Europe is extending its gains and Asian markets are also closing higher. Wall Street rebounded on Monday after the recent $2 trillion sell-off. Hopes that the recovery will continue depend on whether big tech companies can justify their recent gains, which have been triggered by the AI boom.
Initial results on Tuesday were largely positive, with German software giant SAP, pharmaceutical giant Novartis and car manufacturers Renault and General Motors all making gains. United Parcel Service and Lockheed Martin also rose in pre-market trading after increasing their profits. PepsiCo slipped after announcing falling sales in North America, and MSCI and Philip Morris were also among the losers.
However, the big reports are still to come in the next few days, with the focus on the mega caps. Tesla is the first of the formerly important “Magnificent Seven” to report after the close today – but given its recent losses, it will not be as important to a potential Wall Street recovery as Meta Platforms on Wednesday, followed by Microsoft and Alphabet on Thursday.
Some 180 companies, accounting for more than 40% of the S&P 500's market value, report this week. I expect a disappointing report from Tesla, but good reports from Meta and Alphabet, as well as Microsoft at least meeting expectations. I also expect solid forecasts, which will help to prolong the recovery.
Economic data from the Eurozone has improved and private sector activity is at its highest level in almost a year, driven by a buoyant service sector and the return of growth in Germany. If there are no economic surprises, an ECB rate cut in June remains likely, which will further boost European equities.
Gold extended its losses after its biggest one-day fall in almost two years as easing tensions in the Middle East and signs that the Fed will keep interest rates higher for longer dampened demand. Gold is in oversold territory but is vulnerable to profit taking. Oil prices have also fallen – we expect oil prices to rise again.
Markets remain sideways for now and are cautious ahead of Big Tech earnings – a more cautious environment should help gold to a temporary bounce. Cyclical stocks are benefiting from solid earnings reports, while the technology sector still has room for recovery as investors are likely to continue buying up the recent declines.
👁 ROB'S MARKET OVERVIEW:
April 23, 2024
🌐/🇺🇸 Global Markets ➡️
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️/➡️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ↘️/➡️
Materials Stocks ↘️/➡️
💱 Forex
GBP, EUR, AUD ↗️/➡️ (benefiting from recent slide)
USD, CAD ➡️
CHF ↘️/➡️
JPY ↘️/➡️ (remains bearish but will likely see limited losses ahead of BoJ monetary policy outlook)
⚒ Commodity Markets ↕️
Oil prices ↘️/↗️ (temporary slide – will find increasing support below $81.00/barrel (WTI))
Natural Gas prices ↘️/↕️
Metal prices ↘️/➡️ (metal prices to stabilize, remaining bullish)
Gold ↘️/↗️ (likely to rebound slightly and see dip buying near $2,300)
⚡️Cryptos ↕️ (remains volatile – searching for more guidance)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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