At the time, both asset classes recorded negative returns in Europe. Inflation in the region returned to 2 percent in October. annual growth and negatively exceeded analysts’ expectations, which provides arguments for the ECB to take its time in reducing interest rates. Shares in major European companies fell after third-quarter results, with French luxury goods group LVMH missing the growth it wanted from Asian markets and a Dutch semiconductor chip maker falling the most since its IPO after new orders in the third quarter came in half of forecasts.
Critical quarterly results
A few days before the end of October, almost half of the companies in the US “S&P 500” stock index announced their third quarter financial results. So far, 76 percent of the companies that have announced the index. recorded a higher profit than forecast. This indicator is slightly lower than a year ago, when 79 percent of companies exceeded expectations, but higher than the average of the last ten years (75%).
One of the biggest positive reactions to the results was the US electric car and “clean” energy company Tesla. The company’s shares had their best day in 11 years after the results, beating profit forecasts and reporting a 20-30% gain. car sales growth next year. The company’s income grew by 8 percent during the year, helped by as much as 52 percent. growing energy generation and storage segment.
Another US “big seven” company – the leader in the communications sector “Meta Platforms” – received a negative market reaction, despite the growth that exceeded expectations in the last quarter. The company’s income grew by 19 percent during the year, while the profit increased by a little more than a third. CEO Mark Zuckerberg hailed advances in artificial intelligence (AI) across all business segments and promised to continue making significant investments, but did not provide specific numbers for the coming year. It is the fear of excessive capital expenditure and the risk of falling profit margins that has fueled anxiety among market participants.
Taiwan Semiconductor Manufacturing Co (TSMC), a key emerging market company, also announced its latest quarterly results. The world’s largest semiconductor chip maker calmed passions over chip demand, with revenue growing 36 percent. per year due to extremely strong demand in the production of smart devices and AI-related chips. TSMC will also increase capital spending to reduce China’s geopolitical risks – aside from opening its first factory in Japan this year, the company will increase its planned $65 billion USD expansion through three new plants in Arizona, USA.
A look at raw materials
Apart from the asset classes of stocks and bonds, October brought significant changes in the price dynamics of the main commodities. First of all, the focus is on oil, whose prices contribute both to geopolitical decisions and shape consumer inflation expectations.
Oil prices rebounded from this year’s lows earlier in the month amid rising tensions between Israel and Iran. Along with slightly lower US reserves, the price of Brent oil exceeded 81 US dollars per barrel. However, after Iran did not respond to the Israeli attacks, the sentiment subsided a bit. The lack of China’s new fiscal package, as well as slightly falling consumption forecasts, also contributed to the negative sentiment. The oil cartel OPEC+ has also not yet reacted and postponed the long-planned increase in oil production.
In contrast to black gold, oil, real gold rose more than 5 percent in October. and recorded new highs, approaching the price of 2,800 US dollars per ounce. The bullion benefited from worries about both the US presidential election and geopolitical risks, as well as the underperformance of bonds. Although historically gold has not always served as a hedge against inflation, this narrative is only getting stronger against the backdrop of growing deficits in the West. At the same time, in the east, the BRICS bloc of countries continues to seek to increase independence from the United States, so gold remains the simplest means of replacing the available reserves from the US dollar.
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#Justas #Daujotas #October #review #happening #financial #markets #Business
**Interview with Björn Jesch: Market Outlook and Recent Trends**
**Interviewer:** Thank you for joining us, Björn. Let’s dive right into the latest developments in international equity markets. How would you summarize the current outlook for European stocks, especially in light of recent economic data?
**Björn Jesch:** Thank you for having me. The current outlook for European stocks is cautiously optimistic despite some headwinds. Recent inflation figures in Europe have returned to 2%, which may impact the European Central Bank’s (ECB) decisions regarding interest rates. While major European companies have reported weaker growth, there are still promising opportunities, particularly as the market adjusts to geopolitical risks.
**Interviewer:** You mentioned geopolitical risks. Can you elaborate on how these factors are influencing market sentiment, particularly in relation to specific companies?
**Björn Jesch:** Absolutely. The ongoing geopolitical tensions, especially in the Middle East, are causing fluctuations in commodities like oil, which directly impacts consumer prices and expectations. Notably, companies like LVMH have experienced significant declines after reporting lagging sales in Asian markets, revealing the interconnectedness of geopolitics and market performance.
**Interviewer:** Turning to the US market, it’s interesting to see that a majority of companies in the S&P 500 have surpassed profit forecasts. What does this say about the resilience of the US economy?
**Björn Jesch:** The earnings reports are indeed promising. With 76% of S&P 500 companies exceeding expectations, it reflects a resilient economy; however, it’s slightly down from last year’s figures. Companies like Tesla have shown remarkable growth, with substantial gains in both income and sales. Yet, not all sectors are thriving—Meta Platforms, for instance, faced backlash despite positive growth due to concerns over capital expenditure.
**Interviewer:** Speaking of Meta, do you think the focus on artificial intelligence and capital expenditure will shape market trends going forward?
**Björn Jesch:** Yes, definitely. The focus on AI is transforming numerous industries, but this also brings a level of uncertainty regarding capital investments. While long-term growth potential is immense, short-term market reactions are often influenced by fears of unsustainable spending and declining profit margins. Companies that can strategically navigate these waters will likely do well.
**Interviewer:** can we discuss the commodity market, particularly oil prices? What should investors be watching for in the coming months?
**Björn Jesch:** Investors should keep a close eye on oil prices, as they significantly affect inflation and geopolitical decision-making. Recently, we saw Brent crude rebound amid rising tensions in the Middle East, and any further escalations could drive prices higher. It’s crucial for investors to remain informed on these developments as they can have broad implications across various sectors.
**Interviewer:** Thank you, Björn, for shedding light on these important market trends. Your insights are invaluable as we navigate these complex economic landscapes.
**Björn Jesch:** Thank you for having me! It’s always a pleasure to discuss these crucial topics.
