US equity futures continue their recovery after the Fed signaled that no rate hikes are planned and ahead of Apple's earnings report today.
The S&P 500 is trading sharply higher (+0.8%), with major technology stocks posting solid gains (between +0.5% and +2.2%). The markets were concerned about a possible further tightening of monetary policy by the Fed and therefore celebrated the Fed's ultimately rather dovish tone. According to Powell, the official figures would have to present convincing evidence that policy is not tight enough to bring inflation back towards the 2% target. Powell has positioned the Fed exactly as we expected him to. Yields have also fallen slightly, with the all-important 2-year Treasury back below 5%, which is important for near-term policy.
Weekly US jobless claims remained unchanged at 208,000, slightly below estimates. The market now awaits the US labor market data for April, which will be released tomorrow. I don't expect any surprises, but more signs that the US labor market remains too tight for the time being – in other words, more signals that the Fed will have to wait and see.
Apple's figures, which will be released after the market closes, will give investors a better idea of how the iPhone maker is coping with the slump in sales, which is partly due to the sluggish Chinese market. Expectations are on the low side, which doesn't set the bar too high. Nevertheless, Apple's figures could be a disappointment.
In Europe, shares barely moved amid mixed company reports. Drug manufacturer Novo Nordisk fell after disappointing forecasts and transport giant Moller-Maersk slipped. Shell rose after the energy giant beat earnings (unlike Exxon and Chevron) and announced a $3.5 billion share buyback.
The Japanese yen lost as much as 1.1% against the dollar overnight after gaining in regular trading on Wednesday and making a big jump of 450-460 pips overnight. The massive rise in the JPY was likely due to Japanese intervention and took almost all market participants by surprise (we were prepared for this and expected just such a jump in the 400-500 pip range). However, the Japanese authorities will not be able to prevent the currency from weakening again due to the large interest rate and yield differential with the US.
In commodities, oil prices fell after US inventories grew faster than expected and the risk premium fell further. The expectation that interest rates will remain higher in the longer term also weighed on oil prices – and on gold.
We expect the current recovery in equities to continue for a little longer, led by dip buying in the technology sector. The market will then become more cautious ahead of Apple's earnings report and tomorrow's NFP data.
👁 ROB'S MARKET OVERVIEW:
May 02, 2024
🌐/🇺🇸 Global Markets ↗️/➡️
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️
Financial Stocks ↗️
Defensive Stocks ↗️/➡️ (slight gains, before turning sideways)
Energy Stocks ↗️/➡️ (slight gains, before turning sideways)
Materials Stocks ↗️
💱 Forex
AUD, CHF ↗️/➡️ (trimming recent sharp losses)
USD ➡️/↗️ (in sideways movement / remains slighly bullish for now ahead of NFP data)
EUR, GBP, CAD ➡️
JPY ➡️/↘️ (markets concerned about more intervention; remains bearish)
⚒ Commodity Markets ↕️
Oil prices ↗️/↕️
Natural Gas prices ↗️/↕️
Metal prices ↕️ (iron ore sharply higher; overall remains bullish)
Gold ↘️/↕️ (sharp losses after yesterday's gains; will hover near $2,300)
⚡️Cryptos ↗️/↕️/↘️ (short-term rebound possible but with headwinds for now near $60K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
