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Outlook on the S&P 500, Nasdaq 100, FTSE 100 and DAX 40 amid aggressive monetary tightening, recessionary fears and liquidity worries. Source: Bloomberg Indices Shares FTSE 100 S&P 500 Stock market index Nasdaq Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 03 May 2023 Is “sell in May and go away” a good strategy to follow? With major stock indices such as the US 500, US Tech 100, FTSE 100 and Germany 40 trading close to one-year highs near critical technical resistance, having had another positive month in April, following two consecutive positive quarters – usually a sign of further upside to be seen – the question is whether stock markets may soon enter a consolidation phase in the historically seasonally weaker period of the year between May and October. It is true that since records began, most significant market corrections or stock market declines occurred during the Western summer months into October but when looking at the past decade, the picture becomes less clear. According to LPL Research with Bloomberg data, had one sold unmanaged equity indices at the beginning of May and bought these back at the end of October, one would have lost out on significant profits over the past decade, despite this strategy having worked well in 2022. Ten year perfomance chart of sell in May strategy Source: LPL Research, Bloomberg What about liquidity drying up following the banking crisis? Fundamental investors may worry about liquidity drying up due to the recent banking crisis with three US banks, Silicon Valley Bank, Signature Bank and now First Republic Bank all having failed in just under a couple of months, the latter representing the second-biggest bank failure in the US’ history. As banks will be forced to comply with tougher rules that are likely to crimp their ability to lend at a time when the US economy is beginning to feel the brunt of the Federal Reserve’s aggressive monetary tightening, the US may be sliding into a recession later this year and do so with a hard landing which would hurt equity indices. And market breadth? The lack of market breadth in the gains seen since October of last year may also worry some investors. Although the S&P 500 has risen by roughly 17% and the Nasdaq’s six biggest stocks by over 45% on an equal-weighted basis since October, mid-caps have gained a more modest 9%, small- caps only 4%, and micro-caps have fallen by 3%. It is better-than-expected earnings by tech giants such as Microsoft Corp (All Sessions), Meta Platforms Inc and Alphabet Inc - C (All Sessions) last week which have cemented their leadership. The S&P 500’s market capitalisation, which is up 8% this year, has mainly been driven higher by the index’s seven largest stocks which make up 80% of the gains. Having said that, weak market breadth and a gloomy economic forecast don’t necessarily mean that stock markets cannot continue to perform over the coming months and quarters. What does technical analysis have to say? The S&P 500 has come to within a whisker of its 4195.44 February peak at the beginning of May before rapidly giving back some of its recent gains ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting at which another 25 basis-point rate hike is expected to raise the fed funds rate to between 5.00% to 5.25%. From a short-term technical perspective the March-to-May uptrend will remain intact as long as no fall through and daily chart close below the late April low at 4049.35 is seen. If so, an interim top is likely to have been formed with the 200-day simple moving average (SMA) at 3,967.93 and the October-to-May uptrend line at 3,925.32 being reached. As long as the next lower December and March lows at 3,808.86 to 3,764.49 underpin on a weekly chart closing basis, the October-to-May medium-term uptrend remains intact. S&P 500 Daily Chart Source: Tradingview If, however, a continued advance to above the February peak at 4,195.44 were to take place, the way would be open for not only the August 2022 peak at 4,325.28 to be reached, but also the February-to-March 2022 highs at 4,595.31 to 4,637.30. What about the Nasdaq 100? The Nasdaq 100, although it briefly managed to break above its eight-month April high at 13,204.08 on the first day of May by rising to 13,287.47, is also displaying negative divergence which may mean that the index may soon fail around current levels before slipping back to its 2023 uptrend line at 12,504. Nasdaq 100 Daily Chart: Source: Tradingview For the bulls to remain in control and for the August peak at 13,720.91 to remain in focus, not only does the Nasdaq 100 need to stay above its last reaction low at the 12,724.24 late March low, but also overcome its current May high at 13,287.47 on a daily chart closing basis. What about European share indices such as the FTSE 100 and DAX 40? The FTSE 100 is already greatly underperforming its peers year-to-date which can also be seen on its daily chart where the index, unlike several of its US and European counterparts, did not come close to its February high at 8044.40 in April when it only managed to rise as high as 7,938.30 before heading back down again and hugging its 55-day simple moving average (SMA) at 7,764.4 whilst targeting the August and December 2022 highs at 7,616.60 to 7,578.5. FTSE 100 year-to-date relative performance Source: Google Finance Unless the April high at 7,938.30 is exceeded on a daily chart closing basis, further weakness is likely to be witnessed. FTSE 100 Daily Chart Source: Tradingview The technical picture is quite similar with regards to the DAX 40, even though it is outperforming the FTSE 100 by close to 10% year-to-date in that the German equity index is also displaying negative divergence at a time when it seems to be keeling over and losing upside momentum, all of which points to a slip back towards its October-to-May uptrend line at 15,115 taking shape. DAX 40 Daily Chart Source: Tradingview Only a clear rise and weekly chart close above the current May high at 16,011.56 would indicate that further upside remains in store with the November 2021 and January 2022 all-time highs at 16,285.35 to 16,290.19 being back in the picture. This bullish scenario remains possible while last week’s low at 15,688.17 underpins on a daily chart closing basis.

If the Fed and ECB tighten policy, will recession fears be stoked to send WTI lower? Source: Bloomberg Forex Shares Commodities Petroleum Federal Reserve European Central Bank Daniel McCarthy | Strategist, | Publication date: Wednesday 03 May 2023 Crude oil failed to hold onto Friday’s gains at the start of this week and is listing lower going into the Tuesday session. A holiday-impacted trading day saw a mixed bag of data that saw sentiment sway to and from. Markets appear poised ahead of several central bank monetary policy decisions later this week. On Monday, Chinese manufacturing PMI came in at 49.2 for April instead of the estimated 51.4 and 51.9 prior. Non-manufacturing PMI was 56.4 rather than the 57.0 anticipated and 58.2 previously. The less-than-rosy outlook for growth in world’s second-largest economy seemed to undermine crude. Then later on, the US manufacturing ISM for April was 47.1, beating the forecasts of 46.8 and 46.3 previously but still in contractionary territory below 50 for the diffusion index. On a brighter note, US construction spending in March grew by 0.3% month-on-month, beating the 0.1% anticipated and the revised -0.3% prior. The Federal Deposit Insurance Corporation (FDIC) announced that JP Morgan would be acquiring the beleaguered First Republic Bank. This appeared to lift Treasury yields along the curve and the US Dollar got a general boost across the board, undermining WTI. The price action has consolidated since the middle of last week after filling in the gap created by the OPEC+ announcement of a cut to production of 1.1 million barrels per day that kicked in at the start of this week. Looking ahead, the Federal Reserve and the European Central Bank (ECB) will be meeting on Wednesday and Thursday respectively. Both banks are forecast to raise rates by 25 basis points by the market. Although the tightening is anticipated, any deviation from this expectation might see volatility for crude tick higher. Crude oil technical analysis WTI crude appears to have retreated into a range trading type environment after bouncing off the 50% Fibonacci Retracement level of the move from 64.36 to 83.53 at 73.94. That level may continue to provide support ahead of the breakpoints and prior lows in the 72.25 – 72.46 area. On the topside, resistance could be at the recent high of 79.18. Further up, there are a series of breakpoints and previous peaks in the 82.50 – 83.50 area that may offer a resistance zone. Crude oil daily chart Source: TradingView This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

