Markets on Wednesday continued to be guided by the crop of balance sheets, today with companies of the stature of Meta, and indicators that give clues about the resistance of economies to soaring inflation and constant threats to the supply chain. In addition, investors take advantage of recent stock market crashes to buy assets at a lower price.
After positioning themselves at the worst levels since mid-March, both European stocks and index futures in the United States are up. In Europe, Mercedes-Benz AG and Michelin lifted spirits and helped push the Stoxx 600 forward.
In the US, Microsoft shares helped shore up earnings as the company reported better-than-expected first-quarter results. The balance sheets of US companies are providing the markets with some solace, as around 80% of companies have managed to exceed analysts’ expectations.
US Treasury bonds were losing value, with 10-year bonds offering a 2.77% premium. Even so, the premiums are lower than last week.
In both the United States and Europe, indicators are foreseen that show the situation of consumer spending. In Germany, for example, consumer confidence fell in May to an all-time low: -26.5 points, against expectations of -16.0 and -15.7 in the April reading, according to data released today by the GfK institute.
The indicator was worse than the record in May 2020, when the first Covid-19 lockdown took place in Germany. The war in Ukraine raises costs for families and hopes for a solid post-pandemic recovery.
Tomorrow the US Gross Domestic Product (GDP) will be released and expectations are high regarding this indicator, as it should show the first effects of the war in Ukraine and the inflation that the confrontation has generated.
Russia has halted gas deliveries to Poland, the latest increase in tensions between Moscow and European capitals over energy supplies. Russia’s Gazprom PJSC said it has cut off gas flows to Poland and Bulgaria and will keep supplies off until the two countries agree to Moscow’s demand to pay for the fuel in rubles.
The European Union has rejected the ruble payment in principle, saying it violates sanctions and strengthens Russia. European Commission President Ursula von der Leyen said the EU’s gas coordination group was meeting to chart a joint response to Russia’s “unjustified and unacceptable” decision to use gas supplies as “blackmail”.
European gas prices rose more than 20%, while the euro fell to the lowest level against the dollar since April 2017. And because of geopolitical tension, oil remained high, reaching more than US$ 102 per month. barrel for WTI contracts.
US stock markets tumbled sharply, dragged down by a sell-off in tech stocks hours before the release of quarterly earnings from Alphabet and Microsoft. Market sentiment was also affected by fears over a slowing economy and the possibility of the Fed tightening monetary policy. Russia will also cut off gas to Poland and Bulgaria, facing a threat to cut supplies to countries that refuse Vladimir Putin’s new demand to pay for fuel in rubles.