As investors worldwide await the Federal Reserve’s imminent decision on interest rates, the S&P 500
treaded near the flatline, reflecting the market’s cautious stance ahead of the pivotal Fed
announcement. Meanwhile, the Dow Jones Industrial Average edged higher, marking its seventh
record close of the year, showing underlying strength in specific sectors. In contrast, the Nasdaq
Composite retreated, influenced by pre-earnings jitters in big tech and a broader recalibration of risk
appetites. Across the Atlantic, the Eurozone economy showed signs of stabilisation, narrowly
avoiding a recession, while Asian markets grappled with the impact of Evergrande’s liquidation
order. This global snapshot of financial markets sets the stage for a potentially transformative week
in global finance.
Key Takeaways:
S&P 500 Shows Resilience Amid Rate Decision Anticipation: The S&P 500 demonstrated a
holding pattern, closing nearly unchanged with a minor slip of 0.04%, settling at 4,924.97.
This movement indicates a cautious approach by investors as they brace for the Federal
Reserve’s interest rate decision.
Dow Jones Hits Seventh Record Close of the Year: The Dow Jones Industrial Average
continued its upward path, adding 20 points, or 0.1%, to close at 38,467.31. This marks its
seventh record closure in 2024, highlighting selective investor confidence in certain market
segments.
Nasdaq Composite Retreats Amidst Big Tech Uncertainty: Contrasting with the Dow’s gains,
the Nasdaq Composite declined by 0.76%, finishing at 15,509.90. The drop reflects investor
hesitancy and a re-evaluation of positions in technology stocks ahead of major earnings
reports.
European Economy Stabilises, Escaping Recession: The Eurozone economy exhibited
resilience, avoiding a forecasted shallow recession with a flat GDP in the fourth quarter of
2023, following a 0.1% decline in the third quarter. Germany, the bloc’s largest economy,
saw a 0.3% contraction in Q4 but avoided a technical recession due to a revised Q3
performance.
Asian Markets React to Evergrande’s Liquidation: Asian markets, particularly in Hong Kong
and China, experienced downturns due to the ongoing fallout from Evergrande’s liquidation.
Hong Kong’s Hang Seng index dropped 2.4%, and the mainland Chinese CSI 300 fell by 1.78%
to 3,245.04.
Microsoft Surpasses Estimates with Azure’s Growth: Microsoft reported fiscal second-
quarter earnings of $2.93 per share on revenue of $62.02 billion, beating estimates. The 30%
growth in Azure cloud services was a significant contributor to Microsoft’s performance.
Alphabet’s Ad Revenue Falls Short, Despite Overall Growth: Alphabet’s shares slid more
than 4% following its Q4 earnings report. Despite better-than-expected overall revenue and
profit, ad revenue of $65.52 billion fell short of the $65.94 billion forecast, impacting
investor sentiment.
Starbucks Struggles as Earnings Disappoint: Starbucks’ shares fluctuated after reporting Q1
earnings and revenue that missed expectations, with adjusted earnings of 90 cents per share
and revenue of $9.4 billion. The coffee chain’s global same-store sales growth of 5% fell
short of the 7.2% estimate.
Tesla Reacts to Musk’s Compensation Package Ruling: Tesla shares dropped about 3% after
a Delaware court’s decision to void CEO Elon Musk’s $56 billion compensation package,
reflecting the market’s sensitivity to corporate governance issues.
Advanced Micro Devices (AMD) Retreats on Forecast Concerns: AMD shares fell more than
3% following its Q4 earnings announcement and a lighter-than-expected Q1 forecast. The
company anticipates approximately $5.4 billion in sales for the quarter, below the expected
$5.73 billion.
FX Today:
EUR/USD Recovers Amid Mixed European Data: The Euro experienced a modest recovery
against the U.S. Dollar, with the EUR/USD pair advancing from a low near 1.0800, reaching
the 1.0850 zone. Despite the Eurozone’s GDP figures staying flat, the German economy’s
0.3% contraction in Q4 of 2023 capped the Euro’s gains.
USD/JPY Sees Volatile Movements: The USD/JPY pair displayed notable fluctuations,
rebounding off the 100-day simple moving average, indicating a key technical floor. Initial
resistance is seen at 148.20, with a potential to test the 150.00 mark in case of further
bullish momentum.
Canadian Dollar Makes Gains Against Major Counterparts: The USD/CAD pair tested the
low side at the 1.3400 handle but saw recovery, stabilizing around 1.3430. The pair is
grappling with a bearish crossover of the 50-day and 200-day SMAs, indicating a potential
ceiling near the 1.3500 mark.
US Dollar Index (DXY) Maintains Neutral Bias: The DXY Index hovered around 103.40,
showing mild losses amidst a cautious market environment prior to the Federal Reserve’s
policy decision. The index’s stance above the 200-day SMA indicates a sustained buying
momentum, yet its position below the 100-day SMA suggests potential pullbacks. Support
levels are identified at 103.40 and 103.30, with resistance at 103.90 and 104.00.
Gold Prices Fluctuate Amid Market Uncertainties: Gold prices experienced a breakout
above trendline resistance but faced challenges in sustaining gains, with a potential retest
looming at the $2,005 level. On the flip side, a meaningful rebound could encounter
resistance at $2,050, with further upward movement possibly targeting the $2,065
threshold.
Market Movers:
General Motors (GM) Accelerates on Strong Earnings: Shares of General Motors surged
over 7% after the company reported a Q4 adjusted EPS of $1.24, surpassing the consensus
estimate of $1.16. GM’s optimistic outlook for 2024 – projecting adjusted EPS of $8.50-$9.50,
well above the consensus of $7.70 – fuelled the rally.
United Parcel Service (UPS) Dips on Forecast and Job Cuts: UPS shares declined by 6.3%
after announcing plans to cut 12,000 jobs and providing a revenue forecast for 2024 in the
range of $92 billion to $94.5 billion, falling short of the expected $95.57 billion.
Pfizer Beats Estimates Amid Covid Business Decline: Pfizer’s unexpected Q4 profit, with an
adjusted EPS of 10 cents against an expected loss of 22 cents, led to a positive market
response. The pharmaceutical giant’s revenue stood at $14.25 billion, despite a significant
year-on-year decline.
Whirlpool Washed Out on Revenue Forecast: Whirlpool shares tumbled over 6% after
forecasting full-year revenue of $16.90 billion, below the consensus of $17.68 billion,
signalling potential challenges ahead for the appliance maker.
Super Micro Computer (SMCI) Jumps on Strong Sales Forecast: Super Micro Computer’s
stock climbed more than 3% after reporting Q2 net sales of $3.66 billion, exceeding
expectations, and raising its full-year revenue forecast to $14.3 billion-$14.7 billion, up from
a previous projection of $10 billion-$11 billion.
As the financial markets wrap up another day of trading, global economic dynamics and corporate
performances continue to shape investor sentiment. With the Federal Reserve’s rate decision casting
a looming shadow, markets remain sensitive to monetary policy signals and economic indicators.
Today’s mixed movements across major indices, from the Dow’s record highs to the Nasdaq’s
pullback, highlight the ongoing recalibration in investor strategies amidst a landscape scattered with
technological shifts, policy uncertainties, and geopolitical tremors. As investors navigate through this
current market, the focus now shifts to upcoming economic data releases and central bank
decisions, poised to offer further insights into the evolving narrative of global finance.
