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Please see this week’s market overview from eToro’s world analyst staff, which incorporates the most recent market information and the home funding view.
S&P 500, Dow Jones, Bitcoin and gold all proceed to observe a constructive pattern
In an eventful week, the S&P 500 hit its forty seventh report excessive of the yr, whereas the Dow Jones reached its fortieth. Bitcoin gained 9%, whereas oil dropped 7%. In the meantime, gold steadily climbed above $2,700, bringing its year-to-date return to 31%.
US equities had been boosted by robust earnings from main firms, starting from top-tier banks to Netflix, together with strong retail gross sales figures. Price-sensitive sectors like healthcare, supplies, and industrials led the way in which, as a disappointing outlook from Dutch chip machine maker ASML pushed some tech traders towards safer choices. Nonetheless, robust earnings from TSMC reignited optimism round AI shares.
Wanting forward, 112 S&P 500 firms, together with 7 of 30 Dow Jones constituents, are set to report their Q3 ends in the upcoming week. On Thursday, the US, Eurozone, and UK will launch new PMI information, providing a snapshot of the manufacturing sector in every area. With simply two weeks till the US presidential election, expectations about potential coverage modifications may introduce vital market volatility. Within the meantime, Russia will host the sixteenth BRICS Summit.
Bitcoin hodlers see themselves confirmed
After months of consolidation, Bitcoin is gaining bullish momentum. Final week, its worth surged by 9%, climbing above $68,000—simply 8% shy of its all-time excessive of $73,835, set on March 1, 2024. For a lot of holders, Bitcoin continues to function a hedge towards fiat foreign money devaluation, particularly as rate of interest cuts enhance the cash provide and drive inflation. Institutional traders are additionally turning to Bitcoin, which has risen 60% because the begin of the yr. The rising acceptance of Bitcoin ETFs stays a big tailwind for the main cryptocurrency, probably pushing it to new report highs (see chart). As Bitcoin typically rallies as soon as key ranges are breached, FOMO (worry of lacking out) could set in on the subsequent peak.
A thought experiment: What if each investor allotted simply 1% of their portfolio to Bitcoin?
Chart: Bitcoin is testing a key resistance zone between $68,000 and $73,000
Russia hosts sixteenth BRICS Summit in Kazan
Talks of a brand new world order are set to accentuate this week because the BRICS international locations convene for his or her sixteenth Summit in Kazan, Russia, from October 22 to 24. The founding nations, Brazil, Russia, India, China, and South Africa, can be joined for the primary time by new members Egypt, Ethiopia, Iran, and the UAE, together with representatives from two dozen different international locations contemplating membership. BRICS goals to determine a substitute for the G7 and IMF (assembly this similar week), specializing in sanction-proof financing by selling commerce in native currencies relatively than counting on the US greenback. Whereas fast change will not be anticipated, momentum is constructing that might finally problem the dominance of the US greenback and the worth of US Treasury bonds, elements that partly clarify the latest rise in gold costs. Nonetheless, the BRICS nations typically have conflicting pursuits and don’t all the time see eye-to-eye.
US, UK and Eurozone to launch PMI information for October
Why does it matter? Manufacturing on either side of the Atlantic faces fierce competitors from China, which is trying to export its approach out of a property disaster. Every area has its personal challenges: Europe is attempting to revive its financial system, whereas the US goals to keep away from a tough touchdown. In each instances, traders are eager to keep away from additional declines within the PMI Composite, significantly in manufacturing. Consensus estimates put the Eurozone PMI Composite at 49.7, marginally up from 49.6 in September. Within the US, PMI Manufacturing is anticipated to get better to 48.2 from 47.3 the earlier month. Disappointing outcomes may reignite recession fears, although rate of interest cuts in each areas present some cushion towards worsening financial situations. Alternatively, stronger-than-expected information may scale back the chance of additional fee cuts.
Earnings and occasions
Tesla can be in focus after a lacklustre robotaxi occasion with out numbers. Common Motors and Mercedes-Benz will present one other have a look at the automotive sector. Hermès and Kering can be watched particularly after the disappointing LVMH figures final week.
Earnings releases:
21 Oct. SAP
22 Oct. GE Aerospace, Danaher, Verizon, Texas Devices, RTX, Common Motors, L’Oreal
23 Oct. Tesla, Coca Cola, IBM, ServiceNow, NextEra Power, AT&T, Boeing, Iberdrola, Kering
24 Oct. Unilever, RELX, Unicredit, Hermes, Honeywell
25 Oct. Mercedes-Benz
This communication is for data and training functions solely and shouldn’t be taken as funding recommendation, a private suggestion, or a suggestion of, or solicitation to purchase or promote, any monetary devices. This materials has been ready with out taking into consideration any specific recipient’s funding targets or monetary scenario and has not been ready in accordance with the authorized and regulatory necessities to advertise unbiased analysis. Any references to previous or future efficiency of a monetary instrument, index or a packaged funding product should not, and shouldn’t be taken as, a dependable indicator of future outcomes. eToro makes no illustration and assumes no legal responsibility as to the accuracy or completeness of the content material of this publication.
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