Amazon crashed the Nasdaq. The US GDP rises after 2 quarters of decline

The US stock indices traded yesterday without a single trend. At the close of the stock market yesterday, the Dow Jones Index (US30) increased by 0.61%, while the S&P 500 Index (US500) lost 0.61%. The NASDAQ Technology Index (US100) fell by 1.63% on Thursday.

After two consecutive quarters of negative GDP growth, the US economy grew by 2.6% in the third quarter. However, analysts believe the outlook is deteriorating quickly as the cumulative effect of a 300 basis point rate hike is hurting business activity, and the Fed will continue to raise rates through the end of the year to ensure that inflation targets are met. The biggest drop in performance has been in the real estate sector, as home sales have fallen month to month. This component reduced the overall GDP figure by 1.4% in the third quarter, indicating that the housing market is moving from a period of excess demand to a period of moderate oversupply.

The US durable goods orders rose in September, but the data also showed signs that the growth momentum is decreasing. Durable goods orders are reported in nominal terms by the government, so it is difficult to determine the impact of inflation on the data. Economists point out that surveys of the Federal Reserve's regional district banks point to a decline in business investment, prompting talk of a recession.

Shares of tech giant Amazon (AMZN) fell more than 20% in after-hours trading after the company released its third-quarter earnings report, with revenue and guidance falling short of analysts' consensus expectations. The company pointed out that Europe is likely to be its hardest-hit region during the holiday season, with Germany and the UK being its biggest markets after the US.

Apple (AAPL) beat analysts' expectations by posting record revenue and earnings per share. Apple said its active installed device base hit a record high for all major product categories. But despite the good report, the company's stock declined in the evening session.

Caterpillar (CAT) gave investors optimism by reporting better-than-expected quarterly results. Rising prices and increased sales support the heavy equipment company's growth.

Equity markets in Europe mostly rallied yesterday. Germany's DAX (DE30) increased by 0.12%, France's CAC 40 (FR40) lost 0.51%, Spain's IBEX 35 (ES35) added 0.64%, and the British FTSE 100 (UK100) closed Thursday in plus 0.25%.

The European Central Bank raised its interest rate by 0.75%. As a result of this step, the refinancing rate reached 2%. This is the biggest rate hike in the history of the ECB. In addition to the expected rate hike, the ECB also announced changes to the current operations of the Targeted Long-Term Refinancing (TLTRO) in terms of the applied interest rate and earlier maturity dates. But the balance sheet reduction was postponed to the December meeting.

According to experts, the gold market is forming conditions for medium-term growth. Firstly, it is connected with the fact that the US Federal Reserve will soon finish the cycle of rate increases, and the pressure on the gold industry will decrease. Secondly, such markers like Gold miners AD Line and GDX to GLD ratio have long stopped falling and are on the reverse point. Third, gold has a strong seasonal factor ahead - December and January have been the best months of the year for the past 10 years.

Oil prices decreased on Friday as China, the world's biggest oil importer, imposed new Covid blocks in several cities as the number of infections began to rise again.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) decreased by 0.32% for the day, Hong Kong's Hang Seng (HK50) ended the day up 0.72%, and Australia's S&P/ASX 200 (AU200) increased by 0.50%.

The Bank of Japan (BoJ) kept interest rates at record lows as expected on Friday. The central bank kept its short-term interest rate target at negative -0.1% and said in a statement that it would continue to target 10-year bond yields at 0%. But the statement also indicates that inflation is likely to rise in the near term as the Japanese economy struggles with rising commodity costs and supply chain problems. The Сentral Bank expects CPI inflation to be 3% by the end of the year, up from its previous forecast of 2.3%. But inflation is also expected to fall to about 1.5% in 2023 and 2024. Data released a little earlier showed that annual inflation in Tokyo reached a 33-year high of 3.4% in October. Japan is slowly beginning to add up to the conditions for abandoning ultra-low interest rates.

S&P 500 (F) (US500) 3,807.30 −23.30 (−0.61%)

Dow Jones (US30) 32,033.28 +194.17 (+0.61%)

DAX (DE40) 13,211.23 +15.42 (+0.12%)

FTSE 100 (UK100)  7,073.69  +17.62 (+0.25%)

USD Index 110.58 +0.88 (+0.80%)

• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Japan BoJ Interest Rate Decision at 06:00 (GMT+3);
• – Japan BoJ Monetary Policy Statement at 06:00 (GMT+3);
• – Japan BoJ Outlook Report at 06:00 (GMT+3);
• – Japan BoJ Press Conference (Tentative);
• – Eurozone French GDP (m/m) at 08:30 (GMT+3);
• – Eurozone French CPI (m/m) at 09:45 (GMT+3);
• – Eurozone Spanish GDP (m/m) at 10:00 (GMT+3);
• – Eurozone Spanish CPI (m/m) at 10:00 (GMT+3);
• – Eurozone Italian CPI (m/m) at 12:00 (GMT+3);
• – Eurozone German GDP (m/m) at 11:00 (GMT+3);
• – Eurozone German CPI (m/m) at 15:00 (GMT+3);
• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – Canada GDP (m/m) at 15:30 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3).

by JustMarkets, 2022.10.28

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.