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  • #16
    Daily Fundamental ForexTime ( FXTM )

    Key events this week: Big earnings for Big Tech?​








    There’s a lot happening this week, especially on the US earnings front:

    Monday, April 26

    Tesla earnings (after US markets close)
    Tuesday, April 27

    Bank of Japan rate decision
    Alphabet earnings (after US markets close)
    Microsoft earnings (after US markets close)
    Wednesday, April 28

    US President Biden addresses joint Congress
    Fed rate decision
    ECB President Christine Lagarde speech
    OPEC+ meeting
    Apple earnings (after US markets close)
    Facebook earnings (after US markets close)
    Thursday, April 29

    Amazon earnings (after US markets close)
    Twitter earnings (after US markets close)
    US Q1 GDP, weekly jobless claims
    Friday, April 30

    China PMI
    Eurozone GDP, CPI, unemployment
    US personal income/spending, consumer sentiment


    As I had mentioned last Thursday:

    “Corporate guidance for earnings growth over the coming weeks is likely to have an influential role in determining whether US stocks can roar higher. Investors want to ascertain whether earnings prospects are bullish enough to warrant another leg higher for US indices, and whether the Q1 performance has justified recent gains.”

    The same will be applicable for these Big Tech stocks that are scheduled to unveil their latest quarterly earnings this week.

    Note that Tesla, Alphabet, Microsoft, Apple, Facebook, and Amazon have a combined market cap of about $9 trillion. That’s more than half of the total value of the Nasdaq 100 index, which has a market cap of nearly $16 trillion. Hence, how these stocks move could have an outsized impact on the tech-heavy index this week. At present, markets are pricing in an average single-day move of 4% in either direction for each of these six stocks once US markets resume trading after their respective earnings releases.

    A notedly optimistic earnings outlook from these tech behemoths could spur the Nasdaq 100 onto a new record high, considering that the index itself is less than one percent away from beating its 16 April peak.

    Meanwhile, the futures contract is now edging its way back towards the 14,000 mark.






    Amidst all these headline-grabbing earnings releases, Joe Biden is also set to address Congress for the first time as the President of the United States. As he unveils more details about his ambitious spending plans, investors would also be anxiously awaiting details about how it would be funded.

    There’s been media reports last week about a doubling of the capital gains tax, adding to the proposed corporate tax hike announced earlier this month.

    And with Big Tech companies front and center of the taxman’s sights, more of such details released this week could drag US tech stocks lower.



    FXTM Social Media index to cross 700 and hit new record high this week?

    This index is evenly weighted between its 4 constituents, namely Facebook, Alphabet, Twitter, and Snapchat. Note that Snapchat already released its latest quarterly earnings after US markets closed on Thursday, 22 April. This social media company reported better-than-expected surges in its revenue and daily active users, which grew 66% and 22% year-on-year respectively.

    Such a performance pushed Snap’s share price up by 7.45% on Friday alone, which ended a losing streak for the 5 consecutive sessions prior.

    Friday’s surge in Snap’s stocks helped propel the FXTM Social Media index to its highest ever closing price before the weekend.





    Positive guidance out of Facebook, Alphabet, and Twitter this week might see the FXTM Social Media index push above the psychologically-important 700 line before it reaches overbought territory.

    However, should markets be grossly disappointed either by the latest quarterly results or what management has to say about the coming quarters, that could deflate this index until it tests its 50-day simple moving average as a support level once more. The 610-640 range may also prove to be a key area of interest to the downside.




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    • #17
      Daily Fundamental ForexTime ( FXTM )

      Earnings Preview: Uber to drive past pandemic woes?​







      America’s largest ride-hailing platform is set to announce its Q1 results after US markets close on Wednesday. Investors want to know how much Uber’s services are back in demand, as lockdown measures eased between January and March this year.

      Even as broader stock markets have been celebrating the reopening of the US economy, Uber’s stock prices were noticeably more sanguine. The stock has been relatively range-bound over the past two months, with the stock finding a close above $60 unsustainable since posting its highest ever closing price on 10 February. The stock has fallen by over 16% since.





      Treasury Secretary Janet Yellen spooked some segments of the US stock market on Tuesday with comments that hinted at rising interest rates to curb an overheating economy. The selloff in tech stocks contributed to Uber’s share price closing below its lower Bollinger band.

      That in itself may not be such a bad thing for technical traders.

      Uber bulls might take heart from such a technical event because the last time the stock closed below the lower bound of the band, it went on to stage a massive rally of more than 35% in just over two weeks! Also, over the past 12 months, the stock has found its forays below its 100-day simple moving average (SMA) to be fleeting.

      Perhaps in that regard, this stock is akin to a coiled spring, raring to be propelled higher from such oversold conditions, with Wednesday’s announcement potentially serving as the trigger.

