Let The Good Times Roll!

THIS WEEK IN MARKETS

“Chief Twit” Elon Musk is not the only one “letting the good times roll” after taking control of Twitter. 

The US market also saw a lift this week as the economy proved to be resilient and investors increasingly expect a slowdown in interest rate hikes. 

In Singapore, applicants to the 6-month treasury bill were rewarded with an interest rate of 4.19% per annum in the latest auction. 

However, there isn’t much to cheer for Mark Zuckerberg, investors of big tech (ex Apple), and Chinese stocks in a sharp contrast in fortunes. 

We'll be looking out for a few key events in the coming week to determine if the good times keep rolling.  

1. Fed officials are meeting again, and investors are bracing for another 0.75 percentage point (0.75%) increase in interest rates. Read our preview here.
2. The Singapore results season goes into full swing with a number of banks and REITs reporting. 

IMPORTANT

• Not in a recession. The US economy grew 2.6% in the third quarter, above market expectations of 2.4%, as consumers were resilient in the face of inflation and sharp interest-rate hikes.
• See-saw. Chinese stocks had a volatile week after Xi Jinping's consolidation of power, little signs of change in China's Covid Zero policy, and weak economic data caused foreign investors to flee Chinese stocks. Read our analysis here. 

ICYMI

• Apple (AAPL) reported revenue and profit that were above expectations, even as its iPhone sales fell just short of market expectations.
• Meta (META) reported profit that was below expectations and posted a weaker-than-expected forecast for the fourth quarter. The increasing cost of building the metaverse also led to growing investor concerns.
• Amazon (AMZN) expects revenue in the fourth quarter to be substantially lower than the current quarter. This was attributed to a strengthening of the US dollar and an uncertain economy.
• Alphabet's (GOOGL) reported quarterly revenue and profit that were below expectations. Youtube reported its first ever decline in advertising revenue since its results were reported separately. 
• Microsoft (MSFT) reported quarterly revenue and profit that were above expectations.  However, the company expects a decline in sales for its Windows operating system with a fall in personal computer demand. 
• Elon Musk completed his US$44 billion acquisition of Twitter (TWTR) and took over the role of CEO from Parag Agrawal. He also indicated that there will be no change to Twitter’s content moderation policy and has assured advertisers that Twitter will remain a platform where healthy debate can take place.
• Intel (INTC) lowered its sales forecast for the year and announced that it would focus on cost reductions in the coming year. 
• McDonald's (MCD) reported earnings that were above expectations as its sales volumes grew even with rising prices. 
• Coca-Cola (KO) reported earnings that were above expectations and raised its full-year outlook as it is able to raise prices to offset rising expenses.
• Credit Suisse Group AG (CS) plans to raise 4 billion francs through a rights issue, sell shares to investors, and reduce costs by slashing its global headcount by 9,000. 
• UBS (UBS) reported earnings that were above expectations, helped by an increase in client inflows to its wealth management business. 
• The plan to merge Sembcorp Marine (SMM) and Keppel Offshore & Marine (KOM) has been significantly simplified, with SMM receiving a better deal. SMM will directly acquire KOM from Keppel Corp at an improved equity-value exchange ratio. SMM will also retain its listing status on the mainboard, and directly issue 36.8 billion new shares to Keppel.
• UOB Group reported 3Q earnings that were above expectations, driven by higher net interest income and lower credit costs.
• SIA will be redeeming all of its 10-year mandatory convertible bonds issued in June 2020 at S$3.86 billion, funded by existing cash reserves generated from the recovery of the air travel industry.
• Applicants to the November issuance of the Singapore Savings Bond (SSB) were allocated a maximum of $10,500 worth of SSBs. Read our analysis here. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

THE BIG IMPORTANT STORY

S-REITs hammered with rising interest rates. Are they worth buying now?

Rising interest rates can potentially affect REITs by driving weaker rental prospects, increasing borrowing costs, and making them less attractive investments. 

WHAT’S UP THIS WEEK

Monday, 31 Oct

• SG: Capitaland Ascendas REIT, Capitaland China Trust, Capitaland India Trust earnings

Tuesday, 1 Nov

• US: Uber earnings
• SG: SIA Engineering, Parkwaylife REIT earnings

Wednesday, 2 Nov 

• US: Ebay earnings, Fed Rate decision
• SG: Manulife US REIT, Netlink NBN Trust earnings

Thursday, 3 Nov 

• US: Peloton, Datadog earnings
• SG: DBS, Singapore Post earnings

Friday, 4 Nov

• US: Unemployment rate
• SG: Capitaland Investment, OCBC, SIA earnings

THAT’S INTERESTING

• That sinking feeling. Elon Musk walked into Twitter's headquarters carrying a kitchen sink on Wednesday, a few days before the billionaire became the CEO of the social media company. He later tweeted “Entering Twitter HQ – let that sink in!” with a video of his entrance. (Source: Bloomberg)