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Morning Brew October 25 2023
Erik Schafhauser
Senior Relationship Manager
Summary: China Stimulus near - strong earnings boost sentiement
Good Morning
Lower yields, a decent PMI and stronger than expected earnings let Indexes gain yesterday, the big three all added between 0.5% and 1%. Verizon rose 9.3%, GE 6.5%, Coca Cola gained 2.9%, 3m 5.3%.
The European PMIs came below expectations and the US higher, this caused the USD to gain and the USD Index rose almost a full point to 106.23 now. EURUSD retreated to 1.06 and GBPUSD 1.2170. USDJPY remains stuck below the 150. Gold and Sver are a little lower at 1973 and 22.90.
With the US GDP and the ECB tomorrow as well as the US PCE on Friday, this is an interesting tug of war.
China is widely expected to announce fresh economic aid measures to boost the economy to set the economy up for 5% growth next year. A bond issue to the tune of a trillion Yuan has been approved and the state owned investment company Central Huijin announced purchases oof ETFs. Such purchases drove rallies of more than 20% in 2013 and 2015 according to a Reuters article. Chinese stocks and commodities will be worth keeping an eye on on these news.
Microsoft beat expectations in all segments and the stock gained 3% after hours, quarter profit was $2.99 per share, above analyst estimates of $2.65. The presentation focus was strongly linked to AI developments.
Google also beat expectations for sales and earnings but growth in the cloud business disappointed and seems to fall behind Microsoft. Google Cloud third-quarter revenue rose 22.5% to $8.41 billion, the slowest first quarter of 2021. Sheares fell 5.7% after hours.
Deutsche Bank posted an 8% drop in third-quarter profit that was not as steep as analysts had expected
LG Energy Solution warned of slowing revenue growth due lack of demand for EV in 2024
There is not a lot of key data today, the most interesting are the German IFO Index, the New Home Sales in the US and the Canadian Rate decision. Earnings from Meta and IBM will be closely watched. The war in the middle east can cause uncertainty any time.
The Bank of Canada is not expected to adjust policy, there is an 80% chance it will leave rates unchanged.
Key Events this week:
Wednesday
- Data: Australia CPI, DE IFO, Canada Rate decision
- Earnings Boeing, ThermoFischer, T-Mobile, Hilton, General Dynamics, Meta, IBM, Service Now, Mattel,
Thursday
- Data Japan PPI, Turkey Rate decision, ECB Rate Decision, US Durable Goods and GDP Advance,
- Earnings UPS; Northrop Gruman, Merck, Amazon, Intel, Ford,
Friday
- Data US Core PCE, University of Michigan
- Earnings Exxon, Chevron,
Expiries
Physically Settled Futures
RCX3 will expire 25 Oct 2023 at 09:00 GMT
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Expiring CFDs
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