Market snapshot: tech, rates and earnings remain major focus

The main US indices did not manage to reverse Thursday’s losses, but Amazon.com Inc (NASDAQ:AMZN) put the mega cap technology story back on track with an earnings beat driven by strength in its advertising and cloud businesses.

The shares rose by more than 6%, while Intel Corp (NASDAQ:INTC) spiked by almost 8% despite a loss which was worse than expected, as investors chose to concentrate on the revenue beat and strong accompanying outlook comments. 

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While the numbers were a welcome relief from the disappointments of Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc Class A (NASDAQ:META) earlier in the week, they nonetheless served as a stark reminder of just how reliant the market has become on a handful of stocks.

Elsewhere, there was an unusually light non-farm payrolls report, with the reading being clouded by the events of the last month. The headline figure reported that just 12,000 jobs had been added, against a consensus in excess of 100,000, with unemployment remaining unchanged at 4.1%.

However, the number was skewed due to the effects of both the October hurricanes as well as the Boeing Co (NYSE:BA) strike, leading some to suggest that the underlying figure would otherwise have been nearer to 130,000. In addition, the Labour Statistics bureau reported that the survey collection rate was well below average, which implies that there could be some major revisions to the number over the coming months.

As such, the almost unanimous expectation is that the Federal Reserve will cut interest rates by 0.25% this week, with a slightly weaker than estimated manufacturing number apparently sealing the deal. Elsewhere, the outcome of the US election will be announced, where the two candidates still appear to be neck and neck in the race to the White House. The run up to the election has so far provided little additional volatility and indeed the mere fact that the result will be settled should remove one area of uncertainty.

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The quarterly earnings season is less littered with major names as compared to last week, although updates are due from the likes of Super Micro Computer Inc (NASDAQ:SMCI), Novo Nordisk AS ADR (NYSE:NVO), Moderna Inc (NASDAQ:MRNA) and Airbnb Inc Ordinary Shares - Class A (NASDAQ:ABNB). In the meantime, the main indices are still performing strongly, with the Dow Jones having risen by 11.6% so far this year, the S&P500 by 20.1% and the Nasdaq by 21.5%.

There is an equally important few days ahead for the residents of and investors in Asia, where a four-day meeting of the Standing Committee of China’s National People’s Congress is a hugely anticipated event. After the recently announced monetary stimulus measures, investors are hoping for the turbocharge of a fiscal package, where a frenzy of speculation has led to the stellar expectation that as much as $1.4 trillion of debt may be approved.

With such elevated investor aspiration comes the possibility of disappointment, as has been evidenced over recent weeks as markets have dipped and rallied in equal measure in reaction to the previous announcements. Investors will therefore remain on edge until measures to counter the issues of a beleaguered property sector and persistent unemployment are in place – and with a specific timeline – as evidenced by a strong opening across Asian markets which largely fizzled out as the trading session wore on.

The UK is also expected to see the benefit of a 0.25% cut in interest rates on Thursday as the Bank of England announces its decision after a torturous week which saw heightened volatility and uncertainty following a highly-divisive Budget.

On the corporate front, updates from the likes of Primark-owner Associated British Foods (LSE:ABF), Marks & Spencer Group (LSE:MKS) and Sainsbury (J) (LSE:SBRY) will all be scrutinised to gauge the current level of consumer appetite amid what has been a testing few months. The current star of the show is M&S, where a share price rise of 70% over the last year has reflected not only continued investment in and success of its flagship food business, but also apparently changing fortunes at its Clothing and Ocado Group (LSE:OCDO) retail joint venture operations.

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Broker notes contributed to a cautiously positive open for the premier index to the benefit of stocks such as Frasers Group (LSE:FRAS), slightly offset by downgrades to the likes of Reckitt Benckiser Group (LSE:RKT) and Smith & Nephew (LSE:SN.). An overnight pop in the oil price also lifted BP (LSE:BP.) and Shell (LSE:SHEL), although trading levels were light ahead of what could be a decisive week in determining the direction of travel for the remainder of the year.

So far this year, the FTSE100 has added 6.2% although it has been unable to maintain the promise shown in the months around May, as the level hit a record level which remains some 3% away.