A blast at a hospital in Gaza complicated diplomatic efforts in the region midweek, putting markets under pressure. Both sides of the conflict traded blame for the explosion: many condemned it as an Israeli attack, but Israel denied the charge, saying the hospital bombing was carried out by terrorists inside Gaza. US President Joe Biden is still due in Israel on Wednesday to meet with Israeli Prime Minister Benjamin Netanyahu, but his meeting with the leaders of Jordan, Egypt and the Palestinian Authority has been cancelled.
In the Asia-Pacific region, the negative news out of the Middle East pressured sentiment. Stock markets nevertheless had plenty of other information to digest - particularly economic data out of China. The world’s second-largest economy grew at 4.9% in the third quarter when compared with the same quarter a year earlier. That beat market expectations. Consumption and industrial activity also came in above economists’ expectations. China enacted a series of stimulus measures this year after its reopening following Covid lockdowns initially disappointed markets.
On Tuesday, the positive Chinese data was supporting Asian markets but still wasn’t enough to pull major indices out of the red. Hong Kong's Hang Seng Index was trading down 0.3%, while the Shanghai Composite lost 0.8%. In Tokyo, the Nikkei 225 was 0.1% lower and South Korea’s Kospi was roughly flat. In Australia, the S&P/ASX 200 was able to squeeze out a gain of 0.2%.
In New York, stock indices were essentially flat on Tuesday, despite US retail sales increasing 0.7% on the month in September, a reading well above expectations. The Dow Jones Industrial and S&P 500 ended the day close to where they started. The tech-heavy Nasdaq-100 lost 0.3%.
On Tuesday, the Biden administration announced an update to its blockade of certain microchips to China. The policy, which is designed to keep state-of-the-art chips out of the hands of the Chinese military, pressured chipmaker shares. Nvidia stock fell 3.2%, AMD was down 1.2% and Intel lost 0.5%.
A bit of positive news out of Europe helped Germany’s DAX to small gain of 0.1% on Tuesday. The ZEW Indicator of Economic Sentiment for Germany increased substantially in October to -1.1 points, an increase of 10.3 point when compared to the previous month. Additionally, survey participants suggested the economic situation in Germany has stabilized. Germany’s economy has struggled this year. Many economists think Europe’s second-largest economy may be headed towards a double-dip recession after falling into a recession in late 2022 and emerging with close to no growth this summer.
Corporate news in focus: Quarterly figures from ABB, ASML, Volvo, Svenska Handelsbanken, Procter & Gamble, Nasdaq, Morgan Stanley, State Street, Deutsche Börse, Netflix, Tesla, SAP, United Airlines, Alcoa.
Economic data in focus: UK Consumer Price Index (08:00 CET), euro area consumer prices (11:00), European Central Bank President Christine Lagarde speaks at a visit to the Lord Mayor of Frankfurt (11:00), US building permits (14:30), weekly US EIA Petroleum Status Report (16:30), US Fed Beige Book (20:00).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.