Market Overview

2 November 2020

U.S. Elections Made Crowds Turn a Blind Eye on Brilliant Corporate Reports

It seems that stock markets and currencies, as well as commodities, are no longer willing to respond appropriately to the regular macroeconomic background or even to the important Q3 corporate reports from giant companies. The investment community itself seems to not  care about forming any mental conception or any expectations concerning the outcome of the Bank of England’s meeting or the U.S. Federal Reserve’s meeting this Thursday.

An extreme uncertainty surrounding the foggy U.S. election process is driving investors to be cautious, so that nobody is eager to load their investment stomachs too much with additional food of shares and other market assets that may be difficult to digest during what is to come during the next couple of weeks. It is easier and healthy to keep things as they are until the visionary revelation from Washington may descend on the market community.

There is even less economic fundamental clarity because of limited lockdowns in France, Germany, and now in the U.K. too. Large businesses continue to operate almost as usual, but the service sector and the general public are still nervous about the prospects surrounding their regular income, which may lead to limited demand, so "all that jazz" does not create grounds for optimism right at the moment.

Amazon, the world's largest online retailer, beat its own all-time earnings record with $12.37 per share for the Q3 2020 on Thursday, against $7.41 of average forecasts only by expert polls in Bloomberg. And it was done on a record revenue of $96.15 bln. Amazon CEOs foresee for Q4 2020 that the company will have much better net sales, in a range between $112 bln and $121 bln, which is definitely higher than all previous estimations of most market experts and of the IT-giant itself. Yet, the market crowd preferred to save this juicy bonne bouche for later, by selling Amazon shares immediately above $3200 even before the report was released and then by selling Amazon again above $3150 just from the very start of Friday's pre-market trade to kick the prices quickly down to the $3030 area before the end of the week.

Exactly the same story happened with Apple shares, despite better-than-expected Q3 2020 revenue, which exceeded each of the results for Q1 or Q2 2020 and even Q3 2019. Nevertheless, that didn't help Apple shares to hold at least a $110 landmark, so the Apple Co stock prices finished the previous week at $108.86. It is unlikely that lower sales of the iPhones may serve as a convincing excuse for such a decline in Apple shares after $125 per share in mid-October, since it has been clear for some time  that consumers would not want to buy too many old-model iPhones in Q3, expecting the future opportunity to get the new iPhone 12 series with 5G technology decisions in Q4.

Most of the funds and private investors are simply trying to postpone the purchase of any new shares, especially of expensive "big techs", until after the end of the U.S. presidential election. But for now, on the contrary, they are taking some profits each time they catch some better prices to fix profit, fearing some lower dips on the charts.

All eyes are now on America. What's going to happen there? As Joe Biden, the Democratic contender for the hot U.S. presidential seat, just focuses on rallies in two swing states of Pennsylvania and Ohio during the last day of campaigning on Monday, the incumbent U.S. President Donald Trump is trying to clear the hurdle at the final curve with a speed that is almost beyond normal human ability by holding as many as five rallies today to encourage his potential supporters in North Carolina, Pennsylvania, Wisconsin plus two in Michigan. That's after staging five more rallies a day on Sunday, when he already inflamed the crowds in the same Michigan and North Carolina, plus Iowa, Georgia and Florida. 

The inexhaustible Mr Trump is going to close out the two-day intense trip late night in Grand Rapids, Michigan, exactly the same location where he finished his campaign in 2016, when he took Michigan, Pennsylvania and Wisconsin, which were three Democratic states for decades. Perhaps, he just believes in omens and hopes to repeat, in some way, his success of four years ago. However, it would be very difficult for him to repeat such a heroic deed once again, since the gap even in those battleground states is allegedly several percent in favour of Mr Biden, at least according to all official polls. 

Each of Mr Trump's stage rallies created a more visually effective picture with dancing and emotionally chanting crowds than rather slumberous meetings of Mr Biden with an audience usually consisting of hundreds of people inside their klaxoning vehicles, because more people are following COVID-19 restrictions during Democratic events. Anyway, Donald Trump warned again that the outcome of the election might not be known on Tuesday night, due to the counting of mail-in votes in tossup states. "I think it's highly like you’re not going to have a decision because Pennsylvania is very big," Trump said, for example, in Newtown just two days ago. He makes similar statements at all his rallies, so Mr Trump is clearly not going to admit defeat in any cut of cards on Wednesday morning.

Reuters wrote that a record 90 million Americans have voted early in the election, data of the weekend showed. The high number of early voters, about 65% of the total turnout in 2016 already, reflects the coronavirus worries. But mail-in votes counting nationwide may last longer than anybody could expect, and more than that, the results in tossup states may be challenged in courts of any state or even finally in the Supreme Court. 


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Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.


Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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