We believe that natural gas has resumed its descent and would like to go short on a minor rebound to $2.35 with a stop-loss at $2.575 and a downside target at $2.05. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 03 May 2023

WTI drops on recession fears while gold and silver rally on flight to safety Outlook on WTI, gold and silver ahead of Wednesday’s anticipated Fed 25 basis-point rate hike. Source:Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 03 May 2023 WTI drops to five-week low The slide in the price of crude oil is gaining traction with WTI now trading at levels last seen in late March whilst approaching the December trough at $70.25 and the minor psychological $70 mark ahead of Wednesday’s US Fed rate hike decision. Failure at the $70 mark would open the way for the March trough at $64.37 to be back in focus. Good resistance now sits between the January and February lows at $72.50 to $72.64 as well as at the late April low at $73.88. While the accelerated downtrend line at $75.42 isn’t overcome on a daily chart closing basis, further downside pressure is likely to take the price of oil lower still as recessionary fears grow. Source: ProRealTime Gold benefits from safe haven inflows The gold price has finally broken out of its three-week triangle formation and did so to the upside on safe haven flows as the US regional bank index slid by 6% on contagion fears on Tuesday. The early April high at $2,032 per troy ounce is thus being eyed, a rise above which would push the April peak at $2,048 back to the fore. Upside pressure should be maintained while the recent lows seen on the daily chart between $1,978 and $1,970 underpin. Minor support above these levels comes in along the breached triangle resistance line – now because of inverse polarity support line – at $2,006 and around the psychological $2,000 mark. Source: ProRealTime Silver trades near its one-year highs The 28% rally in the price of silver from just below the $20 per troy ounce mark in early March gave way to some sideways consolidation over the past three weeks with last week’s low at $24.50 offering good support. While it underpins, another attempt at reaching this years April and current May highs at $25.91 to $26.09 remains at hand. If overcome, the April 2022 high at $26.22 could be reached. Only a currently unexpected fall through the $24.50 low would make us question our medium-term bullish forecast. Source: ProRealTime

Charting the Markets: 3 May FTSE 100, DAX 40 and S&P 500 take a hit on US bank failure contagion fears. USD weakness lifts EUR/USD and GBP/USD, while USD/JPY falls back after strong gains. WTI drops on recession fears while gold and silver rally. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 03 May 2023 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.

