Key Stories from the past week: Peak earnings season

Markets are still adjusting in preparation for the US election next week. Gold remains strong despite an eroding geopolitical risk premium, indicating the rally is an election trade. US labour market data was mixed with strong ADP numbers versus weak JOLTS and NFP. BoJ kept rates unchanged but hinted future hikes if inflation targets are met. The UK budget was in-line with expectations, justifying the recent lift in gilt yields. And for equity investors, it was a big week with results from some of the most widely held names including Alphabet, Meta, Microsoft, Apple and Amazon. More below on this week’s key stories.


Earnings – Meta and Alphabet
Meta shares slipped following Q3 earnings as company forecasts its spending spree in AI will accelerate in 2025 to improve its advertising offering and content, which Meta is finding challenging to monetise given the costs of servers and competition with Alphabet. Alphabet on the other hand beat Q3 sales expectations helped by growth of its cloud computing business. Despite an initial strong rally, the share pared its gains the following day on the back of a risk-off tone the crept in towards end of week. At Saxo we saw that client exposures remains long overall on both Meta and Alphabet and exposures increased by some 1%.
These stocks moved the most today

Amazon & Microsoft earnings + AI & cloud update
Both companies reported their quarterly earnings, highlighting significant developments in their respective businesses. Amazon reported strong quarterly revenues, driven by generative AI and advertising. AWS sales rose 19%, and overall revenues grew 11% to $159b. Advertising revenue jumped 19%. Shares rose 6%, pushing Amazon's market valuation past $2 trillion. Microsoft's shares dropped 6% after forecasting slower Azure cloud revenue growth. Despite a strong Q1 earnings report, with revenue up 16% to $65.6b and profit at $3.30 per share, the outlook for Azure dampened investor sentiment. Key points include record capital expenditures of $14.9b and significant investments in AI and data centers. Both companies are heavily investing in AI and cloud services, driving growth but also raising concerns about high costs and slower growth in certain areas.
Amazon shares surge in pre-market

Big pharma earnings
The world largest pharmaceutical company, Eli Lilly, reported lower Q3 sales and earnings than expected. The drugmaker blamed high manufacturing costs and fluctuating inventory levels as it races to keep up with demand for its blockbuster anti-obesity treatments. Sales of weight-loss drug Zepbound were $1.2bn, quite a bit below expectations of $1.6bn. Shares of Eli Lilly fell nearly 15% before recovering a little bit and dragged the shares of fellow weight-loss drugmaker, Novo Nordisk, lower as well. Novo Nordisk was one of the most traded instruments by Saxo Bank clients this week, with 70% of those taking advantage of the lower prices to open long positions. Novo will report Q3 earnings on Wednesday the 6th of November.
Eli Lilly Stock Plummets After Earnings Miss

Gold’s election trade
The US presidential election is set to be determined on Tuesday 5^th November. Gold’s record-breaking rise has come in tandem with rising odds of a Trump win, indicating the bull case is a hedge against a potential “Red Sweep”. The price reaction of a democratic win could see risk of a $100+ correction in gold. XAUUSD peaked near 2790 on Wednesday and is now off highs as polls even out. As of Friday, Saxo holders are near even split long vs short XAUUSD.
Will the US election result spark a gold correction?


Earnings season continues next week with the likes of Ferrari (Tues), Novo Nordisk (Wed), Arm Holdings (Wed), and AirBnB (Thurs). Both the Bank of England and Federal Reserve meet on Thursday. The markets are pricing in 24bps of cuts from the Fed and 20bps from BoE. But the real focus will be on the US election. Results will drip in over the night of the 5th and we should have a reasonable picture of things by Wednesday morning.