Market news: summary of the week 24-28.10.2022

28.10.2022 16:13|Conotoxia Ltd Analyst Team

U.S. earnings season is underway, and through it, we could learn how the current economic situation is affecting various sectors. Unlike last week, in which it was possible to get an impression of a better-than-expected situation in the banking sector, we now seem to be experiencing a negative surprise among many technology giants.

market_news

Macroeconomic data

At the start of the week, we learned the PMI industrial health index for Germany and the UK, with results of 45.7 points (47 points were expected), and 45.8 points (48 points were expected), respectively. We could see similar readings in July 2022. In addition, these values may indicate a deepening recession in the sector (a reading below 50 points is taken as a decline in activity).

On Wednesday, we learned data from the US real estate market. September home sales came in at 604,000 (585,000 was expected), down 74,000 from the previous reading. It seems that the decline may have been caused by rising interest rates and an increase in mortgage rates, which fewer and fewer Americans can afford.

On Thursday, we could learn about the Eurozone interest rate decision, which was raised in line with analysts' expectations by 0.75 percentage points, and now the main refinancing rate is at 2% and the deposit rate at 1.5%. The U.S. labor market appears to remain strong, with the number of new claims for unemployment benefits at 217,000 (220,000 was expected). These are the lowest figures since March 2020.

Equity market

It seems that a positive week cannot be credited to the FAANG tech giants (Facebook, Amazon, Apple, Netflix and Google). Only Netflix surprised with a positive result last week. On the other hand, the CEO of Meta Platforms (Facebook) hinted after the company's conference that he was wary of costs in his metaverse project. This information may have influenced the close of Thursday's session and a share price drop of more than 24 percent.

share_facebookSource: Mt5, Facebook, Weekly

Also, surprising was a tweet shared by Elon Musk, in which he showed that he had come with the kitchen sink to Twitter headquarters. We learned that the deal to buy the company was coming to an end at the original price of $54.2 per share. For this reason, the board of directors of the New York Stock Exchange decided to suspend trading of the stock during Friday's session.

Meanwhile, the U.S. real estate industry may have surprised positively, as results came in better than expected despite seemingly declining demand and an environment of rising interest rates. Falling commodity prices and widespread inflation may have allowed business costs to be passed on to customers. As a result, almost half of the real estate companies (AlexRe, Equity, Essex, among others) reported net income from operations more than 50 percent higher than expectations.

Currency market

After Thursday's Eurozone interest rate decision, the EUR/USD exchange rate hovered around parity at 1.000 for a while, eventually falling to a range of 0.995-1.000. It seems that the European currency is starting to strengthen, this time in anticipation of the upcoming FOMC meeting on November 2.

Interest rates remained unchanged following Friday's central Bank of Japan (BoJ) meeting. As Reuters reports: “The Bank of Japan kept ultra-low interest rates on Friday and maintained its dovish guidance, cementing its status as an outlier among global central banks tightening monetary policy, as recession fears dampen prospects for a solid recovery. The central bank also announced plans to increase the frequency of its bond buying next month, doubling down on efforts to defend its ultra-loose monetary policy.”. As a result, the price of the USD/JPY pair has risen above JPY 147 since the decision.

quotes_usdjpy

Source: MT5, USDJPY, Daily Earnings

Results season continues next week

On Monday, we will learn CPI inflation readings for the Eurozone. On Wednesday, the FOMC's decision on interest rate changes appears to be key. Analysts' consensus is for a 0.75 percentage point hike, in addition, US crude oil inventories may prove important. On Friday, on the other hand, we will learn data on the change in employment in non-farm sectors (NFP), which the FED seems to pay particular attention to.

The continuation of the earnings season on Wall Street will show us on Monday the results of the fund of famed investor Warren Buffett, Berkshire Hathaway (BerkshireHa). On Tuesday, we'll learn the Q3 results of healthcare giant Pfizer (Pfizer) and one of the semiconductor and processor industry leaders AMD (AMD). On Thursday, Paypal (PayPal), Starbucks (Starbucks) and Airbnb (AirBNB) will report. The results of the last company may seem particularly interesting, bringing us closer to the situation in the travel industry.

Author: Grzegorz Dróżdż, a Market Analyst of Conotoxia Ltd. (Conotoxia investment service)

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76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.