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(Bloomberg) -- It’s been a turbulent summer for markets. As people return from their summer holidays with the final part of the year in view, the team at Markets Today asked our Instagram followers what they wanted to know. The questions ranged from how to gauge the outlook for the economy and currencies, to trends in stock trading and how to approach a company earnings report. Here — in a lightly edited transcript — are our answers.

What are the risks of a recession?

As luck would have it, Bloomberg tracks the aggregate view of economists on this very question, so we can see what the current view is, and how that has changed over time.

In the UK, economists currently put the risk of a recession over the next year at 30%, down from 60% at the start of the year. In the US, the figure is also 30%, this time down from 50% in January.

So in summary, economists seem less worried about a recession now than they did earlier in the year, reflecting growing confidence that central banks can achieve a soft landing — exiting high interest rates before they crash their economies. With rate cuts already underway in the UK, and seen as imminent in the US, the thinking is the worst may be over, at least for now.

Still, as the market meltdown earlier this month (partly sparked by slightly sluggish US jobs data) showed, there are still considerable jitters surrounding growth out there.

David Goodman 

How about the outlook for currencies? 

For much of the early part of 2024, currency volatility was in the doldrums, as traders took the view that central banks would move largely in unison when it came to rate cuts. That translated to a first quarter when the euro saw the third-tightest range since its inception and sterling its second-lowest since the 1970s.

Since then, though we’ve seen a bit more action, as policymakers began to move at different speeds. The pound has seen some particularly strong moves, climbing more than 7% against the dollar from its April low to last month’s high.

Most analysts expect a small pullback in the pound for the rest of the year, with the median estimate in Bloomberg’s survey for a drop to $1.30, from around $1.31 now. The euro, meanwhile, is seen largely holding its ground against the dollar.

The caveat to all this is that, as we saw in August, markets and central bankers, are very much in thrall to data at the moment. So if we see reports that suggest the BOE, Fed or ECB need to be more cautious, or more aggressive, in their easing cycles, big swings are still possible.

David Goodman 

Will rate cuts mean there will be a downturn in equities? 

Broadly speaking, lower interest rates aren’t a bad thing for stocks. It makes it cheaper for companies to borrow money, enabling them to invest more in future growth while lessening the associated debt which can weigh on their finances.

Still, it really depends on the types of industries stocks are in. If you look at what happens in the UK whenever talk of rate cuts ramp up, you’ll see the main beneficiaries.

Those that are particularly sensitive to rates include property investment firms, who benefit from cheaper loans when rates fall. Homebuilders also get a boost as lower borrowing costs are good for their financing — and cheaper loans for buyers can have the knock-on impact of increasing demand for houses. On the other hand, banks can make more from the money they loan to clients when interest rates are higher.

The picture is also complicated further because some of the UK biggest companies receive a sizable chuck of their revenue from abroad, so exchange rates come into play there too, as well as macro environments elsewhere. Some firms also have to buy materials and have other costs in markets outside the UK, meaning investors will be looking beyond the domestic rate environment when valuing the company. Miners and oil and gas firms are still some of the biggest players in the FTSE 100 and they tend to have the majority of their operations overseas.

Morwenna Coniam 

Do markets move in trends like fashion? 

Sometimes there are recurring trends which sweep over markets and these can mask individual stock moves to an extent. Looking at the last two days, for example, we’re seeing what’s referred to as a ‘risk off’ trading environment, where assets which are the most vulnerable to macro economic forces are shunned in favour of defensive plays.

In the case of stocks, these are things like utilities and consumer shares, which are seen to have revenue streams more insulated from things such as economic data and oil prices. In the opposite scenario oil and gas stocks tend to perform better along with financials and other assets seen as tied to the broader macro environment when markets have more of an appetite for risk.

While these big sweeping trends come and go over periods of time, we also see more specific thematic trends often tied to a new concept or technology. A lot of the volatility we’ve seen recently has been tied to heightened expectations for AI and what it can deliver — with questions now being asked as to whether it’s all quite as promising as the money behind it would suggest. We can also see trends emerge in markets connected to world events, such as in relation to stocks which benefitted from lockdowns during the pandemic.

Often thematic trends can become quite speculative — with a lot of buying over a short period, high valuations and expectations — and risk becoming a ‘bubble,’ which of course tend to burst at some point. One famous example of this is the dot-com boom of the early 2000s.

Morwenna Coniam 

What are the important parts of a company’s financial statement?

One of the first things I learned when I started covering stocks and began to try to decipher an earnings statement is that what investors care about is what’s going to happen, not what’s already happened. That means that often the most closely-watched part of any company release is the outlook, or the guidance, or whatever that specific company calls that section looking ahead to the rest of or to the new financial year.

That doesn’t meant the actual numbers for the period being reported upon aren’t useful. Profit, revenue, sales growth, cash, dividends — all of those will capture attention. More specifically, all of those elements and the guidance will be compared to expectations set before the event. And all put into the context of what the shares have been doing leading up to the results being released.

That means that a company can deliver what may on the face of it look like quite good results, but if the expectations were even better than what they reported, then the shares might fall. On the flip side, a report can look really negative, but shares could rise if things aren’t as bad as feared.

Sam Unsted 

So what happened with Nvidia’s earnings?

Nvidia’s results provide a clear example of how important expectations are in stock markets.

Its quarterly revenue and profit more than doubled, better than anticipated by analysts. It’s also buying back another $50 billion in shares. Problem is, that doesn’t quite qualify as a true blowout set of earnings in the eyes of investors, which is what powered the company’s wild rise over the past couple of years.

And that means any negatives get magnified. The share buyback pace is marginally slower. There are snags with its much-anticipated new chip. The outlook it gave isn’t quite as bullish as desired. That all ends up getting more attention than the results, which while good, aren’t quite as spectacular as was wanted.

Markets, especially in the UK and Europe, are mostly brushing that off today, but Nvidia isn’t. It is falling by around 5% in premarket trading. If that holds, it would wipe about $150 billion from its market capitalisation, nearly the same as HSBC.

That’s a good reminder to all stock watchers that even if a company delivers a very good report, more important for the shares is whether the results are good enough to meet investors’ hopes. And hopes for AI are stratospherically high, particularly for the poster-child of the mega trend.

Sam Unsted