Investing.com -- China reportedly casts doubt over a trade deal with Trump, while Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) are poised to support tech stocks after reporting better-than-expected earnings. Meanwhile, the euro zone's economy remained stuck in a rut in the third quarter. Here's what you need to know in financial markets on Thursday, 31st October.
1. China casts doubt on trade deal, reportedly
The chance of a lasting resolution to the U.S.-China trade dispute remains as slim as ever. Bloomberg reported that Chinese officials are losing confidence in the ability of President Donald Trump to commit even to the limited deal that the two were planning to sign at the upcoming APEC summit (a plan that was already a dead letter after the host nation Chile said Wednesday it couldn’t hold the event due to ongoing civil unrest).
Bloomberg said China remains reluctant to move on issues such as structural reform that would address U.S. concerns about a level playing field in trade. That resistance is nothing new – it was already one of the reasons why the two sides focused on a less controversial “phase-1” deal in the short term. Even so, it reinforces the impression that China is reluctant to commit to any long-term deal with Trump given his ongoing problems with the impeachment inquiry and the possibility of him not being re-elected next year.
2. Stocks set for lower open after Fed signal; tobacco and pharma earnings due
U.S. stocks are poised to open lower, as the latest news out of China reintroduces a heightened degree of uncertainty about the trade picture and, ultimately, the outlook for the U.S. and world economy.
By 6:30 AM ET (1030 GMT), Dow Futures were down 93 points or 0.3%, while S&P 500 Futures were down 0.4% and Nasdaq 100 Futures were down 0.2%.
Today’s earnings roster is headed by Altria, Bristol-Myers Squibb, Celgene, Cigna and ICE.
Overnight, Asian stocks had eked out only modest gains as they digested the Federal Reserve’s signal that there will be no more monetary policy easing in the near term. Yesterday’s 25 basis point cut was already fully priced in. European stocks also fell, lacking much support from a rush of quarterly earnings. Fiat Chrysler bucked the trend, soaring 9.0% after the terms of its proposed merger with Peugeot were published. The deal would create the world’s fourth-largest auto group, with annual sales of $190 billion (if European politicians don’t sabotage it with demands about job preservation).
3. Apple's looking to break its falling revenue streak
Apple’s fiscal fourth-quarter earnings and revenue came in ahead of forecasts, thanks to strong sales of wearables and services that compensated for a continued drop in iPhone sales. The shares rose 2% in after-hours trading.
Even so, the group remains in a transitional phase at the end of a year in which profit has fallen in each of the last four quarters. iPhones still account for well over 60% of group revenue, and the company is having to work harder to improve them (operating costs were up 9% on the year).
The company predicted a strong holiday season, thanks to products such as its new Air Pods. Sales guidance of between $85.5 billion and $89.5 billion would represent an improvement from the $84.31 billion it posted in Q4 2018.
4. Facebook's bandwagon rolls on under defiant Zuckerberg
Facebook (NASDAQ:FB) shares are on course for a higher opening after popping 4.5% after hours on the back of stronger-than-expected revenue and profit in the quarter.
Mark Zuckerberg’s company said active daily users of its platform rose 9% from a year earlier to 1.62 billion, with most new users coming outside the U.S., Canada and Europe. Average revenue per user rose to $7.26, up 19% from $6.09 a year earlier.
Zuckerberg again defended the company’s position of running misleading political ads on its social network, only hours after Twitter CEO Jack Dorsey said his platform would no longer run political ads. Zuckerberg said he expected the coming year to be “tough” but said his position was best for the company and its “community”.
5. Euro zone stuck in a rut as Lagarde rages
A day after the U.S. reported economic growth a little above expectations, the euro zone reported figures that were by and large as gloomy as had been telegraphed. Gross domestic product grew by 0.2% in the three months to September, and by 1.1% from a year earlier.
The numbers came a day after Christine Lagarde geared up for taking over at the European Central Bank by lambasting Germany and other well-off northern European countries for not doing enough to support growth by running a looser fiscal policy.
Meanwhile, national inflation data showed that Lagarde will be under immediate pressure to do something to bring it back up to target. France’s annual inflation rate fell to 0.7% in October, while Italy’s remained stuck at 0.3%