The core inflation rate in the Euro Area retreated slightly in April coming in at 5.6% in April down from last month’s print of 5.7%. Source: Bloomberg Forex Shares Inflation European Central Bank Euro Eurozone IG Analyst | Publication date: Wednesday 03 May 2023 The core inflation rate in the Euro Area retreated slightly in April coming in at 5.6% in April down from last month’s print of 5.7%. The core CPI which excludes prices of energy, food, alcohol and tobacco went down 0.1% following a rise which started in June 2022 when core CPI rested at 3.7%. The core number remains uncomfortably high and despite signs of a slowdown in consumer spending and tightening conditions inflation remains stubborn. Source: DailyFX The YoY inflation rate did inch higher to 7.0 percent in April 2023, from March's 13-month low of 6.9 percent. Energy prices rebounded 2.5% vs -0.9% in March and the cost of services rose at a faster 5.2% vs 5.1% in March. On the other hand, inflation slowed for food, alcohol & tobacco to 13.6% vs 15.5% and non-energy industrial goods 6.2% vs 6.6%. On a monthly basis, consumer prices rose 0.7%, a third straight month of increase. The ECB’s job is a tough one given the economic backdrop of the various countries in the Euro area. European Central Bank (ECB) policymakers have adopted a largely hawkish rhetoric of late ahead of this week’s meeting. Earlier this morning we also had the ECB Bank Lending Survey which strengthened the belief of a 25bps hike at Thursday’s meeting. The lending survey showed substantial tightening by banks in regard to credit standards for both consumers and companies with Eurozone Banks reporting falling demand from companies for credit. Meanwhile consumers and households also felt the brunt of this as rejection rates increased and demand for home loans decreased strongly as consumers remain concerned about the overall confidence and the economic outlook. The Bank Lending Survey at least provided some indication that we are seeing a more restrictive economy as the effects of rate hikes begin to filter through the economy. However, the slight uptick in the YoY inflation print may continue to play on the minds of ECB policymakers. Market reaction EUR/USD daily chart Source: TradingView EUR/USD initial reaction saw a 15 pip drop before recovering to trade relatively flat in the aftermath of the release. The pair has been hovering near the recent range low around 1.0950 in early European trade as the Euro faced some selling pressure following the release of the Bank Lending Survey this morning. The range between 1.0950 and 1.1050 could hold heading not tomorrows FOMC meeting. The longer-term picture for EUR/USD remains abit unclear at present as the technicals and fundamentals seem at odds with one another. The daily chart above shows a break of the ascending channel with further downside preferred from a technical standpoint. As much as the setup looks appealing the heavyweight fundamental data due this week may play a huge role in where EUR/USD heads next. The forward guidance issued by both the Federal Reserve and the ECB could give more clarity on the rate hike paths for both Central Banks as dovish bets on the Fed have seen a fair amount of tempering of late. Key levels to keep an eye on: Resistance levels: 1.1000 1.1050 1.1125 Support levels: 1.0950 1.0900 1.0845 Source: Bloomberg This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Antofagasta, Legal and General, and JD Wetherspoon could be the three best UK shares to buy next month. Source: Bloomberg Indices Shares Commodities United Kingdom Tax Copper Charles Archer | Financial Writer, London | Publication date: Tuesday 02 May 2023 The UK has seen a broad mix of economic news in 2023, making selecting the best UK shares to buy next month somewhat of a challenge. Three key factors are having an outsized influence over UK companies’ performance. First, CPI inflation has increased from 10.1% in February to 10.4% in March, which is higher than most analysts expected. With the base rate already at 4.25%, the markets are pricing in an increase to 5% — and if inflation remains stickier than expected, further increases cannot be ruled out. For context, the Office for Budget Responsibility predicts a drop in inflation to 2.9% by the end of the year, but this is just seven months away. Second, the UK’s tax burden — both personal and business — is at its highest level since World War II. Larger corporations are facing a toxic cocktail of higher taxes, including an increase in corporation tax from 19% to 25% and the end of the popular super-deduction tax break. These changes are starting to impact the decision-making of the country's largest firms, with many — including ARM, AstraZeneca, CRH, and Flutter — looking wistfully at US stock exchanges or moving some operations abroad due to uncompetitive taxation policies. Many respected bodies are now predicting that the UK will experience low growth through 2023 — and this can become self-fulfilling prophecy. Third, several of the UK’s most prominent business leaders are speaking up. Legal & General CEO Nigel Wilson recently referred to the UK as a 'low growth, low productivity, low wage economy,' and Marks & Spencer CEO Stuart Machin believes that London is on 'life support' following the removal of tax-free shopping for foreign tourists. These three factors all point to the same problem: any substantial domestic growth will be difficult to achieve in the near-term and will stoke the inflationary fire if achieved. This is of course, not optimal. However, where there’s negative sentiment, a value investor sees opportunity. Best UK shares to buy 1. Antofagasta (LON: ANTO) Antofagasta is a copper-focused miner that is not as popular among investors as some of its more diversified peers on the FTSE 100. However, the growing supply gap in the copper market could boost its prospects significantly in the second half of this year and beyond. Copper has been identified as the most critical metal globally by Trafigura co-head Kostas Bintas due to a shortage in the market, with only 3.5 days of copper stock equivalent available at the end of last year. Total copper production fell by over 10% to 646,200 tonnes due to droughts and pipeline leaks at its Chilean operations last year, while lower copper prices led to a 26% decrease in pre-tax profit overall. This underperformance has seen Antofagasta's share price slip by 7.4% year-to-date. However, this dip could present a lucrative opportunity for long-term investors looking to take advantage of the expected long-term surge in copper prices. Copper's significant role in global electrification, sustainable energy production, and infrastructure projects should ensure robust demand for the metal. As the world transitions towards renewable energy sources and electric vehicles, the need for copper is expected to rise further. Arguably, ANTO is the best UK share to buy for exposure to this trend. 2. Legal & General (LON: LGEN) Legal & General has experienced a 7.4% decline in its shares over the past year to 234p. However, just like Antofagasta, this could be a buying opportunity for investors. The FTSE 100 company, famous for paying out reliable dividends year after year, now boasts a dividend yield of 8.3%, far exceeding the index average. And the company recently increased its full-year dividend by 5% to 19.37p. In the recent FY22 results, LGEN reported a 12% increase in operating profit to over £2.5 billion, amid a return on equity of 20.7%. The company's Solvency II coverage ratio, an essential metric for the insurance industry, stood at 240% at the beginning of March, an impressive increase from 187% in the previous year. Wilson — who leaves this year — has continually highlighted the company's diversified and synergistic business model as the key factor behind its continued success. LGEN is well-positioned to benefit from aging populations in its key markets, particularly as more people start to need the company's pensions, annuities, and equity release products. Overall, LGEN's strong brand recognition, robust financials, and favourable market trends make it an attractive investment opportunity for those seeking a reliable UK company for their portfolio next month. 3. JD Wetherspoon (LON: JDW) JD Wetherspoon, the FTSE 250 pub operator, has experienced a 60% surge in shares year-to-date, which are currently trading at 724p. For context, the company's like-for-like sales in the most recent half increased by 5% when compared to H1 2019 pre-pandemic figures and by 13% compared to H1 2022. Pre-tax profit of £4.6 million, while lower than the £50.3 million profit reported in 2019, is a notable improvement from the £26.1 million loss of 2022. The company has also reported a decrease in net debt by £176.5 million to £743.9 million, which is likely to have helped in rebuilding the confidence of the company’s investors. Naturally, rising inflation and the crippling cost of living crisis is creating a war on two fronts for the company — profitability is being impacted by increasing labour and stock costs, while customer spend is being squeezed by increased essential bills. The company has a fine line to toe — as it has the opportunity to increase market share as customers seek cheaper offerings, but is already operating on wafer-thin margins. Moreover, CEO Tim Martin remains ‘cautiously optimistic’ about the budget pub operator’s near-term prospects, particularly in light of the traditionally busier summer season. Further, Martin’s campaign for VAT tax parity with supermarkets may find some political sympathy as the industry is weaned off energy bill support.

Fed remains laser-focused on inflation, recession expected The single biggest threat to long-term economic success is inflation. Jeremy Naylor | Analyst, London | Publication date: Wednesday 03 May 2023 Today the Fed is widely expected to raise rates a quarter point to between 5 and 5.25%. This has boosted gold and seen recession-sensitive areas, such as oil and copper down.

Regional banks take a hit as market eyes next potential failures, while JOLTS job openings drop to lowest level since April 2021. All eyes now on ADP Employment Report and Non-Farm Payrolls as labor market indicators. Source: Bloomberg Bank Employment Payroll Unemployment Federal Reserve Nonfarm payrolls Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 03 May 2023 Twenty-four hours after the final rights were read to First Republic Bank, the market aimed and fired at its next regional banking targets. PacWest Bancorp dived 27.8%, Western Alliance Bancorp fell 15.1%, and HomeStreet Inc fell 14.46%, firming the next regional banks likely to fail as regulators continue to dither over how to protect deposits at all banks and end the banking crisis. Adding to the banking gloom hanging over markets and providing another reason for the overnight retreat in the US dollar, Job Openings and Labor Turnover (Jolts) job openings showed that the number of job openings in the US dropped by 384,000 to 9.6 million in March, the lowest level since April 2021. The Jolts job openings data is viewed as a reasonably reliable guide to labour market health. It is followed tonight by a second labour market indicator, the ADP Employment Report, and then the big one Non-Farm Payrolls (NFP), on Friday evening, which will move to front and centre once FOMC and Apple's earning reports are out of the way tomorrow morning. What is expected from the ADP Employment Report and NFP? ADP Employment Report The ADP employment report is released tonight, the 3rd of May, at 10.15pm AEST The ADP report isn’t an exceptionally reliable guide to Non-Farm Payrolls and has underperformed relative to nonfarm payrolls in 2023. Nevertheless, The market expects a 148k rise in ADP payroll employment in April from 145k in February. NFP Non-Farm Payrolls is scheduled for release on Friday night, the 5th of May, at 10.30pm The market is looking for payrolls to rise by 180k in April, slowing from 236k in March The unemployment rate is expected to rise to 3.6% in April from 3.5% in March The participation rate is expected to remain unchanged at 62.5%, and average hourly earnings are expected to rise by 0.3%, keeping the annual rate steady at 4.2%. DXY technical analysis After peaking in September 2022 at 114.78, the DXY index fell over 12% to a low of 100.82 as the market anticipated the Fed would move to slow and then end its rate-hiking cycle. In 2023, the DXY has traded in a holding pattern between 100.80 on the downside and 105.80ish on the topside, largely reflecting uncertainties around the banking crisis and the extent of the growth slowdown in the US and globally. In recent weeks the DXY has been capped by resistance at 102.40/50 and is currently eyeing the bottom of its range at 100.80ish. Should support at 100.80ish break on a sustained basis, we expect the DXY to test horizontal support coming in at 99.50/40. Until then, allow for further sideways-range trading. DXY daily chart Source: TradingView TradingView: the figures stated are as of May 3, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

