European stocks are expected to open on a cautious note on Wednesday as investors digest the mixed earnings results from U.S. technology firms and anticipate next week's pivotal U.S. presidential election and Federal Reserve interest rate decision.
Alphabet, the parent company of Google, surpassed earnings expectations due to robust revenue growth in its cloud division. Contrasting this, chipmaker AMD's guidance for fourth-quarter revenue didn't meet investor expectations.
Today, Meta Platforms and Microsoft are slated to disclose their earnings, while Apple and Amazon are scheduled to announce results on Thursday. Geopolitical tensions remain at the forefront after the European Union raised tariffs—reaching up to 45 percent—on electric vehicles imported from China, eliciting a strong rebuke from Beijing.
There is ongoing investor concern that proposed tariffs by U.S. Presidential Candidate Donald Trump could potentially dampen GDP growth in the U.S., Europe, and China. Although a Trump win is possible in the upcoming November 5 presidential election, current major polls indicate he is closely competing with Vice President Kamala Harris.
Among economic announcements, U.S. reports on private sector employment, Q3 GDP, and pending home sales are expected to attract attention as the day progresses. In the UK, Prime Minister Keir Starmer's newly formed government will reveal its first comprehensive budget today. Analysts anticipate that the Autumn Budget will introduce significant fiscal reforms, including tax and wage adjustments that could profoundly affect the industry landscape.
Preliminary GDP figures from the euro area and other European countries, alongside Eurozone economic sentiment surveys and Germany’s preliminary consumer price data for October, may also sway market sentiment as the day unfolds.
In Asian markets, trends were predominantly negative, with Japanese shares bucking the trend and marking gains amidst ambiguity over Bank of Japan rate hike prospects. Treasury yields declined while gold surged to a new record high against a backdrop of U.S. election uncertainty and enduring Middle Eastern conflicts.
The dollar's rally took a breather while oil prices inched up after experiencing losses in the previous two sessions. U.S. stocks had mixed outcomes overnight ahead of key technology earnings results. Economic data showed a mixed picture too, with job openings dipping to their lowest in over three and a half years in September, while consumer confidence hit a nine-month peak.
The S&P 500 rose by 0.2 percent, and the tech-centric Nasdaq Composite increased by 0.8 percent to achieve a new record closing high, whereas the Dow Jones Industrial Average fell by 0.4 percent, marking its sixth lower close in the last seven sessions.
In Europe, stocks closed lower on Tuesday following disappointing earnings from BP Plc and Novartis AG. The broader European STOXX 600 index declined by 0.6 percent. Germany's DAX fell by 0.3 percent, France's CAC 40 dropped 0.6 percent, and the UK's FTSE 100 decreased by 0.8 percent.
