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In the Global Week Ahead, traders will have their work cut out keeping up with:
The aftermath of Japan's snap election
U.S. OCT jobs data
A U.K. budget
Euro zone Q3 growth numbers, and
A slew of third-quarter S&P500 earnings
And as a U.S. presidential election nears, global market swings are getting bigger.
Next are Reuters’ five world market themes reordered for equity traders—
(1) Mega-Cap Tech Reports, then the OCT U.S. Federal Nonfarm Job Numbers
A full-on week of U.S. earnings is capped by Friday's key jobs data.
Five of the "Magnificent Seven" U.S. titans report quarterly results: Google parent Alphabet (GOOGL - Free Report) on Oct. 29th, Microsoft (MSFT - Free Report) and Facebook parent Meta Platforms (META - Free Report) on Oct. 30th, and Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) on Oct. 31st.
The companies have an outsized influence on markets because of their massive market values.
Tesla (TSLA - Free Report) , the first of the "Magnificent Seven" to report, said on Wednesday it expects to achieve slight growth in vehicle deliveries this year and reported a higher-than-expected third-quarter profit margin.
Economists meanwhile expect the U.S. economy to have created +140K new jobs in October, versus +254K in September.
Two significant storms could skew the data, which comes just ahead of the Nov. 5 U.S. election and a potential 25-basis-point rate cut from the Federal Reserve on Nov. 7th.
(2) More European Banks Report Q3 Results
UBS (UBS - Free Report) and HSBC (HSBC - Free Report) are leading European banks reporting Q3 earnings in the coming days, following Deutsche Bank and Barclays.
The sector is healthier than at any point since the global financial crisis, yet investors want reassurance they can trust its longer-term earnings power as interest rates fall.
Besides looking for evidence of asset quality resilience, they want a sharper strategy, lower costs and the potential to outperform in a low growth global economy.
HSBC has already set the tone this week, unveiling a streamlined executive committee and a merger of some costly banking operations in a sweeping restructuring along East-West lines.
But as Deutsche showed, past problems can still detract from future goals. The German lender blamed a lackluster domestic economy for higher provisions against a possible rise in bad debts to 1.8 billion euros ($1.95 billion) for the full year, from 1.5 billion euros last year ($1 = 0.9239 euros).
(3) The Euro Area Seems to Be Sputtering
The euro is witnessing one of its worst runs ever.
It has only posted four up-days in the last month, its weakest performance since May 2012, when a sovereign debt crisis threatened the survival of the currency bloc.
The prospect of U.S. rates not falling as quickly as anticipated has boosted the dollar, while expectations for Republican Donald Trump to win the November election are hitting the euro, given the risk of a sharp rise in U.S. tariffs on European goods.
The European Central Bank is expected to ramp up rate cuts as the currency bloc's economy sputters, especially in Germany. Europe's powerhouse is deteriorating faster than any other industrialized country and the coming week brings data on growth and inflation that are unlikely to offer much reassurance.
(4) On Wednesday, New U.K. Government Budget Comes Out
Britain's new Labour government unveils its first budget on Wednesday.
With few choices available to finance minister Rachel Reeves as she balances high debt, public spending pledges and a promise not to hike income tax, markets fear extra borrowing and tax grabs on capital gains, dividends and inherited wealth.
The 10-year gilt yield is about 18 bps higher this week, dragged up in part by rising U.S. Treasury yields, even after soft inflation fueled hopes for U.K. rate cuts.
Gripped by budget uncertainty, U.K. stocks are underperforming again after a promising pre-election rally for these long-term laggards.
But bullish U.K. investors, a thinning crowd, reckon British markets could bounce if Reeves' Halloween-eve budget is less frightening than Labour's gloomy assessments of the economy suggested.
(5) On Sunday, a Snap Election in Japan
When new Japanese premier Shigeru Ishiba called a snap election just weeks ago, he had expected to consolidate his party's hold on power.
But his Liberal Democratic Party could lose its absolute majority after Sunday's election and fall short of enough seats to govern when combined with coalition partner Komeito.
Japanese equities, hurt by uncertainty, are on the back foot.
