Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Amazon earnings miss; NASDAQ 100 losing steam; IFO expectations showing turning point?
Peter Garnry
Chief Investment Strategist
Summary: In today's equity update we obviously talk about Amazon's Q3 earnings result last night that missed on EPS and AWS revenue growth while the real kicker was the Q4 revenue range guidance not even hitting consensus estimate. The shares were down 7% in extended trading and will have an impact on the NASDAQ 100 Index in today's session. This means more pressure on Alphabet, Apple and Facebook to deliver strong earnings next week if equity markets in the US are to print new highs. We also talk about today's IFO survey beating expectations and raising the hope for a turning point in the European economy although many macro indicators are still mixed.
The biggest event in equities happened last night after the US market close when Amazon reported Q3 earnings which missed on bottom line but delivered a small beat on revenue. But even worse, Amazon put forth Q4 revenue guidance with the high range below consensus estimate which turned out to be the kicker sending the shares down 7% in extended trading closing at 1,660 (red line on chart). Adding salt to the wound AWS Q3 revenue missed estimates as well indicating faster growth decline than anticipated by analysts. This could lead to a change in valuation for Amazon. One of the things mentioned in the Q3 report was rising logistics costs as the company is pushing out one-day shipping for Prime customers. There are two things likely at play here. Walmart is intensifying the competition for Amazon’s e-commerce business and Microsoft is becoming a formidable competitor in the cloud business. It was the second straight quarter of EPS missing estimates which is the first time since 2014.
Amazon is the third largest component in the NASDAQ 100 Index with a 9% weight so the index will most likely be weighed down by Amazon in today’s session. Even before Amazon’s earnings the index looked like it was losing steam. For NASDAQ 100 to print a new all-time high it requires strong earnings releases from Apple, Facebook and Alphabet, all reporting earnings next week, that combined represent a weight of 25% of the index.
Yesterday’s France PMI figures for October indicated that economic activity is stabilizing in Europe and potentially Europe is getting closer to a turning point. The German IFO survey today shows better than expected expectations in October at 91.5 vs est. 91.0 and up from 90.9 in September. Maybe the green shoots are real. However, our view is that macro indicators are still too mixed to be calling for a turning point, so our expectation is still for the global economy to slow down further over the coming months. The potential catalyst for European equities is more momentum in European new car registrations, which just recently turned positive y/y again, and better numbers out of Asia. If the global leading indicators from OECD turn higher then the global economy is entering the recovery phase and as our table below shows, then European and Emerging Market equities are the most likely winners. Especially Swedish equities look interesting given their pro-cyclical nature and the Riskbank’s decision yesterday to take rates to zero which could add further tailwind to SEK in top of gains from a change in the business cycle. For foreign investors, Swedish equities could become one of the best equity markets next year.
Next week is the busiest in the entire earnings season with around 730 companies reporting earnings in the universe we track. The table below shows the 30 largest companies on market value reporting earnings. The key earnings to watch are Alphabet, Amgen, Merck, Pfizer, GlaxoSmithKline, Apple, Facebook, Sanofi, Bristol-Myers, Novo Nordisk and AbbVie. These are the bellwethers of the technology and health care sectors, the two largest sectors in global equity markets, and thus are very important for equity market direction and the potential for new highs.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)