Farhan Badami, market analyst at eToro Group Ltd, shares his three things to watch in Australia in the coming days.
Big US earnings run
Next week brings the peak of this quarter’s earnings season, with tech heavyweights Microsoft, Meta, and Alphabet reporting on Wednesday, October 29, followed by Amazon, Apple and Intel on Thursday. Together, they make up nearly a quarter of the S&P 500’s market cap, meaning their results will set the tone for broader market sentiment. They’re also among the most-held equities on eToro’s platform in Australia, ranked 5th, 6th and 7th, and 3rd, 4th and 14th, respectively.
Last quarter’s strong showing — with over 80% of S&P 500 companies beating expectations — has raised the bar for performance. Much of that strength stemmed from tight cost control and AI-fuelled demand. But lofty expectations leave little margin for error. With valuations already pricing in continued growth, even small misses on margins or guidance could spark sharp reactions.
The key question now is whether big tech can sustain earnings beyond the initial AI boom. Revenue growth remains solid, but rising capital expenditure on cloud and data infrastructure is squeezing profitability. Microsoft’s Azure expansion and Meta’s AI-driven ad initiatives will be key indicators of how efficiently the sector can translate heavy investment into lasting returns.
AU CPI
The last Quarterly CPI reading before the end of the year arrives on Wednesday. Optimism is not high, with inflation continuing to prove sticky and consumer confidence riding a six-month low.
Last quarter’s hopes for a flurry of cuts before the end of year are truly in the rear view, with expectations for any further cuts in 2025 largely swept off the table. A few analysts out there are still putting their hopes on a November cut, but for now, back-to-back cuts before Christmas don’t seem to be in anyone’s letter to Santa.
This round of CPI data is important because, as we know, month-on-month readings are valuable to analysts, but the RBA hangs its decisions largely on quarterly readings.
I don’t expect any pleasant surprises here. We’re probably going to see inflation remaining sticky - and anything larger than a steady reading will obliterate hopes of anything less than a pause in the final two policy meets this year.
BYD earnings
Chinese EV manufacturer BYD reports its latest earnings this Friday.
Last week’s Tesla earnings carried some positive news but indicated a bit of a bumpy road ahead for the market darling. Inventory woes on the cards next quarter and a series of in-progress innovations are threatening to take attention further away from the company’s main purpose: manufacturing and selling electric vehicles.
There’s a big opportunity here for other players in the space, and BYD certainly knows it. While Tesla is trying to move old models, BYD’s development cycle sits just under two years. The brand is climbing up in prominence both in the market and on the road, so if this proves to have been a hot quarter for BYD and there’s enough innovation in the funnel, you can expect the general sentiment to move up from a hold to a buy pretty quickly.
Tesla may still be the second most held stock in Australia according to eToro’s latest top stocks data, but BYD is ranked fourteenth in the ‘top risers’, with a 9% quarter-on-quarter increase in Aussie holders in Q3. They aren’t coming for the crown just yet, but a solid Q3 earnings will only help build the case that BYD is one to watch.