FTSE 100, DAX 40 and S&P 500 take a hit on US bank failure contagion fears Outlook on FTSE 100, DAX 40 and S&P 500 ahead of Wednesday’s FOMC meeting and rate hike decision. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 03 May 2023 FTSE 100 tracks Wall Street lower The FTSE 100 tracked US equity indices lower ahead of Wednesday’s Federal Open Market Committee (Fed) interest rate decision where a 25-basis point hike, taking the fed funds rate to between 5.00% to 5.25%, is expected. In doing so, the blue chip index dropped to a three-week low and is approaching the 7,724 to 7,708 late January lows which may act as support. Further down lies the 38.2% Fibonacci retracement of the March-to-April advance at 7,657. Downside pressure should prevail while Tuesday’s high at 7,897 isn’t being overcome. Below it minor resistance can be spotted at the late February 7,854 low. Source: ProRealTime DAX 40 forms interim top around the psychological 16,000 mark The DAX 40 earlier this week traded at levels last seen in January 2022 around the minor psychological 16,000 mark, buoyed by better-than-expected earnings from big tech in the US, but gave back some of its recent gains ahead of Wednesday’s Fed and Thursday’s European Central Bank (ECB) meetings, at both of which a 25-basis point rate hike is likely to be seen. Worryingly for the bulls, at least in the short-term, is that this week’s high has not been accompanied by a higher reading of the Relative Strength Index (RSI), meaning that negative divergence is visible. Since in most cases it acts as a precursor to at least a correction against the trend being seen, and sometimes warns of a significant reversal, last week’s low at 15,694 needs to be closely watched. A fall through and daily chart close below 15,694 would confirm an interim top formation and would push the 55-day simple moving average (SMA) at 15,505 to the fore as well as the early April low at 15,481. Immediate resistance can be spotted at the 12 April high at 15,832, followed by the 19 April high at 15,923. Source: ProRealTime US regional bank systemic fears spark S&P 500 sell-off The S&P 500 has come to within a whisker of its 4195 February peak at the beginning of May before rapidly giving back some of its recent gains ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting as rumours of another US bank failure sparked contagion fears and led to a sharp sell-off on Tuesday. The index managed to hold marginally above its March-to-May uptrend line at 4,089, though, a fall through which would lead to the late April low at 4050 being revisited, a drop through which would indicate that a top is being formed. The negative divergence on the daily RSI also points to possible further consolidation being on the cards this week. Minor resistance can be seen at the 4 April and 24 April highs at 4,141 to 4,142 and at the 18 April peak at 4,172. Source: ProRealTime

NYSE listed, the Walt Disney Co. is likely to see an increase in second quarter revenue, although underlying earnings could fall from the prior year's comparative period. Source: Bloomberg Shares The Walt Disney Company Price Stock Technical analysis Revenue Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Wednesday 03 May 2023 When are Disney’s Q2 2023 earnings expected? The Walt Disney Co., listed on the New York Stock Exchange (NYSE), is the largest media and broadcasting company in the world. The company is set to report its second quarter (Q2) earnings for 2023 on Wednesday the 10th of May 2023. The Walt Disney Co. Q2 2023 earnings: What to expect? Data compiled by Refinitiv data arrives at the following consensus estimates for the Q2 2023 results: Revenue of $21.8bn for the quarter Revenue to have increased 7.54% (from the prior year’s comparative period) Earnings per share $0.99 (vs Earnings per share of $1.08 in the prior year’ comparative period) Traders and investors alike will look to assess the influence on the business the return of CEO Bob Iger has had. Subscriber numbers for the Disney+ service could be negatively affected by the company’s failure to renew IPL India cricket broadcasting rights as well as an increase in subscription costs. The business will be hoping to see earnings supported by a continued post covid momentum in the Theme Park business, which saw revenue increase by almost 30% in 2023. How to trade the Walt Disney Co. results The below two graphics provide traders with both a retail short term view on the stock, as well as an institutional longer-term view on the company, as to how market participants are positioning themselves on the Walt Disney Co. ahead of the results release. Source: Refinitiv Workspace A Refinitiv poll of 33 analysts maintain a long-term average rating of buy for the Walt Disney Co. (as of the 2nd of May 2023), with 7 of these analysts recommending a strong buy, 19 recommending a buy, 6 hold and no sell or strong sell recommendations on the stock. A mean of analyst price targets for the stock suggests a longer-term fair value of $125.75 a share, roughly 23% higher than the current traded price (as of the 2nd of May 2023). Source: IG From a retail trader perspective (as of the 2nd of May 2023), 99% of IG clients with open positions on the Walt Disney Co. expect the price to rise over the near term, while 1% of IG Clients with open positions expect the price to fall. Disney earnings: technical analysis Source: IG The share price of Disney continues to trade in a broad sideways price environment. Range trading between price levels might in turn be preferrable than trend following techniques at this stage. In the near term a break of the 100.60 level suggests 106.70 as the next upside resistance target.

Stocks have been under pressure ahead of the FOMC decision, with Asian markets following their European and US peers lower. While a 25bps hike is still the broad expectation, there are concerns that still-strong inflation levels will force the Fed into being more hawkish. The looming debt ceiling crisis might well get a mention, but is unlikely to stay the Fed's hand. While First Republic has been rescued, the hunt is on for other victims, and regional US banks remain under pressure. Today also sees the release of the ADP report, resulting in a busy day for investors, with more big events scheduled for tomorrow and Friday.

