Tech Rally, Strong Corporate Earnings Boost Global Stocks Higher

  • Market Overview

Global equities jumped to a 1-month high on Tuesday as increases in technology stocks, expectations of a strong earnings season and easing bond yields overshadowed concerns over elevated consumer price pressures.

European stocks traded higher thanks to a global tech rally that offset declines in Sweden's Ericsson (BS: ERICAs ) and major pharmaceutical groups. Telecommunications giant Ericsson lost about 3% in intraday trade as a strike from global supply bottlenecks eclipsed better-than-expected core earnings in the three months to the end of September 2021, while France's food corporation Danone shed over 1% owing to rising operation costs and sluggish sales growth in Q3.

Wall Street indices were mostly upbeat as robust earnings from Johnson & Johnson (NYSE: JNJ ) increased risk appetite after the pharmaceutical giant rose by nearly 2% on Tuesday. Johnson & Johnson upwardly revised its earnings projection for the remainder of the year and maintained the sales outlook for its Covid-19 vaccine. Large-cap technology players including Facebook (NASDAQ: FB ), Apple (NASDAQ: AAPL ), Alphabet (NASDAQ: GOOGL ) and Microsoft (NASDAQ: MSFT ) rose between 0.60% and 0.90% for the day.

The tech rally, which was more pronounced in the US, drove Hong Kong stocks to a five-week high on Tuesday, with video platformBilibili Inc (NASDAQ: BILI ) in the lead with an advance of 12%. E-commerce giant Alibaba (NYSE: BABA ) Group also contributed significantly to the day's success after announcing its new innovative processor that is set to power servers in its data centres.
Sentiment was also boosted by reports that Evergrande Group managed to honour its debt obligations to an onshore bond coupon amid ongoing concerns that the indebted property developer is likely to default on its major debt obligations this quarter.

In local markets, while the FTSE/JSE All Share Index (ALSI) did not record any meaningful change, the rand was on the front foot against the dollar on Tuesday, as strong Q3 company profits boosted global sentiment.

In commodities, crude oil remained near record highs amid a steadfast energy crunch, but gains were capped by concerns in China over "whether the world's biggest energy consumer can meet domestic heating needs," Reuters reported. Brent crude oil futures gained over 1%, trading at $85.33 a barrel at the close of business. Gold prices rose as much as 1% on Tuesday amid a weakened dollar environment prompted by unwavering inflationary pressures.

PSG Wealth Daily Investment Update, 20 October 2021

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