A spate of positive earnings surprises in the US helped push the S&P500 to yet another record level last week. Whilst elevated energy and raw material costs remain ongoing concerns for investors, strong earnings momentum in the third quarter has been welcome news with FactSet estimating that earnings have frown by an annualised +33.0% during the quarter. Fresh stimulus hopes also provided a kicker for US stocks with negotiations over the Democrats infrastructure bill moving in the right direction. The S&P500 rose by +1.6% with sector level gains broad based.
Weekly performance elsewhere in global equities was much more negative. In the UK, both the FTSE100 and FTSE250 retreated, the former by -0.4% and the latter by -0.2% whilst in Japan, the Nikkei 225 declined by -0.9%. In Europe, the German DAX also fell with the index posting a weekly fall of -0.3% whilst the French CAC40 was flat. Flash PMI data for the Eurozone revealed a further slowdown in the rate of growth this month on the back of supply chain issues and new COVID related restrictions1.
As for sovereign bond yields, upwards moves were seen across the curve on expectations of higher rates. In the UK, the 10-year climbed by 4 basis points (bps) to 1.15% with the Bank of England now expected to raise rates before the year concludes. The US 10-year meanwhile rose by 8bps to 1.66%, a move matched by the equivalent duration benchmark in the Eurozone which concluded the week at -0.10%.
In the commodity markets, oil prices continued to tick higher with Brent crude adding a further +0.8% to $85.63 a barrel. Gold also ended the week in positive territory, rising by +1.9% to $1,806 a barrel on the back of some modest weakness in the US Dollar. Copper remained incredibly volatile, posting a weekly decline of -1.9% to $9,857 a tonne. The metal fell after the Chinese government intervened in the coal market in an attempt to bring down record prices
The Bank of England publishes its monthly consumer borrowing data in what is a quiet week for major macro releases from the UK. In the US, the advanced reading of Q3’21 GDP is due on Thursday with economic growth expected to have slowed materially from Q2’21’s +6.7% (the forecast is for +2.8% quarterly growth). Meanwhile in the housing sector, new home sales are due on Tuesday whilst on Wednesday, the latest durable goods orders number is published.
On the Continent, the European Central Bank hosts its latest monetary policy meeting on Thursday although no changes to interest rates are expected on this occasion. In terms of data, Q3’21 GDP is also due with CPI inflation also released with both figures out on Friday. Meanwhile it’s a busy week for Japanese data with unemployment, CPI inflation, unemployment and retail sales all released throughout the week. The Bank of Japan also hosts its own monthly policy meeting which takes place during the early hours of Thursday morning. There are no major figures due from China on this occasion. 
Read last week's market update
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