Date Issued – 30th October 2024

Preview

Today’s newsletter highlights UBS’s earnings report, a Nikkei index rise supported by U.S. tech, Schwab’s upcoming trading platform, oil price movements, and Alphabet’s share rise post-earnings. Let’s explore each development:

UBS Reports Strong Q3 Profit, Nearly Doubling Forecasts

UBS reported a robust Q3 profit of $1.43 billion, nearly double analysts’ forecasts and a significant recovery from a loss of $715 million in the same period last year. This earnings surge was primarily driven by higher transaction fees and resilient fee income, which offset challenges from declining net interest income. UBS’s total revenue rose 5% year-over-year to $12.33 billion, and underlying profit before tax increased by more than 100%, showcasing improved cost efficiency amid its strategic integration of Credit Suisse. With a 12% reduction in operating expenses due to synergy initiatives, UBS has shown agility in streamlining operations. Additionally, UBS projects that it will meet its net new asset goal of $100 billion by the end of 2024.

Investment Insight: UBS’s performance highlights its effective cost management and successful integration strategies, suggesting promising growth as it further incorporates Credit Suisse assets.

Market Price: UBS (UBSG): CHF 28.47

Nikkei Rises Over 1% Amid Big Tech Rally on Nasdaq

Japan’s Nikkei 225 index gained over 1% today, mirroring the Nasdaq’s rally, which was fueled by a strong performance in Big Tech stocks. U.S. tech firms posted positive quarterly earnings, which boosted global investor sentiment and sparked gains in tech-related stocks in Japan. This includes electronics and semiconductor manufacturers, which contribute heavily to the Nikkei’s composition. Investor optimism in Japan was further reinforced by news of increased consumer electronics exports, driven by demand from both Western and regional markets. The index’s positive response reflects investor confidence in Japan’s tech sector, as it benefits from both global tech trends and a weaker yen, which supports export growth.

Investment Insight: The Nikkei’s tech-driven rise reflects the positive influence of U.S. earnings on Japanese stocks, particularly in electronics and semiconductor sectors, positioning Japanese tech firms for continued growth.

Market Price: Nikkei 225: 39,277.39

Charles Schwab to Launch Expanded Overnight Trading Platform

Charles Schwab announced plans to roll out an expanded 24-hour trading platform that will allow clients to trade multiple asset classes around the clock. Set to launch next quarter, this platform reflects Schwab’s commitment to meeting demand for continuous trading options, particularly from retail investors and international clients who seek access outside of traditional market hours. The platform will offer trading in select stocks, ETFs, and other assets, providing greater flexibility and allowing clients to respond to global market events in real time. Schwab joins other major brokerages in expanding trading hours, a trend that has gained traction amid a rise in retail trading and demand for international market access.

Investment Insight: Schwab’s extended trading hours could drive increased engagement and trading volumes, strengthening its competitive stance in the brokerage industry as investor demand for accessibility rises.

Market Price: Charles Schwab (SCHW): $71.89

Oil Prices Hover at One-Month Low as Supply Dynamics Recalibrate

Oil prices have settled at a one-month low, with Brent Crude trading near $87.50 per barrel as supply factors regain focus. OPEC’s recent production adjustments, coupled with the gradual resumption of operations in some Middle Eastern oil fields, have eased immediate supply concerns. This recalibration comes amid broader economic uncertainties, as market participants weigh potential shifts in demand due to slower global growth. Investors remain cautious, as political tensions in oil-producing regions could influence short-term supply disruptions. The current price levels are a result of the market’s balancing act, adjusting for both supply pressures and shifting demand expectations driven by economic indicators.

Investment Insight: Oil’s recent stabilization highlights the sensitivity of prices to both geopolitical developments and production shifts, indicating potential volatility in the energy sector as these dynamics evolve.

Market Price: Brent Crude: $71.07 per barrel

Alphabet’s Frankfurt Shares Rise 1.8% Following Earnings

Alphabet’s Frankfurt-listed shares rose 1.8% following a positive Q3 earnings report, highlighting strong ad revenue growth and significant advancements in AI-driven tools. Alphabet reported a 12% increase in ad revenue, a sign of resilience in its core business despite a competitive digital advertising landscape. The company’s commitment to integrating AI into its services, including Google Search and YouTube, is expected to drive future engagement and revenue streams. Alphabet’s growth in its cloud services division also contributed to investor optimism, with the company emphasizing ongoing investment in AI development to maintain its competitive edge in technology and digital advertising.

Investment Insight: Alphabet’s steady ad revenue growth and expansion in AI tools position it as a resilient tech leader. Investors may find long-term value in Alphabet’s innovative approach within the digital ad and cloud computing markets.

Market Price: Alphabet (GOOGL): $171.14

Conclusion:

These market developments reflect dynamic trends across banking, technology, energy, and trading sectors. Staying informed on these shifts will help guide effective investment strategies.

Upcoming Dates to Watch:

• November 1: U.S. Non-Farm Payroll report.
• November 7: FOMC meeting and potential interest rate announcements.
• November 15: U.K. Q3 GDP report release.

Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.

Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.