Earnings and Fed Fail to Lift Sentiment as Markets Await Amazon, ECB and PCE Inflation Data

Markets are reacting cautiously to a packed Wednesday of macroeconomic data and corporate earnings. The Fed’s non-unanimous decision and mixed quarterly results from Microsoft (which beat expectations) and Alphabet (which fell short of expectations) are slowing the tech sector’s recovery and keeping sentiment in neutral territory. Today, attention turns to the ECB, while US PCE inflation figures should provide further insight into the possibility of another rate hike in December. On the earnings front, investors will be watching Amazon, Intel and Caterpillar closely.

Futures point to a slightly negative open for European markets and a flat start for US equities.

Financial markets sentiment

Financial markets are showing neutral sentiment today. Intermarket analysis indicates a Market Health Score of 65/100. Our intermarket dashboards show sentiment improving at a very gradual pace, as investors weigh corporate earnings against monetary policy signals. The S&P 500/VIX ratio remains above its long-term moving average but has made only marginal gains compared with the previous session. The S&P 500/Nasdaq ratio is broadly unchanged, while gold continues to underperform the US dollar and the Dow Jones.

There has been little movement across major asset classes as well. Global equities remain range-bound, while bonds appear to have stalled halfway between their long- and medium-term moving averages.

Our market weather map confirms the limited changes following Wednesday’s packed schedule of earnings releases and central bank announcements. Equities remain in neutral territory, with a slight improvement in the technology sector, which nevertheless remains below the 50-point score threshold. Bonds are consolidating above 50 points, while gold remains in weak territory. Oil and the US dollar continue to trade with scores above 60: inflation and interest rates remain the market’s key drivers.

Global Futures – Pre-Market Sentiment

Pre-Market Futures: Global futures point to a moderate risk-off bias, with an average move of -0.08%. US futures are slightly positive (+0.07%), European futures are slightly negative (-0.12%), and Asian futures are slightly positive (+0.22%).