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10/06/21 10:53
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S&P 500, Nasdaq 100 and Dow rally ahead of US non-farm payrolls Outlook on S&P 500, Nasdaq 100 and Dow ahead of Friday’s US non-farm payrolls. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 03 February 2023 S&P 500 rallies to critical technical resistance post Fed rate hike The S&P 500 accelerated to the upside and on Thursday rallied above its September and December highs at 4,139 to 4,155 - which represent key resistance – but then slid back and closed marginally above this area as Apple sales dropped by 5% in their largest quarterly decline since 2016. If the S&P 500 were to have another daily close above 4,155 this Friday and by definition then a weekly close, especially after the US non-farm payroll data, the August peak at 4,325 would be next in line. En route lies the late August high at 4,215. Minor support below 4,139 can be found between the early December and January highs at 4,101 to 4,094, below which the breached one-year downtrend line can now be seen at 4,037. While Tuesday’s low at 3,994 isn’t being slipped through, the 2023 uptrend remains intact. Source: ProRealTime Nasdaq 100 rallies despite gloomy outlook by US tech giants In case of the Nasdaq 100, a bottom has already been confirmed by Wednesday’s close above the November and December highs at 12,084 to 12,258, with the September peak at 12,902 nearly having been reached before disappointing results by tech giants such as Apple, Amazon and Alphabet drove the index lower. With all three companies offering a gloomy outlook in their quarterly results, a further retracement lower may be seen on Friday. Having said that, the technical bullish view will remain valid as long as investors continue to expect that the Federal Reserve’s (Fed) tightening cycle may be nearing its peak and while Tuesday’s low at 11,817 isn’t being slipped through or a clear technical bearish reversal signal is being given by the index. A rise above the 12,902 September high would put the August peak at 13,722 on the map. Source: ProRealTime Dow continues to be this year’s US underperformer Only the Dow Jones Industrial Average is underperforming and is finding it difficult to advance, having on Wednesday failed around its January high. The index continues to range trade within its 34,941 to 32,474 December extremes but does remain short-term bullish while this week’s low and the October-to-February uptrend line at 33,512 to 33,490 underpin on a daily chart closing basis. Having said that, a rise and daily chart close above the January and February highs at 34,346 to 34,348 needs to be seen, for the December peak at 34,941 to be back in the frame. Failure at this week’s low at 33,490 would have short-term negative implications. Source: ProRealTime -
Early Morning Call: Nasdaq and S&P 500 enter bull market The Nasdaq and S&P 500 entered bull market yesterday as investors now consider rates to be close to peak levels. Jeremy Naylor | Writer, London | Publication date: Friday 03 February 2023 Equity market overview APAC equity markets were mixed overnight. Hong Kong and China mainland indices were the underperformers, despite positive data. Caixin services PMI climbed back up in expansion territory, after four months below the 50 mark. The index rose to 52.9 in January, from 48 in December. European indices opened higher this Friday, remaining on their upward trend after the Bank of England (BoE) and European Central Bank (ECB) decided on interest rates. As expected, both central banks raised rates by 50 basis points yesterday. The BoE's main interest rate is now at 4% and the ECB's main refinancing rate stands at 3%. And as expected, messages from the respective governors were different. BoE governor, Andrew Bailey, said the tightening in pace since the end of 2021 is likely to have an increasing impact on the economy. This should help bring inflation to around 4% in 2023. Previously the BoE's economic projection showed inflation at around 5% this year. "Since the November monetary policy report we've seen the first signs that inflation has turned the corner," said Bailey in his comment following the decision, but added that "it's too soon to declare victory just yet, inflationary pressures are still there." As for the ECB, it explicitly signalled at least one hike of the same size at its next meeting in March. "... the Governing Council intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March and it will then evaluate the subsequent path of its monetary policy," the ECB said. And Christine Lagarde insisted at the press conference: "We know that we have ground to cover, we know that we are not done". In the US, Nasdaq and S&P 500 entered bull market yesterday as investors now consider that rates may be close to peak levels. The US dollar recouped Wednesday's losses sending gold back down to the low $1,900. Yet, the dollar basket could still record a fourth straight weekly loss. It now all rests on January’s non-farm payrolls data. Economists anticipate 185,000 job creations, following 223,000 in December. The unemployment rate should rise one notch to 3.6%, and average hourly earnings 0.3% month-on-month (MoM) and 4.3% year-on-year (YoY). A bit later at 3pm, ISM services PMI for the month of January is expected to rise to 50.4, after 49.6 in December. Earnings Apple pared earlier gains last night after the company's fiscal first quarter (Q1) earnings. The group posted earnings of $1.88 per share, a 10.9% drop compared to the same quarter last year. Analysts had expected $1.94. Revenue fell by 5.5% to $117.15 billion, the first year-over-year sales decline since 2019. $121.88Bln was expected. In detail, iPhone and Mac revenue came in short of estimates, down 8.2% and 28.6% respectively. iPad revenue rose 29.7%, above forecasts. Apple CEO Tim Cook said three factors impacted the results: a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. Amazon shares were quite jittery in extended trading last night. The internet giant missed earnings estimates, posting earnings per share (EPS) of three cents, compared to 17 cents forecast by analysts. Revenue was better than expected: $149.2bn versus estimates of $145.8bn. Investors were taken aback by the group’s guidance. Amazon said its operating profit could fall to zero in the current quarter as savings from layoffs do not make up for the