Daily Market Outlook, October 28, 2021

Daily Market Outlook, October 28, 2021 Overnight Headlines Brazil Reveals Biggest Interest Rate Rise In Almost 20 Years Australia's Central Bank Declines To Buy Target Bond As Yield Jumps Australia Q3 Export Prices Rise 6.2% Q/Q As Coal Surges Australia’s Biggest Bank Now Sees First RBA Hike In Nov ’22 Japan’s Retail Sales Climb As Shoppers’ Virus Fears Ease China Warns U.S. That Support for Taiwan Poses ‘Huge Risks’ New Zealand Announces Phased Easing Of Border Restrictions ECB Expected To Push Back Over Mounting Rate-Hike Expectations Asian Currencies Weaken; S.Korean Won, Philippine Peso Fall Most Oil Extends Decline on U.S. Stockpiles Gain as Commodities Drop China's Winter Natural Gas Demand To Rise 10% From Year Earlier Bond Curves Flash Warning On Growth As U.S., U.K. Yields Slide Stocks Get Reality Check From Earnings, Central Banks In Focus Samsung Electronic Q3 Profit Rises To 3-Year High On Chip Sales Airbus Raises Targets, Rejigs Near-Term Aviation Production Goals Ford Motor Posts Stronger-Than-Expected Profit, Raises FY Forecast EBay Earnings Beat Expectations, But Forecast Underwhelms Market The Day Ahead Asian markets are lower this morning following yesterday’s declines in Europe and the US. President Biden plans to meet Democrat Congressional leaders ahead of his trip to Europe amid signs that passage of his fiscal package has stalled. Yesterday’s UK Budget update contained few surprises as most of the main details had been pre-announced. Stronger than previously expected economic growth allowed Chancellor Sunak to announce both a rise in government spending and lower borrowing figures. Today’s update from the European Central Bank is not expected to see any changes in monetary policy for the Eurozone. There may be some hints on what might replace the Pandemic Emergency Purchase Programme (PEPP) after next March, but it seems more likely that details will be provided after the next meeting on 16th December. What will be interesting is what ECB President Lagarde says about prospects of significantly higher inflation in the short term than it predicted only in September. So far, she and many ECB officials have sounded relatively relaxed and more comfortable with the view that rise will prove ‘transitory’ than many other central banks. Nevertheless, this week’s Eurozone CPI data for October are likely to show inflation continuing to rise sharply. Ahead of tomorrow’s release for the region as a whole today’s figures for Spain and Germany are forecast to see inflation at multi-year highs. In Germany the outturn is likely to be the highest since the early 1990s. However, the ECB will probably take some solace from the fact that ‘core’ inflation (excluding food and energy prices) is still considerably below the headline rate. Also of interest in the Eurozone will be October business confidence readings. Last month saw confidence down in services but, perhaps surprisingly given ongoing concerns about supply chain bottlenecks, up in manufacturing. Given indications that supply disruptions remain a key issue confidence in both is expected to have fallen this month. In the US, Q3 GDP quarterly growth is predicted to have slowed to about 3.5% annualised down from 6.7% in Q2. As US GDP is now back above its pre-pandemic level some slowdown was inevitable. However, the sharper and expected deceleration reflects the impact of supply issues and possibly consumers becoming more cautious. Next week the US Federal Reserve will need to weigh this up along with evidence of higher inflation in reaching its latest decision on monetary policy. Government bond markets saw some sizeable moves yesterday. Yield curves flattened as longer dated yields fell sharply but shorter dated yields rose in some cases as markets factored in concerns about a more aggressive tightening in monetary policy. In currency markets sterling edged down against both the euro and the US dollarG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls )- USDJPY - 114.60 466m. 113.70/80 3.03bn (1.89bn P). 113.50 426m. 112.90/113.00 1.73bn (1.49bn P).- EURUSD - 1.1650/70 942m. 1.1620/30 881m. 1.1600/10 1.77bn (1.17bn P). 1.1500 586m.- AUDUSD - 0.7500 680m. 0.7470 1.02bn (924m C). 0.7370 655m.- USDCAD - 1.2390/1.2400 510m. 1.2350/70 1.98bn (1.31bn C). 1.2300/10 616m.- USDCHF - 0.9170/80 650m.- USDCNH - 6.45 503m. 6.39 809m.Technical & Trade ViewsEURUSD Bias: Bearish below 1.17 Bullish above Pivots around 1.1600 ahead of ECB EUR/USD opened 1.1603 and traded in a 1.1589/1.1609 range Heading into the afternoon it is trading at 1.1605/10 Market was very quiet ahead of the ECB meeting later today Market not expecting any change to the ECB's dovish guidance at this meeting EUR/USD support at 61.8 of 1.1522/1.1670 move at 1.1578 A break below 1.1575 targets full retracement to 1.1522 Resistance is at 10-day MA at 1.1617 and top formed around 1.1625GBPUSD Bias: Bearish below 1.37 Bullish above. GBP/USD within strike of 1.3750 as France – UK row heats up Cable gravitates to 1.3750 option expiry as tensions soar between France-UK France seizes a British trawler as fishing licence row heats up The 1.3750 strike rolls off at 1400 GMT 1.3709-1.3759 was Wednesday's post-UK budget range (1.3759 = NY low Tuesday) 1.3709 approximates to last week's low (1.3711 was pre-budget low Wednesday) 1.3829 was Tuesday's high -- before M&A news hurt the poundUSDJPY Bias: Bullish above 112.50 Bearish below USD/JPY remains heavy into London, month – end flows still Month-end position adjustments still weighing on USD/JPY Asia 113.87 to 113.50 EBS, spike low yesterday 113.29 More downside possible but expect more Japanese bids on way down Lower US long yields weigh but front-end yields higher, attractive? Option expiries in area today could still help contain action 113.00 $1.5 bln, 113.50-70 total $1.2 bln, 113.84-85 $1.25 bln Large in area tomorrow too, 113.75-114.00 $1.7 bln, to help cap? Most of Asia risk-off, Nikkei -1% at TSE close to 28,820.09AUDUSD Bias: Bearish below 0.75 Bullish above Choppy as iron ore slide offsets rise in Aus yields AUD/USD opened +0.23% at 0.7519 and came under pressure Frustrated longs pared back as slide in iron ore provided excuse Dalian iron ore was down over 6% at one stage and AUD/USD fell to 0.7479 Aus yields soared again today after RBA failed to buy the April 2024 bond... Market took lack of intervention as a change in the RBA dovish outlook Market is now pricing in four rate hikes by the end of 2022 The sharp rise in Aus yields helped push the AUD/USD back to 0.7510 Support is at the 10-day MA at 0.7478, which was validated today A close below 0.7475 would suggest upward momentum is waning Key resistance is at the 200-day MA at 0.7559 with sellers ahead of 0.7550

