NEI Monthly Market Insights: October 2022

Nov 21, 2022

Is bad news good news?

October saw most global financial assets rebound, following weak performance in the prior two months. The market responded positively to soft economic data such as downward revisions to global growth and weakening manufacturing PMIs, as a sign that tightening policies are effective and central banks could pause on hikes sooner. This led the market to speculate that central banks could begin to pause on rate hikes based on the softer tone from the European Central Bank (ECB) and Bank of Canada (BoC) raising rates by 50 basis points (bps) instead of the 75bps that was expected. Some signs of easing of inflation also supported this. However, there were other areas of strength in the economic data. The U.S labor market continued to show strength with non-farm payroll increasing by 263K in September, exceeding the five-year monthly average while retail sales consumption remained resilient.

The NEI perspective

Central Banks decelerating rate hikes, but may take longer to get to their peak as oversized rate hikes maybe coming to an end. Policy leaders may take a more cautious approach going forward as they analyze how higher rates are impacting different parts of the economy. A slower pace of tightening may result in a longer journey to peak rates.

Economic growth weakens as monetary tightening takes effect based on the recent contraction in the Manufacturing PMI and weaker projections for GDP growth in the year ahead. On the other hand, it appears inflation may finally be moderating according to recent data on input prices, supply chains and food prices.

No patience for earning misses as well-known mega-cap companies like Alphabet, Amazon and Google see significant decline in share price following the release of their Q3 results. Overall, Q3 earnings were strong with 71% of companies beating estimates, however investors expect slower earnings growth in Q4. Most of the S&P earnings growth came from the energy sector and would have been negative if excluded.

Read more…

Recent Posts

Aviso Weekly Market Pulse: July 8th – July 12th

Market developments Equities: The S&P 500 Index climbed to around 5,615 to end the week, showing signs of recovery despite the tech-led selloff in the Thursday session. Major banks kicked off the earnings season with mixed results. Wells Fargo saw a 7% decline due...

Aviso Weekly Market Pulse: July 1st – July 5th

Market developments Equities: Even with a short trading week, the U.S. stock market is approaching new all-time highs, with the S&P 500 on track for its 34th record this year. Traders are focusing on potential Federal Reserve rate cuts despite signs of economic...

The most tax-advantaged sources for a home down payment

If you’re in the market for a home, don’t leave money on the table when saving for your down payment. We’re sharing the different tools you have available to you as a Canadian first time home buyer to save in the most tax-advantaged way. In this article: Down payment...

Aviso Weekly Market Pulse: June 24th – June 28th

Market developments Equities: Stocks rallied towards new all-time highs this week as cooling inflation data strengthened expectations for Federal Reserve interest rate cuts in 2024. The S&P 500 Index touched above 5,500, led by technology stocks, while the Nasdaq...

NEI Monthly Market Insights: May 2024

Equities continue the rally, but economic paths diverge After a brief respite in April, global equities resumed the rally to find higher ground in May, as ongoing moderation of inflation and resilient economic trends continue to boost investor optimism. The S&P...

Aviso Weekly Market Pulse: June 17th – June 21st

Market developments Equities: The U.S. markets experienced a significant options expiration event known as "triple witching," with an estimated $5.5 trillion in contracts set to expire. This event is causing volatility in the stock market, particularly affecting...