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Thursday, October 27, 2022
Russia’s forces carried out nuclear drills, including a test launch of a ballistic missile, fuelling concerns around a nuclear weapon being used in its war against Ukraine. The US dollar index traded higher on geopolitical concerns.
Australia’s export prices fell by 3.6% during the third quarter, after a 10.1% rise in the prior quarter. This being the first decline in export prices since the third quarter of 2020 exerted pressure on the AUD/USD forex pair.
South Korea’s economy grew by 0.3% during the three months to September. The country’s economy expanding at the slowest pace in a year sent the KRW/USD pair lower in forex trading this morning.
Brazil’s central bank held the Selic rate steady at 13.75% at its latest meeting, exerting some pressure on the BRL/USD forex pair.
Russia’s industrial production contracted by 3.1% year-over-year in September, following a 0.1% decline in the prior month. Although the figure was much worse than the consensus estimate of a 1% decline, the RUB/USD pair remained broadly flat in forex trading this morning.
What’s happening: Shares of Meta Platforms fell in after-hours trading on Wednesday, despite the company reporting upbeat revenues for its third quarter.
What happened: The social media giant’s stock came under pressure on concerns around earnings.
A major announcement by Meta Platforms sent the shares of Nvidia up sharply during the after-hours trading session.
How were the results: The metaverse company reported a decline in sales in the third quarter ended September 30, but the top-line figure still exceeded market estimates.
Why it matters: Meta has been facing a continuous rise in costs as it is carrying out various overhauls of its apps and products to keep earning profits. The company is also making an investment of $10 billion a year on its metaverse business.
Total costs were recorded at $22.1 billion in the third quarter, significantly higher than the $18.6 billion reported in the previous year.
Meta said daily active users for Facebook rose 3% from a year ago to 1.98 billion, while monthly active users rose 2% year-over-year to 2.96 billion.
The daily active people metric for the company’s family of products reached 2.93 billion in September, representing a 4% year-over-year increase, while monthly active users rose 4% year-over-year to 3.71 billion.
Shares of Nvidia spiked around 4.3% in after-hours trading on Wednesday, after Meta increased its capital expenditure forecast citing higher data centre spending.
For 2022, Meta said it now sees capex in the range of $32-$33 billion, compared to its earlier forecast of $30-$34 billion. Management projected 2023 capex between $34 billion and $39 billion, amid investments in data centres and network infrastructure.
Meta guided to fourth-quarter revenues of $30-$32.5 billion, compared to market views of $32.2 billion.
How shares responded: Shares of Meta Platforms fell 19.7% to $104.30 in after-hours trading on Wednesday, following the release of quarterly results. The stock has lost around 26% over the past six months.
What to watch: Investors will keep an eye on rising competition from TikTok and Apple’s changes in privacy settings, which could impact Meta’s results ahead. Markets will also monitor the company’s significant spending on the metaverse, which is impacting its overall margins.
Context: The EUR/USD forex pair recorded gains on Wednesday, rising back above parity for the first time in around a month.
Details: Downbeat economic data from the US increased speculations of the Federal Reserve slowing the pace of its interest rate hikes and exerted pressure on the US dollar.
US home prices fell in August, with rising mortgage rates impacting demand. US new home sales also contracted to an annual rate of 603,000 in September. Although markets widely expect the Fed to raise rates by 75 bps at its November meeting, there’s now a higher probability of policymakers stepping down the pace to 50 bps in December.
The greenback came under pressure on the continued decline in the 10-year US Treasury yield, which fell from a multi-year high of 4.338%. The US dollar index, which measures the currency’s performance versus a basket of major rivals, fell around 1.1% to 109.70 on Wednesday.
The euro surged to its highest level since September 20 on Wednesday, amid weakness in the greenback. Markets also responded to data from the Eurozone showing a 4.4% rise in loans to households in September.
The EUR/USD forex pair gained around 1.2% to settle at 1.0086 on Wednesday.
What to watch: Traders await the ECB’s interest rate decision today. The ECB had hiked its benchmark rate by a higher-than-expected 75 bps in September and signalled further rate increases. Markets expect the ECB to increase interest rates by another 75 bps at today’s meeting.
Other Markets: US indices closed mostly lower on Wednesday, with the S&P 500 and Nasdaq 100 down by 0.74% and 2.26%, respectively, and the Dow Jones index up by 0.01%.
| Technical Levels | News Sentiment |
| EUR/USD – 1.0073 and 1.0085 | Positive |
| EUR/GBP – 0.8666 and 0.8672 | Positive |
| Nasdaq 100 – 11386.90 and 11427.17 | Negative |
| DAX 40 – 13168.44 and 13213.18 | Negative |
| Nikkei 225 – 27330.50 and 27406.50 | Negative |
| Futures at 0400 (GMT) | ||
| EUR/USD (1.0083, -0.03%) | Dow ($32,064, 0.60%) | Brent ($94.28, 0.5%) |
| GBP/USD (1.1634, 0.05%) | S&P500 ($3,863, 0.57%) | WTI ($88.34, 0.5%) |
| USD/JPY (146.04, -0.23%) | Nasdaq ($11,510, 0.56%) | Gold ($1,674, 0.3%) |
Germany’s GfK consumer climate indicator and Bavaria CPI, Spain’s unemployment rate, Turkey’s economic confidence index, balance of trade, foreign exchange reserves, tourism revenues, tourist arrivals and Central Bank of Turkey’s MPC meeting summary, Italy consumer confidence, business confidence and industrial sales, South Africa’s producer inflation, UK’s CBI distributive trades survey’s retail sales balance, Canada’s CFIB’s business barometer and average weekly earnings, Mexico’s balance of trade and unemployment rate, Brazil’s unemployment rate and value of loans, US Durable goods orders, initial jobless claims, continuing jobless claims, GDP growth rate, natural gas stocks change and Kansas City Fed’s manufacturing production index, Argentina’s consumer confidence indicator, Russia’s corporate profits and business confidence, as well as China’s foreign direct investment.
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