Facebook got severely hammered yesterday, and not even a 25% drop could bring in the dip buyers, so one of the biggest tech stocks of America - and the world shed some $250 billion in value in a blink of an eye.  

Of course, Facebook’s 26% plunge during the session weighed badly on the S&P500 and Nasdaq. The S&P500 lost about 2.5% while Nasdaq shed some 4%, rapidly giving back the half of the last couple of days gains. The volatility picked up again, with the VXN index, which is a gauge of volatility on the Nasdaq stocks surging back above the 30 mark, as other tech stocks suffered along with Facebook, Apple lost some 1.60%, Google lost more than 3.50%, Netflix more than 5.50%, and Amazon near 8%!  

But some of them will find it easier to recover today, and among them we have Amazon, which saw its share price rally near 20% in the after-hours trading after the earnings announcement sounded surprisingly satisfactory to its investors.  

Today there are no major earnings on the calendar, so tech investors may enjoy what should be a strong positive session, thanks to … Amazon!  

With the most hyped earnings out of the way, we shall start seeing the volatility ease from next week. But the cards are clearly redistributed at the heart of the FAANG – where Apple, Amazon and Google shined, while Facebook and Netflix lost big at this latest earnings season.  

A last thing to watch: The US jobs data 

The wages growth will be more important than the number of nonfarm jobs added to the US economy at today’s release, because first, we know that the December numbers are heavily shaken by the omicron wave and it’s not representative of the overall health of the US jobs market, and second, even if we see a negative NFP print, it won’t matter much for the Federal Reserve (Fed) expectations.  

But the wages growth is important, as higher wages mean a stickier inflation and a stickier inflation means a more hawkish Fed policy, and a more hawkish Fed policy means less liquidity and less appetite for investors.  

Wages may have grown more than 5% in the US in January, which would be the biggest growth since March last year, and has the potential to revive the Fed hawks. But the good news is, the Fed hawks have gone so far lately that, even a strong growth in wages wouldn’t do much to the overall market mood. The game is now being played on the earnings front, and the latest reaction to Amazon earnings hints that we will probably have a good session before the weekly closing bell. 

She finally said it! 

The European Central Bank (ECB) President Christine Lagarde finally said that inflation in Europe would last longer than they expected due to the soaring energy prices. Brava! 

At yesterday’s press conference, Lagarde affirmed that the ECB is now ready to adjust all tools as appropriate; this could mean a quicker end of the bond purchases, and a rate hike!  

March update to projections will be decisive in what the ECB will do next, but we already know that March projections will include high inflation, and will probably say ‘raise the rates Christine!’. 

Money markets are already pricing in a 10bp hike from ECB by July this summer. The EURUSD rallied to 1.1470 post-ECB, pulling out its 100-DMA for the first time since last June. The next important resistance stands near 1.1550, which is the 38.2% Fibonacci retracement on last May – this January decline, which should distinguish between the actual negative trend and a medium-term bullish reversal. So, we have a thick layer of 1.15/1.1550 offers to be cleared before we call the end of the weak euro against the US dollar.  

Against the pound it’s a whole different story, as the Bank of England (BoE) is already raising the interest rates and the less dovish ECB could give a relief to the EURGBP, but it may not reverse the medium term negative trend in the euro-pound. Because, although a 25bp hike was largely expected from the BoE at yesterday’s meeting, seeing four members over nine voting for a 50bp hike came a surprise and as a warning that the rate hikes in the UK may continue in the coming meetings. Will that help pushing Cable to the 1.40 level is yet to be seen, as yesterday’s hawkish shift couldn’t keep the pair above the 1.36 mark, even with a broadly relaxed US dollar.  

And speaking of the dollar, the US dollar index is again testing its 50-DMA to the downside, and it could be a good level for the dupbuyers to join the USD longs as the hawkish Fed expectations are here to stay. 

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD extends rebound toward 0.6950 amid US-Sino woes, Aussie data

AUD/USD extends rebound toward 0.6950 amid US-Sino woes, Aussie data

AUD/USD is finding its footing while extending the rebound toward 0.6950 amid the upbeat Australian Retail Sales data. The Aussie shrugs off the looming US-China tensions even as Chinese stocks are down over 1% so far. Pre-RBA anxiety could keep AUD bulls on the edge. 

AUD/USD News

USD/JPY pares gains below 132.00 amid chatters over potential BoJ Governor

USD/JPY pares gains below 132.00 amid chatters over potential BoJ Governor

USD/JPY is reversing the opening gap that hit a high near 132.50 in Asia this Monday. The Japanese yen remains heavy amid mixed chatter over a potential new BoJ Governor. A pullback in the US Dollar is also dragging the pair lower amid risk aversion. 

USD/JPY News

Gold bounces off $1,860 support amid Fed, China concerns

Gold bounces off $1,860 support amid Fed, China concerns

Gold price (XAU/USD) consolidates the recent losses as it prints mild gains around $1,875 during early Monday, printing the first positive day in three around the one-month low. The precious metal cheers the US Dollar’s inability to stay firmer ahead of this week’s key events.

Gold News

Why Bitcoin is still in a bear market and what this means for BTC price

Why Bitcoin is still in a bear market and what this means for BTC price

Bitcoin is currently in a bear market, according to analysts, despite the massive rally of January. The selling pressure on the asset has reduced, with miner inflow to exchanges declining to multi-year lows. Despite the bullish catalysts, analysts are waiting a year post the 2022 bear market rally to conclude that the bearish phase is now behind us. 

Read more

Week Ahead – RBA next to hike

Week Ahead – RBA next to hike

After the past week’s central bank bonanza, things will quieten down in the coming days, although not completely, as the Reserve Bank of Australia will keep the rate hike theme running.

Read more

Majors

Cryptocurrencies

Signatures