Mega-Cap Earnings Disappoint But Markets Now Await The US Election

Okay, very good morning to you. Hope you're all doing well. It is Friday, 30th of October. A quick word before we begin, final reminder, the US election preview. I've started putting together a couple of slides already and got some really, I think, useful things and pointers for the night ahead next week to trade the entire US election. So I'm going to be going through that all live this evening, 6 PM London time, for an hour. Going to be joined by members of the rest of the team as well as some special guests, and we'll be giving our latest insight as to trading the night, the kind of chronological order, things you need to look out for, the key battlegrounds, the timings, all of that stuff. We're going to go into greater detail. So all you need to do is go on to AmplifiedTrading.com/US-election-preview and you can register there to attend. But let's get straight into it. Let's talk about what's going on on the charts this morning. And certainly aftermarket earnings were really a major feature, uh, and that was because we had all of the large-cap mega tech names reporting, uh, cumulatively over 36% of the NASDAQ 100 given just 4 companies alone, that being Apple, Alphabet, Amazon, and Facebook. So we'll talk about that a little bit in a moment. As you can see though, the NASDAQ future has dipped as Europe early have come into market, and that follows the dip that we saw in aftermarket trade last night. You can see here in the center chart in the NASDAQ 100 future. This came though despite a generally positive close. This price activity here, if I just zoom in on the NASDAQ, we did rally, uh, really post the ECB event. Um, I guess overall Christine Lagarde hinting toward more policy action is forthcoming in December. And US equities as well had been already quite low in the course of the last couple of sessions, and so actually rallied up into the close. It was a positive one. NASDAQ was up just shy of nearly 1.9%, the S&P gains of 1.2%, the Dow up about half a percent. But then those aftermarket earnings came out And that bumped the futures back down. As you can see here now, in the NASDAQ at least, we are trading below where we were in yesterday's session at the most lowest point. In fact, that was Wednesday's session. So at the moment, stock futures seem negative. But a catch-up for the DAX future, I guess. Now a bit of support turned resistance. Now we've broken down through following that futures move. The double bottom that was Wednesday and Thursday session low, and that S1 corresponding saw a very quick run through down to the S2. Very reminiscent then of how the product like the DAX tends to trade in a momentum-based fashion at those early hours in the futures market. We've come back up, so a key area of resistance now. Any recovery there at around 11,444 in the DAX. Other asset classes what's going on. The DXY has seen a little bit of seesaw price action so far this morning but is broadly flat, and it's largely reflected in both major currency pairs— EURUSD top left and cable broadly flat for the moment. Otherwise, elsewhere in the US, 10-year up, grinding up over in the Asia-Pacific session, just with some of the weakness overall seen and observed in the stock futures. And also in the Asian Pacific equity markets, which generally followed suit then, not from the higher close on Wall Street, but the general soured sentiment post those tech earnings. So just lifting the 10-year a little bit. Um, the Bund coming off a little bit in fixed income, uh, just after we failed to retest up and around the double top from Wednesday's, Thursday's price action, originally around the the main peak of the ECB meeting. And then crude oil, we are down $0.26, trading below the $36 handle. Been a real tough week and a couple of weeks actually for crude oil as the world perception, I guess, of the global economic recovery with the worsening situation with COVID continues to be factored into prices as well. A lot of the refining capacity that was taken offline in the likes of the Gulf of Mexico Now that Zeta has passed, we're expecting more of that to come back online as the area of Louisiana gets back on its feet again after severe power disruptions due to that Category 2 hurricane earlier in the week. So that's, that's pretty much the overall sentiment of things. I'd say it doesn't strike me as overtly bullish or bearish. I think I feel fairly neutral just given the chart setup and the news flow. in play. I'm going to talk about this mega-cap earnings in a bit more detail in a second, but stock futures generally a little bit lower on the back of that. There are some levels of which, such as like the S&P, if we continue to pull back here after some of that initial future selling pressure on the European entrance, there could well be some decent resistance seen up and around what was some of these prior sessions, uh, support levels. Turn now resistance. So then in the S&P, around 3254s I'd be keeping an eye on. All right, let's get into the headlines then. So talking of the mega-cap tech disappointing market where nothing's good enough, I think that's a good title actually. Um, all of these companies actually beat on their top and bottom lines. However, the market is just the bar is just so high for these, these type of companies to outperform these exceedingly high expectations. They're almost doomed to disappoint. Definitely, I think it needs to be taken into context. I mean, a lot of these companies have, have just rocketed through the new pandemic era, which has really defined most of 2020. So a couple of percentage points coming off the top doesn't really, I think, cause for concern in terms of an individual stock perspective. But let me just run you through each company from a top level and the numbers and metrics of why their shares moved. The one thing I did post on Twitter last night, so you can see the types of movements that we were seeing. If I just bring it up here, Google was the real standout. And this is actually a little bit, if I remember from memory, different from what we had from last quarter where Google was a little bit of a disappointment and all the others outperformed. Performed. We've got the flip reverse this time, and it's come with Google shares were up almost 9% after market, and that was because they, they returned to growth in the third quarter after