U.S. House to Vote for Temporary Stopgap Funding to Avoid Government Shutdown

The Q3 comes to an end today, and it couldn’t be worse for beaten-up and spiritually bearish stock markets. September was a particularly terrible month for equities. The Federal Reserve’s policymakers made it clear they’re serious about raising rates until price increases cool down, sending bond yields surging. The central bank’s critics say much of the turmoil is the result of the Fed waiting too long to address inflation and then doing too much, too quickly to fight it.

Stocks resumed their 2022 selloff yesterday, sending the S&P 500 to a new low for the year, as fears swirled that a recession won't stop the Federal Reserve from raising interest rates. The selloff was actually broad-based and was led by Apple (AAPL), which closed down 4.9%. While the top-tier gadget maker is down a whopping 20% so far this year, it has still outperformed the Nasdaq, which has dropped a jaw-crashing 31% since the end of 2021. Usually highly leveraged technology stocks are known to be riskier and more exposed to interest rate increases. In this case, it was a downgrade from Bank of America (BAC) that triggered the decline in Apple, which brought other big names down with it, such as Alphabet and Microsoft. “Shares have outperformed significantly YTD.

The best performer was the Energy sector, 0.34%, with ConocoPhillips (COP, +2.03%), Devon Energy Corporation (DVN, +1.53%), Schlumberger (SLB, +1.50%) and Diamondback Energy (FANG, +1.26%). The S&P 500 declined 2.1% to 3,640.47 in a new closing low for the year. During the session, it also fell to a new 2022 intraday low of 3,610.40. This was also its lowest intraday level since 2020.

In terms of today’s most influential news, the U.S. House of Representatives is expected today to pass a bill funding the federal government through December 16, avoiding a ritual partial shutdown less than 6 weeks before the midterm elections when control of Congress is at stake. Also, in terms of the macro, the U.S. data on personal income and spending for August will be released at the market open. Personal income is expected to increase 0.3% in August, while personal consumption expenditures are likely to have risen by 0.2%. The Chicago PMI for September is scheduled for release at 9:45 a.m. EST, while the University of Michigan's consumer sentiment index for September will be released at 10:00 a.m. EST.

European markets are trading somewhat higher this afternoon. As of 2:10 p.m. CET, the Stoxx Europe 600 Index climbed 0.42%, while the French CAC 40 Index advanced by 0.36%, but both the British FTSE 100 and German DAX remained nearly flat.

The Nationwide House Price Index in the UK climbed 9.5% YoY in September, while British GDP expanded 4.4% YoY in Q2. The current account deficit in the UK narrowed to £33.8 billion in the second quarter versus a revised record £43.9 billion in the previous period. The unemployment rate in Germany came in unchanged at 5.5% in September, while the retail trade in Spain came in flat for August against an annual decline of 0.5% in July.

Also, according to the freshly published Eurostat's preliminary report, the annual inflation rate in the Eurozone reached a record 10% in September, up 0.9 percentage points MoM. Energy is estimated to reach an annual inflation rate of 40.8%. The food, alcohol and tobacco inflation rate followed at 11.8% and non-energy industrial goods prices are expected to rise 5.6% YoY. The services inflation rate is projected to hit 4.3%. The annual inflation rate in France fell to 5.6% in September from 5.9% a month ago.

Asian markets traded mixed earlier today. Japan’s Nikkei 225 fell 1.83%, China’s Shanghai Composite Index fell 0.55%, Australia’s S&P/ASX 200 dived 1.2%, but India’s S&P BSE Sensex jumped 1.8% and Hong Kong’s Hang Seng Index gained 0.4%.

Japan's Ministry of Finance reported that it has spent over ¥2.83 trillion on foreign exchange intervention operations from August 30 through September 28. Over the past 12 months, the yen lost 29% to the U.S. dollar, prompting the last week's intervention in foreign exchange markets by the Japanese government to stabilize the national currency. Japan's housing starts rose by 4.6% YoY in August, while consumer confidence index in the country dropped to 30.8 in September against August’s 3-month high of 32.5. Retail sales in Japan also rose by 4.1% YoY in August, while industrial production increased by 2.7% MoM in August as Japanese unemployment rate declined to 2.5% in August. The Reserve Bank of India increased its key repo rate by 50 bps to 5.9% at its September meeting. The official NBS Non-Manufacturing PMI for China fell to a 4-month low of 50.6 in September, while manufacturing PMI rose to 50.1 in September.