By Geoffrey Smith
Investing.com — Disappointing earnings from Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are set to weigh on US stocks when they open later. World leaders descend on Rome for a G 20 summit, but remain far apart on forging a consensus on climate policy ahead of next week’s COP26 meetings. They’re closer together on the issue of global tax. Eurozone bond yields hit the highest in over a year on fears that the ECB will dial down stimulus. Facebook (NASDAQ:FB) confirmed it will rebrand as Meta, and Big Oil dominates the days earnings roster. Here is what you need to know in financial markets on Friday, October 30.
1. Apple, Amazon Disappoint
Apple and Amazon both disappointed with their quarterly earnings after the closing bell on Thursday, sending both stocks lower in premarket trading.
Apple’s sales were hit by supply chain problems, and CEO Tim Cook warned that the coming holiday quarter may be even worse in this regard. The issue had been flagged previously in unconfirmed reports.
Amazon’s problems were concentrated in higher input costs, notably for labour, which hurt profit margins at the core e-commerce business.
Amazon Web Services, by contrast, continued to churn out money at a decent rate. Even so, earnings per share were some 25% below analysts’ forecasts, in a rare and marked disappointment one of the market’s heavyweights.
2. PCE Prices, Personal Income and Spending
The last inflation- related economic data before the Federal Reserve’s next policy meeting are due at 8:30 AM ET (1030 GMT), how long with figures for personal income and personal spending in September.
Core prices for personal consumer expenditures are expected to have risen by 0.2% in September down from 0.3% in August and a peak of 0.7 in April. The annual rate of core PCE inflation is expected to have fallen risen to 3.7% from 3.6% a month ago.
The PCE Price index is the Fed’s preferred measure of inflation. The numbers come a day after further signs of labour market strength, as initial jobless claims fell to a new post pandemic low of 281,000.
3. Stocks likely to open lower as Big Tech drags; Oil majors eyed
US stock markets are expected to set to open lower later, amid disappointment at the earnings from Apple and Amazon (and also Starbucks (NASDAQ:SBUX), whose revenue also fell short of expectations).
Stocks likely to be in focus later include Facebook, which confirmed its intention to rebrand under the name Meta on Thursday, and oil and gas majors Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), both of whom report earnings.
4. G20 to sign off on tax deal
World leaders converge on Rome, Italy, for an annual summit of the G 20 group of industrial and emerging nations. At least, some of them do – Chinese president Xi Jinping is not attending.
That alone should ensure that nothing of great substance is achieved politically, especially as regards forming a consensus on climate change ahead of the COP26 meeting next week, although the group will likely sign off on a global deal to ensure a minimum corporate tax rate of 15%.
That new minimum rate is a key plank of U.S. Democrats plans to raise taxes on corporations to pay for what is now a heavily pruned spending bill. President Joe Biden said on Thursday he had agreed a framework for the bill which leaves its overall price add around $1.85 trillion, having shed much of the party’s list of election promises.
5. Eurozone bonds get the jitters
Eurozone government bond markets got the jitters, on perceptions that European Central bank president Christine Lagarde, in her press conference on Thursday, had pushed back only half-heartedly against suggestions that interest rates may have to rise next year.
The 10-Year Italian government bond yield rose 16 basis points to 1.15%, hitting a new 14 month high. Benchmark Greek bonds followed suit, highlighting the degree to which markets have been supported by extraordinary levels of ECB support for the last 18 months.
Sentiment wasn’t helped by a sharp overshoot in Eurozone consumer prices in October: preliminary data showed inflation running at 4.1% on the year, up from 3.4% in September and above the 3.7% expected.
Apple and Amazon Miss, G20 Starts, Big Oil Reports – What’s Moving Markets