Stock Market Slide Deepens – Tech Sector Holding Up

The decline in stock markets was seen deepening yesterday with the S&P shedding more than 1%, now down over 3% from April highs. Losses were seen globally with European, UK and Asian shares coming under pressures as recession concerns returned to focus. Weaker data out of the US recently, coupled with near term expectations of further central bank tightening, has fuelled sharp profit taking pull back across stocks. However, the Nasdaq has been able to buck the trend, supported by solid tech earnings this week. On the back of Microsoft and Alphabet beating Q1 forecasts Meta Platforms was seen posting solid results yesterday which helped lift the sector despite the wider risk-off tone.

Key Factors for Today

- USD muted ahead of advance GDP data – plenty of volatility risk seen
- Stocks start a little firmer following yesterday’s sales
- Meta beat forecasts – tech gains underpinning stocks despite banking fears

Market Movers

- Crude falls below $75
- S&P falls under $4190
- Bitcoin holds around $29,000
- EURUSD back above $1.10

Econ Calendar

- US Advance GDP (1.30pm)
- US Pending Home Sales (3pm)
- US Natural Gas Storage (3.30pm)

Earnings

- Exxon Mobil
- Chevron
- Sony

Tech Stocks Hold Up as Meta Beats Forecasts

Meta joined the recent string of tech companies reporting better-than-forecasts results yesterday. The Facebook owner posted Q1 EPS of $2.20, well above $2.02 forecasts with revenues seen at $28.645 billion, around 4% higher than the $27.669 billion the market was looking for. Teach earnings have proved something of an anchor recently helping offset the downside from resurgent concerns for the US banking sector. Today the focus shifts to energy companies with Exxon and Chevron both due to report. On the back of the record profits seen for both companies last year, traders are eager to see how the downturn in oil and gas prices have impacted revenues.

Aside from US earnings, the main focus today will be on the advance US GDP data for Q1. With recession concerns mounting and traders still grappling for a strong read on the May FOMC, today’s data has the potential to create plenty of volatility. The market is looking for a 2% reading, down from the prior quarter’s 2.6% figure. A print in this region should keep the focus on dwindling growth projections though it would likely take a downside miss to
see a scaling back of rate hike expectations for next week’s FOMC.

In FX, a stronger start for risk assets today is feeding into better demand for commodity currencies. AUD, CAD and NZD, which have been under pressure all week, are trading in the green across the European open on Thursday. Whether the moves fizzle out remains to be seen but with key US data ahead there is plenty of event risk ahead today.

Oil prices remain under pressure today. Crude futures have now fallen by more than 11% from the April highs, closing the gap which opened up in response to the latest OPEC+ production cut announcement. With the group signalling its willingness to cut production further if necessary, traders will be watching the current sell off with caution.