      Though with momentum firmly pointing south, Uber appears in need of a major vote of optimism from the markets before we can say with conviction that a new record high is coming into view.

      Is the pandemic finally in Uber’s rearview mirror?

      For the quarter, markets are expecting Uber’s revenue to come in at $3.25 billion, which would mark a gradual increase from the past two quarters, though still 8.2% lower year-on-year.

      The bigger boost likely came from some pandemic-era habits that have stuck around. Uber’s delivery services increased by 150% year-on-year in March, which helped the company post a record high for its monthly gross bookings!

      Still, Uber’s net loss for Q1 is forecasted at around $1.05 billion, with investors wanting to know how such numbers might impact the company’s repeated forecasts of achieving profitability by year-end.

      Winding road ahead

      In its pursuit of profitability, Uber is also set to face some near-term challenges.

      The company has set aside an extra $250 million to lure drivers back with, as the demand resurgence outpaces the number of drivers who’s willing to return to such gigs. That figure could erode its bottom line in the coming quarters.

      Also, Uber may have to contend with higher operating costs if regulators are to have their way. Just last week, US Labor Secretary, Marty Walsh, said that gig workers should be classified as “employees”, which raises the prospects of the likes of Uber being saddled with the compliance costs to employment law. In March, Uber reclassified all its drivers in the UK as “workers”, and the entitled benefits to drivers would cost the company about $300 million per year, according to Morgan Stanley estimates.

      Raring to grow

      Still, it’s not all doom and gloom for Uber’s outlook.

      Besides riding on the global economic reopening, Uber plans to also aggressively grow its delivery services across the US over the coming months, reportedly in partnership with GoPuff, a startup that focuses on deliveries. Such a move would help bolster its deliveries offerings, following its $2.65 billion acquisition of Postmates last year.

      There are also plans to roll out Uber Eats Germany, expanding its foray on the continent beyond existing markets in Spain, France, Poland, and the UK. Uber is also partnering with a London-based EV maker to produce cars for ride-hailing by Q3 2023.

      Such ambitions could help Uber diversify its income streams, both geographically and also across varying business segments.

      How could Uber’s shares react post-earnings?

      Markets think that the stock could move by 8.43% when the US cash session reopens after Uber’s Q1 earnings have been released.

      Uber’s shares already gained 3.6% in extended trading on Tuesday, climbing alongside the stock prices of its rival, Lyft, which announced its own results after markets closed.

      Those who believe in Uber’s long-term prospects must gain enough critical mass in order for the stock to hit a new record high.

      At least for the near-term, investors can take heart that, as the Covid-19 vaccine continues permeating major economies, that should help bolster Uber’s core business as people grow more comfortable hopping back into an Uber for their trips back to work, school, or out about town.





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      • #18
        Daily Fundamental ForexTime ( FXTM )

        US stocks to climb on jobs optimism​









        Asian markets are climbing on the back of Thursday’s gains for US benchmark indices, following fresh signs that the US economy is healing from the wounds inflicted by the pandemic.

        The S&P 500 is now just 0.23% away from its record high, while the Dow Jones Industrial Average posted a fresh record high. The Nasdaq 100 ended a 4-day losing streak, though remains about 3% lower from its highest ever closing price recorded on 16 April.

        At the time of writing, the futures contracts are pointing to further gains for US and European stocks before the weekend.
        Nonfarm payrolls to validate risk-on sentiment

        Yesterday, the US recorded its first sub-500k weekly jobless claims since the pandemic forced lockdowns across the country. With more Americans re-entering the workforce, that would help bring the US economy further along into the post-pandemic era.

        Such optimism has to be endorsed by today’s US nonfarm payrolls data, with markets forecasting that one million jobs were added in April.
        While anything above March’s print of 916,000 would still demonstrate an improvement in the US jobs market, a payrolls tally that’s higher than the-expected one million could well trigger another wave of risk-taking activities across global markets.

        Investors will also be monitoring how US consumer price pressures would react to more slack being taken out of the jobs market. More importantly, markets want to know whether such inflation would persist once the low base effect fades, and force the Fed’s hands into adjusting its policy settings earlier than what these central bankers have conveyed to the markets so far.

        The Fed’s commitment to its ultra-accommodative stance is arguably the biggest theme in play at the moment, despite the concerted attempts by officials to play down any talk about a premature paring of its stimulus measures.
        Gold breaches psychologically-important mark

        Spot gold has broken above the $1800 level for the first time since February, and is set to register its biggest weekly gain of the year so far. Gold’s climb has been aided by stabilizing Treasury yields, which in turn has led to a US dollar that’s been moderating since April, noting the inverse relationship between gold and the greenback.

