U.S. equity futures surged on Monday as investors anticipated a series of mega-cap earnings reports from technology companies, expected to propel the Nasdaq Composite to new highs. The weekend airstrikes by Israel against Iran, which did not target oil or nuclear facilities as initially feared, led to a decline in oil futures during early trading. Wall Street is gearing up for a significant week, marked by the busiest period of third-quarter earnings reports and the final stretch before the U.S. Presidential election on November 5. Notably, five of the “Magnificent Seven” companies—Alphabet, Microsoft, Meta Platforms, Amazon, and Apple—are set to release their third-quarter earnings this week.

European markets opened higher on Monday, with media and construction and materials stocks each gaining over 1%. However, oil and gas stocks declined by approximately 2.3%. Shares of Dutch medical devices giant Philips plummeted by 16.8% after the company revised its full-year sales outlook downward due to weak demand from China. Additionally, oil prices dropped by 6% on Monday following news that Iranian energy facilities were not damaged during an Israeli attack over the weekend.

On Monday, Japan’s benchmark Nikkei 225 and Topix indices saw gains, buoyed by a weaker yen amidst political uncertainty following the ruling LDP’s loss of its parliamentary majority. Meanwhile, China’s CSI 300 edged up by 0.2% to close at 3,964.16, despite the country reporting its worst industrial profit figures since the pandemic, with a significant 27.1% year-on-year decline in September. In other markets, Australia’s S&P/ASX 200 rose by 0.12%, South Korea’s Kospi increased by 1.13%, and Hong Kong’s Hang Seng index reversed earlier losses to finish 0.18% higher.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ACAD, BOH, CNP, HOPE, ON, PRCT, & SJW. After the bell reports include AGYS, AMKR, AESI, BOOT, BRX, BRO, CDNS, CALK, CWH, CSWC, CCCS, CDP, CR, CVI, PLOW, ESI, EHC, FFIV, FLS, F, HILT, NARI, FRC, LEG, LTC, NEW, PCH, RMBS, REG, SAFE, SBAC, SKY, TMDX, TREX, UFPI, UCTT, VFC, WM, & WELL.

News & Technicals’

Volkswagen is contemplating significant pay cuts, layoffs, and the closure or downsizing of its plants in Germany, according to the company’s works council. Management recently proposed a plan that includes a 10% across-the-board pay reduction and wage freezes for 2025 and 2026. The works council estimates that these measures will result in an overall pay cut of approximately 18% for workers over the period. Additionally, Volkswagen plans to shut down three factories and reduce the size of all other plants in Germany.

China’s industrial profits experienced their sharpest decline since the pandemic in September, according to data from the National Bureau of Statistics. Following a 17.8% drop in August, industrial profits plummeted by 27.1% year-on-year in September, marking the steepest fall since March 2020, which saw a 34.9% decrease. In response, Chinese authorities have intensified efforts in recent weeks to stimulate economic growth.

Shares of Japanese camera giant Olympus Corp dropped on Monday following the announcement of CEO Stefan Kaufmann’s resignation amid a drug allegation. Olympus disclosed that it had received an allegation that Kaufmann, a German national, had purchased illegal drugs. The company, in consultation with outside legal counsel, promptly investigated the matter, reported it to the authorities, and fully cooperated with their investigation.

Robinhood announced on Monday the launch of U.S. presidential election event contracts, allowing customers to trade based on their predictions for the closely contested race between Vice President Kamala Harris and former President Donald Trump. Event derivatives involve buying and selling contracts that let traders speculate on the outcomes of specific events, such as elections, economic data releases, or policy decisions, without owning the underlying assets. These derivatives, which are relatively new and generally considered high-risk compared to traditional financial instruments, have gained popularity in recent years.

The market looks to reverse Friday bearishness with huge anticipation of the mega-cap tech reports throughout the week ahead.  We are also seeming celebrating the Israel’s attack didn’t affect the oil infrastructure but strangely there seems to on concern about what Iran may do in response. Stay tuned as there may be more come on the geopolitical front.  Remember we have a big week of jobs data along with the earnings and those pesky bonds continue to march higher suggested a possible problem with this bull run. Plan carefully this week as price volatility could be wild!

Trade Wisely,

Doug