Key Stories from the past week: Earnings scares for two of Europe's giants

This week China remained a focal point with investors very attentive to any government announcements and economic data. Oil saw material price action on a developing situation in the Middle East. Earnings season continued with results from more US banks and big hitters ASML, LVMH, TSMC, Netflix, Rio Tinto and more. While economic data also kept markets busy assessing and adjusting expectations for various central banks rate policies. More below on this week’s key stories.

ASML shocks investors
ASML mistakenly published its earnings ahead of schedule surprising the market. The company reported order bookings far below estimates which saw the share price plummet 16% on 15^th October. Q3 bookings came in at €2.63bn vs €5.39bn estimate. The firm now sees 2025 net sales of €30bn-€35bn vs €35.94bn estimate and it was this soft guidance and further reports of US export curbs to China which exacerbated the downside move. The move was enough to weigh on semiconductor shares more generally although the sector finished the week on solid footing.
ASML earnings: What happened and what to do next

Soft demand for luxury
Shares in European luxury company LVMH fell as much as 7.5% on Wednesday after reporting sales and revenue that missed estimates. The share price has since regained most of that drop, but investors remain concerned about the soft demand for luxury, especially in China. At Saxo, Wednesday saw a decent jump in LVMH trades and trading clients, with a reasonable skew to the buy side.
Luxury's Last Growth Engine Has Stalled

ECB signals dovish
On 17^th October the ECB cut the deposit rate by 25bps as expected from 3.5% to 3.25% as expected in a unanimous vote while stating the disinflationary process "well on track". The euro was broadly weaker post-meeting as traders added to bets the European Central Bank will need a bumper rate cut in December, EURUSD saw its sharpest monthly decline since Sept 2023. Money markets are now pricing 25bps cuts by ECB at every policy meeting through to June and around 40% chance of a 50bps cut at the 12^th December meeting.
ECB accelerates pace of rate cuts, worried by weak economy

Gold's new all-time high
Ten months into 2024 and gold’s 30% YTD rally is one of the more commanding stories in commodities this year. Breaking all-time highs again, the precious metal broke 2700 on Friday driven heavily by haven demand, de-dollarization, and rate cuts. Although the technical picture is starting to look a little overbought. On Friday, Gold was the most active futures contract across the Saxo client base, while XAUUSD has the highest number of trades vs any currency pair over the last 3-month time frame.
How high can gold and silver rally?

Earning highlights for next week include SAP (Mon), GE Aerospace, Philip Morris, Texas instruments (Tues), Tesla, Coca-Cola, T-Mobile, Thermo Fisher, IBM, Lloyds (Wed), Union Pacific, Honeywell, Northrop Grumman, Equinor (Thurs), Sanofi (Fri).

Key Data releases seem to be Japan CPI (Tues) followed by European and US PMIs along with US Initial jobless claims (Thurs). The Bank of Canada’s policy meeting is held on Wednesday 23^rd October and there are a host of central bank policy members speaking throughout the week, this includes ECB President Lagarde, FOMC Member Harker, BoE governor Baily and German Buba president Nagel who are all speaking on Tuesday. Markets will also be looking out for significant commentary from the BRICS summit which is being held next week in Brazil.