US stocks rise on earnings, dollar declines
US equities extended a rally on Tuesday (19 October) as solid corporate results helped counter concerns stemming from elevated inflation.
The S&P 500 Index rose 0.74% to 4,519.63 as earnings at Travelers Cos (TRV US) and Johnson & Johnson (JNJ US) beat expectations while higher commodity and freight costs weighed on shares of Procter & Gamble (PG US). The Nasdaq Composite Index jumped 0.71% to 15,129.09 and the Dow Jones Composite Index climbed 0.56% to 35,457.31.
A fifth day of gains brings the benchmark index within half a percent of an all-time high as the market grapples with the prospect of tighter monetary policy amid rising prices. The dollar was weaker against major peers as traders raised bets central banks around the world will raise interest rates before the Federal Reserve. Meanwhile, global bond yields were mixed with the US 10Y Treasury yield higher at 1.64%.
Investors are paying close attention to the earnings season to see how higher costs for energy and raw materials are affecting margins. Crude oil in New York climbed in a volatile session after Russia signalled it may not give Europe extra natural gas without approval for the Nord Stream 2 pipeline. Meanwhile, base metals took a breather on the race to record highs.
Fed Governor Christopher Waller said the central bank’s bond-buying programme should begin tapering next month. However, he added interest rate increases are probably “still some time off”. The comments were the latest in a slew of speeches from Fed officials expected to try to calm market jitters this week (ending 22 October). – Bloomberg News.
Europe equities rose on Tuesday (19 October) as investors eyed signs of a robust start to the latest earnings season, which outweighed lingering inflation concerns.
The Stoxx Europe 600 Index gained 0.33% to 468.58 by the close in London, with utilities, technology, and financial services leading gains, while food and beverage and telecoms sectors underperformed. Airlines were weighed down by concern about rising fuel costs, Covid infections in the UK, and London Heathrow airport’s plan to lift its charges.
Europe stocks have recovered some ground after slumping in September on concern that central bankers would need to raise interest rates in response to a spike in energy prices and broader inflation. Investors are now looking to company earnings commentary for clues on the impact of higher prices on profits. – Bloomberg News.
Toyota Motor (7203 JP) plans to invest USD3.4b in the US through 2030 to establish a new company and build its first US battery plant, becoming the latest global automaker to accelerate the transition to electric vehicles (EVs) through a battery push.
Production would start in 2025 and at first focus on batteries for hybrid EVs, creating 1,750 new jobs, the company said in a statement that did not disclose the location or production capacity. The investment is specifically for battery work and will not be used to expand vehicle-assembly capacity, a spokesman said.
The investment is part of Toyota’s global plan announced last month to spend JPY1.5t (USD13.1b) by 2030 on battery development and production. The world’s No 1 automaker expects EVs to account for nearly 70% of its US sales by 2030, up from almost 25% currently.
By 2030, Toyota expects to sell 2m zero-emission vehicles globally. The company projects it will sell as many as 1.8m electrified vehicles in the US, including zero-emission models. – Bloomberg News.
The Nikkei 225 Index gained 0.60% to 29,931.00 on Wednesday, adding to its previous climb of 0.65% to 29,215.52.
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