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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Alphabet Plummets 9% Post-Earnings: Despite beating profit and revenue estimates, Alphabet’s stock fell due to slowing Google Cloud revenue growth.
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Microsoft Climbs on Q1 Beat: Microsoft exceeded Q1 expectations with an EPS of $2.99 and $56.52 billion in revenue. Azure’s revenue grew by 29%.
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Ford Strikes Deal with UAW: To end ongoing strikes, Ford has agreed to a 25% pay increase over a four-year contract.
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Gold Nears $2000: Despite a rising USD and treasury yields, gold prices surged on safe-haven demand.
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Meta Drops on Weak Outlook: Strong earnings couldn’t prevent a stock decline as Meta warned of lower advertising demand in the current quarter.
Market Analysis
- Big Tech Earnings Disappoint, Impacting S&P 500: This earnings season has been a letdown for major tech companies, erasing $200 billion in market value and pushing the S&P 500 near correction territory with an 8.8% decline from its peak. Tesla, Alphabet, and Meta have all seen sharp declines post-earnings, while Microsoft remains the lone bright spot. Amazon’s results are pending, and Apple and Nvidia are set to report in November. The underwhelming earnings have called into question the lofty valuations that fueled this year’s stock market rally.
Economic Highlights
- 10-Year Treasury Yield Hits 5%, Global Impact Felt: For the first time since 2007, the yield on the 10-year U.S. Treasury bond reached 5%, up from just 0.50% at the onset of the pandemic. This pivotal financial metric not only increases the U.S. government’s borrowing costs but also has a ripple effect on global financial markets. Higher yields make borrowing more expensive for consumers and businesses, potentially dampening spending and economic activity. The rise also puts pressure on asset prices, from stocks to cryptocurrencies, and strengthens the U.S. dollar against other currencies, affecting global trade and inflation. The Federal Reserve’s focus on curbing inflation through higher interest rates adds to the upward pressure on yields.
Upcoming Events to Watch
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Fed Rate Decision (Nov 1): The Federal Reserve is unlikely to hike rates in its upcoming meeting, despite robust U.S. economic growth. With the market pricing in just a 30% chance of a December rate hike, all eyes will be on the Fed’s forward guidance.
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BoE Rate Decision (Nov 2): Amid signs of a weakening labor market and contracting business activity, the Bank of England is expected to keep rates steady at 5.25%. Money markets are increasingly skeptical about further rate hikes as the UK faces recession risks.
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BoJ Rate Decision (Nov 3): As the yen hits a year-low against the dollar, the Bank of Japan is anticipated to maintain its current policy settings. However, an upward revision in its 2023/24 inflation forecast could hint at future policy normalization.
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Apple Earnings (Nov 2): Apple is set to report its quarterly earnings with an expected EPS of $1.39 and revenue of $89.35 billion. While the simultaneous release of all four iPhone models could boost revenue, headwinds like market saturation and China sales concerns loom.
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US Non-Farm Payrolls: Following the Fed’s rate decision, the U.S. jobs report will be closely watched. A strong report could fuel expectations of a hawkish Fed stance, potentially affecting stock prices and strengthening the USD.
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
EUR/USD is undergoing a corrective phase within a broader downtrend, forming higher peaks and troughs beneath the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) sits at a neutral level. The price appears to be forming a potential bearish flag, suggesting a likely breach below the 1.043 lows. A decisive break and close above the 50 SMA would validate a weekly hammer pattern originating from key long-term support levels.
GBP/USD
GBP/USD is experiencing a corrective stage in an ongoing downtrend, creating inconsistent highs and lows beneath the 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is in a neutral zone. Despite a bullish hammer pattern on the weekly candle chart, the prevailing trend is bearish, suggesting that the current lateral movement is likely to break downward.
XAU/USD
Gold keeps its bullish run, crossing the crucial $2,000 level as the week kicks off. At the same time, the US Dollar Index (DXY), which tracks the USD against a basket of global currencies, is oscillating around 106.60 after pulling back from 106.90. Even with positive U.S. economic data out on Friday, the USD didn’t rally, providing a tailwind for gold prices.
XUS500
Last week, SPX500USD experienced a decline. For the upcoming week, a larger upward correction is on the table, but it’s wise to await a change in order flow before going bullish. XUS500 is retesting its lows from September, and the RSI is bearish but not in oversold territory. The price is moving downward within a broad channel, which seems to be a short-term correction in the context of the long-term uptrend. A move back above the 50 SMA, aligned with the main uptrend, is the most likely scenario, but a break to the downside could signal a more substantial drop towards the 4000 mark.
Thank you for reading! Wishing you successful trades ahead!
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