Welcome to the Weekly Market Update!
In this edition, we bring you the latest highlights and insights from the world of finance. We will cover the week’s top stories, provide market analysis, highlight economic developments, discuss upcoming events to watch, and present technical analysis. Let’s delve into the key information you need to stay informed and make informed financial decisions.
Top Stories of the Week
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Goldman Sachs Profits Fall: Despite a rise in investment banking revenues, the bank’s earnings dropped 36%, marking the eighth consecutive quarterly decline.
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Netflix Surges Post-Earnings: A successful password crackdown led to 8.8 million new subscriptions, beating the 6.6 million forecast. Netflix also announced upcoming price hikes.
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Tesla Misses Q3 Expectations: With an EPS of $0.66 against a $0.74 forecast and a 37% drop in adjusted net income, Tesla’s Q3 results disappointed as price cuts impacted margins.
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Brent Crude Tops $90: Concerns over the Israel-Hamas conflict affecting oil-rich nations drove oil prices up. Iran calls for an oil embargo on Israel.
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United Airlines Drops 9%: Rising oil prices and halted flights to Tel Aviv led to a sharp decline in aviation stocks
Market Analysis
- Gold Prices Soar Amid Middle East Unrest: As tensions between Israel and Hamas escalate, gold prices have reached a four-week high. Despite strong U.S. retail sales and industrial production data, which usually dampen gold’s appeal, the precious metal is trading near its all-time high at $1,943.57 per ounce. The conflict has overshadowed President Biden’s diplomatic visit to Israel and led the U.S. to send aircraft carriers to the Middle East. Gold has gained 6% since the conflict began, reaffirming its status as a safe-haven asset.
Economic Highlights
- China’s Q3 Growth Outperforms Expectations: China’s economy grew by 4.9% YoY in the third quarter, exceeding economists’ forecasts of 4.6%. The country also saw a 1.3% QoQ growth, stronger than the expected 0.9%. September data revealed a 4.5% growth in industrial production and a 5.5% increase in retail sales, both surpassing market expectations. Despite challenges in the property sector and a complex external environment, China’s National Bureau of Statistics remains optimistic about achieving the annual development goals. Unemployment also eased to 5% in September, down from 5.2% a month earlier.
Upcoming Events to Watch
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Middle East Tensions: Markets are closely monitoring the escalating Middle East conflict, especially its potential impact on oil-rich nations. Any signs of intensifying conflict could raise risk premiums on WTI and Brent, while also driving haven flows toward gold.
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ECB Rate Decision (Oct 26): After a 25 basis point rate hike in September, the ECB is expected to pause its rate-hiking cycle. Recent speeches and economic data support this view. However, surging oil prices could influence the central bank’s stance.
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BoC Rate Decision (Oct 25): Amid cooling inflation, the likelihood of a BoC rate hike has dropped to a 16% probability. Despite a pessimistic business outlook, BoC Governor Tiff Macklem has not ruled out rate hikes due to rising political risks.
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Big Tech Earnings: Tech giants Microsoft, Alphabet, Meta, Amazon, and Apple are set to release quarterly earnings. While all are expected to report earnings growth, Meta and Amazon are anticipated to lead, and Apple is expected to lag.
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European Bank Earnings: European and UK banks will unveil Q3 results, with a focus on Net Interest Margins (NIM). As central banks near peak rates, the NIM outlook could dim. International banks like HSBC and Standard Chartered may fare better.
Technical Analysis
We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.
EUR/USD
The EUR/USD pair remains in a bearish trend, consistently forming equal highs and lows below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is currently neutral, hovering around the 50 mark. The pair is consolidating within a tight range of 1.05 to 1.06. A definitive break and close above this range would validate a weekly hammer pattern, originating from long-term support levels. Keep a close eye on these indicators for potential trading opportunities.
GBP/USD
The GBP/USD pair is currently undergoing a corrective phase within an overarching downtrend, as evidenced by the formation of higher lows and higher highs below the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) remains neutral, hovering around the 50 level. While the weekly candle chart displays a bullish hammer pattern, the prevailing trend is still bearish. This suggests that the current sideways movement is likely to resolve in a downward direction. Traders should monitor these key indicators closely for potential entry and exit points.
XAU/USD
The XAU/USD pair is currently exhibiting an uptrend, characterized by higher highs and lows above the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is in overbought territory, registering above 65. The asset has staged a significant rally from its recent low at 1810, successfully breaking through the key resistance level at 1950. Traders should remain vigilant for shifts in momentum.
XUS500
Despite persistent negative headlines surrounding the ongoing conflict, market sentiment remains bearish. Even institutional players failed to position the S&P 500 (SPX) at an optimal closing level last Friday. Apple (AAPL) also exhibited a bearish close, suggesting further downside risk before any potential reversal. Intriguingly, instead of a weekend gap-down, we observed a gap-up in price. The SPX and broader markets have been punishing bullish traders for the past several weeks. Caution is advised in this volatile environment.
Thank you for reading! Wishing you successful trades ahead!
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