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Market Update – October 28 – USD Mixed, Stocks Down, Yield Curve Flattens, Oil tanks

• USD (USDIndex 93.82) V. choppy session as the Yield spreads narrowed to March 2020 lows (2&5yr higher, 10&30yr lower) catalyst – Inflation worries and surprise ending of QE and earlier rates hikes suggested from BOC. Stocks down and Oil sank. Durable Goods missed but not as bad as expected, Trade balance at at record ($96.3 bn
• US Yields (10yr crashed into close at 1.529) lifted in Asian now 1.57%
• Equities lower – USA500 -23 (-0.51%) at 4551 (DOW -0.75%) – Big movers – MSFT +4.21%  & GOOGL + 4.96%, EXXON -2.6% JPM -2.08%  – USA500.F back to 4545. Asian equities weaker.
• USOil down on Inventories more than a double build – at 4.3m vs 2.0m and a draw down last week of 400k barrels. Low $ 79.39 earlier from $83.70 on Monday. 
• Gold recovers from $1783  low yesterday to breach $1800 now.
• FX markets – EURUSD 1.1650, Cable 1.3770, &   USDJPY – (after a strong day on Friday (113.40 low) now at 113.60.

ECB Preview: The central bank is widely expected to keep policy settings on hold today, after Lagarde signalled last month that the important decisions on the future of PEPP and possible changes to the older APP programmes won’t be taken until December. Still, markets will be hoping for some signals on the flavour of the discussion at the presser. The departure (by year end) of Bundesbank President Weidmann – the most hawkish and traditional central banker at the council – fueled speculation of a further strengthening of the older APP asset purchase programs. The ECB’s mandate will still have to be respected, but by keeping some flexibility for emergency situations the ECB could still send a dovish signal, even if it confirms in December that PEPP will end on time in March next year – as is widely expected.

