Big Tech Earnings, Energy Crisis, European Bank Earnings - What's Moving Markets

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Big Tech Earnings, Energy Crisis, European Bank Earnings - What's Moving Markets

By Peter Nurse -- The big tech earnings season starts in earnest, with Google-owner Alphabet and Microsoft scheduled to report before the open Tuesday. IEA talked of a global energy crisis, while sterling continues to gain as Rishi Sunak is appointed as the new U.K. prime minister, the third in less than three months. Stocks are set to open lower, while the major European banks started reporting results, to differing receptions. Here's what you need to know in financial markets on Tuesday, 25th October.

1. Alphabet, Microsoft lead off big tech earnings

Earnings season is ramping up this week, with the four biggest U.S. companies by market value among those set to report results, starting later Tuesday with Alphabet (NASDAQ: GOOGL ) and Microsoft (NASDAQ: MSFT ).

Google-owner Alphabet will be under the spotlight amid worries about the impact of inflation on its advertising revenue growth after Snapchat owner Snap (NYSE: SNAP ), the first major social media company to release its quarterly earnings , warned that it would see no revenue growth in the normally busy holiday quarter.

Microsoft is also likely to post its slowest quarterly revenue growth in over five years, amid doubts whether the company can maintain its annual outlook in the face of a PC market slowdown.

2. "First truly global energy crisis"

The world is in the middle of "the first truly global energy crisis," the head of the International Energy Agency said earlier Tuesday, citing tightening markets for liquefied natural gas worldwide and major oil producers cutting supply.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market significantly, IEA Executive Director Fatih Birol said, adding that the recent decision by OPEC+ to cut 2 million barrels per day of crude output was a "risky" move.

Europe may make it through this winter if the weather remains mild, Birol added, but the possibility of rationing exists if there is an extremely cold and long winter or if there are any surprises, for example, the Nordstream pipeline explosion.

3. Stocks set to fall at open ahead of tech earns

U.S. stock markets are set to open marginally lower later Tuesday, handing back some of the previous session's large gains ahead of the release of earnings from tech giants Alphabet and Microsoft, which could provide further clues into the health of the U.S. economy.

By 6:25 ET (10:25 GMT), Dow Jones futures were down 140 points or 0.4%, while S&P 500 futures were down 0.4%, and Nasdaq 100 futures were down 0.2%. The three main cash indices had all risen around 1% on Monday.

Earnings are also due from the likes of UPS (NYSE: UPS ), General Electric (NYSE: GE ), Coca-Cola (NYSE: KO ), and General Motors (NYSE: GM ) before the bell, while Chipotle Mexican Grill (NYSE: CMG ) and Texas Instruments (NASDAQ: TXN ) will report after the close.

Macroeconomic data releases include the October CB consumer confidence figure and the Richmond manufacturing index , while Fed governor Christopher Waller is set to speak.

4. Sunak has been appointed the new U.K. PM

Rishi Sunak has been officially appointed as the U.K. prime minister, a move that has already been well-received by the markets with the former chancellor widely seen as the most fiscally prudent of the available options.

Sterling rose another 0.4% against the U.S. dollar Tuesday, while the yield on the benchmark 10-year Gilt was largely unchanged, having fallen sharply on Monday when he won the poll to be the leader of the ruling Conservative Party.

The 42-year-old former finance minister becomes Britain's third prime minister in less than two months, its youngest in 200 years, and its first leader of color. He now faces a mammoth task of tackling a mounting economic crisis, a warring political party, and a deeply divided country.

"We now need stability and unity, and I will make it my utmost priority to bring our party and our country together," Sunak said Monday.

5. European banking earnings

The quarterly earnings season for Europe's major banks started Tuesday, with UBS (SIX: UBSG ) and HSBC (LON: HSBA ) receiving very different market receptions.

The Swiss banking giant reported a smaller-than-expected 24% slide in third quarter net profit, prompting stock gains of over 5%, with robust client inflows and lower costs helping to smooth over the impact of turbulent financial markets.

By contrast, HSBC stock fell over 6% after the London-based bank reported a 42% slide in third quarter profit, hit by loan losses and charges from the sale of its French business.

HSBC also named Georges Elhedery as its new chief financial officer on Tuesday, a surprise move that puts him in pole position to eventually succeed Noel Quinn as chief executive.

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