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Weekly Markets Diary - 23 September

Looking to the week ahead

Unlike last week, we do not have any major central bank announcement due for the week ahead. There are also no major companies reporting, so the focus could return to the meme stocks as Bed Bath & Beyond, which will update on Thursday. Cineworld, which is closely related to AMC, will also update on Friday, and is another favourite of the meme stock followers.

The equity markets have continued the recent period of nervousness and are threatening a move back towards the summer lows. Adjusted for inflation, the US 500 is already back to its summer lows. Concerns over lower corporate earnings start to take over from the interest rate compression seen for much of 2022.

Ahead of the next US corporate reporting season, when we will get a clearer picture on how corporate America is faring, some tentative buying momentum may be able to build. It was interesting to note that among the wider sell-off into the close on Thursday 22 September the meme stocks were particularly hard hit. This suggests that the “HODL” fever that gripped many private investors from the pandemic lows may now be losing its sway.

The 10-Year Treasury Yield remains an extremely important metric to follow, because as it gains equity markets generally fall. And yields have powered up in recent weeks, to post 10-year highs above 3.7 percent yesterday.

If yields were able to ease next week this could allow equity market buying to gain confidence. Without this, however, it does remain difficult to see any buying momentum that does emerge withstanding future shocks.

So, while some may be tempted to catch the bottom and catch the majority of a possible relief rally, nervousness looks set to remain the dominant emotion next week.

Trading calendar

Monday 26 September

Major companies reporting:

Ferguson PLC, Finsbury Food

Major economic data due:

No major data due

Tuesday 27 September

Major companies reporting:

Jabil Circuit, United Utilities

Major economic data due:

13:30 US August Durable Goods, -1.1% expected (-0.1% previous)

15:00 US September Consumer Confidence, 104 expected (103.2 previous)

Wednesday 28 September

Major companies reporting:

Paychex

Major economic data due:

No major data due

Thursday 29 September

Major companies reporting:

Bed Bath & Beyond, McBride, Micron, Next, NIKE

Major economic data due:

13:00 German preliminary y/y CPI, 9.3% expected (7.9% previous)

13:30 US Weekly Jobless Claims (213k previous)

Friday 30 September

Major companies reporting:

Cineworld, Pennon, REALTECH AG

Major economic data due:

08:55 German September unemployment rate, 5.6% expected (5.5% previous)

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