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Investors cautious ahead of US elections, mixed tech outlook

US stock markets continued to fall on Thursday, driven by mixed earnings reports from major tech companies and investor caution ahead of key US labour market data due Friday as well as next week’s elections. The major indices all closed lower, with the tech-heavy Nasdaq experiencing the largest decline. Asian markets followed suit, with Japan's Nikkei 225 leading losses, although Chinese stocks bucked the trend with modest gains as manufacturing activity swung back to expansion.

Data
Autore
Shane Strowmatt, LGT
Tempo di lettura
5 minuto

Negative market data
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US stock markets continued their downward trend on Thursday. The CBOE Volatility Index, which acts as a gauge of market fear, shot up 13.8% on Thursday after a 5.2% rise on Wednesday. The Dow Jones Industrial Average fell 0.9% to 41,763.46 points on Thursday, ending October with a 1.3% loss. The S&P 500 dropped 1.9% to 5705.45 points. The Nasdaq 100 experienced the largest decline, losing 2.4% to close at 19,890.42 points, its lowest level in over three weeks, and finished October with a 0.8% loss. Despite positive earnings reports after the bell on Wednesday, shares of Microsoft and Meta fell sharply, contributing to the overall market decline. Investor caution remains high

Tech earnings mixed amid strong sales

Apple, Amazon, and Intel have reported mixed financial results, with each company showcasing strong sales in key segments but facing challenges elsewhere. Apple's AI-enhanced iPhone 16 series drove fourth-quarter sales to USD 94.93 billion, yet the company forecast modest revenue growth for the next quarter, causing a 1.7% drop in after-hours trading. Amazon exceeded third-quarter profit and revenue expectations, buoyed by a 7% rise in retail sales and a 19% increase in AWS revenue, leading to a nearly 6% share price increase after hours. Meanwhile, Intel's shares surged almost 7% after hours after it reported better-than-expected third-quarter revenue and an optimistic forecast, despite a significant net loss due to restructuring charges.

US PCE inflation slows

The US Commerce Department's personal consumption expenditures (PCE) price index, a key inflation gauge for the Federal Reserve, increased by 2.1% year-on-year in September, the smallest rise since February 2021, down from 2.3% in August. Core PCE, which excludes food and energy, rose by 2.7% year-on-year, the same as in August. Also released Thursday, initial filings for unemployment benefits totaled 216,000 for the week ending October 26, a decrease of 12,000 from the previous period and below the forecast of 230,000, indicating a resilient labour market. The data supports the Fed's anticipated 25-basis-point interest rate cut next week, following a significant half-percentage point cut last month.

Nikkei 225 leads losses in Asia, China bucks trend

Japan's Nikkei 225 closed 2.8% lower on Friday, leading losses in Asia-Pacific markets, as Japan's factory output decreased at the fastest rate in three months in October. In contrast, China's CSI 300 rose 0.1% and Hong Kong's Hang Seng climbed 0.9% after China’s Caixin manufacturing PMI for October exceeded expectations, reaching 50.3 and returning to a value over 50, which signals expansion. Australia's S&P/ASX 200 declined 0.5%, while South Korea's Kospi also ended the session down 0.5%.

German retail sales rise unexpectedly in September

German retail sales increased by 1.2% in September, defying analysts' expectations of a 0.5% decline, according to data released on Thursday. This marks the continuation of a growth trend that began in June, albeit at a slower pace. Preliminary data released a day earlier showed Europe’s largest economy grew by 0.2% in the third quarter, driven by government and household spending. Germany’s DAX fell 0.9% on Thursday.

Euro area unemployment stable at 6.3%

The euro area seasonally-adjusted unemployment rate remained at 6.3% in September, unchanged from August and down from 6.6% in September last year, according to Eurostat data released on Thursday. The EU unemployment rate also held steady at 5.9%, a decrease from 6.1% a year ago. The European Central Bank made its third interest rate cut this year in October, citing weak economic activity. The STOXX Europe 600 lost 1.2% on Thursday.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Chevron, ExxonMobil, and Mitsubishi.

Economic data in focus: Swiss retail sales (07:30), Swiss Consumer Price Index (07:30), euro-area Consumer Price Index (11:00), US nonfarm payrolls (12:30), US unemployment rate (12:30), US ISM Manufacturing PMI (14:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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