A disastrous loss could force Ishiba to fall on his sword, wresting the dubious mantle of shortest-serving prime minister from Sosuke Uno, who held office for under 10 weeks in 1989.
Taking on an additional coalition partner could force Ishiba to shelve some market-unfriendly policies he has favored, such as higher corporate and capital gains taxes.
Politics could make the Bank of Japan's job more difficult, with policy normalization already complicated by a fragile economy and unstable markets. It is expected to stand pat at its meeting ending on Thursday.
A recap of election results came out Monday, Oct. 28th, under a leading headline in the Financial Times…
Japan’s Prime Minister Shigeru Ishiba has vowed to stay on as the nation’s leader after his Liberal Democratic party was trounced in a general election, leaving it unable to govern alone and threatening to paralyze Japanese politics.
The LDP’s performance in Sunday’s poll was the ruling party’s worst in 15 years, far surpassing even the most pessimistic forecasts.
While the LDP remains the largest party, even in combination with its junior coalition partner, the Komeito party, the bloc ended 18 seats short of the 233-seat threshold needed to control parliament.
Ishiba said he did not plan to resign, telling reporters on Monday that Japan’s economic and security conditions meant that national politics should not be allowed to stagnate.
“In light of the severe criticism we have received from the public, we will endeavor to ensure that the national government remains stable,” he said. “We will fulfill our duties to protect the lives of the people and the country by responding to tough issues in a solemn and appropriate way.”
The yen sold off sharply, weakening about -1% against the US dollar to a three-month low.
The Nikkei 225 Average rose +1.82% on the weaker yen and expectations of hefty government spending ahead of what is now set to be an even harder-fought upper-house election next year.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Vertiv (VRT - Free Report) : This is a $122 a share stock, in the Computers- IT Services industry, with a market cap of $42.1B. I see a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Vertiv Holdings Co. provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services.
Vertiv Holdings Co., formerly known as GS Acquisition Holdings Corp, is headquartered in Columbus, Ohio.
(2) Advantest (ATEYY - Free Report) : This is a $52 a share stock, in the Electronics – Measuring Instruments industry, with a market cap of $38B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of D.
Image Source: Zacks Investment Research
Advantest Corp. is one of the world's leading automatic test equipment suppliers to the semiconductor industry, and is also a producer of electronic and optoelectronic instruments and systems.
A global company, Advantest has long offered total ATE solutions, and serves the industry in every component of semiconductor test: tester, handler, mechanical and electrical interfaces, and software.
Its logic, memory, mixed-signal and RF testers, and device handlers, are integrated into the most advanced semiconductor fabrication lines in the world.
(3) TransUnion (TRU - Free Report) : This is a $104 a share stock, in the Business - Information Services industry, with a market cap of $20.2B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Headquartered in Chicago, IL, TransUnion is one of the leading global providers of risk and information solutions to businesses and consumers.
The company provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses.
What sets TransUnion apart are its distinctive and comprehensive datasets, next-generation technology and its analytics and decision-making capabilities — which enable it to deliver insights across the complete consumer lifecycle.
TransUnion boasts rich domain proficiency across a wide range of industry verticals, including insurance, healthcare and financial services. It also caters to verticals like wireless, real estate and general commercial/business information. Possession of both nationwide consumer credit data and comprehensive, diverse public records data, enables the company better predict behaviors, assess risk and address a broader set of business issues for its customers.
With a presence in more than 30 countries and territories, TransUnion is spread across North America, Latin America, Europe, Africa, Asia Pacific and India.
The company's operations are organized into three operating segments: U.S. Information Services (USIS), International and Consumer Interactive.
U.S. Markets (64% of total gross revenue in 2023) offers consumer reports, risk scores, analytical services and decision-making capabilities. Its services are used to acquire new customers, assess consumers’ ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, verify consumer identities, and investigate potential fraud, among others.
International segment (21%) delivers online data services, marketing services, credit reports, analytics, decision services, and other value-added risk management services as well as consumer services.
Consumer Interactive segment (15%) provides solutions including credit reports and scores, credit monitoring, fraud protection and resolution and financial management solutions. These solutions enable consumers easily manage their personal finances and take precautions against identity theft. Its products are provided through user-friendly online and mobile interfaces. The segment serves consumers through both direct and indirect channels.
