FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews
42 567.79

Equities back in the meat grinder after big tech earnings

30 October 2020

Global markets breathed a sigh of relief on Thursday as risk appetite returned to some degree, but it was not meant to last, with the meltdown in equities resuming today on the heels of a barrage of earnings by the world’s leading tech firms. Apple, Amazon, and Facebook all reported blockbuster top and bottom lines that blew consensus expectations out of the water, and yet, their shares crumbled in after-hours trading.

This is the main element that is dragging all of Wall Street down today as there hasn’t been any other noteworthy news, with futures suggesting a 1.5% loss for the S&P 500 at the open, more than wiping out yesterday’s 1.2% rebound. Given their enormous market capitalization, these tech titans have a tremendous weight in indices like the S&P, so they can drag the entire market down if they sell off.

Frankly, that the world’s biggest companies can report blowout earnings and still crash is a massive red flag for what lies ahead, as it implies that an incredible amount of optimism has already been priced in. Microsoft reported earlier this week and met the exact same fate.

In the bigger picture, this softness may also reflect some deleveraging by big players ahead of the weekend, as the overall environment is quite unstable with virus numbers soaring and the US election looming, making some liquidation of ‘risk’ quite prudent. Indeed, many investors may also prefer to raise cash and sit on some ‘dry powder’ for now, to capitalize on any bargains that arise from the election.

FX market doing its own thing, euro weakness prevails

The currency market is a different story though, with the dollar climbing alongside stocks yesterday, and barely rising today even as equities crumble, which is a strange divergence. The greenback is usually a mirror opposite of the stock market nowadays, because of its safe-haven qualities.

This divergence may come down to the euro being exceptionally weak. The single currency fell across the board yesterday, helping to prop up the dollar, after the ECB sent the clearest signals ever that more stimulus is coming. President Lagarde offered a downbeat assessment of the virus-stricken economy and stated that the ECB “will” recalibrate its instruments in December, something that was unanimously agreed.

This argues for limited upside in euro/dollar going forward, though admittedly, the pair could still shoot higher next week on a landslide Biden election victory as speculation for king-sized US stimulus packages ramps up. With the same logic though, the pair could also sink lower on a contested election. In other words, the US election is far more important than the ECB for euro/dollar’s fortunes over the next few days.

Today: Eurozone inflation and GDP, final election polls

The highlights today are the Eurozone’s preliminary inflation stats for October and third-quarter GDP. The spotlight will be on inflation, as the GDP print may already be considered outdated given how dramatically infections have surged in Q4. The bloc’s core inflation rate hit a record low in September and any more weakness today could fuel expectations for the ECB to come out with a bazooka at its next meeting, instead of a toy gun.

In energy markets, crude oil remains under tremendous pressure as the lockdowns in Europe suppress the demand side of the equation and the increasing production in Libya and elsewhere dampen the supply side.

Finally, the last batch of US election polls should be dripping in. Biden has a much bigger lead than Clinton did against Trump at this point, both nationwide and in most battleground states, even if the gap has narrowed lately. Election polls were spectacularly wrong in 2016, but pollsters have since changed their methodology to adjust for that error, so they may prove more accurate this time.



Trading the BoE and FOMC meetings
Trading the BoE and FOMC meetings

The FOMC and the BoE meeting are firmly in our sights now, and positions and exposures will need to be managed accordingly. Certainly, the FOMC meeting could...

22 Sep 2021

Stocks bounce back after Evergrande panic
Stocks bounce back after Evergrande panic

As investors increasingly liken the Evergrande crisis with the collapse of the Lehman Brothers in 2008, they remain in the dark about the Chinese government's intentions...

21 Sep 2021

Oil Was Put on Hold
Oil Was Put on Hold

The oil price is falling after rallying before. Early in another September week, Brent is trading at $74.50 and has a lot of room to correct. The strong greenback...

20 Sep 2021

Dollar starts Fed week on front foot, stocks hit by Evergrande fallout
Dollar starts Fed week on front foot, stocks hit by Evergrande fallout

Fears of global contagion from the worsening crisis in China's property sector continued to weigh heavily on sentiment at the start of trading on Monday as markets...

20 Sep 2021

Dollar jumps, gold slumps, stocks nervous
Dollar jumps, gold slumps, stocks nervous

Worries that the US consumer is rolling over were dealt a major blow yesterday after the nation’s retail sales for August overpowered some gloomy forecasts. The retail sales...

17 Sep 2021

Energy is the play: how we get to $100 crude
Energy is the play: how we get to $100 crude

Natural gas futures in Europe and the UK are flying, while our natural gas (NG) CFD (the underlying is traded on the NYMEX) pushed over $5.60 and into 7-year highs...

16 Sep 2021

Forex Forecasts

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.