European Open The December 10-year Bund future is up 4 ticks, but the 30-year future is moving higher long Gilt futures are rallying, as markets turn pessimistic on the growth outlook. DAX and FTSE 100 futures are managing slight gains though in line with US futures.

Today – German Unemployment, EZ Consumer Confidence, US GDP, PCE Prices Advance, Weekly Claims, ECB Policy Announcement and Press Conference   Earnings- Airbus, AB InBev, Carlsberg, Evolution Gaming, Nokia, Saint Gobain; Shell; Amazon, Apple, Comcast, Merck, Caterpillar, Mastercard, Yum!, Shopify.

Biggest FX Mover @ (06:30 GMT) NZDCAD (+0.37%)  Recovering from BOC shock yesterday down to 0.8820 back to 0.8880 now.  Faster MAs aligned higher, MACD signal line & histogram rising,  RSI 55 & rising. H1 ATR 0.0012, Daily ATR 0.0062.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Dollar Up, Yen Down as Investors Focus on Central Bank Policy Decisions

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Yen and euro under pressure ahead of central bank meetings

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The GBPUSD Rebounds Following Rishi Sunak Budget Speech

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Budget 2021: the chickens come home to roost

Rishi Sunak delivered his budget today amid a fragile and uncertain time. Max King analyses.

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Budget 2021: Here is what Chancellor Rishi Sunak announced

Rishi Sunak delivered his much anticipated Budget today. David Prosser explains what it means for you.

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BoC rate decision & US Durables kick off!

USDCAD fell from near 1.2410 to 1.2309 following the BoC announcement, where rates were left unchanged, as expected, and the Bank’s QE program was ended. The BoC moved its time frame for rate lift off to the middle two quarters of 2022, a bit earlier than previously expected. All together, a hawkish statement, which along with a morning rebound in oil prices, should continue to support the CAD.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Midweek Market Podcast – October 27

Inflation, Yields and Earnings dominated market sentiment this week as the USD found some support and commodity prices continued to soar.

HotForex · Midweek Market Podcast

 

The Market Week – October – Week 4  

As last week, Yields remain the key driver of markets, while the Greenback has found some support as stock markets hit new all-time highs. Central banks have come into focus and remain on the hawkish side as inflation data continued to suggest a “higher for longer” outcome. The Evergrande saga has a temporary reprieve and commodity prices continue to soar.

Still to come this week; Earnings from some major players including Amazon and Apple, Central Bank rate announcements from the BoC, BoJ & ECB, US GDP & PCE data and the usual potential month-end shenanigans.

The number and quality of the US jobs recovery grinds on and remains central to the FED’s tapering timeframe. The weekly US unemployment claims last week registered a new pandemic low at 290,000 and the long-term claims also improved significantly. Claims this week are expected to hold under 300,000.  

The vaccine rollouts continue to drive sentiment, and the Delta variant remains a significant concern. Asian lockdowns continue to ease as Melbourne ended its record 263-day restrictions. But spikes in rates in Eastern Europe continue to weigh as the vaccination rate starts to stall.  However, as booster jabs roll out in high-income countries, low-income country vaccination rates remain below 5%.

The USDIndex found support at 93.50 this week and was capped at 94.00, significantly below the one-year highs of last week.  EURUSD could not close over 1.1650 and struggles at 1.1600 ahead of the ECB on Thursday.  Likewise, USDJPY cooled from 4-year highs at 114.70 and tested 113.50 ahead of the BoJ also on Thursday.  Cable held its bid (topping at 1.3830 again) ahead of Wednesday’s budget but under 1.3750 as anticipation of a rate hike from the BoE before year end cools.

The major US stock markets posted new all-time highs as the third quarter earnings season continued its strong start. 81% of the companies in the S&P500 that have reported have exceeded Wall Street estimates. #TESLA rallied over 12% on Tuesday alone and joined the exclusive group of companies whose market capitalization exceeds $1 trillion.

Gold had a particularly volatile week. As the USD cooled, found support, and then rose, yields gyrated, and inflation data continued to move higher.  This week from lows at $1766 the price spiked to $1813 before slipping back under the psychological $1800 and finding support at $1780 and the 50-day moving average.

