At the end of Thursday, the Dow Jones (US30) Index was down 0.90%. The S&P 500 Index (US500) was down 1.86%. The NASDAQ Technology Index (US100) closed lower by 2.44%. Disappointing earnings forecasts from major tech giants Microsoft (MSFT) and Meta (META) raised concerns about their high artificial intelligence costs and potential pressure on profits. Meta (-4.1%) and Microsoft (-6%) reported significant increases in artificial intelligence spending, dampening investor optimism and weighing on shares of other major tech companies, including Nvidia (-4.7%) and Amazon (-3.4%).
Today, the US Nonfarm Payrolls report will be released. Economists believe the labor market will add only 111,000 jobs in October, down significantly from 254,000 in September. Strikes by major companies (including Boeing) and weather-related disasters are cited as the reason for the drop. The unemployment rate is expected to remain at 4.1%, and average hourly earnings are expected to rise slightly from 3.9% to 4.0% year-over-year. The weak report should support stock indices and gold after a sell-off in previous sessions.
Equity markets in Europe were steadily declining on Thursday. Germany’s DAX (DE40) fell by 0.83%, France’s CAC 40 (FR40) closed down 1.05%, Spain’s IBEX 35 (ES35) lost 0.36%, and the UK’s FTSE 100 (UK100) closed down 0.61% yesterday. After Eurozone inflation unexpectedly rose to 2% from 1.7% and exceeded the forecast of 1.9%, investors are betting that the ECB will maintain a cautious stance on rate cuts, supported by solid economic growth. This is putting pressure on European indices. Weak corporate reports are also contributing to the negativity. TotalEnergies shares fell by 3.2% to their lowest level since February after reporting lower net income and sales in the third quarter. BNP Paribas shares fell by 4.8% as its results failed to impress investors, although the lender reaffirmed its 2024 growth trajectory. In contrast, Airbus rose by 0.3% after its earnings and revenue beat forecasts. Société Générale shares rose by 11.7% to their highest level since June after beating third-quarter earnings expectations.
WTI crude oil prices rose to $71 per barrel on Friday, rising for the third consecutive session as market attention shifted back to the Middle East conflict. The change was prompted by a report that Iran may be preparing to launch an attack on Israel from Iraq in the coming days, with sources indicating that the alleged attack could involve drones and ballistic missiles. Investors remained on edge, especially after Israel’s military chief warned that any further missile attacks would be followed by a “very hard” strike on Iran.
The US natural gas (XNG/USD) prices fell to below $3.75/mmbtu, down sharply from a four-month high of $3.1, amid falling risk premiums and evidence of ample domestic supply. Adding to this was data from Wood Mackenzie showing that US production rose to 103 bcf/d at the end of October, close to a record high. That matched a significant rise in inventories in the fourth week of the month when EIA data indicated a 78 billion cubic feet increase.
Asian markets were mostly down on Thursday. Japan’s Nikkei 225 (JP225) fell by 0.50%, China’s FTSE China A50 (CHA50) lost 0.50%, Hong Kong’s Hang Seng (HK50) decreased by 0.31% and Australia’s ASX 200 (AU200) was negative 1.04% for yesterday.
Hong Kong stocks rose by 1% on the first trading day of November, reversing losses from the previous two sessions amid gains across sectors. Traders welcomed private survey data showing that China’s manufacturing sector returned to growth in October after a series of stimulus measures taken by Beijing in late September, which coincided with official data.
In Australia, mixed economic data clouded the Reserve Bank of Australia’s (RBA) policy outlook. Producer prices rose more than expected in the third quarter, while retail sales slowed significantly in September. In addition, earlier data showed that the annual average consumer price index, the RBA’s preferred measure of inflation, fell only slightly to 3/5% in the third quarter, remaining above the target range of 2%-3%. Markets largely expect the RBA to keep rates unchanged at 4.35% during its upcoming meeting next week.
Indonesia’s annual inflation rate fell to 1.71% in October 2024, the lowest since October 2021, while remaining within the central bank’s target range of 1.5% to 3.5%. Core inflation hit a 15-month high of 2.21% from September’s 2.09%.
