Stocks and U.S. Equity shares inched higher this Wednesday, mainly pushed by resilient company earnings. Analysts now look forward to pivotal Federal Reserve monetary policy for fresh impetus.
Wednesday kicked off with Nasdaq 100 rallying 1.5%. A reassuring report from Alphabet Inc, Microsoft Corp., and Texas Instruments helped push the S&P 500 futures by 1%. European stocks also edged higher, thanks to decent performance in the banking sector. The general mood remains edgy as investors now await the much-anticipated interest rate hike, part of a global wave of monetary tightening aimed at curbing inflation.
Meanwhile, the dollar and Treasury yields have remained largely unchanged as investors prepare for a widely expected 75 basis point hike by the Fed later today. On the flip side, oil and European natural gas prices have surged higher, extending yesterday’s gain further.
Unfortunately, Credit Suisse Group AG reported a larger than expected loss. The company has now announced a replacement for its embattled chief executive officer. The lender added that it is working on a turnaround plan to mitigate more losses. Similarly, Deutsche Bank has waived off its efficiency target for the year, warning that its key profitability goal is less likely to be achieved.
UniCredit SpA, another top lender, saw its shares rally by 6% after posting a second-half profit that exceeded analysts’ expectations. The lender has now lifted its full-year target as it envisages better gains owing to European rising interest rates.
Fed’s proposed move to tackle price pressure will bring the combined base point increase to 150 points, its steepest rise since the 1980s when the then Federal Reserve chairman Paul Volcker batted sky-high inflation.
International Monetary Fund Warning
Monetary tightening, Europe’s energy crises, and the current challenges in China’s property sector are some factors impacting the global outlook. The IMF is now warning that the world economy is on the brink of outright recession.
Even though US companies’ earnings have revived the market a bit, there are continued doubts about how long they can continue to weather the current economic challenges.