USOil prices continued to soar, printing new 7-year highs as demand outstrips supply, inventories continue to be drawn down and OPEC keeps production in check. This week the price peaked at $83.70 (again) before declining to $82.00 per barrel.

The yield on the US 10-Year Treasury Note remains very much in focus and a key market mover. A significant rally to 1.68% before slipping to 1.62% keeps rates elevated in the short-term. With a more hawkish FED, rising inflation, and markets pricing in a taper of $15bn per month from next week’s meeting, the focus has now turned to actual rate hikes moving closer than Q4 2022.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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USDCAD Rebound may Target 1.25 as BoC may Fail to Deliver Hawkish Surprise

European shares came under selling pressure on Wednesday ahead of the ECB meeting. Commodity markets and emerging market currencies pare down recent gains, indicating waning risk appetite. Another realm of risk assets, cryptocurrency markets, sustain deeper losses.Two key events for today are the meeting of the ECB and the Bank of Canada. The balance of risks for the Euro is slightly shifted downward (i.e., EURUSD sales are likely), since neither the economic component, nor the spreads of bond yields of the leading EU countries and the periphery do not currently contribute to the hawkish position of the ECB. On the other hand, a weak Euro in combination with rising commodity prices spur inflation expectations, which the ECB may reflect in its economic forecast today. An upward revision of inflation, together with an unchanged stance on tightening the policy, is a clear signal for the sale of the national currency as the expected real return on fixed income assets will need to be revised downward, i.e., investors will be forced to look for yields elsewhere (outside EU?)Depending on the degree of dovishness of Lagarde's speech today, EURUSD poised to test lower levels, especially lower bound of major downtrend –the area of 1.1520-1.1540:A number of US data yesterday indicated continued expansion - consumer sentiment from the Conference Board (above forecast), Dallas and Richmond Fed indices for manufacturing and services (above forecast). Durable goods orders are expected today to assess consumer expectations in the US in light of rising inflation pressures, including on expensive goods such as cars.The API report showed that reserves at Cushing could have decreased by 3.73 million barrels, total oil reserves increased by 2.32 million barrels, and gasoline and distillate stocks rose by 530K and 986K barrels, respectively. Market participants are closely following today's EIA report, in particular the Cushing inventory update. If it indicates decline below 30 million barrels WTI timespreads will be likely offered additional support.The Bank of Canada may announce a QE cut today and this is the baseline scenario for CAD which has already been factored into the exchange rate. Nevertheless, caution in the BoC’s outlook of future rate hikes may further weaken CAD, for this there are other prerequisites – weakness of the oil market, as well as technical setup in USDCAD: In the course of rebound from July lows, USDCAD made abreakout from the downtrend channel and can now target the upper bound ofcurrent short-term uptrend channel which coincides with major resistance levelat 1.25.

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Apple: High Tech, High Income

An important week for tech company earnings reports has started with :

• Facebook, which reported third-quarter revenue this year totalling $29.01 billion, a 35% jump compared to the same quarter in 2020.
• Microsoft Corp. with revenues of $45.3 billion in the first quarter of fiscal 2022, after a 22% increase from the same timeframe a year earlier, with net income growing 48% year-on-year to $20.5 billion in the quarter ended September 30, 2021, while operating income totaled $20.2 billion, up 27% year-on-year. Diluted earnings per share stood at $2.71, up 49% from the first three months of the 2021 fiscal year.
• Alphabet Inc. reported third-quarter earnings at $65.1 billion, beating expectations of around $63.3 billion and up 41% compared to the same quarter in 2020. Diluted earnings per share (EPS) reached $27.99, much higher than the expected $23.48 and 70.6% higher year-on-year. Net profit jumped 68.7% year-on-year to reach $18.9 billion.
• Twitter Inc. reported revenue in the third quarter of 2021 totalling $1.28 billion, marking an annual increase of 37% but still missing expectations. On the other hand, it recorded an operating loss of $743 million and a net loss of $537 million, which was down from the operating income and net income observed in the same period in 2020. Meanwhile, diluted loss per share stood at $0.67 per share, worsened by earnings per share (EPS) of $0.04.
• AMD announced revenue for the third quarter of 2021 of $4.3 billion, operating income of $948 million, net income of $923 million, and diluted earnings per share of $0.75. On a non-GAAP* basis, operating income was $1.1 billion, net income was $893 million and diluted earnings per share was $0.73.

