Today’s Big Picture
Equities in Asia started the week off mostly higher, led by the 2.2% and 2.6% moves higher in Hong Kong’s Hang Seng and China’s Shanghai Composite, respectively. By mid-day trading, European equities were mostly higher as well, and U.S. futures point to a flat market at the open. The U.S. bond market is closed today.
There are four main drivers of equities this week:
- First is the ongoing fiscal stimulus talks in the U.S., which in our view, look increasingly less likely to result in a deal before the 2020 U.S. presidential election on November 3.
- The second will be the onslaught of corporate earnings reports this week, particularly for financial firms and large banks. Comments surrounding loan growth, consumer borrowing levels, and the like will be a keen focus as investors revisit growth prospects for the second half of 2020 and consumer spending prospects ahead of the year-end holiday shopping season.
- The third will be Apple’s (AAPL) “Hi, Speed” event slated for tomorrow, October 13, at which it is widely expected to unveil the 5G iPhone.
- The fourth is Amazon’s (AMZN) 2020 Prime Day event, which was postponed from its usual time thanks to the pandemic.
As for earnings, Data from FactSet sees the S&P 500 constituents delivering EPS of $33.30 for the September quarter, up dramatically from $28.22 in the June quarter but down considerably from the $42.21 earnings in the September 2019 quarter. With the coronavirus resurgence, we suspect investors will be closely scrutinizing and parsing management comments to determine if the rebound in corporate earnings for the December quarter will materialize as expected. That answer will help shape the next move in equities.
According to a study published last Friday of 1,062 patients in the New England Journal of Medicine,