Early Morning Call: FTSE 100 opens higher as Lloyds beats expectations in Q1 Lloyds Banking Group beat profit expectations for the first quarter, with a pretax profit of £2.3 billion, above the £1.95 billion average of analyst forecasts compiled by the bank. Jeremy Naylor | Analyst, London | Publication date: Wednesday 03 May 2023 Equity market overview Asia-Pacific equity markets fell overnight. Tech stocks weighed on the Hang Seng and Australia’s S&P/ASX 200 for a second day. The Nikkei was closed as Japan celebrated Constitution Day. Fed on rates Tonight, the Federal Funds Rates are expected to rise by 25-basis points (bp) to a target range of 5%-5.25%. Stubborn inflation remains the single biggest risk to long-term economic problems. This remains the priority over a recession which is the short-term pain that has to be endured. Before the conclusion of the Federal Open Market Committee (FOMC) meeting, the market awaits latest ADP employment change data and ISM services PMI. Earnings Elsewhere on the equity market, Lloyds Banking Group beat profit expectations for the first quarter (Q1), with a pretax profit of £2.3 billion, above the £1.95 billion average of analyst forecasts compiled by the bank. Net income rose 15% to £4.7bn. In France, BNP Paribas' profit more than doubled in the first quarter compared to a year ago, after the sale of its US division. The sale of Bank of the West yielded about €2.95Bln in capital gains, lifted the bank's net income to €4.44Bln, in line with expectations. Deutsche Lufthansa expects strong demand for holiday travel this summer and sees significant year-on-year (YoY) improvement in adjusted EBIT for the full-year. The German airline group posted an adjusted quarterly EBIT loss of €273 million, after a €577Mln loss in the previous period. Analysts’ consensus was €-279Mln. Revenues jumped 40% to €7.02Bln, falling short of consensus for €7.57Bln. Ryanair said traffic increased by 13% in April to 16 million customers. Load factor rose by three percentage points to 94%. In the US, Ford Motor fell in extended trading last night after being cautious in its outlook. Ford confirmed its full-year guidance but cautioned that "higher industrywide customer incentives as vehicle supply-and-demand rebalances" will be a "headwind" for profitability. T he carmaker posted better-than-expected earnings for the first quarter. Adjusted diluted earnings per share (EPS) were 62 cents, compared with 38 cents a year ago. Analysts had expected 40 cents. Revenue also beat expectations. Advanced Micro Devices fell 6.2% last night after its sales guidance missed market expectations. The chipmaker posted earnings of 60 cents per share on revenue of $5.40Bln, both lines beating estimates. But AMD missed analysts' estimates for PC and data centre chips sales for the first quarter. AMD CEO Lisa Su told investors that the first quarter was the bottom of the market for the company's PC business and the industry, and remained confident in the group's ability to grow in the second half of the year. 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.

For more up to date news on how markets will open, the latest earnings and economic news, watch IGTV live in the platform at 07:30am UK. Today’s coverage: Indices: Looking at a higher open across Europe today after the drop yesterday. Technically there’s still a target of October 2022 lows, at some point. Techs worst hit FX: USD on the block today ahead of the US rate decision. Fed continues to focus purely on inflation and expected to steer the economy into recession Equities: Earnings – LLOY HLN MTRO BDEV STLA LHA AIR BNP RYA Commods: Gold back up above $2000. Oil and base metals down on renewed recession expectations, copper close to breaking 2023 low support

What to expect and how to trade Lloyds’ upcoming interim management statement. Source: Bloomberg Shares Price Lloyds Bank Bank Recession Economy of the United Kingdom Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 02 May 2023 When are Lloyds’ results expected? Lloyds Banking Group PLC, the United Kingdom-based financial services provider, is set to release its first quarter (Q1) 2023 interim management statement on 03 May 2023. Lloyds’ shares shrug off banking worries Like most banking stocks, Lloyds suffered heavily in March during the crisis around Silicon Valley Bank, Signature Bank and Credit Suisse. The stock dropped from a post-pandemic high of 54.33 pence to a four-month low of 43.66p, before rebounding as fears of a wider banking crisis receded. While the share price dropped sharply in 2022, it has recovered all these losses, surging 40% from the October 2022 low to the February 2023 peak. UK economy outlook crucial As such a key player in the lending market for businesses and individuals, Lloyds is intimately linked with the outlook for the UK economy. The good news is that, for now, a recession has yet to arrive. The winter is now past, and with it perhaps the worst for now for UK energy bills, giving homeowners and businesses more money to spend, though rising mortgage costs continue to hit spending. But inflation continues at an elevated level, likely requiring further action from the Bank of England (BoE). Recent data showed double-digit Consumer Price Inflation (CPI) growth, along with strength in pay packets; as a result price growth will remain strong, pushing the BoE (however unwillingly) into raising rates to a fresh high. Hopes of a cut in rates by year-end rest on a deterioration in economic data, but this supposed ‘bull case’ for the UK economy would also need to include skirting a recession, something that may not be achievable. Low valuation supports share price Crucially, Lloyds continues to trade on a lowly P/E ratio of around 7. This prices in much of the uncertain outlook, and provides some potential upside for the shares in the medium-term. Crucially, it also trades well below the FTSE 100’s P/E of 12.5. This undemanding valuation does provide some hope for the shares to outperform, but of course much depends on whether the UK does hit a recession, either later this year or early in 2024. How to trade Lloyds into the interim management statement Refinitiv data shows a consensus analyst rating of ‘buy’ for Lloyds – 5 strong buy, 10 buy, 4 hold and 2 sell - with the median of estimates suggesting a long-term price target of 64.00 pence for the share, roughly 32% higher than the current price (as of 02 May 2023). Source: Refinitiv IG Group Holdings PLC sentiment data shows that 93% of clients with open positions on the share (as of 02 May 2023) expect the price to rise over the near term, while 7% of clients expect the price to fall whereas trading activity over this week and month shows 63% of sells. Source: IG Lloyds – technical view The recovery in the Lloyds share price from its March 46.73 pence banking crisis low is ongoing despite the recent drop in the oil price dragging the company’s share price lower, so far to its late April low at 47.245p. While the next lower 200-day simple moving average (SMA) at 46.65p underpins on a daily chart closing basis, a resumption of the late March advance may ensue. Lloyds Daily Chart Source: Tradingview For the bulls to be back in control, however, a rise and daily chart close above the April high at 50.30p needs to be seen. In this case the February peak at 54.33p would be back in the frame, a rise above which would allow for the January 2022 peak at 56.00p to be back in play. Lloyds Weekly Chart Source: Tradingview The medium-term uptrend, which began in October of last year, remains valid as long as no drop through the March low at 43.66p is seen.

