Macro:

Big Tech investors weren’t disappointed on Tuesday, as Alphabet announced better than expected results after the bell. The Google’s parent Alphabet saw its revenue rise 15% from the same time last year, ad revenue grew more than anticipated and more importantly, Google Cloud printed a solid 35% growth compared to the same time last year. The division earned $11.4 billion last quarter, comfortably above the $10.5bn revenue pencilled in by analysts. Google was up by around 1.66% yesterday before the earnings and rallied nearly 6% after the bell. It could have performed better if not for the serious regulatory issues it’s facing, including an antitrust trial questioning its monopolistic position. The trial could require the company to divest major assets like Android, Google Play, or Chrome. Rough. But anyhow, Alphabet’s latest beat serves as a fresh rebuttal to investors who fear a slowdown in AI demand.

And indeed, news at AMD were not enchanting. One of Nvidia’s biggest rivals gave a lacklustre revenue forecast for the current quarter, a message that raised worries about potentially slowing AI sales. Today, it’s Microsoft and Meta’s turn to reveal how well they did last quarter. The earnings announcements will continue with Apple and Amazon on Thursday – and Exxon and Chevron on Friday.

But the latter may be less enthusiastic than the tech peers. BP announced its quarterly results yesterday and they were mixed. The company reported the slowest profit growth in nearly four years due to weak oil prices. That was better than expected and topped with a $1.75billion buyback program. Alas, the company warned that it could change their strategy of buying back $1.75bn worth of shares every three months due to weak oil and gas prices. The shares slumped 5%.

Speaking of oil prices, the barrel of US crude remained under a selling pressure yesterday, and is slightly better bid this morning on the back of a small decline in US oil inventories (API) but trend and momentum indicators remain tilted to the downside and strong resistance is eyed near the $70pb psychological level, which also matches the minor 23.6% Fibonacci retracement on July to September selloff. The fading geopolitical tensions that were supportive of the bulls until this week have left their place to Chinese growth worries and supply/demand discussions – which both are negative for oil prices. In fact, World Bank thinks that global oil supply will exceed demand by 1.2mbpd next year. That makes me wonder whether OPEC might step in to put a floor under a more severe selloff.

Data

On the data front, the first glimpse at the US jobs numbers were soothing for the Federal Reserve (Fed) doves. The JOLTS data released yesterday showed that job openings in the US fell to their lowest levels since 2021, and Atlanta Fed’s GDP Now forecast dived below 3%. As such, the US 2-year yield is now testing the 4% level to the downside, and the US 10-year yield consolidated near 4.25%. The US dollar index eased after hitting a fresh high since summer.

Today, all eyes are on the ADP report. Analysts expect that the US economy may have added around 110K new private jobs in October. A softer-than-expected data could further back the Fed doves and weigh on the US dollar, whereas a strong-looking data will probably do little to erode the rate cut bets until we have more clarity from Thursday’s GDP and core PCE figures and Friday’s official jobs report.

But before, we have a mountain of figures to digest from elsewhere. Earlier today, Australia revealed higher-than-expected inflation in the Q3. But the September figure was lower than pencilled in by analysts and kept the Aussie bears in charge of the market. The AUDUSD continued to advance toward the 65 cents level, pressured by a broadly stronger US dollar and softer iron ore prices on worries that the Chinese stimulus measures won’t be enough to stimulate desired growth and support iron ore prices.

Here in Europe, the major Eurozone countries will be revealing their October preliminary CPI numbers today – expected to show an uptick in headline figures for October. If that’s the case, we could see the euro bears give back field and let the EURUSD rebound after a 4 figure selloff since the end of September. First resistance is eyed at 1.0870, near the minor 23.6% Fibonacci retracement on that selloff and the 200-DMA, and the key resistance sits at 1.0935, the major 38.2% Fibonacci retracement. These resistances could be seriously challenged in case of surprisingly weak jobs data from the US this week.

Elsewhere, Cable is testing the 1.30 level ahead of today’s budget announcement, amid hopes that Rachel Reeves will handle the announcement of the largest tax increase in recent times with enough tact, and the USDJPY is consolidating above 153 ahead of tomorrow’s Bank of Japan (BoJ) decision, which is expected to bring nothing new to the table, if not a pledge of more support for the economy amid rising political uncertainties.

Bitcoin reached the highest levels since March on the back of rising odds for a Trump win – which is also sending Trump’s Media and Technology Group shares skyrocketing since five weeks. The prediction markets assess more than 60% chance for a Trump win at next week’s presidential election, while the latest CNN poll gives 47% chance of winning to both candidates, making the Trump-friendly assets’ gains vulnerable.

Source: Reuters