Big Tech and Big Oil, Yen Strength and Ant Mania – What’s up in Markets

Big Tech’s outlooks disappoint (with the exception of Alphabet (NASDAQ:GOOGL)), while Big Oil surprises to the upside (although crude prices are plunging again). The euro zone’s economy rebounded more than expected in the third quarter, but the euro is still weak, in contrast to a resurgent yen. And Ant Group’s IPO triggers a stampede of retail investor orders. Here’s what you need to know in financial markets on Friday, October 30th.

1. Big Tech fails to reassure

Silicon Valley’s finest rolled out results that beat expectations for earnings – handsomely so in the case of Alphabet and Facebook (NASDAQ:FB) – but which still gave cause for concern with outlooks that decidedly less bullish.

Facebook, Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) all fell in after-hours trading and stayed lower in premarket, on concerns about higher input costs, post-election regulatory risk and, in the case of Apple, the failure to give guidance for revenue in the current quarter, when the company expects the holiday season to kickstart a new supercycle for phone upgrades.

Only Alphabet stock reacted positively to the day’s news, rising 6.6% in premarket trade after the company said its advertising business rebounded in the quarter and promised it will break out its Cloud hosting business’s numbers separately in future.

2. Yen nears four-year high; euro not lifted by GDP

The yen was on course for its highest weekly close against the dollar in over four years, as the risk aversion prompted by the latest wave of the coronavirus pandemic in Europe and the U.S. pushed demand for the foreign exchange market’s favorite funding currency.

By 7:30 AM ET (1130 GMT), the dollar was at 104.44, just off the previous session’s low, after better-than-expected Japanese industrial production data for September. Japan’s exposure to the broader Asian economy appears to be supporting it too. Korea’s industrial output also beat expectations, up 8.0% on the year in September.

The euro, however, remained under pressure at $1.1653, after hitting a one-month low on Thursday in response to ECB President Christine Lagarde’s gloomy prognosis for the economy. Better-than-expected third-quarter gross domestic product data for the Eurozone, up 12.7% on the quarter rather than the 9.4% rise expected, did little to help, overshadowed by weak German retail sales numbers for September and another month of sub-zero inflation.

3. Stocks set to open lower; spending, income data eyed

U.S. stocks are set to open lower again on Friday, weighed down by the reaction to Big Tech earnings after the bell on Thursday.

By 7:30 AM ET, Dow 30 futures were down 183 points, or 0.7%, while S&P 500 Futures were down 0.7% and Nasdaq 100 futures were down 1.1%.

Aside from the Gigacaps, shares in Twitter (NYSE:TWTR) fell over 16% in premarket after social media platform warned of rising expenses and a possible hit to advertising spending in the fourth quarter related to the elections. The service also added only 1 million active users in the quarter, rather than the 9 million expected. One relative outperformer was Netflix (NASDAQ:NFLX), which announced it will raise prices for U.S. subscribers on Thursday.

The evident frailty of market sentiment suggests that data for personal income and spending at 8:30 AM ET will be monitored more closely than usual. The Michigan consumer sentiment survey follows at 10 AM ET.

4. Ant Mania

Ant Group’s initial public offering continues to break records, with retail investors placing more than $2.8 trillion (yes, trillion) of orders for stock.

That’s more than the entire GDP of the United Kingdom, the world’s seventh-largest economy, or the entire market capitalization of the German or Canadian stock exchanges.

The Chinese financial services group, built around the Alipay payments system, has already completed the sale of stock to institutional buyers, at a price that will bring in at least $34.4 billion, and as much as $39.5 billion if – as seems likely in view of the overhang of retail bids – the underwriters exercise the greenshoe option.

5. Big Oil surprises to the upside; crude battered

Crude oil prices bounced from their lowest level in nearly five months but remained well below the lower end of their summer trading range.

By 6:25 AM ET, U.S. crude futures were roughly unchanged at $36.16 a barrel, up more than a dollar from Thursday’s lows but still on course for a drop of some 10% this week. The international benchmark Brent was likewise down 0.2% at $38.20 a barrel, on growing concerns that the surge in Covid-19 cases will lead to more demand destruction by the end of the year.

On the corporate front, however, Chevron (NYSE:CVX) reported a surprise profit and Exxon Mobil Corp (NYSE:XOM) a narrower loss than expected for the quarter, while France’s Total (NYSE:TOT) reported better-than-expected earnings, again defending its pre-pandemic dividend level and saying it’s ‘resilient’ at $40 a barrel.