Following the RBA’s surprise 25-basis point rate hike to 3.85% and tightening stance, we would like to go long AUD/NZD at $1.0804 with a stop-loss at $1.0680 and an upside target at $1.1050. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 02 May 2023

EUR/USD awaits rate decisions, USD/JPY nears March high and AUD/USD rallies on surprise RBA rate hike Outlook on EUR/USD, USD/JPY and AUD/USD as the RBA hikes rates by 25 basis-points ahead of Wednesday’s Fed and Thursday’s ECB rate decisions. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 02 May 2023 EUR/USD oscillates around the $1.1000 mark EUR/USD continues to range trade around the minor psychological $1.10 mark ahead of Wednesday’s Federal Open Market Committee (Fed) and Thursday’s European Central Bank (ECB) meeting in which both central banks are expected to hike their rates by 25 basis-points (bp). Were last week’s low at $1.0963 to give way, the $1.0929 late March high and also the mid-April low at $1.091 would be targeted. If, however, a rise above Monday’s high at $1.1035 were to be seen, the $1.1075 to $1.1095 April highs would be back in the picture. Further up the January 2022 low and early March 2022 high can be spotted at $1.1121 to $1.1122. Source: IT-Finance.com USD/JPY rally nears March peak Last week’s swift rally in the USD/JPY exchange rate, on the back of comments by the newly appointed governor of the Bank of Japan (BoJ) Kazuo Ueda in which he modified the central banks’ forward guidance by removing references to the Covid-19 pandemic and vowed to keep interest rates at “current or lower” levels, has taken the cross close to its March peak at ¥137.91. Around the March high the exchange rate is likely to at least short-term consolidate. Slips should find support along the 200-day simple moving average (SMA) at ¥136.97, below which there is no significant support to speak of until the ¥135.13 to ¥135.11 mid-March and mid-April highs. Source: IT-Finance.com AUD/USD rallies on surprise 25 basis-point rate hike AUD/USD shot back up to its 55-day SMA at $0.6708 as the Reserve Bank of Australia (RBA) surprised market players with a 25 bp rate hike to 3.85% and hinted at the possibility of further tightening in order to tame domestic inflation which at 7% remains stubbornly high. The February-to-May downtrend line at $0.6724 has also nearly been reached, as has the 200-day SMA at $0.6734, both of which are likely to at least short-term cap. If overcome on a daily chart closing basis, however, the April high at $0.6806 may be revisited. Minor support can be found around the 24 March and 10 April lows at $0.6626 to $0.662. Source: IT-Finance.com

Charting the Markets: 2 May Outlook on FTSE 100, DAX 40 and S&P 500, EUR/USD, USD/JPY and AUD/USD as RBA hikes rates by 25 basis-points with Fed and ECB likely to follow suit. Brent crude oil and gold slip while copper price rises. 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.

Traders commonly utilize the moving average as a technical indicator to identify trends and establish dynamic support and resistance levels. This video will explain how you can use this indicator in your trading journey and explore its various applications and uses.

An earnings recession is likely, but earnings growth is beating expectations with Apple, Uber, and Coinbase three stocks to watch this week. IG Analyst | Publication date: Tuesday 02 May 2023 US earnings season is past the halfway point, and S&P 500 companies are exceeding the low bar set prior to the reporting period. In this week’s Investor Spotlight, we review the earnings season so far, discuss last week’s tech results, and home in on three companies reporting in the week ahead. US earnings clear a low bar The bar was set low for company earnings heading into the first quarter reporting period. Although still expected to deliver negative EPS growth, earnings have exceeded expectations so far, according to data compiled by FactSet. Aggregate EPS growth for S&P 500 companies is forecast to fall 3.7% for the quarter, up from a 6.7% forecast contraction tipped at its outset. Cyclical stocks have been amongst the biggest outperformers, indicating a more resilient US economy. The blended earnings estimate for the consumer discretionary sector is currently 47.8%, with industrials, energy, and financial services also posting stronger than expected growth. S&P 500 earnings growth: Q1 2023 chart Source: FactSet Tech earnings prop up market Mega-cap tech results were the talk of the Street last week and will likely remain so in the week ahead. Corporate giants Alphabet, Meta Platforms, Amazon, and Microsoft handed down earnings and all beat analyst expectations. The stronger results fuelled an emerging trend on Wall Street of US tech outperformance. Not for the first in recent history, strength in big tech is propping up the performance of the S&P 500, which is pushing higher on a noteworthy lack of breadth. As can be seen in this chart produced by Jason McIntosh from ‘Motion Trader’, there’s a growing divergence between the S&P 500 Index and the equal-weight S&P 500 Index. Source: Jason McIntosh, Motion Trader Three stocks to watch The reporting season is past its halfway point, with a lion's share of Wall Street’s hottest companies already reporting. However, investors still confront a stacked corporate calendar. Source: Earnings Whispers Here are three companies to watch in the week ahead. Apple (AAPL) Apple reports on Friday morning (AEST). As outlined here by IG Market Analyst Hebe Chen, Apple is expected to see a drop in both revenues and profits for the quarter, with EPS tipped to slip to $1.44 per share. After a year clouded by softening demand and continued supply-side disruptions, investors will be keenly awaiting what the business says about future sales activity and the company’s ability to defend margins. Amid geopolitical risks, expectations for weaker consumption, and fewer growth opportunities, what guidance Apple management provides about future earnings growth will be the focus. Following several quarters of subdued growth, analysts are expecting a stronger pick-up in earnings in the periods ahead. That prospect supports a bullishness toward Apple stock amongst the analyst community. Currently, 34 of 42 brokers recommend a buy, while seven suggest a hold, and one a sell. The consensus price target is roughly in line with the market price target, however, and has been progressively lowered recently. Apple shares look to be rangebound in the long term, having failed to make a new high in over a year. Medium-term momentum is skewed to the upside. However, an upward-sloping wedge pattern indicates this rally could reverse. Sellers have emerged in Apple shares above $176 in the past, meanwhile, technical support is around $157 and $150. Apple weekly chart Source: IG Uber (UBER) After surprising investors by delivering positive earnings last quarter, Uber is tipped to reveal EPS of -$0.09 for Q1 2023. Despite this, earnings are still forecast to increase by 52% from the corresponding period last year as the company’s business returns to normal following pandemic restrictions across the globe. The outlook remains murky for Uber as the company looks to navigate softer macroeconomic conditions and regulatory risks that could impact the business’s ability to retain drivers. EPS going forward is forecast to barely break into positive territory, with sustained positive earnings not expected until 2024. Uber’s take rate, or the amount of money it makes as a total percentage of fares, is expected to pick up. Analysts remain very constructive on Uber stock. Out of 46 surveyed analysts, 31 recommend buying, while only four suggest holding and one selling. The consensus price target is at a hefty premium of $46.78. Uber shares still appear in a downtrend and a series of higher lows suggests the stock may have bottomed. Buyers could emerge on dips towards upward-sloping trend line support. Short-term resistance appears to be around $36.00 per share. Uber weekly chart Source: IG Coinbase (COIN) Trader favourite Coinbase reports on Thursday morning as the business looks to push through the turmoil of last year’s crypto winter and continued financial market uncertainty. Following a devastating 2022 for Coinbase profits, analysts are expecting the business will begin moving in the right direction again this year. EPS in Q1 is forecast to rise 32.13% to -$1.34, with the broker’s earnings expected to have bottomed in the middle of last year. Revenues are expected to be significantly lower than in the corresponding period last year, however, they are expected to be higher than in the previous two quarters. Analysts are neutral on the stock, following 18 months that have seen it lose more than 80%of its value. Most recommend a hold, with 13 analysts suggesting that action, seven pitching a sell and nine a buy. The consensus price target is $73.14. In the bigger picture, Coinbase is clearly in a downtrend. Near-term support looks to be around $52.00, while resistance could emerge at a confluence of levels at $60.00. Coinbase weekly chart

