U.S. stocks closed out a second consecutive quarter with upsides recorded yesterday but stock traders remain wary because the pending U.S. presidential election and exploding COVID-19 caseloads
What we know; The Nasdaq composite index rose 11% in Q3 2020 and registered its biggest two-quarter increase since 2000.
- The U.S stocks post gains in Q3, amid growing geopolitical uncertainty, were up 7.6% in Q3 2020.
- The S&P 500 rose 8.5% for the third quarter, although it fell 3.9% in September in its first monthly decline since March when the COVID-19 pandemic started its spread across the world’s most powerful economy.
Still, the benchmark index’s quarterly gain extended its nearly 20% rise in the second quarter, for its biggest two-quarter jump since 2009.
Hopes for economic recovery and historic stimulus from Washington and the Federal Reserve fueled the U.S. stock market’s rally following the COVID-19 -driven crash in March.
That said, investors remain shaky as growing uncertainty on the viral onslaught killing over a million people and shows no signs of slowing down coupled high uncertainty in the U.S election, that is supposed to decide the next most powerful world leader, as kept stock traders lingering on their next moves.
Stephen Innes, Chief Global Market Strategist at Axi gave vital notes on the prevailing macros at the world’s most important equity market by saying;
“US equities closed out Q3 with another higher close overnight.
“The statement from US Treasury Secretary Mnuchin saying: ‘one more serious try’ on a fiscal stimulus deal after more talks took place overnight, helped improve investor sentiment.
“The escalator clause could be the special sauce and maybe how the Republicans try to meet the Democrats where they are. And House Speaker Pelosi can still feel like she can claim victory in getting the number closer to her $2.2 trillion targets.”
Global risk appetite gained from positive noises around a stimulus deal from U.S capital as the market was still giving mixed signal from the US presidential debate debacle
Why Microsoft shares dropped 2% amid rising earnings
Microsoft shares dropped about 2% after the tech juggernaut gave unimpressive revenue guidance.
The world’s software giant, Microsoft saw its shares drop about 1.66% of its value, immediately after the tech juggernaut gave unimpressive revenue guidance. That said, Microsoft printed impressive first-quarter earnings which exceeded estimates.
What you should know
- Microsoft’s stock price is falling on bearish comments coming from the company after it released impressive earning results, stating that its revenue guidance was weak and further hinted that it continued to face pressure from lower one-off sales of software due to the COVID-19 pandemic.
- Microsoft also revealed that operating profit margins were more likely to be affected in H1 2020 year. It increased its investments in its present cash cow business (cloud computing) while seeing a deep drop off in high-margin sales on its Windows operating system for Personal computers.
- It’s also important to note that the stock bears are hitting hard on the trillion-dollar market capitalized company on the bias that Microsoft further disclosed that for the final three months of 2020, its expected revenue would range between $39.6billion to $40.4billion; or a growth of 8% at the midpoint of the range, compared to global market forecasts of $40.4billion.
Here are some highlights of its most recent earnings;
- Revenue was $37.2 billion and increased by 12%.
- Operating income was $15.9 billion and increased by 25%.
- Net income was $13.9 billion and increased by 30%.
- Diluted earnings per share were $1.82 and increased by 32%.
Revenue in Productivity and Business Processes was $12.3 billion and increased 11%, with the following business highlights:
- Office Commercial products and cloud services revenue increased 9%, driven by Office 365 Commercial revenue growth of 21% (up 20% in constant currency).
- Office Consumer products and cloud services revenue increased by 13% and Microsoft 365 Consumer subscribers increased to 45.3 million.
- LinkedIn revenue increased by 16%.
- Dynamics products and cloud services revenue increased 19% (up 18% in constant currency), driven by Dynamics 365 revenue growth of 38% (up 37% in constant currency).
What they are saying
However, in its recent earnings call, Microsoft CEO, Satya Nadella, gave valuable insights into why Microsoft is heading in the right direction, with significant investments in its cloud businesses.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation.