Key Global Macro
Friday morning’s 8:30 am EST U.S. nonfarm payroll adds should be a trader focus.
On Monday, Japan’s SEP household unemployment rate should hold steady at 2.5%.
The ECB’s De Guindos gives a speech.
On Tuesday, the S&P/Case-Shiller Home Price indices for AUG come out. The consensus sees +6.0% y/y, versus 5.92% y/y prior.
U.S. JOLTS Job Openings come out. 7.92M is expected, after a prior 8.04M print.
On Wednesday, the Reserve Bank of Australia (RBA) trimmed mean CPI for Q# should be +3.5% y/y, falling from a +3.9% y/y prior rate.
The Euro Area real GDP growth rate for Q3 should be +0.8% y/y, versus a +0.6% y/y prior number.
U.S. APD private job additions for OCT should be +110K, following a +143K print in the prior month of SEP.
U.S. real GDP growth for Q3 comes out. An annualized +3.0% is the consensus.
On Thursday, Mainland China’s NBC manufacturing PMI comes out for OCT. THE consensus looks for 50.1 to follow a 49.8 print.
The Euro Area core Harmonized Index of Consumer Prices (HICP) for OCT comes out. +2.7% y/y is expected, in line with a prior +2.7% y/y print.
The Euro Area household unemployment rate for SEP should be static at 6.4%.
On Friday, U.S. nonfarm payrolls for OCT should be +140K, down from a +254K prior SEP print. The household unemployment rate should be static at 4.1%.
The U.S. ISM manufacturing PMI for OCT should be 47.6, up from a prior 47.2 print.
Conclusion
Through Friday, October 25th, stock traders and covering analysts have studied Q3 results from 182 S&P500 members, or 36.4% of the index’s total membership.
Total earnings for these 182 companies that have reported are down -2.1% from the same period last year, on +4.5% higher revenues
75.8% of the companies beat EPS estimates. 58.8% beat revenue estimates
The proportion of these 182 index members beating both EPS and revenue estimates is 51.1%
With 168 S&P500 members on deck to report results — this week — we will have then seen Q3-24 results from 70% of the index’s membership.
What does Zacks Research Director Sheraz Mian expect from the MegaCap Techs?
He thinks they bring in a much-stronger +16.9% earnings growth rate in Q3-24, relative to the same period last year, on +13.3% higher revenues.
That is why mega-cap tech earnings and revenue results – along with their forward outlooks — are so important.
Whether you own the mega-caps or not, it does not matter. They are a crucial component in both the S&P500 and the Nasdaq.
Warm Regards,
John Blank, PhD. Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
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5 of 7 Mega-Cap Tech Results: Global Week Ahead
In the Global Week Ahead, traders will have their work cut out keeping up with:
And as a U.S. presidential election nears, global market swings are getting bigger.
Next are Reuters’ five world market themes reordered for equity traders—
(1) Mega-Cap Tech Reports, then the OCT U.S. Federal Nonfarm Job Numbers
A full-on week of U.S. earnings is capped by Friday's key jobs data.
Five of the "Magnificent Seven" U.S. titans report quarterly results: Google parent Alphabet (GOOGL - Free Report) on Oct. 29th, Microsoft (MSFT - Free Report) and Facebook parent Meta Platforms (META - Free Report) on Oct. 30th, and Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) on Oct. 31st.
The companies have an outsized influence on markets because of their massive market values.
Tesla (TSLA - Free Report) , the first of the "Magnificent Seven" to report, said on Wednesday it expects to achieve slight growth in vehicle deliveries this year and reported a higher-than-expected third-quarter profit margin.
Economists meanwhile expect the U.S. economy to have created +140K new jobs in October, versus +254K in September.
Two significant storms could skew the data, which comes just ahead of the Nov. 5 U.S. election and a potential 25-basis-point rate cut from the Federal Reserve on Nov. 7th.
(2) More European Banks Report Q3 Results
UBS (UBS - Free Report) and HSBC (HSBC - Free Report) are leading European banks reporting Q3 earnings in the coming days, following Deutsche Bank and Barclays.
