21 Oct 2018 21:30 (GMT)

SNAPSHOT 

U.S. stocks were mixed as strong earnings were pitted against global concerns. Treasurys fell on speculation of further rate rises. Crude followed the Dow higher. Gold edged lower despite a slight drop in the value of the dollar.

OPENING CALL 

With a nod from China’s central government, more localities will probably offer to bail out listed companies facing the risk of having to dump shares which have been pledged as collateral.

Following Shenzhen and Guangdong’s steps to inject state funds into locally listed firms, the city of Beijing has also asked banking and brokerage creditors not to dump shares or freeze company assets, Caixin reports.

The PBoC’s chief said earlier today that authorities "actively encourage" local governments’ efforts to help out private firms facing financing difficulties. That was part of a litany of government officials looking to calm sentiment, and Chinese stocks closed sharply higher today, cutting some of this week’s fresh declines.

EQUITIES 

Strong quarterly earnings reports helped the Dow Jones Industrial Average eke out slight gains for the week, despite days of turbulence for U.S. stocks.

Stocks have swung sharply in recent trading sessions. The Dow industrials rose more than 2% on Tuesday after encouraging economic data and better-than-expected earnings from Goldman Sachs before reversing course Thursday amid geopolitical tensions and ending 1.3% lower in a bruising trading session.

On Friday, Procter and Gamble’s best quarterly sales growth in five years boosted shares of the consumer-products giant and helped lift the blue-chip index into positive territory. The Dow industrials ended the day up 64.89 points, or 0.3%, at 25444.34, putting its weekly gain at 0.4%, its first after three weeks of declines.

The S&P 500 slipped one point, or less than 0.1%, to 2767.78 on Friday, while the Nasdaq Composite fell 36.11 points, or 0.5%, to 7449.03, its third consecutive session of losses. The S&P 500 ended the week up a fraction of a percent, while the Nasdaq lost 0.6%.

Losses among consumer-discretionary stocks offset some of those gains and contributed to the underperformance of the S&P 500 on Friday. EBay led the sector lower, shedding $2.80, or 8.9%, to $28.75 after an analyst cut the online marketplace’s price target, citing PayPal’s mention of slowing merchandise-sales volumes at its former parent.

Other quarterly results were more positive, with shares of PayPal rising after the company boosted its outlook for the fourth quarter. The financial sector rose after a round of encouraging earnings from regional banks, with shares of Citizens Financial Group, Synchrony Financial and SunTrust Banks all rose.

FOREX 

The dollar edged lower, weighed down by weaker-than-expected U.S. economic data and a renewed appetite for risk among some emerging market investors.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.17% to 89.89.

Sales of previously owned U.S. homes fell 3.4% in September from the previous month, the National Association of Realtors said Friday, extending a weak stretch for the housing market in a period of otherwise strong U.S. growth.

Shortfalls in U.S. data undercut the case for the Federal Reserve to keep raising rates at its current pace and tend to weigh on the dollar, which becomes more attractive to foreign investors when borrowing costs rise. Most investors believe the Fed will raise rates for a fourth time this year in December.

Some money managers sought out emerging market currencies Friday, after Chinese officials rushed to reassure investors that the country’s economic fundmanetals are solid, despite slowing growth and recent stock market declines.

BONDS 

Treasury prices fell as investors speculated that the Federal Reserve may want to raise interest rates higher than previously expected.

The yield on the benchmark 10-year Treasury note yield rose to 3.198%, the highest in more than a week, from 3.175% Thursday. Yields rise as bond prices fall.

Yields rose Friday as investors assessed recent comments from Fed officials that suggest the central bank could raise interest rates above the so-called neutral level — a point when monetary policy no longer supports growth but is not yet restrictive.

Minutes from the Fed’s September meeting released Wednesday showed that officials are debating whether they will need to raise interest rates to levels sufficient to slow down a fast-growing economy in order to prevent it from overheating.

At an event Thursday, Fed Vice Chairman Randal Quarles affirmed that rosy economic outlook, saying that economic indicators suggest the economy will remain strong "for a significant period into the future.".

COMMODITIES 

Oil prices closed higher, as a recovery in U.S. stocks boosted prices from a five-week low.

Light, sweet crude for November delivery rose 0.7% to $69.12 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 0.6% to $79.78 a barrel.

U.S. prices fell 3.1% for the week, hurt by climbing supplies and weakness in major U.S. stock indexes off disappointing economic data from China. However, a Friday rebound helped the crude market stabilize, traders said.

"We’ve been playing risk on, risk off," said Tariq Zahir, managing member of Tyche Capital Advisors. "We’re really watching from more of a global macro standpoint here."

Oil has recently come under pressure from data showing that inventories are on the rise. On Wednesday, the U.S. Energy Information Administration reported that stockpiles of crude oil rose by 6.5 million barrels in the week ended Oct. 12 to their highest level since late June.

"U.S. inventories now show a clear surplus to the five-year average and are trending higher, suggesting the market remains well-supplied for the moment," said analysts at Schneider Electric.

On Friday, data from Baker Hughes showed that the U.S. oil rig count rose by 4, signaling increased production. That brought total active oil rigs to 873, the highest since March 2015.

Still, traders said potential supply disruptions still remain on the horizon, with Iranian sanctions set to come into effect in early November.

Copper prices rebounded after Chinese officials lined up to urge market calm, though the industrial metal remained on course to end the week lower after the country’s weaker-than-expected growth figures.

Front-month copper for October delivery added 1.1% to $2.7680 a pound on the Comex division of the New York Mercantile Exchange to snap a five-session losing streak. Worries about the Chinese economy slowing and tariffs also contributing to weaker demand for materials used heavily in construction and manufacturing have pushed prices more than 16% below their June four-year highs.

But Friday’s advance came after Chinese officials called for confidence in China’s economic outlook. The rare joint effort followed Chinese GDP data, which revealed the weakest pace of economic expansion since the financial crisis.

Among precious metals, front-month gold for October delivery edged down 0.1% to $1,225.30 a troy ounce, though a weaker dollar pushed the metal to a third consecutive weekly advance. The dollar’s slight pullback lately and a pickup in market volatility have helped gold trim some of its 2018 decline, but analysts still think higher interest rates could pose a challenge moving forward. Higher Treasury yields make gold less attractive to investors, and a stronger dollar makes it more expensive for overseas buyers.

Most-active silver futures rose 0.3% to $14.650 a troy ounce, platinum added 0.5% to $836 and palladium climbed 0.5% to $1,069.90.


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