Powell’s comments send US Treasury Yields higher, indices fall

US equity market

The equity market in the US and Asia Pacific (APAC) region ended lower as Federal Reserve (Fed) Chairman Jerome Powell said on Thursday that monetary policy was not yet too tight. US 10-year. Treasury yields rose above 5% for the first time since 2007.

The UK economy

In the UK, consumer confidence has slumped. Friday's reading from Gfk fell sharply in October to -30, from 21 in September. Economists had anticipated that the survey would improve to 20. This latest reading was the lowest in three months; all five components dropped.

Expectations for the UK economy over the next 12 months fell 8 points to -32, while the outlook for personal finances dropped to -8 from -2. Accelerating costs of heating and gasoline, the surge of mortgage and rental rates, a slowing job market, and now the uncertainties posed by conflict in the Middle East are all contributing to the growing unease, according to GfK.

UK retail sales

Meanwhile, UK retail sales fell more than expected in September, with the high cost of living continuing to squeeze the consumer. Retail volumes slipped 0.9% on the month, having risen 0.4% in August.

China's economy

As expected, China kept its benchmark lending rates unchanged in October. The one-year loan prime rate was kept at 3.45%, while the five-year Loan Prime Rate (LPR) was unchanged at 4.2%. Several clues lead economists to believe the People's Bank of China (PBOC) would stay put: Recent better-than-expected indicators like gross domestic product (GDP) or retail sales pleaded for less monetary support; CNY weakness was also seen as a factor against further rate cuts; and earlier this week, the medium-term lending facility remained at 2.5%. It usually gives a good indication of any changes to the lending benchmarks.

Japanese inflation

Japan's inflation slowed in September but remains well above the Bank of Japan ( BOJ) target. Headline inflation rose 3% in September year-over-year (YoY), after 3.2% the previous month. Core Consumer Price Index (CPI), which excludes fresh food costs, rose 2.8%, easing from the 3.1% recorded in August but still exceeding a median market forecast for a 2.7% gain. More importantly, the core-core index, which strips away fresh food and fuel costs, rose 4.2% in September from a year earlier, slowing from a 4.3% gain in August. The Bank of Japan (BOJ) closely watches this reading as a better gauge of trend inflation.

Hewlett-Packard Enterprise

Over in the US, Hewlett Packard Enterprise unveiled its outlook for 2024 after the closing bell. The company said adjusted earnings per share for 2024 are expected to range from $1.82 to $2.02, well below the estimate of $2.14 per share. Free cash flow for the coming year is expected to be between $1.9B and $2.1B, lighter than the estimate of $2.39B. The company said it is shifting its portfolio to higher-growth, higher-margin businesses with the aim of increasing its long-term profitability potential. HPE bets on cloud computing and artificial intelligence to represent more than 50% of revenue by fiscal 2026.

American Express

More of the same for American Express. Like in the previous quarter, the group is expected to post an increase in earnings and revenue. Earnings are seen at $2.96 per share. Revenue is forecast to rise to $15.37 billion, after $13.56 billion a year earlier. Like in Q2, the top line should benefit from higher interest rates and revolving loan balances. Spending on travel and entertainment may also have helped boost spending volume across American Express's network.

Also expected before the bell, oil services company Schlumberger is forecast to produce earnings of 77 cents per share on revenue of $8.32 billion. That is to be compared with earnings per share (EPS) of 63 cents and revenue of $7.5 billion a year ago.