The sector is healthier than at any point since the global financial crisis, yet investors want reassurance they can trust its longer-term earnings power as interest rates fall.
Besides looking for evidence of asset quality resilience, they want a sharper strategy, lower costs and the potential to outperform in a low growth global economy.
HSBC has already set the tone this week, unveiling a streamlined executive committee and a merger of some costly banking operations in a sweeping restructuring along East-West lines.
But as Deutsche showed, past problems can still detract from future goals. The German lender blamed a lackluster domestic economy for higher provisions against a possible rise in bad debts to 1.8 billion euros ($1.95 billion) for the full year, from 1.5 billion euros last year ($1 = 0.9239 euros).
(3) The Euro Area Seems to Be Sputtering
The euro is witnessing one of its worst runs ever.
It has only posted four up-days in the last month, its weakest performance since May 2012, when a sovereign debt crisis threatened the survival of the currency bloc.
The prospect of U.S. rates not falling as quickly as anticipated has boosted the dollar, while expectations for Republican Donald Trump to win the November election are hitting the euro, given the risk of a sharp rise in U.S. tariffs on European goods.
The European Central Bank is expected to ramp up rate cuts as the currency bloc's economy sputters, especially in Germany. Europe's powerhouse is deteriorating faster than any other industrialized country and the coming week brings data on growth and inflation that are unlikely to offer much reassurance.
(4) On Wednesday, New U.K. Government Budget Comes Out
Britain's new Labour government unveils its first budget on Wednesday.
With few choices available to finance minister Rachel Reeves as she balances high debt, public spending pledges and a promise not to hike income tax, markets fear extra borrowing and tax grabs on capital gains, dividends and inherited wealth.
The 10-year gilt yield is about 18 bps higher this week, dragged up in part by rising U.S. Treasury yields, even after soft inflation fueled hopes for U.K. rate cuts.
Gripped by budget uncertainty, U.K. stocks are underperforming again after a promising pre-election rally for these long-term laggards.
But bullish U.K. investors, a thinning crowd, reckon British markets could bounce if Reeves' Halloween-eve budget is less frightening than Labour's gloomy assessments of the economy suggested.
(5) On Sunday, a Snap Election in Japan
When new Japanese premier Shigeru Ishiba called a snap election just weeks ago, he had expected to consolidate his party's hold on power.
But his Liberal Democratic Party could lose its absolute majority after Sunday's election and fall short of enough seats to govern when combined with coalition partner Komeito.
Japanese equities, hurt by uncertainty, are on the back foot.
A disastrous loss could force Ishiba to fall on his sword, wresting the dubious mantle of shortest-serving prime minister from Sosuke Uno, who held office for under 10 weeks in 1989.
Taking on an additional coalition partner could force Ishiba to shelve some market-unfriendly policies he has favored, such as higher corporate and capital gains taxes.
Politics could make the Bank of Japan's job more difficult, with policy normalization already complicated by a fragile economy and unstable markets. It is expected to stand pat at its meeting ending on Thursday.
A recap of election results came out Monday, Oct. 28th, under a leading headline in the Financial Times…
Japan’s Prime Minister Shigeru Ishiba has vowed to stay on as the nation’s leader after his Liberal Democratic party was trounced in a general election, leaving it unable to govern alone and threatening to paralyze Japanese politics.
The LDP’s performance in Sunday’s poll was the ruling party’s worst in 15 years, far surpassing even the most pessimistic forecasts.
While the LDP remains the largest party, even in combination with its junior coalition partner, the Komeito party, the bloc ended 18 seats short of the 233-seat threshold needed to control parliament.
Ishiba said he did not plan to resign, telling reporters on Monday that Japan’s economic and security conditions meant that national politics should not be allowed to stagnate.
“In light of the severe criticism we have received from the public, we will endeavor to ensure that the national government remains stable,” he said. “We will fulfill our duties to protect the lives of the people and the country by responding to tough issues in a solemn and appropriate way.”
The yen sold off sharply, weakening about -1% against the US dollar to a three-month low.
The Nikkei 225 Average rose +1.82% on the weaker yen and expectations of hefty government spending ahead of what is now set to be an even harder-fought upper-house election next year.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Vertiv (VRT - Free Report) : This is a $122 a share stock, in the Computers- IT Services industry, with a market cap of $42.1B. I see a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Vertiv Holdings Co. provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services.
