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Daily Macro markets update 30/10/2024

Market Report. 

📈 Alphabet reported third-quarter earnings that beat analyst expectations on both revenue and earnings per share. Revenue grew 15% year-over-year to $88.27 billion, driven by strong growth in Google Cloud and YouTube advertising. Google Cloud revenue increased nearly 35% to $11.35 billion, reflecting strength in AI offerings for enterprise customers. YouTube advertising revenue of $8.92 billion beat estimates, showing the platform continues growing though at a slower pace than other options. Net income increased to $26.3 billion, up from $19.7 billion in the prior year.

📉 The Dow Jones Industrial Average fell 0.36% on Tuesday, while the S&P 500 gained 0.16% and the Nasdaq Composite, encouraged by google results, increased 0.78% to end at a record high. The majority of Asia-Pacific markets saw a decline on Wednesday. China’s CSI plummeted approximately 1.2%, while Hong Kong’s Hang Seng index sank nearly 1.4%. Following the announcement that the European Union has increased tariffs on Chinese EVs, Chinese EV stocks pulled down the indices.

🇩🇪 Germany’s GDP grew 0.2% quarter-on-quarter in Q3, avoiding a technical recession but remaining below pre-pandemic levels. However, structural weaknesses and high energy costs continue weighing on the economy alongside subdued exports and rising competition. The number of unemployed rose more than expected in October to 2.86 million, reflecting challenges in the labor market. Major automaker Volkswagen is in talks over potential mass layoffs and wage cuts amid difficult conditions. Inflation rose in key states in October, suggesting the national rate may increase from the prior month.

🇮🇹 Italy’s GDP stagnated in Q3 compared to the previous quarter, missing forecasts of 0.2% growth and casting doubts over full-year projections. On a year-on-year basis, GDP grew 0.4% in Q3, according to preliminary data. Domestic demand increased but was offset by weaker exports compared to imports. The service sector expanded while industry contracted sharply. Agriculture saw a slight decline. Prior full-year forecasts of around 1% growth are likely to be revised down.

🇪🇺 Eurozone GDP grew 0.4% in Q3, beating forecasts but showing fragility as industry remained in recession and consumption barely grew. Year-on-year growth was 0.9%, keeping the bloc on track for around 1% expansion in 2024, below potential. A potential Trump presidency threatens oversized tariffs, increasing costs and lowering trade. Escalating US-China tensions and the EU’s new electric vehicle tariffs on China also impact prospects. Growth has hovered near zero for two years as surging energy costs, due to the sanctions against Russian energy, and shifts in auto demand weigh on industry.

🚗 Elon Musk warned about this: China’s electric vehicle industry is crushing the competition. Xiaomi delivered more than 20,000 units of its SU7 model in October, surpassing 75,000 since March, and is already accepting orders for the SU7 Ultra. Analysts forecast 250,000 deliveries next year. Xpeng and Nio reached 100,000 units faster than Tesla, which took 12 years to do so. Tesla remains the juggernaut, though, with more than 1 million vehicles produced and a 10% rise in its stock this year.

🔧 The European Union has decided to impose tariffs of up to 45.3% on imported electric vehicles from China after concluding an anti-subsidy investigation. Tariff rates will range from 7.8% for Tesla to 35.3% for SAIC, on top of the existing 10% car import duty. The EU says China’s EV subsidies and excess production capacity amount to unfair competition threatening the EU industry. Beijing has criticized the “protectionist” move and launched retaliatory probes into EU imports, also challenging the measures at the WTO. European automakers face increasing competition from lower-cost Chinese EVs gaining market share in the EU. Germany opposed the tariffs due to potential Chinese retaliation particularly impacting its large car sector.

📊 Remember, today we will know the results of Microsoft and Meta. Tomorrow, Apple and Amazon. There will be volatility in the markets, be careful.

Market View:

📈 Yesterday, the Mini S&P 500 futures approached the 5900 point area, boosted by the results published by Google. However, they are currently retreating back towards the 5870 area. The Nasdaq 100 had even more upward momentum and quickly approached its all-time highs, coming within a few points of reaching levels near 20800 points, from where it is now retreating to 20707 points.

💵 The dollar is experiencing some volatility today, but remains strong against the euro, with the DXY index rising over the last few hours towards 104.50. EUR/USD regains the 1.08 area once again; in the last few hours it approached 1.0850, but has pulled back with heavy selling, but remains above 1.08.

🛢️ The spread between WTI and Brent crude oil remains, but the balance seems to have shifted to the bullish side and it is WTI that is approaching the Brent price. Crossing $69 per barrel will be key to completing this strategy. Gold has reached new all-time highs, trading at $2800 per ounce, and is slightly back towards $2790 at the moment. Bitcoin has also shown strong movements and in the last few hours reached $73600, from where it has retreated to the $71940 area.

🌍 Geopolitics:

📜 Israel’s Channel 12 News presents new documents and unpublished conversations showing Netanyahu’s efforts to sabotage any hostage deal.

☢️ President Putin ordered yesterday military to begin nuclear weapons drills.

🇫🇷 French General, former deputy chief of staff of NATO forces in Europe, Michel Yakovleff, has explained in France Tv what Trump’s role is: “Everything is obvious. He is an agent, guided and directed for 4 years who receives instructions remotely”, he said.

🇸🇰 The European Union understands that sanctions against Russia do not work, but cannot admit that they are wrong, says Robert Fico, the Slovak prime minister during an interview on 60 Minutes. He also added, Kiev’s refusal to receive the UN Secretary General is a very dangerous step in the current conflict.

🇵🇷 Yesterday, during a livestream with Voto Latino, broadcast on CNN, Biden said ‘the people of Puerto Rico are decent and honourable people, the only garbage I see out there are their (Trump) supporters’”. Trump was informed of this during a meeting in Pennsylvania, to which he responded: ‘It’s terrible… Hillary said you were deplorable, but garbage is worse…forgive him, he doesn’t know what he’s saying’.

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