News Recap • Week 42 2024

Markets

First up, here’s a quick look at the most interesting price action this week in the equity market, forex, and commodities.

• S&P 500 rose 0.85% to a new ATH on the back of positive bank earnings. The index logged its 47th record close for the year on Friday and its sixth weekly record in a row, the longest win streak in 2024.
• Nasdaq Composite slightly lagged the S&P with a 0.8% advance but still managed its highest-ever weekly close.
• DAX jumped 1.46% to a fresh new ATH despite poor economic data out of Germany, proving how well a stock market can perform amidst a recession.
• Hang Seng gave up 2.11% despite a 3.63% gain on Friday as it continues to pull back after the stimulus-fueled rally that was kicked off in mid-September. Meanwhile, the CSI 300 rose 0.98% for the week after a 3.62% rally on Friday. Investors are digesting China’s new stimulus measures and the market’s massive run-up.
• India’s Nifty 50 declined 0.44% and is now 5.3% off of the ATH reached a month ago. Aside from the brief market crash after the election in June, this is the first +5% pullback in a year. We were due for one.
• The DXY rose 0.53% for the week to its highest weekly close since July as the dollar continues to strengthen.
• Gold rallied another 2.41% to a new ATH. Gold is now up 32% for the year, well ahead of the S&P 500’s 23% gain.
• Silver had a great week as well, rallying almost 7% to its highest level since 2012.
• Crypto also has a strong week with the total market up by 7% as of Sunday afternoon CET. Bitcoin was leading the rally among the majors, up almost 9% for the week and within 8% of its ATH from March. Many investors are attributing the recent rally to Donald Trump’s increased odds of winning the election. He is - for good reason - perceived as much more pro-crypto than Kamala Harris. Another contributing factor could be the somewhat crypto-friendly comments made by Harris earlier in the week.

The ECB made its third interest rate cut

The European Central Bank cut interest rates by another 25 bps from 3.5% to 3.25% on Thursday. The cut had been fully priced in for a while, along with an additional cut at the next meeting in December.

The rate cut came as Eurozone inflation fell below the ECB’s target of 2% in September for the first time since inflation took off after the Covid-19 breakout.

This was the ECB’s third rate cut this year. The first one was made in June when rates were lowered from 4% to 3.75%.

We’re now looking ahead to the Fed’s rate meeting on November 7 where markets currently see a 90% probability of a 25 bps rate cut.

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China, China, China

There was a slew of economic data and new stimulus announcements coming out of China this week. Here are the main headlines.

China GDP beat expectations

The most important data point from China was arguably their GDP data. The country reported Q3 annual GDP growth of 4.6% on Friday, slightly below the 4.7% annual growth reported in the second quarter but beating expectations for 4.5%.

On a quarterly basis, China saw a 0.9% expansion in Q3 vs 0.7% in Q2.

China’s own stated GDP growth target is 5% this year, which does seem within reach now with the extra stimulus coming in Q4.

The numbers were received positively with both the Hang Seng and CSI 300 rallying 3.6% on Friday.

China real estate stimulus

Senior Officials from China’s Ministry of Finance said on Saturday that local governments will be allowed to issue more special bonds to buy land and unsold housing inventories from developers.

Mainland China’s CSI 300 rose 2% on Monday with real estate gaining 5%.

China also announced an expansion of its “whitelist” of real estate projects on Wednesday. The whitelist was created in January this year and allows city governments to recommend residential projects to banks for speedier lending.

All commercial housing projects will now be eligible for the whitelist. So far, 2.23 trillion yuan has already been approved in loans to whitelisted projects but that figure is now expected to almost double by the end of the year.

China’s exports and imports fell short in September

China’s exports grew 2.4% in September from a year ago, far below the 6% forecast. Imports rose by 0.3%, also well below expectations of a 0.9% gain.

Exports have been one of the bright spots in China’s economy while consumer spending has lagged and the real estate sector has been struggling.

The numbers came out on Monday, kicking off a busy week of Chinese macro data.

China retail sales and industrial production did better than expected

China’s retail sales grew 3.2% from a year ago in September, better than the 2.5% forecasted. It was also significantly better than last month’s reading of 2.1%.

Industrial production grew 5.4% from a year ago, also beating expectations of 4.5%.

The urban unemployment rate also fell from 5.3% in August to 5.1% in September.

These are all encouraging signs for the Chinese economy which has been struggling for a few years now.

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Q3 earnings started to roll in

Q3 earnings season kicked off in earnest this week with banks leading the charge. Most of them surprised to the upside. Netflix rounded off the week with a massive beat as well. Here are some reports worth highlighting.

