LIVE MARKETS The champagne's gone flat: World business sentiment turns gloomy

  • Main U.S. indexes red; chips, banks, FANGs hit harder
  • Energy biggest loser among S&P sectors; utilities up most
  • Euro STOXX 600 down ~0.4%
  • Dollar, gold up; crude, bitcoin down
  • U.S. 10-Year Treasury yield slides to ~1.42%

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As companies worldwide prepare to shut the books on a year that was supposed to tell a story of economic rebound from the global health crisis brought about by COVID, the mood is dimmer than markets might have assumed when they were tossing confetti and singing 'Auld Lang Syne' nearly twelve months ago.

Since then, we've added the unwelcome words 'Delta' and 'Omicron' to our daily vocabularies, digested the notion that the coronavirus could be here to stay, and struggled to get our arms around a tangled, systemic, worldwide supply chain fiasco.

Oxford Economics' (OE) most recent Global Risk Survey which included 120 responses from November 29 through December 9, showed business sentiment turning pessimistic for the first time since the height of the pandemic.

"Our December flash survey finds that 61% of businesses have become more negative about global economic growth prospects over the past month," writes Jamie Thompson, OE's head of macro scenarios. "Concerns over the risks posed by supply-chain disruption and the new Omicron virus variant are evident throughout the latest survey."

As to when the current not-so-transitory wave of consumer price inflation will peak, the majority of the survey participants see it happening in the first quarter (36%) or second quarter (26%) of 2022.

For a breakdown of inflation expectations, please see the graphic below, courtesy of OE:

Inflation survey

Inflation has been sent into orbit by supply scarcity, a sticky problem which a sizeable chunk of the respondents see persisting throughout the coming year and into 2023.

"Half of the respondents report that their business is currently being affected by the supply-chain crisis, such as material and component shortages and transportation bottlenecks," Thomson adds. "Around 30% of those affected report being severely affected. Few expect an early end to disruption, and almost 1-in-5 businesses (19%) now expect disruption to their business to persist beyond 2022."

(Stephen Culp)



As U.S. mid-west residents and businesses dealt with the aftermath of a series of deadly tornados that killed at least a 100 people on Friday night, Piper Sandler analyst Paul Newsome looked at the market share of insurance companies in the area affected.

While Newsome noted that it was too early to estimate the amount of claims insurers would receive he noted that the catastrophe was unusual as tornados rarely hit in December and when they do they tend to affect a smaller geographic area for a shorter period of time. read more

He noted that the tornado outbreak, which moved across multiple states including Arkansas, Illinois, Missouri, Tennessee and Kentucky. In Kentucky, Governor Andy Beshear estimated the death toll at 80 and talked about one twister that tore across 227 miles (365 km) of terrain, almost all of which was in Kentucky.

So Newsome noted that while tornadoes can typically result in hundreds of millions of dollars worth of claims, "this could be a lot more."

While the event was usual, Newsome suggested that it may be another data point indicating that increasingly unpredictable and unusual weather event may now be a permanent issue that insurance investors must consider. read more

U.S. President Joe Biden said on Saturday it was likely to be one of the largest Tornado outbreaks in U.S. history and that he would ask the Environmental Protection Agency and others to take a look at whether climate change was a factor. read more

Looking at 2020 data for auto, commercial, home owner and auto passenger insurance, the analyst estimated that State Farm has the biggest exposure to the affected states with 22% share of the market followed by Allstate Corp (ALL.N) at 8%, Liberty Mutual at 5.2%, Progressive (PGR.N) at 4.7% and Farmers insurance at 4.6%.

While Newsome estimated the Cincinnati Insurance Co (CINF.O) share of the market at just 1.4% that stock was one of lead decliners in the S&P 500 financial index (.SPSY). its shares were down more than 2%. Shares in Allstate were last down more than 1% while Progressive was up 0.5%.

Travelers (TRV.N), which has an estimated 3.7% share of the market was down 0.9%. Chubb was down about 1.4% along with Hartford Financial (HIG.N), which has a 1.5% share. Newsome put Sate Auto's (STFC.O) share of that market at 0.8% and the stock was virtually unchanged on Monday.

(Sinéad Carew)



After stock futures hinted at a pale green start to the week, Wall Street defied those expectations on Monday by heading lower after the opening bell.

The three major U.S. stock indexes appeared to be cooling their heels after S&P 500 hit a record closing high on Friday and notched its best biggest weekly percentage gain since February

Tesla Inc (TSLA.O), Microsoft Corp (MSFT.O) and (AMZN.O) weighed heaviest, with Apple Inc (AAPL.O) bucking megacap tech-plus trend following a target price hike from JPMorgan.

The gadget maker hit an new intraday high and is on the brink of becoming the only company in the world to have crossed the $3 trillion market value mark.

The Federal Reserve is expected to convene tomorrow for its two-day meeting, and its concluding statement and Q&A will be scrutinized for clues as to the extent to which the central bank will shorten the timeline of expected tightening of its accommodative monetary policy. read more

Powell & company will most certainly be talking about inflation, which continues to sizzle, as evidences by Friday's hot CPI reading which showed the highest annual headline increase in nearly four decades. read more

Here's your opening snapshot:


(Stephen Culp)



Despite less than stellar breadth readings on Friday along with the S&P 500's (.SPX) fresh record-high close read more , the Nasdaq New High/New Low (NH/NL) index, has made a constructive turn:


This measure of internal strength may have become sufficiently washed out with the Nasdaq's (.IXIC) recent weakness. After falling to 12.5% on December 6 read more , which was its lowest reading since early-April 2020, the NH/NL index has now risen four-straight days.

In so doing, this measure ended Friday at 21.1% which put it above its descending 10-day moving average, at 19.5%, for the first time since November 12. read more

It now remains to be seen if last week's sharp NH/NL index upturn from especially depressed levels will lead to the broader Nasdaq re-heating, and therefore, fuel a more sustained IXIC rise. Indeed, there certainly is room for the NH/NL index to rise before it will encounter resistance lines from its highs earlier this year. The measure's early November peak was at 75.7%.

Of note, current readings on the NYSE show a similar picture as the Nasdaq. After also falling to its lowest level since early-April 2020, the NYSE's measure also ended Friday above its 10-DMA.

A Nasdaq NH/NL index violation of its Dec. 6 low can open the door for a test of its March 2020 trough at 1.2%, something which could put the IXIC on ice.

(Terence Gabriel)



Terence Gabriel is a Reuters market analyst. The views expressed are his own

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