Kaohoon Morning Brief – 27 October 2022

1) FSS expects growing concerns on economic outlook if US GDP misses expectations

Finansia Syrus Securities (FSS) expected the SET to move sideways-to-sideways-up within 1,590-1,605 points. Generally, the market still has support from fund flows. They began to stream into equity and futures markets after the Dollar Index and U.S. bond yield extended their retreats due to the market optimism that the Fed would slow its rate increases late this year. Today, investors should keep an eye on the ECB meeting. The market expects it to raise its policy rate by another 0.75% to 2%. Also, the U.S. is due to release its 3Q22 GDP tonight. If it misses estimates, it may trigger market concerns over the economic outlook and the prospect of a recession next year. On the local front, the focus is still on economic recovery. In particular, consumption and tourism are about to enter their high season.

Besides, the market will release more 3Q22 earnings results from the real sector. FSS still prefered domestic and reopening plays in 4Q22-2023 and believe they will outperform the market. In the short run, place selective bets on stocks with a healthy 3Q22 forecast.


2) Meta plunges 20% in after hours on 3Q results missing expectations and weak 4Q forecasts

Share price of Meta Platforms plunged sharply by 20% in an after hours trading session on Wednesday after missing 3Q earnings expectations and a weak forecast for the fourth quarter.

Facebook’s parent delivered 3Q22 earnings per share (EPS) of $1.64 vs. $1.89 expected. Revenue for the quarter was $27.71 billion vs. $27.38 billion expected.

This is the second-straight quarter that Meta reported a decline in revenue. Reality Labs division, which houses its VR headsets, lost more than $9 billion in the first three quarters of this year.


3) Bank of Canada raises lending rates for the 6th time by 50bps to 3.75%

The central bank of Canada raised rates for the sixth time this year by another 50 bps increase to 3.75%.

The Bank of Canada is trying to control inflation that is running at the highest level in decades, despite a slowdown for the third month in a row in September. Statistics Canada reported that the consumer price index declined to 6.9% in September, down from 7% in August.

However, food prices at stores increased at a pace of 11.4%, which was the fastest pace of increase in grocery bills since August 1981.