Spreadex Market Update
Stocks Lose Momentum on Mixed US Earnings – Big Names Due Today
We saw choppy action across markets yesterday mixed performance from the latest set of US earnings fuelled an uptick in uncertainty. Both Goldman Sachs and Netflix reported better-than-forecast EPS for Q1 on lower-than-forecast revenues. US stocks in particular saw some weakness creeping in later in the session as focus shifted back to hawkish Fed expectations. Fed’s Bullard was seen calling on the need for more rate hikes from the Fed yesterday, downplaying inflation talk. Fed’s Bostic however voiced support for one further hike then a considerable pause. These comments show the growing rift among Fed members, making future policy moves harder to call for the market.
Risk Sentiment Weakens as Focus Shifts to Fed
Bitcoin is holding above the $30k mark for now though the bull move has lost momentum in recent days. A growing focus on further Fed tightening has stopped the crypto revival in its tracks for now. However, while above the $29775 level, the outlook remains bullish. Looking ahead today, attention will shift to the next set of companies due to report Q1 earnings with the main focus being on Morgan Stanley, Tesla and IBM.
In FX, GBP has been higher again today in response to the latest UK inflation data released this morning. Headline CPI was seen cooling to 10.1% from 10.4% prior, coming in above the 9.8% the market was looking for. Additionally, core CPI was seen unchanged at 6.2%. With UK CPI proving very sticky at higher levels, BOE rate hike expectations have moved back into the spotlight, underscoring the need for more aggressive action from the bank.
Later today, USD will be back in focus with the latest Fed beige book release due to give an insight into the Fed’s assessment of the economy. Additionally, we have further Fed speakers on deck with Goolsbee and Mann due to make comments. Currently, the market is pricing in around a 90% chance of a further 25bps hike next month and around a 20% chance of a further 25bps hike in June.
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