In the world of macro data this week, the market was able to take a break from central banks' decisions on interest rate changes. On Tuesday, we had the results of the German economic sentiment index, which turned out to be more positive than expected at -59.2 points (forecast -65.7 points). Further down, however, are the low levels last seen during the crisis in 2008.
Macro Data
Wednesday saw the release of CPI inflation results for the Eurozone and the UK, among others, which were close to market expectations at 9.9% (forecast 10%) and 10.1% (forecast 10%), respectively. The data showed that inflation still seems to be breaking records.
Finally, of the key macroeconomic data, the number of new applications for unemployment benefits filed in the United States was positive, falling to 214,000 (forecast 230,000).
There is an estimation that the rising global inflation and the non-worsening labour market may not change the monetary policy stance from central banks. As it was mentioned in the morning's commentary on the bond market: "Looking at the chart of the quotation of the ETF with the symbol AGG, someone could see that since the peak in August 2020, the price of a unit of this fund has fallen by more than 20 percent [...] Nevertheless, presently, until the peak in US interest rate hikes is reached, this market may continue to be under pressure."
Source: Conotoxia MT5, AGG, Weekly
Stock Market
The current week has been in terms of the earnings season for the third quarter of this year, particularly reported results from the banking sector, most of which reported positive earnings per share (EPS) results than expectations. Among others, Bank of America Corp. (BankofUS) EPS 0.81 (forecast 0.77), Goldman Sachs Group Inc. (GS) EPS 8.25 (forecast 7.69), or Blackstone Inc. (Blackstone) 1.06 (forecast 0.99). This could be a positive sign, because as the stock market saying goes, "there is no bull market without banks."
Surprising for analysts were the results of Tesla (Tesla), Netflix (Netflix) and Snap (Snap), which do not seem to be affected by the spectre of recession. The giant, which sells electric cars, improved net income to $3.33 billion (forecast $1.65 billion), revenue growth jumped 55 percent year-on-year, and earnings per share (EPS) came in at $1.05 (forecast $0.99). Netflix surprised with its first increase in subscriptions since the beginning of the year, which may have pushed its stock price up more than 10 percent at the opening of Wednesday's session. 
Source: Conotoxia MT5, Netflix, Weekly
In the social media market, one of the first reports was presented by the owner of Snapchat, whose y/y revenues did not seem to show significant change. Investors seem to reacted negatively, however, after the number of users of the Snapchat app appears to have fallen for the fifth consecutive quarter.
Source: Conotoxia MT5, Snap, Weekly
Currency Market
In the absence of a decision on interest rate changes this week, someone could see no significant changes in the currency market. The EUR/USD pair continues to hover below parity at 1.00. Recall that these are values previously seen more than 20 years ago. Noticeably weakened the Japanese yen against the US dollar (USD/JPY) piercing the level of JPY 150. The question of possible intervention by the Bank of Japan is beginning to arise, as the exchange rate of this currency pair has risen by more than 30 percent since the beginning of the year. For the British pound, on the other hand, more uncertainty may continue, due to political developments. The recent rise in the GBP/USD pair came after the resignation of the British Prime Minister from office.
Source: Conotoxia MT5, GBP/USD, Weekly
The earnings season continues next week?
Next week on Wall Street will be packed with the publication of reports from well-known companies. On Tuesday, Google will present quarterly results along with Coca-Cola or Microsoft. On Wednesday, there will be a report from Apple, which recently decided to cut orders for the new iPhone due to falling demand. Facebook will also present results on that day. Online retail giant Amazon will present its report on Thursday, October 27, along with McDonald's and MasterCard.
In addition, next week we could expect, among other things, the ECB's decision on interest rates in the Eurozone, CPI inflation in Germany and GDP results in the United States. In addition, at the end of the week there will be a meeting of the central Bank of Japan (BoJ), where it is possible that the topic of possible intervention in the foreign exchange market or a change in the range for Japanese bond yields would come up. The results of Tuesday's consumer mood report from the United States (CB Consumer Confidence) may seem interesting.
Grzegorz Dróżdż, a Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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