Apple will report its earnings for the fourth fiscal quarter (third calendar quarter) of 2021 on Thursday, October 28. In Apple’s earnings report last July, the results were a staggering $81.4 billion versus an estimated $73.3 billion with an EPS of $1.30 vs. $1.01 estimate. Will difficulties such as semiconductor supply constraints, which have affected industries from automobiles to telephones, affect earnings this time around? Apple faces the same cost and supply chain challenges as its peers and those problems may hit revenue this quarter and over the holidays. Companies may need to pay more for shipping and may struggle to procure enough semiconductors or other key materials.

According to a Bloomberg report, the tech giant has reduced its iPhone 13 production target by around 10 million units from the previous target of 90 million units. Although the long-term earnings impact is believed to be minimal, the reduction will inevitably also have an impact on short-term earnings and affect the stock price of the supplying company.

https://www.tipranks.com/stocks/aapl/earnings-calendar

For Apple’s fiscal fourth quarter, analysts on average predict revenue of $84.8 billion, up 31.1% year-on-year and earnings of $1.24 per share, a 70% increase from what the iPhone maker reported last year. The quarter benefited from new releases in the iMac segment and iPad division, which last quarter recorded some of the fastest growth in a decade. Meanwhile, the 16-inch 64GB MacBook Pro, which is billed as the most affected product, experienced a delay in shipping until the first half of December, according to an Apple Insider report on Tuesday. There was no prior warning and no clarification for the move by the company, according to the report. This delay will not affect the current earnings report, but could be an issue that makes stock prices correct before the earnings report later. Apple’s third-generation AirPods, which were finally released and available Tuesday for $179, the third- feature a new design, better battery life, water resistance and improved audio quality.

Zacks’ Consensus forecast for current earnings is pegged at $85.49 billion, representing a 32.1% growth from the figure reported for last year’s quarter. The consensus mark for current earnings is pegged at $1.23 per share, unchanged over the past 30 days and showed a 70% growth from the figure reported in last year’s quarter. Zacks ranks Apple stocks #2 (BUY).

https://www.tipranks.com/stocks/aapl/forecast

The stock price of AAPL (MT5: #Apple) since the beginning of the year until today has posted a gain of +12.2%. Specifically for the third quarter, it only rose +3.7% due to a deep correction in September. Based on 26 Wall Street analysts who offered 12-month price targets for Apple in the last 3 months, the average price target is $170.09 with a high estimate of 198.00 and a low estimate of 140.00. The average price target represents a 13.76% change from the last price of $49.51 with a strong buy rating. Technically the #Apple price position has been trading flat since the end of last week. Currently the price position is at 149.33 after trying to surpass 150.00. The asset price is on the median line and the 200-day EMA. MACD and RSI are validating further moves to the upside for the price’s recent peak at 157.25. A break of this price level will confirm the continuation of the bullish trend for the projected target of 172.40 (from draws 123.12-157.25 and 138.27). Immediate support is in the area of the 144.80 bounce that investors are anticipating for lower prices to buy. A disappointing earnings report, likely to bring asset prices back to the 138.27 support. Overall, asset prices are in a bullish mode.

Ady Phangestu

Market Analyst – Educational Center – Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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How to invest as oil prices keep heading higher

Oil prices are soaring reversing a sharp meltdown seen at the depths of the Covid-19 crisis. Saloni Sardana explores how you can play the market.