“We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”
The C.F.O of Microsoft also buttressed the leading software maker’s long term investment.
“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue-generating $15.2 billion, up 31% year over year.
“We continue to invest against the significant opportunity ahead of us to drive long-term growth,” said Amy Hood, Executive Vice President and Chief Financial Officer of Microsoft.
Why U.S biggest Bank, JP Morgan Chase is bullish on Bitcoin
America’s JPMorgan Chase has given valuable insights on why it believes the odds are with Bitcoin.
America’s biggest bank, JP Morgan Chase, recently released a rare statement on the world’s flagship crypto, where it said that Bitcoin has what it takes to challenge gold’s status as the go-to alternative financial asset.
When compared to other financial assets like gold and crude oil, Bitcoin looks relatively small, considering that it has a market capitalization of $242 billion, compared to the precious metal’s (Gold) $2.6 trillion market value. However, this means the crypto has more room for upside and can potentially compete with gold as the preferred alternative currency.
In a report credited to Business Insider, America’s most valuable bank, JPMorgan Chase, gave valuable insights on why it believes the odds are with Bitcoin to keep rising in value.
“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price,” JPMorgan Chase said.
And over time, Bitcoin could be held for other reasons such as for making payments, not just for being a store of wealth as gold is, according to JPMorgan Chase.
“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value,” JPMorgan Chase explained.
What you should know
It’s important to note that such a bullish call by an American elite bank is coming on macros that BTC has a circulating supply of 19 million coins and a max supply of 21 million coins, meaning there are about 2 million left to be mined.
- Taking into account that about 4 million Bitcoins have been lost forever as a result of BTCs’ owners dying, and their next of kin not having access to such cryptos, it is fair to say there are only about 15 million BTC presently in circulation to cater for over 7 billion people fighting to have a stake in Bitcoins. This means that as BTC becomes scarce and more popular, it is only a matter of time before crypto asset valuation will hit the roof.
- As the general economic law states, when demand is high and supply is limited, prices of such products usually go up.
- Another strong fundamental increasing the odds on the world’s most popular crypto is that it’s almost impossible to forge, and has strong durability characteristics.
- Thanks to its complexly designed decentralized blockchain network, it will take you more than a supercomputer to make such an attempt. Also, you have to confuse all players in the blockchain network, in accepting such forged digital coin.
Biggest IPO: World’s biggest Fintech plans to raise $34 billion
Ant Group has begun the process of a concurrent initial public offering in what could mark one of the biggest IPOs of 2020.
The world’s payment juggernaut, Ant Group, is hoping to raise $34.5 billion in its dual initial public offering (IPO) after setting the price for its shares today, making it the biggest listing of all in modern history, in a report credited to CNBC news.
The Chinese financial powerhouse had earlier disclosed previously that it would divide its stock issuance equally across Chinese major stock exchanges, which include Shanghai and Hong Kong, issuing 1.67 billion new shares at each of those exchanges.
Ant Group’s Shanghai-listed shares will be quoted at 68.8 yuan each. The issuing of 1.67 billion shares would raise 114.94 billion yuan or $17.23 billion.
- The Hong Kong-listed shares have been priced at 80 Hong Kong dollars each, raising 133.65 billion Hong Kong dollars or $17.24 billion.
- The listing would produce a return of at least $34.5 billion, as the figure could go higher if the so-called over-allotment option is exercised, depending on demand.
- It would make it the largest initial public offer of recent memory, putting it ahead of previous record-holder Saudi Aramco, which raised about $29 billion.
What you should know
Ant Group, formerly known as Ant Financial and Alipay, is an affiliate company of the popularly known e-commerce company Alibaba.
- Ant Group remains the world’s most valuable FinTech company, and most valuable unicorn company, with a target valuation of over US$280 billion.
- The group owns China’s largest digital payment platform, Alipay, which serves over one billion users and 80 million merchants, with total payment volume (TPV) transaction reaching RMB118 trillion in June 2020.
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