Asian shares edged broadly lower overnight amid lingering concerns over the health of the global economy. Weak data from Germany in the previous session, South Korea's economy unexpectedly contracting and the Japanese central bank pledging to keep interest rates at record lows until 2020 all served as signs of weak economies across the globe.
The move lower in Asia came after the S&P slipped back from Wednesday's record highs on mixed earnings and falling oil prices. The Nasdaq also ended the session 0.2% lower after reaching another intraday record high and the Dow closed 59 points in the red.
Caterpillar dropped 3% despite posting better than expected earnings. Words of warning over its Chinese business from the CFO was sufficient to knock investor confidence. At&T dived 4% as first quarter revenue disappointed. On the plus side eBay and Domino's rolled out earnings that topped expectations.
After the close, earnings from the closely watched tech sector were encouraging, although investors are nervous that strong corporate data is not enough. Economic statistics across the globe also need to show more signs of life for the current rally to be sustained. European bourses are pointing to a stronger start after the opening bell.
Microsoft's cloud boosts earnings
Microsoft beat both sales and earnings expectations on Wednesday thanks to its expanding cloud services. Revenues rose 14% to $30.6 billion, whilst earnings rose 20% to $1.14; sales at the cloud product division jumped at impressive 73%. Cloud is clearly the way forward for Microsoft and demand for these services is expected to remain strong. Shares jumped 3% in aftermarket trading to hit a market cap of $1 trillion for the first time.
Facebook flies higher
Facebook was another crowd pleaser. There was a lot to like in Facebook's results after the firm posted robust quarterly sales and signalled that it could be close to resolving the US privacy investigation. First quarter sales soared 26% in a clear sign that users and advertisers have not been put off by the continual scandals such as privacy breaches and fake news that Facebook has been facing. Facebook remains resilient thanks to its 2.7 billion average monthly users and its ability to allow advertisers to precisely target this sprawling audience with ads. Facebook shares jumped to $202.25 in after market trading after closing the session at $182.58.
Dollar is King
The dollar index is easing back in early trade on Thursday after rising to a high of 98.18 overnight – its highest level since May 2017. The USD/JPY surged to its strongest level this year overnight, whilst EUR/USD dropped to its lowest level since June 2017. Whilst there was no particular catalyst for this noticeable move higher, US stocks hovering around record highs and a dovish chorus from global central banks is clearly relevant. Investors will look towards US durable goods and US jobless claims for further clues as to the health of the US economy. Both indicators are expected to be supportive of the buck.
Opening calls
FTSE to open 11 points higher at 7482
DAX to open 7 points higher at 12320
CAC to open 4 point higher at 5580
This information has been prepared by London Capital Group Ltd (LCG). The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. LCG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.