UK PM’s Liz Truss’s Resignation, a Sign of Narrowing Options to Improve European Economies

U.S. stock futures are flat to higher as U.S. Treasury yields edge higher ahead of another busy day of earnings and fresh economic data. Companies reporting results today include American Airlines, AT&T, Snap, and Union Pacific. Yesterday, the Dow fell 0.3%, the S&P 500 lost 0.7%, and the Nasdaq slipped 0.9%.

Commoditywise, crude oil prices rose amid concerns about tightening supply countering U.S. moves to release more oil from its reserves. The WTI light sweet crude is now just below $86 per barrel.

Later tonight, the U.S. National Association of Realtors reports existing home sales for September. Expectations are for 4.7 million homes to be sold, down from 4.8 million in August as higher prices and mortgage rates impact demand. The Conference Board will also release its Leading Economic Index for September. It is expected to decline 0.3% MoM after a similar drop in August. Jobless claims for state unemployment benefits are projected to have climbed by 2,000 to 230,000 in the latest week.

Earningswise, Tesla (TSLA) shares are trading down about 6% in premarket after the electric vehicle maker cut its delivery target for this year. Tesla reported a record $3.3 billion in profits, beating analyst expectations but revenues of $21.5 billion were short of forecasts. Against that backdrop, Netflix (NFLX) shares soared 13% as the biggest streaming service reported it added more than twice as many subscribers as anticipated last quarter, and posted quarterly results that beat forecasts. Better-than-expected earnings also boosted shares of Procter & Gamble (PG), The Travelers Companies (TRV), and United Airlines (UAL). Tesla (TSLA) shares advanced during the regular session, but are lower thereafter following the release of the EV-maker's earnings. Meanwhile, Alcoa (AA) shares are falling 9% in today’s premarket after having reported a surprise loss for Q3 of $746 million representing the latest shortcoming for the company, with shares down about 37% this year amid higher energy costs and a decline in alumina production.

European markets are trading lower today. The Pan-European Stoxx Europe 600 Index fell 0.26%, while the British FTSE 100 fell 0.16%, the French CAC 40 Index declined 0.36%, and German DAX waned by 0.2%. The Eurozone recorded a current account deficit of €20.21 billion in August versus a year-ago surplus of €21.05 billion. Producer prices in Germany rose by 2.3% MoM in September, against a 7.9% increase in the previous month, while annual producer inflation in the country rose to a mind-boggling 45.8% in September.

U.K. Prime Minister Liz Truss announced her resignation earlier this afternoon following a failed tax-cutting budget that rocked financial markets and which led to a revolt within her own Conservative Party. Truss said in a statement outside Downing Street: "We set out a vision for a low-tax, high-growth economy that would take advantage of Brexit." The manufacturing climate indicator in France climbed to 103 in October from a 1 1/2-year low level of 102 in September.

Elsewhere, Asian markets traded broadly lower earlier this morning. Thus, Japan’s Nikkei 225 fell 0.92%, China’s Composite Index fell 0.31%, while Hong Kong’s Hang Seng Index fell 1.4%. Australia’s S&P/ASX 200 eased by 1%, while India’s BSE Sensex retreated 0.3%. The People's Bank of China held its key lending rates for a second consecutive month. China's capital, Beijing, has dialed up measures to stop Covid-19, strengthening public checks and locking down some residential compounds after a quadrupling of its case load in recent weeks, just as a key Communist Party congress entered full swing.

Apparently on the weakened yen, exports from Japan surged by 28.9% YoY to ￥8,818.7 billion in September, while imports increased 45.9% to a new high of ￥10,912.6 billion. The Australian unemployment rate remained unchanged on a monthly basis at 3.5% in September. The Japanese yen hit 150 to the dollar (at the time of writing it is trading at 149.8545), falling to a 32-year low against the U.S. dollar as Fed moves to raise interest rates push the dollar higher against other major currencies.