Market review
Global equity markets fell this week with earnings guidance from some of the largest US companies disappointing investors. Global bonds also fell as strong economic data releases in the US caused bond yields to move higher over the week. The week also saw the UK budget announcement and the release of economic estimates in the Eurozone.
Alphabet, Microsoft, Meta Platforms, Apple and Amazon all reported earnings results for the third quarter of this year. Alphabet reported positive earnings noting better-than-expected sales for its cloud-computing business and driving more business for its search engine. Amazon beat estimates for the quarter with its e-commerce, advertising and cloud services all posting positive results. Whilst Microsoft and Meta Platforms posted solid revenue results, they disappointed with their guidance as investors grew concerned with Meta’s future Artificial Intelligence (AI) expenditures and the slower than expected integration of AI into Microsoft’s cloud platform. Apple’s earnings announcement sparked fresh concerns about revenue growth and ongoing weakness in China.
In the US according to Automatic Data Processing (ADP), US private businesses added 233,000 to their payrolls in October 2024 which was the most since July 2023. Meanwhile, the latest US Gross Domestic Product (GDP) growth rate showed an annualised expansion of 2.8% in Q3 2024 with personal spending increasing at its fastest pace since Q1 2023. The Federal Reserve’s preferred gauge of inflation - the US Core Personal Consumption Expenditure (PCE) Index - posted a 0.3% gain from the previous month in September 2024 which was the highest print in five months. The better growth picture along with continued elevated inflation caused US bond yields to rise over the week.
In Europe, the latest estimate of GDP Growth showed the Eurozone expanded 0.4% in Q3 which is the strongest growth rate in two years. This print also showed that the Germany economy expanded 0.2%, surprisingly avoiding a recession. Meanwhile the latest estimates of inflation in the Eurozone show that annual inflation accelerated to 2% in October 2024, up from 1.7% in September and above forecasts of 1.9%. In the UK, the Labour government announced its latest budget which we cover in the chart of the week below.