financial impact of consumers and cloud customers clamping down on spending. Amazon forecast it would earn between $0 and $4 billion in operating income this quarter, compared with the $4.04 billion that analysts were expecting. Additionally, the company believes sales growth in its long-lucrative cloud business will slow for the next few quarters. In Q4, Amazon Web Services sales reached $21.3bn, versus $21.76bn expected. Alphabet missed on both top and bottom lines for its Q4. Google's parent company posted earnings of $1.05 per share, on revenue of $76.05bn. Analysts anticipated EPS of $1.18 and $76.53bn in revenue. Alphabet suffered from a pullback in advertising revenue. Advertisers have cut their budgets as rising inflation and interest rates fuelled concern over consumer spending. The company said it would take a charge of between $1.9 billion and $2.3 billion, mostly in the first quarter of 2023, related to the layoffs of 12,000 employees it announced in January. Ford Motor reported lower than expected earnings. Ford posted earnings of 51 cents, compared to analysts' expectations of 62 cents. Revenue came broadly in line with expectations, at $41.8bn. Ford predicted a difficult year ahead, blaming chip shortages and other supply chain issues, production "instabilities" that raised costs, along with lower-than-expected volumes. In 2022, the company recorded an adjusted profit of $10.4bn, short of Ford's own forecast of $11.5bn. Ford expects 2023 adjusted pretax earnings of $9 billion to $11 billion. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
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Softer rate hike bets continue to send big tech shares surging overnight, with the switch from value to growth displayed in the sharp performance parity between the DJIA and the Nasdaq. Source: Bloomberg Forex Indices United States Federal Open Market Committee Federal Reserve Dow Jones Industrial Average Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 03 February 2023 Market Recap Softer rate hike bets in the aftermath of the recent Federal Open Market Committee (FOMC) meeting have sent big tech shares surging overnight, with the switch from value to growth displayed in the sharp performance parity between the DJIA (-0.11%) and the Nasdaq (+3.3%). Treasury yields continue to head lower but managed to regain some footing by session close, with the US 10-year yields successfully defending its 200-day moving average (MA) for now. The US dollar index (+0.84%) managed to pare some previous losses but resistance still remain in the way at the 101.30 level. After-market moves saw some dampening of overnight optimism with the earnings releases from Apple, Amazon and Alphabet. Pockets of weakness have surfaced in both Amazon and Apple’s outlook, with Amazon’s guidance for quarter one (Q1) operating income below consensus ($0-$4 billion versus $4.04 billion expected) while Apple forecasts another revenue decline after latest top and bottom-line miss. Alphabet also missed on both top and bottom-line. With the more resilient big tech companies caving in to economic pressures, brewing growth risks will continue to be pitted against hopes of a ‘dovish pivot’, with the latter still seemingly in wider control. The conclusion of the European Central Bank (ECB) meeting brought about an expected 50 basis-point hike, but hawkish reaffirmation in the press conference seems to pave the way for more rate hikes to come. Unlike the Federal Reserve (Fed), the ECB pushed back against dovish expectations by saying that the ‘disinflationary process is not already at play’. The Bank of England (BoE) hiked by 50 basis-point as well, but with the central bank bringing attention to the largely unfelt impact of past rate hikes, an impending end to the hiking cycle seems to be the takeaway. The divergence in policy stance has been reflected in the GBP/EUR, which is retesting the lower trendline of a falling wedge pattern. A bearish crossover is displayed on the moving average convergence/divergence (MACD). A close below the trendline support may pave the way to retest its September 2022 bottom at around the 1.107 level. Source: IG charts Asia Open Asian stocks look set for a positive open, with Nikkei +0.51%, ASX +0.38% and KOSPI +0.01% at the time of writing. Chinese equities have been seeing some weakness lately, with the Hang Seng Index and CSI 300 failing to find much upside despite the improved risk environment. The Nasdaq Golden Dragon China Index also closed in the red overnight (-1.3%). The day ahead will leave China’s Caixin purchasing managers index (PMI) figures in focus, but with recent outperformance in earlier official PMI readings failing to prompt a sustained upmove in Chinese indices, it bodes the question of whether we can see much of a positive reaction to any upcoming outperformance. Technicals in overbought region seems to be in the way, along with some moderation in upward momentum potentially triggering some near term profit-taking. Closer to home, the Singapore Index continues to hover at the 3,370 level of support. Banks, which took up close to 45% of the index’s overall weightage, have reacted to softer rate hike bets with some downward pressure yesterday. However, this is somewhat supported by renewed traction in the REITs sector, which viewed the impending end to the rate hiking cycle positively. For now, the overall upward bias for the index may seem to remain but any failure for the 76.4% Fibonacci retracement level to hold may prompt a near term retest of the 3,320 level. Source: IG charts On the watchlist: Gold prices finding sellers at US$1,960 in aftermath of Fed meeting Despite the dovish tint provided at the recent FOMC meeting, gains in gold prices have been pared back after a retest of the US$1,960 level. This level is where a key 76.4% Fibonacci retracement level resides, when drawn from its March 2022 peak to November 2022 bottom. Some profit-taking could seem to be in place after prices rose more than 20% over the past three months. However, a greater conviction for sellers could be a break below the US$1,895 level, where dip-buyers have previously stepped in to form a bullish pin bar. Any close below the US$1,895 level could be on watch to pave the way towards the US$1,840 level next. Source: IG charts Thursday: DJIA -0.11%; S&P 500 +1.47%; Nasdaq +3.25%, DAX +2.16%, FTSE +0.76%
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