Vertiv Holdings Co., formerly known as GS Acquisition Holdings Corp, is headquartered in Columbus, Ohio.
(2) Advantest (ATEYY - Free Report) : This is a $52 a share stock, in the Electronics – Measuring Instruments industry, with a market cap of $38B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of D.
Image Source: Zacks Investment Research
Advantest Corp. is one of the world's leading automatic test equipment suppliers to the semiconductor industry, and is also a producer of electronic and optoelectronic instruments and systems.
A global company, Advantest has long offered total ATE solutions, and serves the industry in every component of semiconductor test: tester, handler, mechanical and electrical interfaces, and software.
Its logic, memory, mixed-signal and RF testers, and device handlers, are integrated into the most advanced semiconductor fabrication lines in the world.
(3) TransUnion (TRU - Free Report) : This is a $104 a share stock, in the Business - Information Services industry, with a market cap of $20.2B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Headquartered in Chicago, IL, TransUnion is one of the leading global providers of risk and information solutions to businesses and consumers.
The company provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses.
What sets TransUnion apart are its distinctive and comprehensive datasets, next-generation technology and its analytics and decision-making capabilities — which enable it to deliver insights across the complete consumer lifecycle.
TransUnion boasts rich domain proficiency across a wide range of industry verticals, including insurance, healthcare and financial services. It also caters to verticals like wireless, real estate and general commercial/business information. Possession of both nationwide consumer credit data and comprehensive, diverse public records data, enables the company better predict behaviors, assess risk and address a broader set of business issues for its customers.
With a presence in more than 30 countries and territories, TransUnion is spread across North America, Latin America, Europe, Africa, Asia Pacific and India.
The company's operations are organized into three operating segments: U.S. Information Services (USIS), International and Consumer Interactive.
Key Global Macro
Friday morning’s 8:30 am EST U.S. nonfarm payroll adds should be a trader focus.
On Monday, Japan’s SEP household unemployment rate should hold steady at 2.5%.
The ECB’s De Guindos gives a speech.
On Tuesday, the S&P/Case-Shiller Home Price indices for AUG come out. The consensus sees +6.0% y/y, versus 5.92% y/y prior.
U.S. JOLTS Job Openings come out. 7.92M is expected, after a prior 8.04M print.
On Wednesday, the Reserve Bank of Australia (RBA) trimmed mean CPI for Q# should be +3.5% y/y, falling from a +3.9% y/y prior rate.
The Euro Area real GDP growth rate for Q3 should be +0.8% y/y, versus a +0.6% y/y prior number.
U.S. APD private job additions for OCT should be +110K, following a +143K print in the prior month of SEP.
U.S. real GDP growth for Q3 comes out. An annualized +3.0% is the consensus.
On Thursday, Mainland China’s NBC manufacturing PMI comes out for OCT. THE consensus looks for 50.1 to follow a 49.8 print.
The Euro Area core Harmonized Index of Consumer Prices (HICP) for OCT comes out. +2.7% y/y is expected, in line with a prior +2.7% y/y print.
The Euro Area household unemployment rate for SEP should be static at 6.4%.
On Friday, U.S. nonfarm payrolls for OCT should be +140K, down from a +254K prior SEP print. The household unemployment rate should be static at 4.1%.
The U.S. ISM manufacturing PMI for OCT should be 47.6, up from a prior 47.2 print.
Conclusion
Through Friday, October 25th, stock traders and covering analysts have studied Q3 results from 182 S&P500 members, or 36.4% of the index’s total membership.
With 168 S&P500 members on deck to report results — this week — we will have then seen Q3-24 results from 70% of the index’s membership.
What does Zacks Research Director Sheraz Mian expect from the MegaCap Techs?
He thinks they bring in a much-stronger +16.9% earnings growth rate in Q3-24, relative to the same period last year, on +13.3% higher revenues.
That is why mega-cap tech earnings and revenue results – along with their forward outlooks — are so important.
Whether you own the mega-caps or not, it does not matter. They are a crucial component in both the S&P500 and the Nasdaq.
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist