A look at the day ahead in U.S. and global markets from Mike Dolan
Cloudy outlooks from U.S. megacaps Microsoft and Meta combined with edgy government bond markets around the world to unsettle investors on Thursday, with the latest U.S. opinion polls showing next week’s presidential election is no foregone conclusion.
The week’s deluge of events and data releases continued apace overnight – shaded earnings beats from the latest two of the ‘Magnificent Seven’ firms, a Bank of Japan policy rate hold and a crumb of comfort for Chinese manufacturing.
Europe, meantime, continued to digest above-forecast GDP and inflation updates from Wednesday, with Britain’s tax and debt raising budget keeping UK government bonds on edge.
UK 10-year gilt yields hit their highest in a year on Thursday, while euro zone equivalents touched their highest since July as markets scaled back hopes for a 50 basis point cut in European Central Bank interest rates in December.
U.S. Treasuries outperformed by comparison, juggling a slight headline miss on third-quarter GDP that was offset by robust consumer spending details and big jumps in private sector payrolls and home sales. Those data teed up tomorrow’s employment report. Before then, Thursday also sees the release of the Federal Reserve’s favored inflation gauge from personal consumption expenditures data (PCE).
But U.S. stock futures have been dragged into the red by renewed anxiety over whether the massive spend on artificial intelligence by tech giants will deliver profitable results going forward, with Microsoft and Meta both down 4% ahead of today’s bell on their overnight results.
A 10% earnings-related drop in Advanced Micro Devices on Wednesday and 32% plunge in the shares of Super Micro Computer, after Ernst & Young resigned as the company’s accountant, both jarred the AI theme more broadly.
With Apple and Amazon reporting after the bell later today, S&P500 and Nasdaq futures were both down about 1% before the open.
But as Halloween hits, next week’s election sucks most of the oxygen out macro market speculation at this stage.
While financial markets have been leaning to a win for Republican Donald Trump in recent weeks, and even a possible clean sweep for the party in Congress, opinion polls continue to show the contest is too close to call and caution against premature bets.
With national polls neck and neck still, a new CNN poll on Wednesday showed Democrat Kamala Harris has a marginal edge over Trump in swing states Michigan and Wisconsin – with the two tied in Pennsylvania less than a week before the votes. The poll showed Harris leading Trump by 48% to 43% among likely voters in Michigan and by 51% to 45% in Wisconsin.