Macro Update | $MSFT $GOOGL Earnings & FOMC Preview

Okay, very good morning, Wednesday, 28th of April. Hope you're doing well. Uh, gonna get you up to speed on a couple of things. The close on Wall Street, we had some aftermarket earnings for some of the tech giants like Microsoft and Alphabet. And we're also going to get you up to speed on Australian data overnight, some more tensions brewing in the Middle East, i.e., with Yemen and Saudi Arabia. There's been an update on the situation on the port strikes in Chile, which has led to a bit of a decrease in copper prices coming off their recent run-up higher in the overnight session. And then things that are coming out today, namely that of the FOMC. What can we expect from Jerome Powell and his colleagues today, later on? And we've also got Biden's American Family speech as well due today. But starting off with just generally what the charts look like for the open. And it's been, I would say, relatively quiet. As we know, it's kind of mid and second half of the week where we start to get some more of the key kind of potential catalysts, i.e., the Fed, the GDP data, the Eurozone inflation growth data on Friday, as well as a batch of more large-cap earnings still to come. But at the moment, if you were looking at these major currency pairs Um, range plays have definitely been the order, um, of the last two sessions. You can see here cable just really respecting that between— in the futures, 1.3870 up to around the 1.3922 area. Kind of similar in the euro as well. One currency that has seen the major dollar pairs a bit of a breakout has been dollar-yen. There was an area there of the course of the last several trading sessions that we were keeping an eye on which lined up respectively around the R2 yesterday at around 108.50 in the futures. And that had a bit of a breakout through then the latter part of yesterday's kind of post-European exit into the North American later trading hours. And that's just continued to push on up to finding some resistance from those previous highs that we saw back on the 16th. Just had a bit of profit taking in the Asia-Pac session on the back of that. And just came up to retest now as we go into the European morning. But quite a nice move materializing over the last couple of sessions in, in dollar-yen there. Um, in terms of the close on Wall Street last night, um, it's not really too much to comment on. Um, the S&P and Dow are basically absolutely flat. The NASDAQ, um, kind of sounds more sensational than it is. It was the first down day we've had in, in 3 sessions, but it was down only about half a percent. And actually, if you look at a lot of these US indices, you know, if we look at the S&P here, you can see in the— on the right-hand side, again, respecting a range so far for the week. So consolidation at these record high levels. So still keeping an eye here for any more definitive break really of this area of around 4185.25, which as you can see, the kind of pullbacks on the test of that level are getting more shallow, which might be then indicative of a push up. Again, catalysts could be forthcoming data or earnings releases. And then for the NASDAQ, obviously it's being constrained to a certain degree by this upside level around 4— just over 14,050. That was the area that really capped last week's price activity. We had a bit of a test that came in the very early hours of yesterday's session, drop off at the open yesterday, but we kind of recovered and we're in a short-term trading band between 13 953.79 on the upside for the, for the moment. But again, companies like Apple, Facebook, they're all reporting after market today, will likely act as, as main catalysts there. Then oil prices had the JMMC yesterday, and I think unsurprisingly they're just kind of the expectations just rolling over on the current supply packs. So it keeps it in play for the moment. I don't think they can make any other choice given what's going on with COVID and the likes of India and other emerging economies at the moment, with the risks that that, that carries for the demand side. So oil remains elevated, and this comes irrespective of the fact that we had API inventories last night. Just very quickly look at those. We had a build of 4.319 million in the headline figure last night. That was actually much larger than anticipated. Draw of 200,000. Cushing builds 742 Gasoline draw 1.288 million. If you actually look at the price of oil, we did come off a little bit, um, during the overnight session. This is when the data came out, was really when we were peaking in price up around $63.30. We dipped overnight in Asia, found some support at a relative technical area of interest, which was that previous low on the 19th. You can see tests on the 20th and also in yesterday's session. So a bit of technical relevance around 62, 67, and then we've had a bit of a bounce up and just keeping an eye back to that previous