US financials

• Goldman Sachs beat Q3 earnings and revenue forecasts. Earnings came in at $8.40 vs $6.89 expected while revenue showed $12.70 vs $11.8 billion. Shares initially rose on the news but declined shortly after.
• Bank of America showed a slight beat on both earnings and revenue, largely driven by a big beat in its fixed-income trading business. Shares rose on Tuesday after the report.
• Citigroup beat on both earnings and revenue but set aside more money for potential loan losses. The latter seemed to concern some investors. Shares dropped 4% on Tuesday after the release.
• Morgan Stanley rallied 7% on Wednesday after beating on both Q3 earnings and revenue. Profits rose 32% to $3.2 billion.

Mixed signals from two big semiconductors

• Dutch semiconductor equipment maker ASML announced earnings day ahead of schedule and lowered their sales outlook for 2025. Their forecast is now for sales to come in between €30 and €35 billion, the lower half of their previous guidance. Net bookings for the September quarter came in at €2.6 billion, less than half of the LSEG consensus estimate. The stock plummeted 15% on the news, dragging the rest of the chip stocks down with it.
• Taiwan Semiconductor, the world’s largest producer of advanced chips, announced a big beat on Thursday with earnings of 352 billion Taiwanese dollars vs 300 billion expected. This was a positive surprise after ASML’s disappointing release on Tuesday.

Netflix continues to own the streaming space

• Netflix beat on both the top and bottom lines for Q3. The company reported $9.83 billion in revenue, better than the $9.77 expected and the $8.54 reported a year earlier. Earnings per share rose from $3.73 a year ago to $5.40, also beating expectations of $5.12.
  • Netflix added 5.1 million new subscribers during the quarter, more than the 4.5 million expected by analysts. This brings the total subscriber number to 282.7 million across all membership tiers. Starting next year, Netflix will no longer report subscriber numbers.
  • The ad-tier membership stood out with a 35% jump from the previous quarter. It also accounted for more than 50% of new sign-ups in Q3 in the markets where it’s available. Netflix is on track to roll it out in Canada in Q4 and more broadly in 2025.

A bit of luxury, airlines, and retail

• LVMH fell 6% on Wednesday after a disappointing earnings release. The company reported a 3% decline in Q3 sales compared to the same quarter last year.
• United Airlines beat on both earnings and revenue as well, jumping 12% on Wednesday. Q4 estimates also came in above forecast. Other airline stocks got a boost on the news. Delta and American Airlines both rallied 7%.
• Procter & Gamble reported earnings Friday morning with especially revenue and China demand coming in lower than expected. The company did manage a small EPS beat though. Shares were pretty much flat in Friday’s session.

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In other news

• US retail sales rose 0.4% in September, better than the 0.3% expected. It was also significantly better than the 0.1% rise in August. Excluding autos, the number looked even more impressive with a 0.5% gain vs 0.1% expected.
• The US saw 241,000 initial unemployment claim filings this week, 19,000 fewer than the forecast and last week’s numbers.
• The annual inflation rate in the UK came in at just 1.7% in September. This was well below Bank of England’s target of 2% and analysts’ forecast of 1.9%. The rate is down from 2.2% in August.
  • Core inflation still runs significantly hotter than the headline number at 3.2%. This was also below the 3.4% forecast and down 40 bps from last month.
  • The big drop makes a rate cut in November much more likely. The British pound fell around 0.6% against both the US dollar and the euro.
• Elon Musk’s SpaceX pulled off one of the most impressive engineering feats ever when the company safely caught their Starship rocket booster at the launch pad after a successful launch.
• Apple’s new iPhone 16 got off to a great start in the Chinese market. Compared to last year’s model, sales were up 20% in the first three weeks after launch. The Pro and Pro Max models did particularly well. Total iPhone sales, however, were down 2% year on year due to lower demand for older models.
• World Liberty Financial, a decentralized finance project backed by Donald Trump and family, launched its token sale this week. So far, it’s nowhere near the target of raising $300 million.
• The Biden administration decided to print another $4.5 billion in the form of student loan forgiveness for around 60,000 borrowers.
• Kamala Harris unveiled her ‘Opportunity Agenda’ for Black men. It includes a proposal of forgivable loans of up to $20,000 for Black entrepreneurs and a vague statement about protecting Black men and others who participate and invest in the crypto market.
• Investors’ appetite for hedging against a stock market decline is at its lowest since July 2023 as measured by the equity put-to-call ratio. It’s also at its second-lowest level since March 2022.
• Boeing reached a tentative deal with 33,000 workers who have been on strike since September 13. The company is offering a 35% wage increase over four years.