        The precious metal is now up by almost 7.8% over the past two months, since it registered its year-to-date low on 8 March, and has now broken above its 100-day simple moving average.

        Real yields on 10-year Treasuries remain firmly in negative territory, while its breakeven rates are now around their highest since 2013. Such conditions have implored gold prices to pare its year-to-date losses, considering its trait as a zero-yielding asset.

        In order for gold to push higher from current levels, spot prices must carve out an extended presence above $1800 in order to encourage more bulls to get off the sidelines, especially those who cling to the belief that the precious metal is a worthy hedge against faster inflation.




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        • #19
          Daily Fundamental ForexTime ( FXTM )

          Key events this week: Inflation all the rage?​








          So much for that blockbuster US jobs report last Friday.

          The April nonfarm payrolls came in at an utterly disappointing 266,000 instead of the one million figure that was expected. Yet US stocks merely shrugged off the jaw-dropping figures to climb higher, with both the S&P 500 and the Dow Jones Industrial Average posting their respective record highs on Friday.

          Even Big Tech got in on the act, with the Nasdaq 100 climbing for a second straight day to move to within 2.3% of its highest ever closing price that was set on 16 April.

          'Markets Extra' podcast: Sell in May - Yea or Nay






          The futures contracts for all three major US stock indices (S&P 500, Dow, Nasdaq 100) are pushing higher at the time of writing.

          US stocks have demonstrated tremendous resilience by taking everything in its stride, supported by a better-than-expected US vaccination rollout and the Fed’s ultra-accommodative stance.

          Let’s see how they fare with this week’s key events:

          Monday, May 10

          Chicago Fed President Charles Evans speech
          Tuesday, May 11

          Fed speak: Fed Governor Lael Brainard, San Francisco Fed President Mary Daly,
          New York Fed President John Williams
          Germany ZEW survey expectations
          OPEC monthly market report
          Wednesday, May 12

          UK GDP, industrial production
          BOE Governor Andrew Bailey speech
          Fed Vice Chair Richard Clarida speech
          US inflation
          Thursday, May 13

          St. Louis Fed President James Bullard speech
          US weekly jobless claims
          Alibaba earnings (before US market opens)
          Disney, Coinbase earnings (after US market closes)
          Friday, May 14

          Dallas Fed President Robert Kaplan speech
          US consumer sentiment, industrial production, retail sales


          Can Gold reach its 200-day SMA?

          When the shocking US jobs report was released, investors fled to safe havens.

          The buying of US Treasuries sent its yields lower. The strong correlation between Treasury yields and spot gold once again on full display last week, especially when the shocking jobs figures were released. 10-year yields screeched towards the 1.5% mark before erasing its declines, not before elevating gold prices onto a higher plain.






          In order for gold prices to climb even higher, investors must have stronger conviction about the precious metal’s traditional role as a hedge against inflation. Of course, falling Treasury yields and a weaker dollar would also go a long way for bullion bulls.

          And that brings us to the April US consumer price index due Wednesday.

          Although this set of data is expected to be high due to the low base effect, given the abnormally low CPI figures throughout Q2 2020 due to the lockdown measures across the United States, the inflation outlook is very much central to global financial markets. Still, concerns about inflation making a roaring comeback could be taken down a notch after last Friday’s severely disappointing US jobs report.

          This could mean that gold bulls may have to depend on other factors, namely another decline in US yields, a softer dollar, or bouts of risk-off sentiment.

          Any of these events could help move bullion closer towards testing its 200-day simple moving average as a resistance level over the course of this week. However, with spot gold’s 14-day relative strength index now flirting with overbought levels, should prices lurch higher, that may trigger a pullback to clear some of the eventual froth.









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          • #20
            Daily Fundamental ForexTime ( FXTM )

            Key events this week: Inflation all the rage?






            Gold prices are holding relatively steady on Tuesday, holding on to most of its gains garnered over the past three days. Earlier today, it posted a 3-month high before paring gains.

            From a technical perspective however, a near-term pullback may be healthy and necessary in order to clear the path for further gains. After all, its 14-day relative strength index has been flirting with the 70 mark, which typically denotes overbought conditions.







            That isn’t to take anything away from spot gold’s start to the trading week – one that gold bulls will be savouring.

            Bullion has punched decisively above its 200-day simple moving average, having built on a series of higher highs since forming a double bottom in March, even threatening to fall into a bear market (20% drop from its record high). It dipped below the $1680 line on a couple of occasions in March, only to go on and advance by more than 9% since.

            Perhaps most importantly, gold prices this week have broken out of the downtrend it has adhered to since posting its record high back in August 2020.

            'Markets Extra' Podcast: Can gold return to $2000?

            Why are gold prices climbing?