level as well that we were trading late in the US hours at 63.30. All right, well, I'm going to run you through the news, um, as per usual on the live stream that the senior traders will put on for the community from 8 till 10 AM They will go through the charts from a technical perspective and some of the trade setups of the day. Uh, the other final product just to mention before I do look at the news is gold. Um, to me looks more technical than anything else. We had a bit of a breakdown in price through the early part of the Asia session as we went through the low from the prior Asia session, and that's just taken out the weekly low that was seen around 1768. And so gold's seen a bit of volatility in generally lighter volumes and exacerbating some of that move during the Asia-Pac session. But worth keeping an eye on some of those downside levels. The dollar a touch firmer this morning actually, and the DXY is coming up to retest up and around yesterday's high. The DXY is currently trading up just shy of 0.2%. So I would be watching that because that could exert some downside pressure on some of these major currency pairs as well, which would be something be keen to, to keep an eye on. All right, so quick wrap-up of what was happening last night. And we had Microsoft earnings, and I'm just going to go over these in a very kind of top-level fashion and just get you up to speed in terms of the aftermarket reaction. The EPS from Microsoft, $2.03 against expected $1.78. Revenues also slightly beat expectations at $41.6 $7 million. Q3 sales were up 19%, lifted by robust demand for cloud computing services that exceeded expectations— $15.12 billion against around $14.86 billion expected on the street. They had their strongest quarterly jump in personal computer shipments, also a decent beat on expectations. Biggest, biggest jump they've seen there in more than 2 decades. So actually very good numbers from Microsoft. Um, but nonetheless, their shares, as you can see here, actually traded down— well, down about 2.6% in aftermarket hours, but they were actually down in excess of 3.5% at one point. I guess Microsoft's been a little bit of a victim here to its own success. The share price on the year before these— this earnings report has hit, they're up about 25% year to date, never mind pandemic. So I think this move is, is very much contained. The numbers were really quite positive, if anything. So I think it's just the fact that on the revenue side, on the street, there were some looking for even better numbers. And I guess when you perform so well, just generally market expectations are so hyped that, that it's almost inevitable you're going to come off a little bit. But again, in context, even if we open we open on the NYSE and we're, we're on the NASDAQ, we're down about 2.6%. We're still going to be up about 22% on the year anyway, so generally positive despite the aftermarket bump. Alphabet Q1 EPS $26.29 against expected $15.70, absolute blowout. Revenues $55.31 billion against expected $51.5 $5 billion, powered by an increase in digital ad spending by businesses looking to take advantage of the ongoing pandemic reopening. They also announced a $50 billion share repurchase program of their Class C stock. Uh, shares were— if I just quickly flip over— up in excess of 4%. The real outlier here, uh, on the upside, they really did firm up quite aggressively in, in post-market trade. AMD was another one, beat on the EPS and revenues. As it says here, they gave a bullish forecast, they raised their 2021 revenue outlook, and they were also trading up just shy of 4%. And then Visa was another major larger cap earnings report, they were up about 1% following their numbers. So looking out for today, we pre-market, um, one of the bigger Dow components. You've got Boeing, Spotify, something quite, quite watched in terms of those in vogue names as well pre-market. Then aftermarket, I'll go through these a lot more detail in the Amplify Community before the release, but you've got Apple, Facebook, Qualcomm, probably the big three to keep an eye on. Before I, um, look at the calendar for the rest of the day, just a quick wrap-up of some other things just so you're aware from the overnight session. I did briefly mention the Australian data overnight. I must stress that the Aussie weakened overnight and then quickly reversed those gains, and we're trading pretty much at the highs in Aussie now. So very limited sustained reaction here after the headline Australian CPI overnight came in at 0.6% quarter-on-quarter. Expectations were for 0.9%. Core inflation decelerated at the slowest pace on record as the government programs lowered costs in the economy, but wages growth remained subdued. Demand for things like services still recovering to their pre-pandemic levels. So yeah, the, the currency slid after the report, but it was taken back very quickly indeed. So, um, I don't think it was a a