“Assumed” CB Dovish Tone VS Big Tech Disappointment
The ECB hiked rates and signaled another 50 bps in March, and more after that. The BoE also increased rates 50 bps but in a split 7-2 vote. A positive productivity report was good news for the Fed outlook, though jobless claims continued to show a tight labor market. Expectations that central banks are nearing the end of rate hikes supported massive rallies in bonds and stocks. Signs that inflation pressures are softening added to the gains.
Stocks & Bonds surged, Yields dove sharply – Investors were also scrambling to buy bonds that are still seeing some of the highest yields in decades. US100 surged 3.25%, the US500 was up some 1.47%, and US30 was -0.11%. European bourses jumped sharply with a 2.16% pop in the GER40 and a 0.76% jump in the UK100. China shares fall, Japan’s Nikkei up 0.3%.
The positive earnings news from Meta after Wednesday’s close added to the bullish momentum in stocks. But disappointing earnings report added to some afterhours drifts!
Apple – 3.22% – Apple reports first profit miss since 2016 as iPhone sales fall short, and production disruptions in China. Reuters February Target $168.4.
Amazon -5.07 % – Beat Q4 expectations BUT stated that growth in its long-lucrative cloud business will slow for the next few quarters. Reuters February Target $137.72.
Alphabet -4.94% – Advertising revenue fell by 4% while YouTube revenue dropped 8%, reflecting a challenging ad environment amid a slowing economy. Reuters February Target $124.76.
Ford -6.42% – posts lower profits due to chip shortages and other supply chain issues and production “instabilities” that raised costs, along with lower-than-expected volume issues and downbeat outlook; the automaker predicted a difficult year ahead, sending its shares down after the bell as investors were disappointed following this week’s robust report from rival GM. Reuters February Target $13.97.
Has the market’s January rally got ahead of itself?
The USD Index – found a bid and rose to 101.75 from a low of 100.82 even as it weakened against EUR, GBP, and JPY.
EUR – Another rate hike in March. Wiped out Wednesdays gain. It is back to 1.0893.
JPY – steady at 128.50.
GBP – BOE long way to go! Drifts to 1.2190, up 0.10% on the day.
USOil – suffers by 5% – Next Support level at 74.70 and 71. China economy bounces back thanks to services BUT the China reopening trade for commodities has flagged amid questions over the timing and extent of the country’s recovery.
Gold – down to 1911.
Today – Attention turns to Friday’s US nonfarm payroll report and ISM Services PMI.
Biggest FX Mover @ (07:30 GMT) GBPUSD (-0.27%). Drifted to 1.2180. MAs aligned lower, MACD histogram & signal remain well below 0, RSI 29 but flat. H1 ATR 0.0015, Daily ATR 0.01097.
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