Positive surprises in big tech earnings provided slight relief: Nasdaq 100, AUD/USD, EUR/USD
A lacklustre session in Wall Street overnight was met with some slight relief after-market, with positive surprises from Microsoft and Alphabet’s results.
Market Recap
A lacklustre session in Wall Street (DJIA -1.02%; S&P 500 -1.58%; Nasdaq -1.98%) overnight was met with some slight relief after-market, as positive surprises from Microsoft and Alphabet’s results aided to set a less negative tone for risk sentiments. Both tech giants smashed top and bottom-line expectations, reflecting some resilience amid the downbeat environment, which may drive some hopes for upcoming big tech companies to outperform as well.
A better-than-expected quarterly guidance was also delivered from Microsoft, while Alphabet’s advertising revenue has held up surprisingly well amid the broad-based pullback in ad spending. This marks the first quarterly top and bottom-line beat from Alphabet after four quarters of underperformance. The results have sent Microsoft and Alphabet’s share price up 8% and 2% respectively.
Nevertheless, the gains in US equity futures this morning still trail the overnight losses for now, as lingering economic concerns and uncertainties around any spillovers from First Republic Bank (FRC) continue to be something for the bulls to deal with. Economic data yesterday revealed a sharper-than-expected moderation in consumer confidence (101.3 versus 104 forecast), which adds to the list of downside surprises seen since the start of April and points to a more downbeat economic outlook.
For the Nasdaq 100, it continues to edge within a bull flag formation for now. General convention is that the retracement may reach the 38.2% Fibonacci level before breaking the upper trend line, which may leave the 12,700 level on watch for any holding up. Another move back to retest its 2023 high will provide greater conviction for the bulls, which puts the formation of any new higher high on the radar.
Asia Open
Asian stocks look set for a mixed open, with Nikkei -0.33%, ASX -0.40% and KOSPI +0.12% at the time of writing, as sentiments struggled to balance between the negative handover from Wall Street, and the attempt for recovery after-market on Microsoft and Alphabet’s results.
On the economic front, the Reserve Bank of Australia (RBA) trimmed mean quarter one (Q1) CPI came in lower than expected (1.2% quarter-on-quarter (QoQ) versus 1.4% forecast) but headline continues to reveal some persistence (1.4% QoQ versus 1.3% expected). This could provide an overall mixed view, but the lack of a broad-based upside surprise in inflation could still be tapped on for more wait-and-see from the central bank. Expectations remain anchored for a rate pause at the upcoming meeting.
For the AUD/USD, the pair has struggled to reclaim its key 100-day moving average (MA) upon multiple retests, with the bears seeking to overturn the higher lows narrative displayed since March this year. Upward momentum has stalled recently, with greater conviction for the bulls to be a move back above its 100-day MA to denote a shift in trend. The MA line has shown to be a key resistance line by capping the pair on three separate occasions this year.
On the watchlist: EUR/USD still attempting for a break of key resistance
The EUR/USD is back to retest its 2023 high at the 1.105 level this week, where an upward break could point to the formation of a new higher high and further reiterates its overall bullish trend. A defensive lean in market sentiments is keeping a breakout in check for now, along with some moderating upward momentum, but a series of support remain on watch to hold up the pair in the event of a retracement. This includes an upward trendline support and its 100-day MA.
Monetary policy divergence between the European Central Bank (ECB) and the Federal Reserve (Fed) will remain the key driving force for the pair over the coming months. Expectations remain well-anchored for an impending rate pause from the Fed, while on the other end, the ECB is expected to stay on its hawkish path to tackle persistent core prices, with any such confirmation likely to translate into EUR/USD strength.
Tuesday: DJIA -1.02%; S&P 500 -1.58%; Nasdaq -1.98%, DAX +0.05%, FTSE -0.27%
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.