Weekly Market Outlook

The first three days of this week almost completely lack important economic and financial data items that deserve investors’ attention. However, Thursday deserves special attention, as three US tech giants – Apple, Amazon and Facebook – are due to release their earnings reports.  On the same day, the ECB and the Bank of Japan are scheduled to report their interest rate decisions. On Friday, the focus will be on the third quarter GDP of Germany, France and the EU, as well as on the US personal spending.

Amazon Q3 results (Thursday)

With the rising demand and having achieved large profits in Q2, Amazon hired 175k new employees for its deliveries. As management said, their expectations were for another profitable period in Q3. However, with the emergence of new players in the cloud computing field, the company’s revenue rise was slowed down. It remains to be seen whether the company has been able to achieve numbers as good as these reported in the last quarter.

Apple Q4 Results (Thursday)

The tendency for customers to refrain from purchases in the second year half, waiting for the launching of new products, led to expectations of a weak Q3. The global pandemic took its toll too, and Apple attempted to deal with the rough conditions by launching new, cheaper iPhone models, like the SE. This has drawn customers switching from Android to iPhone, so with larger sales, revenues increased.

Compared to iPhone sales, thanks to which revenue rose to $26.4bn, iPad and Mac computers sales contributed too, though more modestly. Apple TV+ was another bright spot, though by no means reaching the scales of Amazon Prime Video and Netflix.

Facebook Q3 Results (Thursday)

Facebook did not suffer in the restrictions-ridden pandemic crisis, and in Q2 nearly doubled its profits. Facebook’s monthly users numbers spiked and, compared to 2.6bn in Q1, rose to 2.7bn. The company’s expectation about Q3 was warily stated, with an anticipation of just about 10% profits. Facebook is already being pressured with ad boycotts and on account of how it deals with hate speech. Because the data to be announced this week will show Q3 results, there is the concern that the anticipations of users growth and of revenues could be way too high. Analysts expect profits to come out at $1.91c per share.

 Bank of Japan Rate Decision (Thursday)

The Bank of Japan has been striving to keep interest rates low for a 30-year period. In spite of this, it has been repeatedly failing to raise inflation to 2%. The institution’s latest attempt to come to the aid of companies dealing with the pandemic imposed obstacles has been a $1trn loan program. The latter is to last until March next year, with no changes expected in the bank’s policy. Japan’s economic recovery is much more meagre compared to other major economies.

 ECB Rate Decision (Thursday)

After the expansion of the bank’s Pandemic Emergency Asset Purchase programme, and the extension of its term, investors were expecting to see recovery carrying on in the third and fourth quarter too. Yet recovery has been postponed and the eurozone is seen slipping back into deflation. The ECB insist that they still have the resources to cope with a double-dip recession. In reality, the bank remains the only European support, as the EU, torn by lack of consensus, provides virtually no fiscal resources. With the splits in ECB’s governing council, and the opposition of many members to further stimulus in the short term, however, the institution is once again faced with the pressure to react to the possible economic deterioration in the next quarter.

 France, Germany & EU Q3 GDP (Friday)

This Q3 data will possibly indicate a comprehensive economic rebound in the summer. Late in the summer though, the different PMI data started to decline slowly, especially in August and in September, indicating a slowdown in economic activity. Analysts forecast Q3 GDP rising with 14.2% in France Q3 and with 7.5% in Germany. As for the EU, the rise is seen at 9%, after the 11.8% decline in the second quarter.

 US September Personal Spending (Friday)

After the US emerged from the daunting lockdown, retail sales rebounded to a surprising level. Consumer confidence also rebounded significantly in September, though that happened in the run-up to the presidential elections, and following the cease of the $600 per week payment to households received until end July. Personal spending has risen significantly too, for four consecutive months, and will possibly continue to rise for another one.