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Palantir Technologies Inc. is set to report earnings after the market close on Monday, following a remarkable 140% rally driven by artificial intelligence this year. However, Wall Street's average target suggests a potential decline of over 30% in the next 12 months, reflecting growing caution among investors who seek more concrete results from AI technologies.
The DAX 40 has retreated nearly 3% as investors take profits ahead of significant events in the US and China, including the US presidential elections and China's National People's Congress. The index is testing major support at 19,000 points, with a favorable risk/reward ratio for potential buying, targeting 20,000 points. Positive seasonality trends suggest a possible year-end rally following the election outcomes.
European markets are set to open mixed as traders await crucial U.S. jobs data, with the FTSE 100 and DAX slightly up, while the FTSE MIB declines. This follows a challenging October, marked by significant losses amid corporate earnings and inflation concerns. U.K. house prices rose 2.4% annually in October, reflecting a slowdown from September's growth. The upcoming U.S. jobs report is pivotal for the Federal Reserve's policy decisions next week.
Global stock markets are declining due to disappointing earnings from tech giants Microsoft and Meta, alongside pre-election uncertainties. The US economy grew by 2.8% in Q3, missing forecasts, while job openings fell significantly. Key upcoming events include the US presidential election and interest rate decisions from the RBA and FOMC.
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Amazon CEO Andy Jassy reassured investors about the company's significant investments in generative AI, which drove an 81% increase in capital expenditures to $22.6 billion in the last quarter. He emphasized the potential for high returns, citing the rapid growth of AWS and the expected $75 billion capex in 2024, fueled by demand for AI infrastructure. Jassy noted that generative AI has already become a multi-billion-dollar revenue stream within AWS, growing at a rate three times faster than AWS's initial growth.
Asia-Pacific markets experienced declines, led by Japan's Nikkei 225, which fell over 2% following significant losses on Wall Street. The S&P 500 and Nasdaq Composite recorded their worst days in nearly two months, influenced by disappointing earnings forecasts from Microsoft and Meta. Traders are awaiting key economic data, including China's manufacturing PMI, while Australia's producer prices index showed a year-on-year increase of 3.9%.
BlackRock has launched the iShares Top 20 U.S. Stocks ETF (TOPT) to provide investors with a diversified option beyond the 'Magnificent Seven'—the largest tech stocks. This ETF includes the 20 largest U.S. stocks by market capitalization, aiming to capture growth while addressing concerns over the concentration of mega-cap companies. Since its launch on October 23, the ETF has seen a 2% decline.
Nasdaq 100 futures rose 0.3% as investors analyzed tech earnings ahead of key jobs data. Amazon and Intel saw significant gains after exceeding earnings expectations, while the Dow dropped over 300 points due to declines in major tech stocks. Economists anticipate a modest increase in nonfarm payrolls for October, with the unemployment rate expected to remain at 4.1%.
UBS has raised its price target on Meta Platforms, Inc. to $719 from $690 while maintaining a Buy rating. The company primarily operates social networking services, including Facebook, Instagram, and WhatsApp, with 3.98 billion monthly active users in 2023. Revenue sources are predominantly from advertising (97.5%), with a small portion from virtual and augmented reality products.
UBS analysts express optimism for stock markets, citing strong US economic fundamentals and favorable macro data. Despite recent declines, they highlight a robust GDP growth of 2.8% and significant job creation, suggesting limited recession risk and potential Federal Reserve rate cuts ahead. With AI driving growth in tech, UBS sets a target of 6,600 for the S&P 500 by the end of 2025.

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