Europe before the bell: Results first, budget later
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EUROPE BEFORE THE BELL: RESULTS FIRST, BUDGET LATER
It's going to be a busy day, in fact it's already been one, but at the moment, European share markets are set to open meaningfully lower as traders process a slew of company earnings, before the focus turns to Britain and the new government's budget.
Stoxx 50 futures STXEc1 are down 0.4% with bigger losses set to come in France where CAC 40 futures FCEc1 are 0.6% lower.
There's been a small deluge of earnings with stand outs being Volkswagen VOWG_p.DE where third-quarter operating profit plunged 42% and Campari CPRI.MI which suffered an 18.2% drop in third-quarter operating profit.
Banks bucked the trend, continuing to post solid results and UBS Group UBSG.S posted third-quarter profit that was almost double expectations, and Standard Chartered upgraded key performance targets after its profits also bet analyst expectations.
To pull out a few others, Amundi AMUN.PA, Europe's biggest fund manager, posted in-line quarterly inflows, Glencore GLEN.L reported lower copper, cobalt, zinc, nickel and thermal coal production for the first nine months and BASF BASFn.DE posted a 5% increase in operating earnings.
Overnight Google parent Alphabet GOOGL.O said on Tuesday its AI investments were "paying off" as it reported a 35% surge in its cloud business and U.S. election-related spending lifted YouTube ad sales in the third quarter.
Then Britain's budget comes around 1230 GMT. Finance minister Rachel Reeves will announce what may be the biggest tax hikes in three decades in a bid to fix the country's sagging public services, alongside billions of pounds of extra borrowing to overhaul the economy.
There is also U.S. third quarter GDP to come later as well.
Good luck.
(Alun John)
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BUDGET, GDP AND TECH EARNINGS
Investors will have a full calendar of major releases to digest on Wednesday, from bank and Big Tech earnings to a UK budget, along with a U.S. private payrolls report and growth figures for the U.S. and several big European economies.
As if that weren't enough, bitcoin BTC= is closing in on a record high, the European Union has decided to increase tariffs on China-built electric vehicles and the latest polls reinforce that the U.S. presidential election is set to go down to the wire.
European stocks were set for a negative opening ahead of the various risk events likely to shape the day's market moves, chief among them the first budget from Britain's Labour government after 14 years of Conservative rule.
Traders have already sold UK stocks and gilts in the run-up, unsure how finance minister Rachel Reeves can possibly balance high debt, public spending pledges and a promise not to hike the income tax.
Sterling GBP=D3 held steady around the $1.30 level, although options pricing reflected some degree of nervousness over the budget outcome.
Investors will also have their eye on various earnings releases later in the day, including Meta Platforms META.O and Microsoft MSFT.O, which are among the "Magnificent 7" of U.S. megacaps.
Google parent Alphabet GOOGL.O on Tuesday offered a positive note with quarterly revenue that beat estimates.
The run of results - including Apple AAPL.O and Amazon.com AMZN.O numbers due on Thursday - will be crucial to determining whether Wall Street can sustain the optimism around technology and artificial intelligence that has lifted indexes to record highs this year.
On the economic front, Wednesday's advance third-quarter growth figures in the United States are likely to show that the world's largest economy maintained a solid pace of growth, as subsiding inflation and strong wage gains powered consumer spending.
That is likely to contrast with the increasingly dour growth outlook for the euro zone, which has flirted with recession for more than a year now.
The euro EUR=EBS is headed for a fall of nearly 3% against the dollar in October, its worst monthly decline since May 2023.
In Asia, Chinese assets fell broadly on Wednesday, as investors braced for a tightly contested U.S. election that could have huge ramifications for China, even as Beijing tries to shore up growth.
News that China is considering approving the issuance of more than 10 trillion yuan ($1.4 trillion) in extra debt in the next few years was overshadowed by the prospect of hefty tariffs in the event of a victory next week by Donald Trump, especially if accompanied by a clean sweep in Congress for his Republican party.
China's currency and equities will bear the brunt of a protectionist shift in the U.S. and are likely to be sensitive to any trade and foreign policy implications in news on the election.
Key developments that could influence markets on Wednesday:
- UK budget
- Various earnings releases including: UBS Group AG, Volkswagen AG, Airbus SE, Meta Platforms, Microsoft
- France, Germany, Euro zone, U.S. preliminary GDP
- U.S. ADP National Employment Report
(Rae Wee)
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