European shares and Wall Street stock futures were muted on Wednesday, following two sessions of gains for global equities, as investors balanced better than expected US corporate earnings with signs of persistent inflationary pressures.
The regional Stoxx Europe 600 was steady in early London dealings. Contracts tracking the S&P 500 edged 0.1 per cent higher, after the broad gauge closed the previous trading day up 1.1 per cent, taking its gains from the start of the week to 3.8 per cent.
Those moves came as Goldman Sachs on Tuesday became the latest bank to post forecast-beating third-quarter results, with net income of $3.1bn, down from $5.4bn in the comparative period a year earlier but above analysts’ estimates. Rivals such as Bank of America cited “consumer resilience” behind better than expected corporate earnings this week.
Companies in other sectors have also shown signs of resilience, with Netflix revealing after the closing bell on Tuesday that it had stemmed its subscriber losses in the third quarter. Popular programmes such as Stranger Things had helped it to add 2.4mn members, more than double the number forecast by the streaming giant.
Netflix’s Frankfurt-listed shares rose more than 14 per cent on Wednesday morning.
Investors have been closely monitoring the recent flurry of corporate financial statements for evidence of strain from inflation and rising borrowing costs. The Federal Reserve and many global peers have turned the screws on monetary policy vigorously this year in a bid to curb rapid price growth, with the US central bank raising interest rates by 0.75 percentage points over three straight meetings, taking its target range to 3 to 3.25 per cent.
Concerns have intensified that such tightening will compound a protracted economic slowdown.
Fresh data on Wednesday revealed that the rate of UK inflation accelerated in September to 10.1 per cent, up from 9.9 per cent in August, on the back of higher food prices. The number was higher than the 10 per cent consensus among economists polled by Reuters.
In government debt markets, the yield on the 10-year UK bond added 0.07 percentage points to 4 per cent after the Bank of England said on Tuesday that it would begin asset sales in November as it prepares to unwind a quantitative easing programme in which it accumulated almost £850bn of gilts.
The gilt market has been steadier in the wake of new British chancellor Jeremy Hunt’s move on Monday to walk back most of Westminster’s ill-fated “mini” Budget, unveiled by his predecessor in late September.
The pound slipped 0.3 per cent against the dollar to $1.128 on Wednesday, while the greenback added 0.2 per cent against a basket of six peers. Japan’s yen touched a new 32-year low against the US currency of ¥149.47.
In Asian equity markets, Hong Kong’s Hang Seng index lost 1.9 per cent after China’s Communist party congress failed to offer hope that the country might ease its zero-Covid policy and its decision to delay the release of third-quarter gross domestic product figures.