Upbeat quarterly reports continue to boost market sentiment

Market commentary

European stocks initially rose but later declined on Wednesday, as cautious market sentiment and ongoing worries about economic growth in Europe were reinforced by a blend of varied corporate earnings. The STOXX 50 Index fell by 0.40% to 4 990, while the broader pan-European STOXX 600 ended the day 0.50% down at 505. Trading Economics added that: “Kering led the losses among the currency bloc’s blue chips with a near 7% plunge, after warning investors that weakness for discretionary spending in its key Asian markets is likely to hamper its operating profit this year, led by the bearish outlook in its flagship brand, Gucci. Insurers also booked losses with Allianz and AXA both dropping close to 2%, while the Deutsche Boerse slid 4% following its earnings release to cap off a poor session for financials.”

US stocks struggled to gain momentum on Wednesday due to worries among investors regarding the future direction of interest rates, despite positive corporate earnings announcements. The S&P 500 saw little change, the Nasdaq slightly increased by 0.10%, while the Dow Jones dipped 0.10%. Meanwhile, long-term Treasury yields surged ahead of an upcoming rise in government debt issuance, leading to stricter financial conditions and diminishing demand for more volatile equities, according to Trading Economics.

Most Asian equity markets advanced on Wednesday as upbeat quarterly reports boosted market sentiment. However, despite the global rally also driven by reduced tensions in the Middle East, Chinese stocks struggled to gain momentum as investors sought indications of additional policy support. There's anticipation in the market for further easing measures from Chinese authorities this year, but the depreciation of the yuan restricted the potential for interest rate reductions.

The FTSE/JSE All Share Index advanced for the fifth consecutive session on Wednesday, closing at 74 514 points. Market sentiment continued to be driven by optimism surrounding the earnings season, with market participants anticipating key economic data releases from the US for insights into the future path of interest rates.

In commodities, Brent crude was 0.54% weaker at $88.02 a barrel at 19h00. Official figures revealed a surprising drop of 6.37 million barrels in US crude inventories last week, contrary to predictions of a 1.6 million barrel increase. Moreover, concerns regarding supply diminished as tensions in the Middle East continued to calm, with both Iran and Israel indicating no intention of further military actions against each other. Additionally, oil tankers, which had previously been delayed due to disruptions in the Red Sea, resumed their deliveries, alleviating pressure in international markets and enabling economies to replenish their inventories. Gold was little changed at $2 323.42/oz at 19h30, while platinum lost 0.73% to trade at $914.3/oz.