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Key Stories from the past week: The market feints while earnings season gets under way
Despite earnings season kicking off, and some important US economic data on the wires, it was a relatively stable week for US and European markets - equity benchmarks and FX pairs saw modest moves week-on-week. Asia on the other hand was a standout focus as China returned from Golden Week for investors to price the recent stimulus package. Meanwhile, oil and gold fluctuated with the various macro inputs. More below on this week’s key stories.
Chinese shares take investors on a wild ride
Chinese equities proved highly volatile as trading recommenced following Golden Week. After a 30% rally in September valuations hit a setback as Beijing withheld major new stimulus announcements. Price volatility seems to have been exacerbated by margin financing. All eyes now turn to the Chinese Ministry of Finance policy briefing on Saturday for clues on fresh fiscal support.
Investors, analysts eye bigger China stimulus at Saturday briefing
Google breakup?
The US Department of Justice announced it is considering options to break-up Google to address the search engine’s monopoly. The unknown result could be a value overhang until a final decision is made. Whether the company is more valuable as a whole or in pieces remains to be seen, a completed break-up could provide evidence of hidden value and internal synergies, which would confirm monopolistic traits and justify the break-up. The share price has fallen 3% this week while Saxo clients have been net buyers.
Alphabet Might Get Broken Up
Thursday's data dump
Inflation and jobs are currently the two most important macro inputs in the US, so Thursday’s CPI data and jobless claims were highly anticipated. CPI was slightly hotter than expected, while jobless claims came in materially above consensus. The labour market seems to hold the most attention as the data boosted the rate-cut premium. Nasdaq futures were the product of choice for Saxo clients to play the events, albeit moves were relatively calm.
US Stocks See Modest Moves Following Inflation Data
Tesla's 'We Robot' event leaves much to be answered
Elon Musk unveiled Tesla's Cybercab robotaxi, targeting production by 2026 for under $30,000, while also introducing a 20-passenger Robovan concept. Tesla shares reacted badly with investors unimpressed at the lack of details on near term plans for these concept models as with focus now shifting back to fundamentals.
Five takeaways from Tesla's Robotaxi show
US Bank Earnings
US banks made a positive start to the Q3 earnings season with beats from JP Morgan, Wells Fargo, and BNY Mellon on Friday. JP Morgan is the most held US financial name across Saxo’s client base, and the company presented a decent beat to Net Interest Income, boosting the share price. BNY Mellon and Wells Fargo both reported profits that topped expectations. Although the macro picture is arguably the more important driver over the coming weeks, it is positive for equity markets to get earnings season off to a good start.
Q3 earnings begin
Next week markets will reacting to the Chinese finance policy briefing (Sat 12th Oct) and will also get China Q3 GDP figures (Thurs). September CPI data from UK (Weds), EU (Thurs) and the ECB interest rate decision (Thurs) with the market anticipating a 25bps cut to the current rate of 3.5%. Third quarter earnings highlights include; UnitedHealth Group, Johnson & Johnson, Bank of America, Goldman Sachs, Citigroup (Tues). ASML, Abbott Laboratories, Prologis, Kinder Morgan (Weds). Taiwan Semiconductor, Netflix, Morgan Stanley (Thurs). Proctor & Gamble, American Express, Schlumberger (Fri).