S&P 500 nears bear market as earnings growth slows to 9.1%

The Australian dollar rose slightly on Monday morning as investors reflected on the weekend. In it, the Labor Party led by Anthony Albanese won the election, beating the incumbent Scott Morrison. Albanese has promised to help transition the economy into a clean energy superpower. He also promised to push companies to pay more salaries in a bid to boost the economy. His election comes at a time when wage growth has been a bit slow in the past few months. The Reserve Bank of Australia has also started hiking interest rates.

American futures declined as concerns among corporate profits rose. Last week, American retailers like Target, Walmart, Home Depot, and Lowe’s showed that the biggest retailers were struggling to find growth as the cost of doing business rose. The same picture is seen across the sectors. According to FactSet, 95% of all companies in the S&P 500 index have published results. 77% of these have reported a positive EPS surprise while 73% have reported a positive revenue positive. The blended earnings growth has been 9.1%, which is the lowest since Q4 of 2020. The top companies that will publish their results are Zoom Video, Faraday Future, AutoZone, Intuit, Nordstrom, Toll Brothers and Best Buy among others.

The economic calendar will be a bit muted on Monday. The most important event will be a speech by Andrew Bailey, the Bank of England (BOE) governor. In it, he will likely talk about last week’s data dump by the ONS. The data revealed that the country’s retail sales rose in April while inflation jumped to the highest point in years. The unemployment rate declined to the lowest level in years. Other important data will be the German business confidence data.

XBR/USD

The XBRUSD pair rose to a high of 110.51, which was above last week’s low of 103. On the four-hour chart, the pair is above the ascending trendline shown in blue. The pair is also below the important resistance at 114.17. It has also moved slightly above the 25-day moving average while the MACD has moved slightly above the neutral level. Therefore, the pair will likely keep rising as bulls target the key resistance level at 112.75.

EUR/USD

The EURUSD pair is trading at 1.0560, which is slightly below last week’s high of 1.0600. On the four-hour chart, the pair is between the upper and middle lines of the Bollinger Bands while the Relative Strength Index and the Commodity Channel Index have moved from the overbought level. The pair will likely hold steady as bulls target the key resistance at 1.0625.

GBP/USD

The GBPUSD pair has been in a strong bullish trend in the past few sessions. It is trading at 1.2492, which was slightly above the important support level at 1.2400. It has moved above the 25-day moving average while the Relative Strength Index (RSI) has moved above the blue trendline. However, it has also formed a double top pattern. Therefore, the pair will likely pull back today.