Financial Markets Daily Report

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In yesterday’s session, central bankers’ comments centered the stage again, as investors positioned for today’s release of the key CPI October data in the U.S.

Investors started the week with a mixed tone as they digested the positive employment data in the U.S., strong corporate earnings and comments from central bankers in both sides of the Atlantic. For the Fed, Richard Clarida said that if the economic outlook advances as expected, conditions for rising interest rates will be met by year-end 2022.

Financial markets ended the week on a positive note, supported by stronger-than-expected employment data in the US (non-farm payrolls rose by 531k in October while the jobless rate edged down by 0.2 p.p. to 4.6%) and the approval by lawmakers in Washington of the $1.2tn infrastructure spending bill.

In yesterday's session, investors traded with an optimistic mood as they digested the Fed's decision to initiate the tapering of net asset purchases this month and the dovish confirmation that it will keep its policy interest rates unchanged for the foreseeable future.

Investors traded with a risk-on mood yesterday, after the confirmation that the Fed will begin this month to taper its net asset purchases, but that it will keep its policy interest rates unchanged for the foreseeable future, at least until the economy reaches full employment.

In yesterday's session, investors traded cautiously as they positioned for today's conclusion of the Federal Reserve meeting (where we expect Jerome Powell to announce the beginning of a reduction in the pace of net asset purchases) and tomorrow's Bank of England monetary policy meeting.

In the first session of the week, investors traded with a risk-on mood ahead of the Federal Reserve meeting that starts today and concludes on Wednesday. We expect Jerome Powell to announce the beginning of the tapering of the net asset purchase programme, which could start in November and conclude in mid-2022.

In an eventful session, investors traded with a risk-on mood and stock indices rose in the U.S. and in most euro area trading floors. In fixed-income markets, sovereign yields edged up in both sides of the Atlantic, specially so in Italy, where Mario Draghi presented the 2022 fiscal budget with some tax cuts and an increase in the retirement age.

During a volatile session, financial markets ended with negative results, taking a breath from the recent rally and refocusing on the risks around the growth outlook, lingering inflationary pressures and changes in monetary policy.

Investors traded with a risk-on mood on Tuesday, extending recent gains across equity markets following the release of positive economic data and solid corporate results.

Financial markets started the first session of the week with modest gains, focusing on the release of positive earnings results for Q3 (around 80% of the S&P listed firms have reported better-than-expected results) and bringing the S&P to a new record high. In Washington, Democrats lawmakers stepped closer to a deal on Biden’s fiscal agenda.

Financial markets ended the week with mixed results, balancing the positive tone from the corporate results for the Q3 earning season with disappointing survey economic data in Europe.