Morning wrap (01.11.2024)

Pacific and Asian indexes are experiencing a mixed session and are not following the clear declines seen on the main U.S. indices yesterday. Chinese indexes are gaining between 0.50% and 1.00%, the Singapore SG20cash index is down 0.02%, the Japanese JP225 index is down 0.65%, and the Australian AU200.cash index is up 0.20%.

U.S. indices ended the session with declines between 1.60% and 2.00%. The catalyst for the declines included disappointing forecasts in reports from companies like Microsoft (MSFT.US) and Meta Platforms (META.US) and uncertainty surrounding the upcoming presidential elections in the United States.

It appears that market sentiment is shifting from one in which anything related to artificial intelligence (AI) drove gains to one where investors are actually paying attention to profitability and the capital-intensive investments required in AI.

The largest declines were observed among companies in the tech and semiconductor sectors. The biggest drops were seen in companies like SMCI (-12%), ARM (-8.50%), Microsoft (-6.00%), and Nvidia (-4.80%).

Apple also lost 1.90% in after-hours trading following the release of its quarterly results. Despite the negative reaction from investors, the tech giant’s results were record-breaking and exceeded analyst expectations, with adjusted earnings per share of $1.64 and a new revenue record of $94.93 billion. The post-session sell-off of Apple stock only confirms the negative sentiment and high uncertainty prevailing in the market.

Meanwhile, Amazon (AMZN.US) gained more than 6.00% in after-hours trading. The report exceeded expectations for both revenue and earnings per share, although the AWS segment slightly underperformed estimates. Net revenue grew by 11% year over year to $158.88 billion, surpassing the upper end of the company’s initial forecast. Earnings per share increased to $1.43 (+52% compared to Q3 2023: $0.94). AWS segment revenue rose to $27.45 billion, repeating a 19% increase for the second consecutive quarter.

Today, investors' attention will focus primarily on the NFP (Non-Farm Payroll) report from the U.S. labor market. It is currently the most crucial report, closely watched by Fed officials ahead of next week’s interest rate decision.

The final PMI index reading for Japan's manufacturing sector from au Jibun Bank fell to 49.2 in October from 49.7 in September. It was a slight increase from the preliminary reading of 49.0. However, the index remained below the 50.0 threshold that separates expansion from contraction for the fourth consecutive month.

Activity in China’s manufacturing sector rebounded in October following a decline the previous month, with production and new orders growing at the fastest pace since June. The PMI index stood at 50.3 compared to 49.3 in September and expectations of 49.6.

Gold is up 0.15% to $2,750 per ounce, slightly rebounding after yesterday's deeper sell-off. Silver is down 0.05% to $32.60.

Oil is up 0.07%, returning above $70 per barrel to $70.70. Oil prices are rising despite the sell-off in U.S. stocks following reports that Iran is preparing to attack Israel from Iraq in the coming days.

Bitcoin, after testing its historical ATH on Wednesday, saw a steep decline yesterday, and today the sell-off continues (-1.60%). Bitcoin has already lost more than 6.00% from its peak of over $73,000, dropping to $69,000. Even larger declines, over 8%, have been noted for Ethereum. Today, ETH is down 1.00% to $2,490.