World Indices in Shaky Mode as Earnings and Macro Data Send Controversial Signals

The U.S. economy downturn is still in the cards, just not right away. To be sure, economists point to how the 2.6% increase in Q3 GDP had more to do with rising exports than anything else. That was above the Dow Jones forecast for 2.3%. But the Commerce Department report also revealed that one measure of inflation fell in recent months. No matter how you slice it – recession avoided, recession still coming, recession avoided and still coming – it’s a very strange economic situation. Consumer prices are still climbing, household spending is under pressure and surging mortgage rates are cooling the housing market as unemployment sits at a five-decade low. Meanwhile, major companies are sending conflicting earnings messages, leaving the stock market confused.

Amazon.com (AMZN) projected sluggish sales for the holiday quarter and its stock plunged almost 20% in extended trading. The world’s largest online retailer has spent this year adjusting to a sharp slowdown in e-commerce growth as shoppers resumed pre-pandemic consumption behaviors.

Today on the economic front, the Bureau of Economic Analysis will release the personal income and spending report for September at the market open. Apart from the main metrics, traders may also focus on the annual rate of the core personal consumption expenditure index, which is the Fed’s preferred inflation gauge.

At 10 a.m. EDT, the National Association Of Realtors will release the pending home sales index for September. The headline index is a measure of future housing activity.

Thereafter, the University of Michigan will release the final consumer sentiment index for October, also. The preliminary reading released in early October showed an increase in the index from 58.6 in September to 59.8.

European stocks are trading sideways as of 5 p.m. CET, as investors still digested weak GDP reports from the region and stayed cautious ahead of next week’s U.S. Fed rate decision. At the time of writing, the German DAX traded 0.13% higher. The British FTSE 100 decreased by 0.46%, while the French CAC 40 fell by 0.29%. Yesterday, the ECB announced that it was changing the terms and conditions of its targeted longer-term refinancing operations, or TLTROs – a tool that provides European banks with attractive borrowing conditions. ECB President Lagarde said the so-called "normalization" process is, however, not finished and more rate hikes are expected.

Corporatewise in the region, beleaguered Swiss bank Credit Suisse (CS) revealed the most dramatic steps yet in its latest restructuring: raising billions of dollars, firing thousands of employees and carving out its investment bank. The overhaul is an urgent attempt to restore credibility after a succession of big losses and management chaos shattered its reputation as one of Europe’s most prestigious lenders. Investors, looking at combined charges of about $6.6 billion and the dilution effect of planned share sales, sent the bank’s stock hurtling downward as much as 16%.

Earlier in Asia, Hong Kong stocks led losses as shares in the Asia-Pacific fell as the Bank of Japan left its benchmark interest rate unchanged. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.57%. The Hang Seng index in Hong Kong briefly lost 3.66%, with the Hang Seng Tech index falling 6.1%. In Australia, the S&P/ASX 200 fell 0.87%. The Nikkei 225 in Japan fell 0.89%, while the Topix was 0.3% lower. The Japanese yen maintained146-levels after the Bank of Japan kept rates at ultra-low levels, in line with expectations.

South Korea’s Kospi was 0.7% lower. In mainland China, the Shanghai Composite was 1.32% lower and the Shenzhen Component shed 2.5%. Some Chinese airlines listed in Hong Kong reported earnings, along with EV maker BYD. South Korea’s LG Electronics was also scheduled to report earnings.