AMD is scheduled to report its first quarter (Q1) earnings after the market closes on Tuesday, the 2nd of May, 2023. Source: Bloomberg Shares AMD Revenue Price Demand Inflation Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 02 May 2023 Key dates AMD is scheduled to report its first quarter (Q1) earnings after the market closes on Tuesday, the 2nd of May, 2023. Company profile The share price of AMD fell 55% in 2022 as the impact of higher interest rates and inflation weighed on tech stocks. The fall in AMD’s share price was compounded by a “weak PC environment in the second half of the year”, a reference to lower consumer demand for finished electronics and an excess of parts needed to make PCs and servers. The company reported the following key numbers in its Q4 2022 earnings call. Revenue of $5.6 billion increased 16% year-over-year, primarily driven by growth across the Embedded and Data Center segments, partially offset by lower Client and Gaming segment revenue Gross margin was 43%, a decrease of 7 percentage points year-over-year, primarily due to the amortization of intangible assets associated with the Xilinx acquisition Non-GAAP diluted earnings per share was $0.69 compared to $0.92 a year ago, primarily due to lower Client segment operating income. Cash, cash equivalents and short-term investments were $5.9 billion at the end of the quarter. The company returned $250 million to shareholders through share repurchases in the quarter. What to expect During its Q4 2022 earnings report, AMD provided guidance for the first quarter of 2023. The company expects revenue to be approximately $5.3 billion, plus or minus $300 million, a decrease of approximately 10% year-over-year. Moreover, the Client and Gaming segments are expected to decline year-over-year, partially offset by Embedded and Data Center segment growth. AMD expects non-GAAP gross margin to be approximately 50% in the first quarter of 2023. AMD CEO Lisa Su told analysts the PC environment was “weak.” She went on to state, “Although the demand environment is mixed, we are confident in our ability to gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio.” Key financials: summary Revenue: $5.3 billion vs $5.6 billion in Q4 2022 Diluted EPS: $0.57c vs $0.69c per share in Q4 2022. AMD revenue chart Source: AMD AMD EPS chart Source: AMD What else to watch out for? Forward guidance: Comments on the macro environment around consumer demand and excess inventory Gross Margins: A key metric for chip makers - should be around 50% Datacenter: Comments on increased demand for AI accelerators Note: Tech Stocks Earnings in Q1 2023 have been better than expected from companies including Microsoft, Meta, Google, and Amazon, not to mention AMD’s main competitor Intel. AMD technical analysis The AMD share price fell over 65% from its bull market $164.46 high in November 2021 to its $54.67 low in October 2022. AMD weekly chart Source: TradingView During the first quarter of 2023, the share price of AMD rallied over 50% as tech stocks enjoyed their best quarter since Q2 2020. While the rally is viewed as a countertrend, it appears incomplete and is eyeing the resistance at $90 coming from the downtrend from the $102.43 low. A sustained break above $90 should see the rally test and break the $102.43 high of March, before hitting a solid band of resistance $105/110.00 area. AMD daily chart Source: TradingView TradingView: the figures stated are as of May 1, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. Summary AMD is scheduled to report its first quarter (Q1) earnings after the market closes on Tuesday, the 2nd of May 2023. Given that the technical setup suggests the countertrend rally has further to go and the tendency for tech earnings this quarter to beat expectations, we expect the AMD share price to rally above the recent $102.43 high in the sessions ahead.

The Australian dollar was boosted by the RBA rate hike; the 25 basis points lift makes the 3.85% cash rate the highest since 2012 and the CPI is enemy number1. If the RBA remain hawkish, will AUD/USD soar? Source: Bloomberg Forex Shares Inflation United States dollar Consumer price index Monetary policy Daniel McCarthy | Strategist, | Publication date: Tuesday 02 May 2023 The Australian dollar roared over 67 cents after the RBA tightened monetary policy following a pause last month. The 25 basis point lift took the cash rate to 3.85%. In the accompanying statement on monetary policy, the bank said, “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve.” They highlighted the tight labour market and that wages had started to pick up. Australian retail sales and trade data will be released this week followed by building approvals figures next week. The Citibank Economic Surprise Index (ESI) in the chart below is leaning toward a possible beat for AUD fundamental coming up. Created in Excel, sourced from Bloomberg Prior to the meeting, interest rate markets were pricing on a fifty-fifty chance of a 25 basis point hike later this year. Now that it has arrived, the market is recalibrating and digesting the intonation of the statement. The reaction in AUD/USD has been more abrupt. It would seem that last week’s inflation figures stoked some flames of concern with headline CPI of 7.0% slightly beating forecasts of 6.9% year-on-year to the end of March and it was against 7.8% previously. The RBA’s preferred measure of trimmed-mean CPI was 6.6% year-on-year for the same period instead of estimates of 6.7% and 6.9% previously. The headline CPI figure has been above the RBA’s mandated 2 – 3% inflation target since the second quarter of 2021 while the trimmed mean has been above the target since the first quarter of 2022. The RBA didn’t start raising the cash rate until May 2022. The shortcomings of the trimmed mean measure may have been exposed by this episode. This adjusted inflation gauge looks at the middle of 70% of the headline CPI basket. That is, it eliminates the 15% of the basket that rose the most and least. This symmetric approach means that if one side of the basket is seeing far more aggressive price changes, the other side of the basket being eliminated doesn’t necessarily evenly compensate for it. When inflation pressures are moving significantly up or down, the value of appraising the underlying price changes using a core method such as the trimmed mean might not be as useful as it has been historically. What is apparent from today’s decision is that the RBA are back in inflation-fighting mode. The Federal Reserve and European Central Bank (ECB) will meet late this week while the Bank of England will gather next week. Interest rate markets have priced in a 25 basis point lift by all three central banks. AUD/USD one minute chart price reaction to RBA hike Source: TradingView This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

