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Markets rebound as investors digest gloomy economic outlook

by LLB Reporter
4th Oct 22 10:08 am

Stocks are up, the Vix volatility index is easing back, and US and UK government bond yields are falling. It’s as if everyone has forgotten about the gloomy outlook and instead regained an appetite for risk

How long this party lasts is another matter as we’re about to enter the next earnings season and there is a fear that market expectations for sales and profits are too high, which means many companies could shock when they report.

Danni Hewson, financial analyst at AJ Bell, said: “Next week we’ll get insight into the state of the consumer via results from PepsiCo and Walgreens Boots, together with a broader view of individuals and businesses via results from banking groups including Citigroup, JPMorgan and Wells Fargo. Any negative news from these names will cast a very dark cloud over the rest of the earnings season.

“It’s not often that Legal & General has to calm investors’ nerves, given it is meant to be a steady as she goes type of business. Its shares enjoyed a relief rally after reassuring the market that it hasn’t been a forced seller of gilts or bonds, and that it continues to have a good solvency coverage ratio.

“It’s been a while since Made.com’s shares rallied and so a 22.7% jump is worth noting. The troubled sofa company has been searching for a buyer and says talks have begun with several interested parties. A bidder will need deep pockets as the main reason why the business is up for sale is because of the difficulties in raising the level of finance needed to put the group on the right path to sustained profitability.”

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