long-lasting impact that would see on the back of this evident in the price that's already materialized so far. The other thing, just briefly to mention, Yemen's Houthis say they fired a drone at a southern Saudi air base. What this is talking about is the city of Qamish Mashayt, which is in the southwest. It's very close really to the Saudi-Yemen border. That was claimed, this drone trying to attack a military airbase in the Saudi Arabian city from Yemen's Houthi militants, is what they're claiming. A bit of context, it's the fifth largest city in Saudi Arabia, definitely more, um, more synonymous with the, the airbase that's situated there rather than anything to do with the Aramco, like, oil industry or infrastructure, anything of that degree. So This hasn't really had too much of an effect. I mean, just mindful of, you know, just commenting on this stuff because it is quite sensational headlines. It's ongoing, very frequent activity we're seeing this geographic region of this nature. So it's not particularly new, but does come into context with oil just tapping on the ceiling of that previous late US session high at $63.30. So just to be aware of. And then the other thing in copper prices, as I mentioned, I did put this out on Twitter as well because I just happened to be sat at my computer, as I do at 11:30 at night, and I saw the news break. And it was that the Chile President Piñera said last night he'd signed into law the opposition-led bill allowing a third drawdown from pensions. And if you remember, it was poor workers in Chile that called for strikes on Monday in protests over the president's move to try and block that bill, which did actually contribute to some of this ongoing uptick that we've been seeing in copper. I mean, copper is rising on a variety of different things, from China to global reopening to Biden's infrastructure plan. But it was an element that was helping. And I think when a price like an asset like copper, you don't need much of a reason to just book some profit after we've seen real acceleration in prices. Particularly over the last couple of sessions. And so during the Asia-Pac session, that's exactly really what's happened. We've just come off from, as you can see here, through 2 AM London time, we broke through what was yesterday's low point. And now in the copper future, just finding some resistance. You can see here right on that S1, which is a really nice technical resistance actually. Now you can see you've got the S1, you've got the overnight respect on multiple tests on that resistance level with back on that high from what we had on Monday and a support resistance turned support on that session. So yeah, interesting to keep an eye there. Downside, obviously you've got to have a test on the range from the Asian session, uh, $4.4175. Any breakdown through there would be targeting around $4.4060, which would encapsulate those areas from, from the beginning of the week for copper prices. And then the Fed, I guess, is the final thing to talk about because the calendar is relatively quiet. And so the Fed's coming out, usual time, 7 PM. And this isn't really going to take me too long to explain because really I'm not expecting a great deal. I think the Fed have gone to great pains to really stress the point that despite, uh, the, the kind of the cause for a more optimism or positive outlook given the state of some of the recent economic data points that we've had. That's really going to be epitomized by the strength in the increasing growth picture, which we'll get with the Q1 advance GDP tomorrow in the US. The point being is the Fed aren't going to change anything just yet. Inevitably they will. They will have to. It's just not now. So as far as what we can expect from tonight, Definitely no changes in policy. Perhaps there could be this hinting towards the taper program as an outside risk, particularly given what happened with the Bank of Canada just a week ago. I do not think that that will materialize. I think the language that we've heard from all the Fed officials tells me that it's too early yet to make those type of noises, irrespective of the fantastic consumer confidence yesterday and all the other figures that have been lining up showing that the, the growth kind of story is now underway. So we'll be tuned in, we'll cover this live for the community, but not expecting any great surprises there. Also on the calendar, the final thing I wanted to just quickly comment on is there is a number of UK European corporate earnings as well to be aware of. So ahead of the cash open later, Santander, Deutsche Glaxo comes out normally at midday London, so during session if you're many FTSE traders. Sanofi, Sainsbury's as well. So quite a few there to, to also keep an eye on. But that is it, gonna leave it there, let you guys get on with the day. Any questions at all, let me know, and we will see you online for the Fed later. Thanks very much.