Positive sentiment prevailed in the stock markets last week and major indices appreciated moderately. While no good economic or political news has been released, investors remain optimistic, with the SP500 CFD rose 1.2% and reached a new all-time high of 3,027 points on Friday.
Other important US indices also showed positive developments but did not reach new heights: the Nasdaq Composite grew 1.9% on a weekly basis and the industrial index Dow 30 gained 0.7%.
China's leading Shanghai Composite index rose 0.6% and remains in the horizontal trading channel since May this year. Economic indicators included real estate prices, which rose by 8.4% over the year and decelerated moderately compared to the last six months, when the growth reached as much as 10.7% in May and June. Real estate prices in China are extremely important as they form a significant portion of the population's net worth, which has been encouraged by the financial sector, so a significant slowdown in growth or even a drop in prices would be very negative economic news.
In the US bond market, the spread between 2-year and 10-year bonds was fairly stable at 0.17%, while the spread between 3-month and 10-year bonds increased from 0.08% to 0.13%. Market participants remain cautious and are not taking new positions in anticipation of this week's US Federal Reserve's meeting, which is likely to provide a hint of further monetary policy.
In commodities market, sentiment was also positive. WTI oil rose 5.4% to 56.6 USD per barrel. In metals market, copper appreciated 1.8% over the week, aluminum fell -0.7% and iron ore was stable at 85 USD/T.
Summing up the performance of the sectors, all of them appreciated. The largest growth was recorded by commodity companies, which gained 3.2%. Industrial and financial institutions also appreciated, with a 1.6% price increase. Healthcare and consumer goods companies posted relatively worse performances, rising 0.9%.
Third-quarter financials for Caterpillar, one of the largest industrial companies in the US, were announced last Wednesday before the stock exchange opened. The company produces a variety of industrial machinery for the construction, mining and raw materials, oil and gas and transport sectors. The most important are construction, which accounts for just over 40% of revenue, and oil and transport, which generate about 40% of sales. The remaining 20% comes from the raw materials segment. Although Caterpillar is one of the best-known manufacturers of premium and state-of-the-art equipment, the businesses that purchase this equipment are cyclical and have a high degree of volatility, which also affects Caterpillar's financial performance.
Caterpillar posted 12.76 billion USD in revenue for the quarter, well below the 13.43 billion USD market forecast. Sales also declined by -6% compared to the same period last year. The fall was mainly due to slowing sales of construction equipment in China and oil facilities in the US and general uncertainty in the global economy, which led to lower inventory levels at retail partners. In general, the downturn is related to the cautiousness of industry players to invest in the face of negative economic data and poor future expectations. Adjusted earnings per share were 2.66 USD and below the 2.91 USD forecast. This was a drop of -8% compared to the same period a year ago. It is also important that company executives have significantly trimmed their full-year financial forecast for 2019 and expect to earn between 10.90 USD and 11.40 USD per share for the year, while previously expected was 12.06-13.06 USD.
After the financial results were announced, Caterpillar's share price fell as much as -8%, but later recovered and ended the trading session with a slight rise. Caterpillar's stock price has risen about 20% over the last 12 months. The company pays dividends at an annual yield of 3.1%.
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