To get reality checks from stock earnings, focus by central bank Reuters

Reuters. File photo: A man looks at a stock quotation board outside a brokerage in Tokyo, Japan, April 18, 2016. REUTERS / Toru Hanai

Hideyuki Sano writes

TOKYO (Reuters) – Global stock stocks peaked from record highs as a strong reminder of the supply chain snag in the corporate earnings report, as investors looked to see if central banks could consider tightening monetary policy before they even think about it.

MSCI’s Gauge of World Stocks, ACWI, traded up 0.05% () on Thursday, leading the loss with a 1.1% fall.

China’s mainland stock fell 0.2% while MSCI’s broader Asia-Pacific stock index outside Japan fell 0.1%.

Overnight on Wall Street, it lost 0.51% from Tuesday’s all-time high, although Nasdaq has changed little, thanks to strong gains from Microsoft (NASDAQ 🙂 and Google Parent Alphabet (NASDAQ :).

Nevertheless, earnings reports also show the largest U.S. manufacturers, including General Motors (NYSE 🙂 Ordinary electric (NYSE :), 3M and Boeing (NYSE 🙂 face logistical headaches and high costs due to global supply disruptions that are likely to continue until next year.

GM lost 5.4% after disclosing their earnings on Wednesday.

In Asia, Japanese robot maker Fanuk (OTC 🙂 fell 8.5% while IT firm Fujitsu fell 9.8% because their earnings exceeded the expected impact from the chip deficit.

“The market is predicting that the impact of a chip deficit will fade by the end of the year. But if it remains a problem next year, investors will certainly feel less confident about the outlook,” said Masayuki Murata, general manager at Sumitomo Life Insurance.

Concerned about inflation due to disruptions in global supply, investors are keeping a close eye on whether the world’s central banks will see their liberalized epidemic stimulus system reduced further.

The Bank of Canada has completed its quantitative easing sooner than expected, indicating that it may raise interest rates earlier than previously thought, with April 2022.

The move by the BoC also raises hopes that the US Federal Reserve may move faster towards rate hikes, with Fed Funds setting futures in two rate hikes by the end of 2022.

The Fed is expected to almost unanimously announce a reduction in its bond purchases at its policy meeting next week.

The two-year U.S. Treasury yield rose 0.528% and last stood at 0.501%. At the beginning of October, it was about 0.26%.

In contrast, long-term yields have declined in part because a tight monetary policy could control inflation down the road.

The yield on the 10-year U.S. note fell to 1.545%, from a five-month high of 1.705% a week earlier.

There was a sinking in the UK Gilt’s Yield, which helped bring down global bond yields after the UK government cut forecasts of borrowing more than expected.

The 10-year gilt yield fell 12.8 basis points on Wednesday, its biggest fall since March 2020, 0.982%.

In the forex market, the Canadian dollar held firmly at C $ 1.2362 per dollar after the BoC’s surprise.

Other major currencies were stuck before policy announcements later in the day from the Bank of Japan and the European Central Bank, although no major changes are expected.

The yen stood at 113.73 per dollar, hitting its four-year low of 114.695 last week when the euro changed hands at 16 1.1600.

Oil prices fell after oil stocks rose more than expected, even as fuel inventories dwindled and tanks at the country’s largest storage hub became more empty. [O/R]

Larger-than-expected gains in U.S. crude stocks have led to strong gains in recent weeks and the U.S. crude benchmark has led some investors to unload long positions after reaching many-year highs.

Brent fell 1.8% to $ 83.07 a barrel, from Monday’s seven-year high of $ 86.70, while US crude fell $ 81.25 a barrel, 1.7% to a seven-year high of $ 85.41.

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