October 30, 2020

Stock Futures Tank, Big Tech Fail To Impress

Stock Futures Tank, Big Tech Fail To Impress

European and U.S. futures are tanking on the final day of the week as investors are concerned about the rise in coronavirus cases. The number of German coronavirus cases exceeds 500K today. The big tech earnings have failed to boost confidence in their outlook.

Big Tech 

Big tech stocks impressed Wall Street by beating their revenue estimates; however, some failed to excite in other metrics. For instance, Apple smashed the sales number for the fiscal third quarter. The sales number came in at $64.7 billion; however, Greater China sales plummeted by 29%. This is a concern for investors because China is a major market for Apple, and the fact that sales have dropped in China has raised alarm bells for investors.  

As for the social media giants, Twitter’s sales number was impressive; sales revenue soared by 14% to $936 million. Speculators who were looking for a drop of 5% in the sales number are likely to face pain as the stock may attract new investors. However, the disappointing element was that the user growth wasn’t impressive, and this may trigger some profit-taking. 

Facebook showed that it has the ability to weather the ad boycott storm as the sales number bumped 22% to 21.5 billion. Monthly active users also confirmed strong growth. 

U.S. Presidential Update 

Florida has become a vital battleground between Joe Biden and Donald Trump. Polls show that the difference is narrowing up. According to the Monmouth University survey, Joe Biden is leading the polls by 50%, while Trump is at 45%.

Speculators will continue to pay close attention to various poll numbers, and market players are widely expecting a democratic win. Although, it is possible that Donald Trump may come back for the second term, as many are impressed by his work. 

Growth 

The U.S. economy posted a record quarterly growth number yesterday. The GDP surged by 33.1% last quarter. However, last quarter, the GDP declined by 31.4%, so the overall GDP is 3.5% below its pre-Covid peak. This is going to remain a concern for investors. The delay in the potential stimulus package is only going to add more pain for the U.S. GDP. 

Ready To Act 

At the outset, it may look like the European Central Bank failed to impress the markets as it didn’t announce an increase in its asset purchase programme yesterday. However, the devil is in the detail, and this is what investors need to pay attention to.

The ECB’s message was immensely clever and dovish yesterday. It said that the bank would look at all tools to help the economy, and this means that the ECB can push the interest rates even lower.

Any further reduction in the interest rate is going to make things more difficult for the ECB because the bank will have a very difficult path to face to bring the interest rates back in positive territory. 

Another reason that the ECB didn’t increase the asset purchase programme yesterday is that the ECB knows that it has limited tools left at its disposal and its influence on economic growth isn’t yielding the same sort of results which it did before. 

More Lockdowns

The global coronavirus cases have increased to 44.89 million, and nearly 1.179 people have lost their lives. The new daily coronavirus cases in Europe are still increasing as Italy and Portugal have posted new daily records.

Greece has followed in the footsteps of France, and a one-month lockdown will also take place. Dr. Anthony Fauci believes that it could be the end of 2021 when we start to see normality coming back into our lives, which means another year of pain for the global economy.