FOMC preview: preparing a pause and what it means for US equities As the Federal Reserve is expected to signal a pause in rate hikes, the question remains whether strong earnings reports will continue to support the market, or will it leave investors searching for the next catalyst? Source: Bloomberg Indices Shares Federal Reserve Federal Open Market Committee S&P 500 Interest Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 02 May 2023 In some ways, we shouldn’t be surprised. Like the March FOMC meeting, the lead-up to Thursday’s FOMC board meeting has featured another banking failure. However, the swift and tidy resolution around First Republic Bank this week has created none of the uncertainty seen ahead of the last FOMC meeting. Instead, the interest rate market and commentators expect the Fed to deliver a 25bp rate hike, raising the target range of the Fed Funds to 5-5.25%. The real focus will be on if and how the FOMC adds some flexibility ahead of a possible pause in June. What is expected? The FOMC is expected to signal a pause and retain a tightening bias using wording similar to the RBA used for its pause in April - noting that the timing and size of future rate hikes will depend on incoming data and information. The Fed will also note that interest rates will likely remain high for an extended period which contrasts with the rates markets pricing of 50bp of rate cuts from September into year-end. What does a pause mean for US equities? Historically US equities have typically rallied after a Fed pause. However, each cycle is different. US stock markets have rallied strongly from their October lows in anticipation of an imminent Fed pause which led to the interest rate-sensitive Nasdaq ruling off on its best quarter since June 2020. Hence there is a good argument to say that a Fed pause is already priced in. The Fed is unlikely to open the door to possible rate cuts this year which could have been the catalyst for another leg higher. Instead, as explained above, they will note that rate hikes will remain high for an extended period. Perhaps the wild card in all of this is that the run of strong US earnings either continues or runs out of steam over the next fortnight. According to FactSet of the 53% of S&P 500 companies already reported, 79% have reported a positive EPS surprise, and 74% have reported a positive revenue surprise, pushing back expectations of an earnings recession. S&P 500 technical analysis The S&P 500 is trading at the top of its multi-month 4210-3800 range. While below range highs 4210/00 area, we continue to look for a test of 4000 and then 3800 in the months ahead. However, should the S&P 500 see a sustained break above 4210 (three daily closes above), it will put the August 4327 high on the market’s radar. S&P 500 daily chart Source: TradingView Nasdaq technical analysis After a storming run across the finish line, the Nasdaq ended the month of April in positive territory (+0.49%) after holding and bouncing from important support highlighted at 12,800. Should the Nasdaq continue to hold the support at 12,800 and then see a sustained break above the recent 13,348 high, it would set up a retest of the August 13,740 high. Aware that if the Nasdaq were to fail from here and then see a sustained break below 12,800, it would signal that a deeper pullback is underway towards 12,400 with scope to the 200-day moving average at 12,100. Nasdaq daily chart Source: TradingView Dow Jones technical analysis The Dow Jones completed April with a 2.5% gain for the month, posting a bullish close above the downtrend resistance from the bull market 36,952 high. If the Dow Jones can now take out the 34,342 high year-to-date high, it opens a test of the 34,712 high from December 2022 with a scope to the 35,492 high from April 2022. Aware that a retreat much below 32,000 would suggest the Dow Jones's latest attempt to break higher has failed and that a deeper decline towards support at 32,670 (from the 200-day moving average) is underway. Dow Jones daily chart Source: TradingView TradingView: the figures stated are as of May 2, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

RBA raises rates again by 25bp, more hikes possible despite softer inflation. Source: Bloomberg Indices Inflation Australian Securities Exchange ASX Interest Monetary policy Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 02 May 2023 At its Board Meeting today, the Reserve Bank of Australia raised its official cash rate by 25bp to 3.85% ending its pause after just one month. The RBA's eleventh rate rise in twelve months has rocked the local asset markets that were confidently pricing in no change to permit the RBA time to achieve its stated goal of allowing more time to assess the impact of its rate hiking cycle. Last week's softer-than-expected Q1 2023 core inflation print proved of little comfort, as the RBA noted. “Inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range,” the RBA governor, Philip Lowe, said in a recent statement. “Given the importance of returning inflation to target within a reasonable timeframe, the board judged that a further increase in interest rates was warranted today.” While the RBA noted that goods inflation was slowing, it said that service inflation remained elevated with upside risks. "Services price inflation is still very high and broadly based, and the experience overseas points to upside risks." The RBA's aim remains to "keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains narrow." The RBA retained its tightening bias and noted that more rate hikes were possible, bringing more misery to households already straining under the weight of higher mortgages and elevated inflation. Governor Lowe stated, "Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve." Attention now turns to the Federal Budget to be handed down next week Tuesday, May 9th. Labour force data for April is scheduled for release on May 18th. There will also be interest in the outcome of the Fair Work Commission Minimum wage determination in July. The interest rate market is currently 50% priced for another 25bp rate hike by August, with the RBA's terminal rate priced at 3.98%. What happened to the ASX 200? The ASX 200 was caught off guard by the RBA's decision to raise rates, diving 80 points (1.1%) from 7328 to a low of 7248 in quick time before settling down 66 points (-0.91%) at 7268 at the time of writing. All sectors are trading lower: Real Estate (-2.3%) Communications (-1.71%) Energy (-1.32%). As noted previously, the ASX 200 typically sees a pullback in May/June of 3-5%, which targets a pullback towards 7150 at a minimum. The May pullback appears to have commenced this afternoon. The AUD/USD has springboarded higher to be trading at .6707 for a gain of 1.15% on the day. ASX 200 daily chart Source: TradingView TradingView: the figures stated are as of May 2, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

Has the Reserve Bank of Australia (RBA) set the scene for a dose of reality that central banks are still far from done on raising rates? Jeremy Naylor | Analyst, London | Publication date: Tuesday 02 May 2023 The RBA raised rates by another 25 basis points and said it is still not done. On Wednesday, the Federal Funds Rates is expected to rise by 25 basis points to a target range of 5%-5.25%. For the European Central Bank (ECB), a day later, a majority of economists expect the main refinancing rate to rise by 25 basis points to 3.75%. IGTV’s Jeremy Naylor looks at these two risk events for the markets.