Financial Markets Daily Report

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Markets started the first two sessions of the week with mixed results, with fears about rising inflation and slowing growth remaining the key themes among investors, and ahead of the start of the Q3 corporate earnings season.

Markets ended the week on a weak note, following the release of disappointing employment data in the U.S. (non-farm payrolls rose by 194k in September after 366k in August). The report, however, showed wage growth picking up (4.6% y/y), which reinforced fears that inflationary pressures are building up across the economy.

Investors traded yesterday with a risk on mood as U.S. Democrats and Republicans agreed on a truce in the debt-ceiling standoff, easing concerns of a possible near-term government debt default. On the data front, industrial production in Germany fell by -4.0% mom in August while the U.S. weekly jobless claims fell to 326k last week.

In yesterday's session, investors’ sentiment worsened in the euro area, amid inflationary concerns, while in the U.S. investors focused their attention on a potential breakthrough in negotiations between Democrats and Republicans to extend the debt ceiling and on the better than expected ADP employment report.

Yesterday investors traded with optimism amid better than expected economic sentiment data in advanced economies. In particular, the U.S. non-manufacturing ISM index for September increased by 0.2 points to 61.9 while the final Composite PMI in the euro area remained at elevated levels (56.2) despite falling by 2.8 points.

In the first session of the week, investors sentiment worsened and stock indices declined across the board, led by the tech sector. The euro area Sentix Confidence Index fell by 2.7 points to 16.9 in October, the third consecutive decline.

Investors ended the week with mixed results, as fears intensified that inflationary pressures are building up across the globe. The headline HICP in the Eurozone rose to levels not seen since 2008 (3.4% y/y in September) while in the U.S. the PCE deflator remained elevated (4.3% y/y august).

During the last session of the quarter, financial markets traded cautiously amid concerns on inflation, fiscal uncertainty in the U.S. and ahead of relevant economic data releases today.

Yesterday markets steadied after a few mixed sessions. Volatility nudged down and European stocks rebounded, while U.S. equities posted moderate gains.

Markets suffered a risk-off session amid concerns over the debt ceiling in the U.S. Volatility jumped and stocks were lower across advanced and emerging economies as Republicans blocked a Democratic move to raise the debt limit. U.S. Treasury Secretary Janet Yellen warned that her department will run out of cash around October 18.

Investors traded in a cautious mood in the first session of the week. Volatility rose, U.S. equities declined moderately and European and EM stocks nudged up.

Markets ended the week in a mixed mood as investors pondered over the Fed's plans for stimuli withdrawal, risks from China's Evergrande and the announcement that Chinese authorities will ban all transactions and mining related to cryptocurrencies. Global stocks declined or closed flat while the USD rose against most AE and EM currencies.