a decline that was seen in the previous period, fueled predominantly by digital advertising, which I don't think comes as too much of a surprise from a logical perspective as the com— as the country's all around the world, particularly in the developed world, continue to find their feet in the new kind of restricted, uh, not fully returned mobility state of play. Digital advertising, as you can imagine, is one of the key avenues of which all types of companies can pursue. So Alphabet really benefiting from the back of that, up around 9%. Of the other companies, we had Apple So Apple shares were down about 4.5%, uh, after market. Uh, their results topped Wall Street estimates after record sales of Macs and services made up for the delayed iPhone 12 launch. But its shares dropped almost 5% then after the firm revealed iPhone revenue missed the average of analysts' estimates. Going forward though, I'd say over the period ahead, 3-6 months, I do feel like the iPhone 12 will be a success, uh, just given the very basic understanding of the fact that refresh rates are coming up for renewal on some of these extended long contracts from when the X was released, given how expensive a normal iPhone is now. And so I'd be expecting then that normal upgrade process to really boost those numbers going forward. So down 4.5% though. uh, individually. The next company then was Amazon. They were down about 1.25% after market. They said they planned to spend more than analysts estimated related to COVID-19. Otherwise, the online retailer projected a steep jump in sales in the current quarter. It actually exceeded expectations, indicating it expects the surge in online shopping during the pandemic to extend through the holiday season. And then finally, Facebook was little changed. They were down about a percent, uh, even after sales topped estimates, where it warned of continued uncertainty due to COVID next year and said plans to spend heavily on employees and new technologies. So as I said, I don't think there's any room for concern here that this is a, a real massive disappointment, even though a stock change of 4.5% in nominal terms is actually quite a lot in terms of market capitalization for a company like Apple, I think it does need to be taken into context. And also the fact that forward-looking, I think individually for them, they've got, um, probably more brighter prospects with the likes of the iPhone 12 ready to kick off. So yeah, it did move markets last night. Do I think that that's like a key reason to just get short the market this morning? Not for me, I'm afraid. The other thing then we had yesterday was the ECB. Of course, I'm only going to touch upon this because there were some ECB sources which came out yesterday, and I thought actually that was quite telling. I did feel like Christine Lagarde, as good as she, she can be— I know she gets highly criticized, she's certainly a little bit more— she knows that a lot of people, I don't think, like her, particularly in the mainstream media. She she's a bit bitey in the press conference compared to, say, Mario Draghi ever was. But what I thought was quite interesting was the fact that ECB sources came out last night, and that says to me that the ECB felt that Christine Lagarde didn't really fully convey what they wanted to say. I think she tried to reemphasize it during the press conference a number of times, the phrase she said to recalibrate monetary support by December at the latest. And that phrase widely understood then to mean that's the key hint towards more, um, top-up to the, the PEP coming in December. But the sources came out and they stated that policymakers debated tools for the next stimulus package on Thursday, in which some favored more bond purchases under the PEP, some preferred targeted long-term refinancing operation adjustments and others a mix of both. So that sounds a little bit more supportive than perhaps what she was trying to hint towards yesterday. So the fact that they felt they needed to come out and do that, I thought, was, was quite, quite telling. Overall though, has the market responded to that? Not really. The euro is still down from where it was, and the DAX is still looking a little bit precarious given what a tough week the German stock market has had, really initiated by that, that large-cap SAP getting hammered back at the beginning of the week. And as I said, so it's got a decent level of resistance at its R— or it's S1, which was Wednesday, Thursday's range low as well. To keep an eye on the futures market. Moving on then to elections. Obviously, the, the clock is ticking now. And as I said, I'm going to do a full what you need to know guide for the night. I'm going to do that today at 6:00 PM. You just need to register for the event in the link below if you're watching this on YouTube. But a couple of things I wanted to touch upon. One was Texas. And the reason why I wanted to look at the individual polls pertaining to Texas was that that area reported its biggest one-day jump in coronavirus deaths in 3 weeks yesterday. Do you think that's worth keeping an eye on? Because Texas, after California, is the second largest Electoral College state by votes, accounting for 38. So this particularly important area, it definitely leans towards Trump. There's only one poll of late that has gone the way of Biden. Trump is up 2.3 points. But as you would have come to understand, um, the worse a COVID situation is experienced in the state, the more that tends to go against the president, given that he's seen as chiefly responsible for the management of that, even though it's at a state government level. The other area I'm quite interested in, and again, this is all about focusing on battlegrounds, another key one is Ohio. Now, in Ohio Trump and Biden are tied. So as you can see here, it's flipping depending on who's running the poll between either candidate. Now, Ohio, Indiana reported their biggest jumps in infections also yesterday, and Ohio is the 7th largest Electoral College with 18 votes. That then leads us on to the top battleground states, and this includes then Wisconsin, Michigan, Pennsylvania, North Carolina, Florida, and Arizona. And as you can see, Biden's lead now is just 3.2. Uh, that continues to narrow, as you can see here from these, um, converging blue and red lines. So from where we were 15 days ago, um, there was a decent kind of 6-point lead or