rival Snap (NYSE:SNAP) posted weak revenue in the third quarter due to changes in Apple’s privacy settings, which left advertisers unable to target adds on Apple (NASDAQ:AAPL) devices and, accordingly, less willing to pay to place them.
The Wall Street Journal reported fresh disclosures on Sunday that showed how Facebook repeatedly intervened to moderate and filter the political content on parts of its site, notably in suppressing conservative publications such as Breitbart.
Others to report on Monday include Kimberly-Clark and Royal Caribbean (NYSE:RCL) Cruise Line. Overnight, HSBC followed Wall Street's trend in releasing earnings that were heavily bolstered by the release of loan provisions.
3. Stocks set to edge higher.
U.S. stock markets are set to open modestly higher but likely to remain rangebound pending the release of Big Tech earnings this week. Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) will follow Facebook on Tuesday, while Amazon (NASDAQ:AMZN) reports on Thursday.
By 6:15 AM ET (1015 GMT), Dow Jones futures were up 16 points, or 0.1%, while S&P 500 futures were up 0.1% and Nasdaq 100 futures were up 0.3%.
There was little immediate to reports over the weekend that Democratic lawmakers are moving closer to an agreement on tax hikes to fund their spending programs. Treasury Secretary Janet Yellen said at the weekend that the proposals are likely to include a tax on unrealized equity gains over a certain threshold.
Stocks likely to be in focus later include PayPal (NASDAQ:PYPL) and Pinterest (NYSE:PINS), after the former said there are no talks ongoing for the two to merge.
4. Europe labors toward the year end
Europe’s largest economy faces “a difficult quarter”, according to the Ifo research institute, whose closely-watched index of German business confidence fell for a fourth straight month on Thursday. The Ifo business climate index fell to its lowest in six months in October, as more and more of the country’s manufacturing sector fell victim to component shortages – notably for semiconductors.
Across the Baltic, Sweden’s Volvo was forced to scale down the size of its IPO, amid concerns about the chip issue and about its majority Chinese ownership. The carmaker is a unit of Geely Automotive.
There was bad news from other parts of Europe too, with the Bank of Spain reportedly slashing its growth forecasts for this year and next, and with the breakdown of talks between the Italian government and Unicredit (MI:CRDI) over the sale of long-running problem Banca Monte dei Paschi di Siena.
5. Oil market tightens further
Crude oil prices started the week on a firm footing, with premiums for spot delivery approaching some of the highest in recent years.
The degree of so-called ‘backwardation’ – the premium over futures contracts that is paid for immediate delivery – is now close to an all-time high, with the April futures contract trading over $5 below the spot physical price.
Such dynamics are typically taken as bullish signals, reflecting strong real demand. Goldman Sachs analysts estimate that global demand is now back at 99 million barrels a day, effectively erasing the dip in demand caused by the pandemic.
By 6:30 AM ET, U.S. crude futures were up 0.8% at $84.45 a barrel, while Brent was up 0.7% at $85.20 a barrel.
By David Randall NEW YORK (Reuters) -Bad news may once again be good news on Wall Street, as signs of slowing U.S. growth fan hopes that the Federal Reserve may not need to...
By Ann Saphir and Howard Schneider (Reuters) - Evidence U.S. inflation is cooling will not budge Federal Reserve policymakers from half-point interest rate hikes planned for...
WASHINGTON (Reuters) - The U.S. Federal Reserve is carrying $330 billion in unrealized losses on its holdings of U.S. Treasury and mortgage-backed securities as of the end of...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.