31/10/2024 - 08:35 UTCThe dollar declined further against most major currencies on Wednesday, with the dollar index down for a third consecutive session ahead of key inflation and employment releases that could determine the Federal Reserve’s monetary policy path forward. Meanwhile, the U.S. private sector witnessed robust payroll growth in October, dismissing fears of disruptions caused by hurricanes and labor strikes, as indicated by the ADP National Employment Report. Independent data revealed that the U.S. economy expanded at an annualized rate of 2.8% in the third quarter, marginally below the 3% consensus forecast.
Based on the CME Fedwatch tool, markets are currently pricing in a strong likelihood of a 25-basis-point interest rate reduction by the Federal Reserve. The probability of such a cut stand at 96.9%, while the odds of rates remaining unchanged are negligible at 3.9%.
Wall Street displayed weakness on Wednesday as earnings season continues with mixed results, and uncertainty rises ahead of the U.S. presidential election on November 5 that could stall the market’s gains. The US 500, US 30, and US tech 100 all closed sharply lower.
Meta Platforms Inc. reported robust third-quarter financial results on Thursday, surpassing analyst expectations for both earnings and revenue. This performance was attributed to significant growth in ad impressions and pricing. Despite this positive outcome, the company's shares declined in after-hours trading as investors assessed the results and future guidance in light of elevated expectations fueled by AI advancements.
Microsoft Corporation stock price saw some gains following the tech giant's announcement of first-quarter earnings per share that exceeded analyst expectations. Microsoft Cloud revenue experienced robust growth, surging 22% year-over-year to reach $38.9 billion.
Market participants may see some price action later today as several key economic indicators are released. These include inflation data from the eurozone in the form of CPI, the Core PCE Price index which is the main gauge for US inflation, US jobless claims, US personal income and personal spending numbers, the Chicago PMI data and Canada’s GDP.
The EUR/USD pair saw upward momentum on Wednesday ending the session 0.35% higher.
In the U.S., third-quarter economic growth was reported at an annualized rate of 2.8%, just below the 3% forecast. Additionally, October's private sector employment rose by 233,000 jobs, a notable increase from September’s revised figure of 159,000, according to the latest ADP National Employment Report.
Eurostat's initial estimates showed that the Eurozone's economy grew by 0.4% quarter-on-quarter in Q3 2024, outperforming the projected 0.2%. On a yearly basis, Eurozone GDP rose by 0.9%, slightly above the market consensus of 0.8%.
Investors are now turning their attention to the upcoming Eurozone Harmonized Index of Consumer Prices (HICP) and the U.S. Personal Consumption Expenditures (PCE) Price Index, both of which are scheduled for release later today.
Gold prices climbed to a new record high of $2,790 on Wednesday, driven by uncertainty surrounding the upcoming U.S. Presidential Election.
Recent data from the United States shows continued economic expansion and a strong labor market. Third-quarter GDP figures, while solid, fell slightly below forecasts, while the ADP Employment Change report for October indicated stronger-than-expected private sector hiring.
Geopolitical tensions continue to underpin demand for gold as a safe-haven asset, even as Middle Eastern conflicts show signs of easing, with officials indicating a potential de-escalation.
Oil prices recovered on Wednesday, climbing over 2% as unexpected declines in U.S. crude and gasoline inventories, along with speculation that OPEC+ might delay a planned production increase, drove gains.
The U.S. Energy Information Administration (EIA) reported that gasoline stockpiles fell to a two-year low last week, driven by rising demand, while crude inventories also saw an unexpected decline as imports decreased.
Meanwhile, Reuters reported that OPEC+, a coalition of the Organization of the Petroleum Exporting Countries and allies like Russia, might consider postponing its planned December production increase due to concerns over weakened oil demand and rising global supply.
U.S. stock indexes ended lower on Wednesday, driven by a drop in chip stocks and caution among investors awaiting a series of corporate earnings announcements.
Following the close, both Microsoft and Meta Platforms reported earnings that exceeded quarterly revenue estimates. Earlier, Alphabet, the first of the "Magnificent Seven" mega-cap stocks to release results this week, rose 3.09% after surpassing expectations for third-quarter revenue and profit on Tuesday.
On the economic front, the Commerce Department’s preliminary estimate showed the U.S. GDP grew at a 2.8% annualized rate in the third quarter, slightly below the anticipated 3.0% growth. A separate report indicated private payrolls rose by a higher-than-expected 233,000 jobs in October.
Investors are also closely watching the closely contested U.S. presidential race between Kamala Harris and Donald Trump as the November 5 election approaches.
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