so, almost double of what it is at the moment now. Going into the final stretch. And it's really Trump that's been making the headway as we go into that, that event. Now, over the weekend, as you would expect, the campaigning really ramps up another gear. Trump is scheduled to campaign on Friday, today, in Minnesota, Wisconsin, and Michigan, while Biden has planned stops in Wisconsin and Minnesota as well as Iowa as well. So again, all focused in really on these key states that will likely define the outcome. The final thing I wanted to mention was obviously what has been one of the main focal points of the week, which is, you know, mega-cap earnings aside, just leaving out the GDP number from the US for a moment, just leaving as well the ECB, the main thing really has been COVID-19. The fact that this situation continues to deteriorate, and also then the subsequent government actions to try to control this and the economic implications that that will have on their local economies. And a couple of charts here I just wanted to share. This is looking at COVID-19 death rates rising again across Europe, but in comparison to what we saw in, let's say, the first wave, the trajectory rates are more shallow, and I think that's understandable. I think before we were behind the curve trying to deal with this in regard to the speed of implementation of lockdown, the understanding of the virus, the transmission, the education of the public, the infrastructure, the testing, so on and so forth. So I think that is to be expected. A normal pandemic wave, whether it— you're looking back to SARS or Ebola, does tend to go in this pattern of first wave is bigger and it gets proportionally smaller, but you can expect several waves thereafter until actually a vaccine is implemented and distributed, or otherwise enough time goes out where immunity takes place. But the other thing here then is looking at the UK, and many people looking at the fact that the UK really— it's not a matter of if but when they go into more stringent lockdown to follow counterparties that have been seen in mainland Europe. And this is looking at the number of people in hospital with coronavirus is rising exponentially and is already approaching its March peak in many places. And again, I do think that this will be a bit of a drag on sterling. Sterling has already come down a little bit this week, just given some of the renewed dollar strength that we've had with some of the general kind of movement elsewhere with lower equities. But I do think that this is coming, particularly in the north. Again, is where the more trouble spots reside. In the northwest, we're pretty much 82% back to around the number of hospitalizations that we were seeing back towards that initial first peak. London's still pretty low, and, and so is the south generally. Southeast 22%, southwest 30%. 35, but it's mainly Northwest, Northeastern Yorkshire that at the moment are meaning that currently England is doubling every 14 days their hospitalization rates. So one would think then to get ahead of this, given the kind of delayed period because of the incubation time for then the virus symptoms to appear being around 7 to 14 days, that some kind of action from the UK really needs to happen soon to get this virus under control. The other thing is then you can look at hospital admissions in regard to age, and as you can imagine, as was the case before, it's definitely the older demographic which is being impacted the most, and those numbers are starting to creep up, up towards where we were back in kind of May time, which if you remember was when we were coming out the early phases of just getting over the worst that was observed in really late March, April. So something to just keep an eye on as we go through the weekend on that, on the press coverage. Again, very quiet on the Brexit front, as you would imagine. That's kind of a side issue because the major deadlines for that are not really coming until mid-November, as per source comments earlier this week. And so I'm not really looking out for too much on any type of movement on that discussion. Really, I'd say short-term story sterling focus fundamentally for direction will largely be dependent not only on dollar fluctuation, of course, next week with the election, but also about will they— and I believe that they will— go into more stringent national lockdown in the UK and how much impact that's going to have then to weigh on the sterling currency. Quick look at the, the overall calendar for today. We've already had the German data come out, so let me just get you up to speed. I don't think that the— let's have a look on my headline scroll. I can't see them actually have posted, the guys at News Squawk, the GDP numbers as yet, but they've got the German retail sales numbers. That's of really little consequence. Market doesn't really care for German retail sales. Just bear with me one second. Uh, it doesn't look like the, the GDP numbers in Germany, uh, were scheduled, so perhaps this is just a dated calendar. So we'll move on. Looking further forward then into the HICP flash inflation reading coming out of the eurozone, could be one to keep an eye on if you're trading European assets. You've got the flash preliminary GDP number for Q3 as well, where we are looking for still negative growth, but albeit almost half of that of what we saw in the prior quarter. So staging this, this rebound that we're seeing, reminiscent of kind of what we had in the US, but perhaps not as powerful yesterday. And then the US session, we get personal income, you've got PCE data, Chicago PMI as well this afternoon, and then the final October University of Michigan report. From a speaker perspective, you've got ECB's Di Guindos. From an earnings perspective, pre-market in the US, Exxon Chevron are probably the biggies to look out for. And then at the weekend, do be aware you've got the manufacturing, non-manufacturing PMI numbers coming out as well from China. But I'll keep you updated on that on my Twitter feed and in the Amplify Live Discord channel. All right, that is it. Going to let you get on. Hopefully I will see you, if not throughout the day, then later on this evening. Don't forget to register for the event. We'll be sharing the link across all of the the Amplify social media. So I look forward to it. All right, if I don't speak to you then, then take care and have a great weekend.