            1) Investors’ desire to hedge against inflation
            The precious metal is traditionally seen as a way to preserve one’s wealth during times when the prices of goods and services climb higher, eroding consumers’ purchasing power along the way. With markets having grown more concerned about the prospects of faster US inflation, it has helped boost gold prices.


            2) The weaker dollar
            Gold tends to have an inverse relationship with the US dollar. In other words, as the buck goes up, gold goes down, and vice versa. With that in mind, the greenback has been declining for a third consecutive day, with the dollar index (DXY) falling by about one percent since last Thursday.


            3) Stabilizing US Treasury yields
            Recall throughout the first quarter, Treasury yields spiked higher which roiled various asset classes, including the zero-yielding yellow metal. However, of late, 10-year Treasury yields haven’t strayed too far away from the psychologically-important 1.60% line over the past month, while real rates on the same tenor are falling back deeper into negative territory. All that has created a more conducive environment for gold to explore more of its upside.


            4) Volatility in cryptocurrencies
            In recent months, markets had been questioning gold’s suitability as an inflation hedge, with some segments of the market apparently preferring alternative assets. However, given the volatility seen in the likes of Bitcoin of late, it appears that investors are flocking back towards an asset that has stood the test of time.


            5) ETF inflows
            The flow of funds in and out of gold ETFs have had a major say on spot prices. According to Bloomberg data, these bullion-backed ETFs have been adding on troy ounces of gold for a 7th straight day, which is the longest streak of additions since 6 January. Although on a year-to-date basis these ETFs have net sold about 6.63 million ounces of the precious metal, recent purchases suggest that investors are coming round after a tumultuous Q1.


            6) A dovish Fed
            Policymakers at the world’s most influential central bank, the Federal Reserve, have repeatedly assured markets that the inflation surges are likely to be temporary. Hence, the Fed is in no rush to pull back its support for the financial markets, nor bring forward any US interest rate hike. Although markets took some time to buy into that messaging, the repeated assurances by Fed officials have enabled gold prices to climb higher.



            What else could move gold prices this week?

            The minutes from the latest FOMC meeting, to be released on Wednesday, could offer more clues about the Fed’s inflation outlook. More signs that the Fed is willing to tolerate an inflation overshoot could spur on gold bulls.

            Thursday’s weekly US jobless claims could be key as well. Another better-than-expected reading on the labour market could prompt investors to raise their expectations for faster US inflation, adding to gold’s gains in the process.

            The rest of the week is also set to feature more speeches and appearances by Fed officials. Any hint about the Fed’s outlook on the US economy and consumer prices, and the eventual policy response by these central bankers, could also move gold prices and the dollar.


            Could we see $2000 gold?

            Markets are currently pricing in just an 8.4% chance that spot gold would breach the $2000 mark by the end of this quarter.

            While there appears to be plenty of tailwinds in play at the moment, gold prices still have another 7% to make up for before reaching that psychologically-important mark.

            Gold bulls would need a significant ramp up in any of the 6 reasons listed above in order to close that gap and achieve the $2000 handle once more.





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            • #21
              Daily Fundamental ForexTime ( FXTM )

              Risk on the defensive​







              The mood in markets is pretty subdued after two days of losses in stock markets and US futures pointing to another day in the red, even after bumper earnings reports by two of the major US retailers, Walmart and Home Depot. European bourses are nursing losses of over one per cent as risk sentiment is put in the shade by lingering inflation fears.





              Bitcoin has caught the headlines this morning after falling below $40,000. Two weeks ago, the world’s most popular cryptocurrency was trading close to $60,000 but Elon Musk’s “did he or didn’t” (sell Tesla’s holding) tweet plus a China ban on financial services offering crypto services has hurt the crypto. Prices have just bounced off the widely watched 200-day SMA.



              Focus on FOMC Minutes

              This current cautious environment is generally good for the dollar which has halted the run of four days of losses so far today. The downtrend from the end of March peak is strong though, with the FOMC minutes released later today not expected to upset markets a great deal. The focus is on interpreting the Fed members’ thinking on the upbeat economic picture and the current assessment of “transitory” inflation drivers. Notably, this April meeting saw Chair Powell state in the press conference that “now is not the time to talk tapering” so the dollar may have a tough time looking for many positives in the minutes.







              It’s those “base effects” again…

              UK inflation data jumped this morning with the headline more than doubling to 1.5% from 0.7%. For sure, energy prices were helped by the regulator lifting the household cap, but the increase was well known, like in every country’s CPI figures. Going forward, energy prices and reopenings are expected to push inflation higher in the coming months. Wage pressures will also be important as the jobs market comes to terms with the ending of the furlough scheme in September.

              GBP/USD had enjoyed three days of gains, propelling it to levels not seen since February. Bulls would like to hold onto last week’s highs around 1.4160 but the bounce from the more important 1.40 support mark should stay the course.









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