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Market Update – October 27 – Yields up, Robust USD

• USD (USDIndex 93.84) – topped at 94 before retracing to 93.84 in Asia session.Wall Street rally to more new highs on the USA500 and USA30, with the USA100 closing in on its peak, before gains faded. Solid earnings continued to underpin optimism, and stronger than expected confidence and housing data helped too. – rekindled Fed tightening fears.
• The long end of the market saw yields dip, overlooking the inflation jump as the longer term outlook is still benign. The 10-year Treasury yield has moved up 1.4 bp to 1.622%. Australia’s 10-year rate moved up and the 3-year jumped nearly 16 bp after core inflation came in higher than anticipated and reached a 6 year high in data for the third quarter.
• FT: Alphabet and Microsoft smash estimates with $110bn revenue haul (+33% from Q3 2020) – surge in cloud computing, and a strong rebound in digital advertising – All eyes on US open. Big misses from Robinhood, tanking its shares – closed at 40.09
• Evergrande in focus again as authorities called on billionaire Hui Ka Yan to use his personal wealth to support China Evergrande Group. Chinese authorities called on companies to make “active preparations” to meet payments on offshore bonds. – sell-off in seven weeks for Chinese tech shares.
• German import price inflation hit 17.7% in September- The breakdown showed that energy prices remain the main driving factor, & that the shortage of natural gas and the spike in oil prices are not the only problems hitting supply chains, with supply shortages likely to keep prices elevated into next year.
• USOil steadied in $82 – $83.
• Gold dip on robust USD, higher yields and ahead of central banks, at $1785.
• FX markets – EURUSD 1.1600, Cable bounced 1.3774, USDJPY – 114 from 114.30.

Today – US Durables and BoC rate decision and conference. Earnings:  Thermo Fisher, Coca-Cola, McDonald’s, Sony, ServiceNow, Bristol-Myers Squibb, Boeing, GlaxoSmithKline, ADP, GM, Old Dominion, CME, Edwards Lifesciences, Norfolk Southern, Twilio, Ford, General Dynamics, KLA Corp., eBay.

Biggest FX Mover @ (06:30 GMT) AUDUSD (+40%)  It spiked at 0.7535, faster MAs, rising and RSI at 60. Fast MACD signal line & histogram keep rising,  implying to further rise in the short term.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Amazon: Q3 Report Under New CEO

Amazon (#Amazon) – The online retail giant with a market capitalization of $1.68 trillion (after Apple, Microsoft, and Alphabet) is due to report third-quarter results on Thursday, Oct. 28 after the market close, with Zacks forecasting a return per share of $8.72, down from $12.37 in the year-ago quarter. Sales are expected to be $111.85 billion, higher than the $96.15 billion in the same quarter a year ago.

Since the Covid-19 outbreak, the online retail business has continued to grow, however, after the easing of lockdown measures consumers seem to be returning to their old ways of living again. This trend can be seen in Amazon’s revenue for the past quarter, which was lower than analysts expected. As a result, the company’s share price has dropped more than 7% since its Q2 report, with the company commenting that this slowing growth may continue for the next few quarters compared to the period of the pandemic last year.

In addition to retail, the cloud business has also been one of the beneficiaries of the Covid-19 pandemic, with Amazon Web Services (AWS), Amazon’s cloud division, last quarter generating $14.8 billion in revenue and selling 13% of $113.08 billion in total sales in Q2. The expansion of the new บริการใหม่ของ AWS include the addition of new users Arctic Wolf Networks, Sun Life, and a partnership with Wyndham Hotels & Resorts to develop services for 21 hotel brands, which are all expected to contribute to cloud revenue. Continued growth is expected in Q3, with Zacks expecting AWS revenue in Q3 to be $15.5 billion, while the Amazon Prime streaming division, which operates in 22 countries, generated $7.9 billion in the past quarter, an increase of 28% compared to the same period of the previous year.

Another key change that could affect Q3 results is the departure of Jeff Bezos as CEO in Q2 , replaced by cloud computing head Andy Jassy.

Amazon’s share price from year-to-year is up 3.66%; after falling from the all-time high zone ($3,773.00) from the Q2 report, it is now trading in the $3376.00 zone in the triangle above the MA20 and MA200. The narrowing of the price in the triangle indicates an unclear direction and the momentum is decreasing. This is consistent with the MACD moving near the 0 line and the RSI near the 50 level. We may see the company’s share price breaking out of this triangle. But if the earnings are close to the expected numbers, the share price may continue to swing within the triangle frame. It has a first support at the MA200 at $3,320.00 and a low zone at $3,175.00, while the baseline is at $3,460.00 and quarter high zone $3,550.00.

The factors that could put pressure on the company’s stock price later include inflationary pressures and Fed movements, while supply chain problems and recent shortages in semiconductors are also likely to affect the sales of related products especially during the upcoming major shopping season.

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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

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