Big Tech report Q3 results

MARKETS

The US dollar held onto its gains this week despite a generally brighter tone in markets. US Q3 GDP came in ahead of expectations bolstering demand for the buck as it kept its haven appeal. EUR/USD dropped to a 1-month low while AUD/USD touched the key 0.70 level for the first time since July.

It was another down day for precious metals with gold back down at $1850 per oz, which has acted as support since the sharp drop in August. Oil dropped to a 4-month low with WTI briefly falling below $35 per barrel.

Wall Street finished with a flourish with major benchmarks rising over 1% over the economic optimism offered by the GDP positive surprise. Asian and European markets finished flat after sharp declines this week. Earnings have been topping estimates in Europe but the COVID 2nd wave is dominating investor sentiment.
 

Dovish ECB 

The European Central Bank kept interest rates unchanged at its meeting Thursday but dropped strong hints that more will be done in December. Many Eurozone countries are in deflation and rising COVID infections have caused governments to lockdown economies, threatening the economic recovery. The central bank said work had begun to “recalibrate its instruments”. The recalibration probably means more asset purchases – it has spent half of the 1.35 trillion Euros already allocated to buying European bonds.
 

Tech’s Q3

Apple, Amazon, Alphabet and Facebook universally beat top and bottom line estimates (profits and sales) – normally something associated with a good reaction to earnings. In the case of Alphabet the beat was so big that the stock looks set for double digit gains when it opens on Friday. However for the others it was the lack of guidance for the current quarter that has investors worried. 

Apple just released its all-important iPhone 12 – its first 5G phone – but has offered no estimates on sales. Amazon said it expected $4biilion in extra costs because of COVID in Q4, which could overwhelm an uncertain holiday sales period. Facebook reported a drop in US monthly active users but its advertising revenues seemed unaffected by boycott campaigns.