US equity futures fluctuate as earnings roll in; bonds climb

Bloomberg

US equity-index futures fluctuated along with European stocks on Tuesday as investors weighed a flurry of company results and the odds of the world’s biggest economies agreeing a trade deal in November. Treasuries rose and the pound drifted.
S&P 500 futures were little changed after the underlying gauge closed above 3,000 on October 21, less than 1% from a record. A positive start to the earnings season continued, with UPS and Procter & Gamble both beating expectations. Biogen also surged in early trading on news it will ask US drug regulators to approve an experimental Alzheimer’s therapy.
The Stoxx Europe 600 Index erased an earlier decline as gains in energy companies helped offset a drop for travel and construction-sector shares. Earnings in the region were mixed, with UBS profit beating estimates as the Swiss lender said it will book a roughly $100 million charge in the fourth quarter to restructure a unit. Drugmaker Novartis raised its earnings forecast for the third time this year.
The pound fluctuated as Prime Minister Boris Johnson prepared to put his Brexit deal to a vote. Crude oil, gold and emerging-market stocks all advanced.
Yields fell for both European and US government bonds.
It’s a huge week for corporate earnings, with around one-fifth of S&P 500 members due to report, including McDonald’s on Tuesday followed by Microsoft and Caterpillar a day later. So far the results have generally surprised to the upside, reassuring investors that companies are weathering slowing growth and the trade war. All the same, analysts
are cutting estimates for next year as the protectionist dispute between the world’s biggest economies continues to take a toll.
President Donald Trump stoked hopes that a trade deal can be reached next month, saying that China has indicated negotiations are advancing and has started buying more American agricultural products.
“There are still residual concerns about the outlook as we head towards Christmas with memories of last year’s price capitulation still fresh,” Greg McKenna, strategist at McKenna Macro, wrote in a note to clients. “But earnings so far aren’t as bad — or should I say much worse — than thought. And there is still much cash on the sidelines, and the increase in bond yields is mildly supportive of stocks.”
Earlier in Asia, shares jumped in South Korea — which is seen as a proxy for global trade — while they posted more modest increases in Hong Kong, Australia and China. Japan was closed for a holiday.
The Canadian dollar showed little reaction as PM Justin Trudeau won a second term in elections, though with a reduced mandate.
Earnings season is in full swing with companies reporting including: McDonald’s, Procter & Gamble, Microsoft, Caterpillar, Amazon.com, Daimler and Kia Motors.
Thursday brings monetary policy decisions from the European Central Bank and Bank Indonesia.
Futures on the S&P 500 Index were little changed in New York. The Stoxx Europe 600 Index was steady. The UK’s FTSE 100 Index gained 0.3%. The MSCI Asia Pacific Index advanced 0.2%. The MSCI Emerging Market Index jumped 0.4%.
The Bloomberg Dollar Spot Index was little changed. The euro decreased 0.1% to $1.1141. The British pound was little changed at $1.2955. The Japanese yen was steady at 108.60 per dollar.
The yield on 10-year Treasuries declined two basis points to 1.78%. Germany’s 10-year yield dipped two basis points to -0.37%.