Early Morning Call: equity markets bounce back, led by Hong Kong's Hang Seng

Equity market overview

Equity markets in Hong Kong and mainland China bounced back overnight after recording heavy losses during the first session of the week.

Elsewhere in the region, indices were mixed. Japan’s Nikkei closed 0.48% lower, while Australia S&P/ASX 200 rose by 0.33%.

The three main US indices lost around 1.5%, while in Europe the German DAX was the underperformer, ending the session 1.09% lower.

In Japan, the unemployment rate remained at 2.6% in October, missing expectations of a fall to to 2.5%. Meanwhile, the jobs-to-applications ratio rose to 1.35 in October from 1.34 in the previous month, improving for the 10th straight month, and the highest reading since March 2020.

Still in Japan, retail sales increased by 4.3% in October year-on-year (YoY), missing market consensus of 5%, and lower than the 4.8% rise recorded the previous month. This was nonetheless the eighth straight month of increases in retail trade.

Later this afternoon, Germany consumer price index (CPI) is expected to rise by 10.3% in November YoY, down from 10.4% a month ago.

At 1.30pm, the market awaits Canada third quarter (Q3) gross domestic product (GDP) growth rate. Economists expect an annualised rise of 1.5%, after 3.3% in Q2.

Also expected this afternoon in the US is the S&P/Case Shiller home price index, house price index, and Conference Board consumer confidence.

Earnings

Elsewhere on the equity markets, Shell announced just after the close of European markets yesterday the acquisition of renewable gas producer Nature Energy, for $2 billion. Nature Energy is a Danish company that operates 12 biogas plants in Denmark and one in France. This is an acquisition that can be seen as another proof of the growing appeal for the sector.

Last month BP announced the planned acquisition of a US biogas producer, Archaea Energy, for $4.1bn.

easyJet posted a pretax loss of £178 million, and a record EBITDAR of £674m. If the group’s operational performance improves, it still warned that fuel costs will rise by around 50% in the first half (H1) of 2023.

Yesterday, Rolls-Royce and easyJet announced having successfully run an aircraft engine on hydrogen, a world aviation first. They said they were already planning a second set of tests, with a longer-term ambition to carry out flight tests.

In the US, Hewlett Packard Enterprise is scheduled to report earnings tonight after the bell. Analysts anticipate earnings of 57 cents per share on revenue of $7.37bn.

Following the failure of crypto exchange FTX, contagion in the digital currency space has now spread to crypto lender, BlockFi. It's filed for bankruptcy protection, indicating it hoped to restructure, days after suspending withdrawals.

According to a press release, BlockFi has about $257 million in cash on hand.