Stocks caught in crosshairs of earnings and central bank meetings

Global stocks traded in narrow ranges near recent record highs on Thursday as investors digested a stream of mixed earnings ahead of key central bank meetings.

The MSCI All World Stock Index (.MIWD00000PUS) was little changed at 741 points, barely below its lifetime high of 749.16 points hit last month. In Europe, the STOXX index (.STOXX) of 600 companies was also flat at 474 points, some two points below its record high from August.

Markets awaited the European Central Bank’s meeting later in the morning, with the US Federal Reserve and Bank of England meetings next week also a focus against the backdrop of inflationary pressures from bottlenecks in global supply chains.

“The markets are caught in a bit of a no-man’s land of optimism that earnings are going to continue to be positive, against pessimism that inflation is going to crimp profit margins,” said Michael Hewson, chief markets analyst at CMC Markets.

“Even if there has been no evidence of that, we need to get these central bank meetings out of the way as they are keeping investors on tenterhooks,” Hewson said.

The impact of bottlenecks on sectors like autos was further highlighted on Thursday by Volkswagen (VOWG_p.DE), its shares falling 2.4 per cent after the German car giant cut its outlook for deliveries as a shortage of computer chips led to lower-than-expected operating profit in the third quarter.

In Asia, Japan’s robot maker Fanuc (6954.T) tumbled 7.8 per cent while IT conglomerate Fujitsu (6702.T) shed 8.4 per cent as their earning showed a bigger than expected impact from a global chips shortages.

Oil prices eased to their lowest in two weeks after official figures showed a surprise jump in US inventories of crude, while rising cases of COVID-19 in Europe, Russia and some outbreaks in China dented hopes for a global? economic recovery.

Brent fell 1 per cent to $83.78 per barrel , off Monday’s seven-year high of $86.70. US crude fetched $81.80 per barrel , down 1 per cent and off a seven-year high of $85.41 hit on Monday.

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Overnight on Wall Street, the S&P 500 (.SPX) lost 0.51 per cent from an all-time high of 4,574.79 hit on Tuesday, while the Nasdaq (.IXIC)closed the session little changed. The ECB is expected to keep policy unchanged and push back against growing expectations for an interest rate hike next year, even though it may admit that inflation will be higher than projected.

The euro was steady at $1.1612 ahead of the ECB’s policy announcement later in the day.

Global stocks traded in narrow ranges near recent record highs on Thursday as investors digested a stream of mixed earnings ahead of key central bank meetings.