Today is Tuesday, October 11, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly
In this edition of Insight Weekly, we continue to examine U.S. stocks. The bear market risks declining further if third-quarter earnings fall short of optimistic outlooks. S&P Global Market Intelligence economists forecast that S&P 500 earnings per share will decline in 2022 and grow modestly in 2023. The strength of the dollar has impacted stocks with overseas exposure: the S&P 500 Foreign Revenue Exposure Index fell more than 28.9% from the start of 2022 to the end of September, according to S&P Dow Jones Indices. The Federal Reserve continues to tighten monetary policy to constrain inflation, causing the median return for major U.S. bank stocks to fall to negative 4.3% in September.
Only 15 U.S. bank branch acquisition deals have been announced in 2022 as of Sept. 28, down from 44 in all of 2021, according to an analysis by S&P Global Market Intelligence. Digitization and online banking have forced banks to cut down on their branch networks. At the same time, banks are looking to strike a balance between increasing digital adoption and maintaining a physical footprint.
U.S. companies that accumulated debt to fortify their balance sheets as the COVID-19 pandemic swept the globe now are burning through their cash reserves in order to pay down debt instead of refinancing at higher costs. Debt ratios are notably lower compared to the pre-pandemic era.
- In Focus: Falling stocks
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Stocks have further to fall if earnings estimates prove too optimistic
Stocks may still be overvalued as economists at S&P Global Market Intelligence suggested that consensus estimates for earnings season are overly optimistic.
—Read the full article from S&P Global Market Intelligence
Record dollar strength ravages stocks with most overseas exposure
The S&P Foreign Revenue Exposure Index, which tracks American companies’ exposure to revenues generated outside the U.S., has fallen more than 28.9% since the start of the year.
—Read the full article from S&P Global Market Intelligence
Fed's aggressive tightening continues to weigh on US bank stocks in September
The month-to-date industry median return of major exchange-traded U.S. banks was negative 4.3% in September.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Credit Suisse must show progress to ease growing market doubts over revamp
The Swiss banking group is expected to announce yet another strategy update by Oct. 27, but market concerns about its ability to bounce back from three years of continuous crises have spiked.
—Read the full article from S&P Global Market Intelligence
Branch M&A deals slow after strong 2021
Only 15 branch acquisition deals have been announced in 2022 as of Sept. 28, involving 31 branches and $1.63 billion in total deposits, according to an analysis by S&P Global Market Intelligence.
—Read the full article from S&P Global Market Intelligence
Top 20 European banks by market cap, Q3'22
The market value of Italy's UniCredit rose the most during the quarter, while British banks experienced significant declines.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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S&P 500 falls another 9% in September as recession fears grow
Growing recession fears amid persistent high inflation, along with another aggressive rate hike by the Federal Reserve, have caused investors to pull back from stocks and turn to safer alternatives.
—Read the full article from S&P Global Market Intelligence
The economic impact of Hurricane Ian
Hurricane Ian will have a noticeable impact on near-term GDP growth in Florida but only a slight impact at the national level, according to James Kelly, senior economist at S&P Global Market Intelligence.
—Read the full article from S&P Global Market Intelligence
US companies shed cash reserves to reduce debt burdens
As borrowing costs rise U.S. companies are deleveraging, using cash reserves built up in response to COVID-19 to lower their debt burdens.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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Insurance Insight: Fla. flooded vehicle claims could add to industry's auto physical damage woes
The devastating storm surge in southwest Florida could broaden the implications of Hurricane Ian for the U.S. property and casualty industry.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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US REIT stocks fall deeper into negative territory in Q3
The Dow Jones Equity All REIT Index recorded a total return of negative 10.8% for the period, compared to a negative 4.9% return for the S&P 500, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
NAV Monitor: US equity REITs trade at median 27.6% discount to NAV on Oct. 3
Office real estate investment trusts traded at the highest median discount to net asset value as of Oct. 3, while the communications sector was the only property type that traded at a median premium.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives:Energy and Utilities
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US ready for a battery factory boom, but now it needs to hold the charge
New investments are flooding into U.S. battery manufacturing, lured by federal incentives and the growing mainstream appeal of electric vehicles. How much supply the energy storage industry can capture is an open question.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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States seen as next battlefield for Big Tech antitrust cases
State politicians impatient with the pace of federal movement on Big Tech antitrust concerns are likely to follow California in utilizing their own laws and resources to take action, policy experts said.
—Read the full article from S&P Global Market Intelligence
US institutional investors cautious on Chinese tech, media, telecom listings
Though the immediate risk of Chinese companies being forced to delist from U.S. exchanges has passed, U.S. investors remain skittish about the threat of heightened regulatory scrutiny of Chinese technology, media and telecom investments.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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US Midterms 2022: Republicans unlikely to slow mining ESG trend
The U.S. midterm elections could decide the fate of environmental, social and governance disclosure legislation, but international pressure on miners to disclose will likely continue growing.
—Read the full article from S&P Global Market Intelligence
Chile on track for 2022 copper slump but could rebound in 2023
Chile is set for a steep decline in copper output amid water scarcity and lower ore grades.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Supply Chain
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Higher energy costs and strong dollar offset impact of cooling supply chains
Supply chain cost pressures and wage pressures eased in September, helping bring down factory cost inflation in the U.S., mainland China and many other economies.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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The Week in M&A
Deal Profile: Taichung Commercial Bank to buy American Continental Bancorp
Deal Profile: Louisiana-based Home Federal Bancorp to buy in-state peer Northwest Bancshares
Texas remains popular for bank M&A, but activity comes back down to earth in '22
Precious metal deals dominate mining M&A for week ended Sept. 30
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The Big Number
Forecast of cloud gaming revenue by 2026
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Written and compiled by Alex Virtucio