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Tech titans soar on standout quarterly results, ECB delivers a tentative taper, and Catalonia’s Puigdemont faces an internal revolt or an external ouster. Here are some of the things people in markets are talking about.
A trio of U.S. tech titans announced earnings that crushed expectations after markets closed on Thursday, sending their shares soaring in the after-hours session. Amazon.com Inc. showed it can do it all, with top and bottom line beats that included roughly $1.3 billion in quarterly revenue from Whole Foods Market Inc. and profit growth of more than 40 percent in its cloud-computing division. It’s little wonder why executives of everything from property developers to amusement park operators have name-dropped the e-commerce giant in quarterly conference calls. Demand for cloud services also helped propel Microsoft Corp.’s sales higher, contributing to better-than-anticipated earnings. Alphabet Inc., the parent company of Google, saw ad volumes surge in the third quarter while its mysterious “Other Bets” – the non-internet project division – drew praise from CFO Ruth Porat. The tech news won’t stop there: pre-orders for Apple’s iPhone X begin on Friday.
QE Cut in Half
The European Central Bank has elected to buy fewer bonds for a longer time. President Mario Draghi unveiled plans to halve monthly asset purchases to 30 billion euros in January through September, and cautioned the program will not have a "sudden end." Policy makers reportedly assume their bond purchasing program will be over by the end of next year. The tentative taper weighed on the euro, one of the worst-performing G-10 currencies on the day.
Catalonian separatists are livid with regional President Carles Puigdemont's shift away from declaring independence. Puigdemont said he considered calling regional elections but didn't receive any concessions from the national government, which is moving forward with a plan to oust the administration. Two members of Puigdemont's party have quit. Spanish bonds outperformed their peers, while the IBEX 35 rose nearly 2 percent on the day.
All About Earnings
Buoyant earnings helped push U.S. stocks higher on Thursday, with the aforementioned earnings beats from tech behemoths setting up a strong finish to the week. Bank shares soared in the wake of House Republicans’ adoption of a budget resolution that may see tax reform come to pass by year-end. It was another bad day for biotech shares, hit by a double whammy of Celgene Corp.’s poor results and U.S. President Donald Trump’s pledge to go after companies that helped fuel the opioid epidemic. Reports that Amazon has received pharmacy-wholesaler licenses in at least a dozen U.S. states catalyzed a larger drop for drug distributors. Brent futures approached $60 per barrel after Saudi Crown Prince Mohammed bin Salman backed an extention of output curbs made by OPEC and other major producers. The Bloomberg Dollar Spot Index rose to hit a 15-week high.
Nikkei 225 and S&P/ASX 200 futures are both trading to the upside ahead of the open. It’s a fairly light end to the week for economic data in the region. Japanese inflation, due out at 8:30 a.m. Tokyo time, is forecast to hold steady at an annual rate of 0.7 percent in September, both on a headline and core basis. Singapore's unemployment rate is also forecast to remain unchanged in the third quarter at 2.2 percent. South Korean consumer confidence for October also rose to 109.2 in October from 107.7 in the prior print, more positive data on the heels of its fastest growth since 2010 in the third quarter. After Asian markets close we'll get the advance reading of U.S. third-quarter growth, forecast to moderate to 2.6 percent quarter-on-quarter as natural disasters took their toll on activity.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Hong Kong’s iconic trading floor is the latest to close for good
- China’s ambitions could split the global economy.
- Traffic is so bad in Manila, workers are moving into dorms.
- Top hedge fund bets against Chinese debt.
- Ray Dalio is worried about bonds.
- Opioid billionaire arrested.
- Here’s Toyota’s challenge to Rolls-Royce and Bentley.