- Alibaba stock has dropped 3.6% in Friday's premarket.
- BABA is down 21% over the past month.
- US inflation data is causing shares to recede on Friday.
- Relations between China and the US are also worrying markets.
Alibaba (BABA) stock has lost another 3.6% to trade at $90.80 in Friday's premarket on the back of a higher than expected inflation reading for the US economy. The Personal Consumption Expenditure (CPE) index came in hot an hour before the stock market opened in New York. The MoM reading for January was up 0.6%, 50% higher than the 0.4% reading that was expected.
This is significant because the US Federal Reserve relies on the CPE to gauge the state of inflation, and the above trend verdict means that the central bank is likely to raise interest rates higher and longer than expected. NASDAQ futures fell 0.9% on the news.
Alibaba stock news: US, China tensions not making things easy
US-China relations have caused a major sell-off in Chinese ADRs over the past week. Alibaba stock is down 21% over the past month. While some of that is due to China's difficulty in delivering on the post-covid "re-opening" thesis, as poor Chinese industrial data continues to sour appetites, more recent news that China is in talks with Russia to begin supporting the latter's invasion of Ukraine with heavy weaponry are sending shivers down the spines of Western investors.
The news emerged recently when US Secretary of State Antony Blinken said China's overtures to Russia were worrying. If the aid taps in Beijing are turned on, it would very likely lead to the US slapping China with economic sanctions similar to those place on Russia following its invasion of Ukraine one year ago. Major sanctions would likely have a devastating effect on Chinese ADRs in the US market and could also simply lead to a reduction in global GDP.
Alibaba earnings news
Alibaba reported adjusted earnings per share of $2.79 for the most recent quarter on Thursday, alongside revenue of $35.92 billion. Both figures bested Wall Street consensus. Adjusted EPS came in $0.39 higher than expected, and revenue narrowly cleared the consensus bar by $40 million.
“We expect continued recovery in consumer sentiment and economic activity," said Daniel Zhang, Chairman and CEO, who admitted that covid precautions had eaten into the quarter's results. "We are focused on driving growth for our customers amid the competitive landscape, and creating sustainable, long-term value for our shareholders.”
Chinese ecommerce sale arrived at $10.8 billion, while Alibaba Cloud revenue reached $3.9 billion. Truist Securities raised their price target on BABA shares from $120 to $130.
Alibaba stock forecast
Alibaba stock was already firmly in a downtrend before the unloved earnings arrived. The only hope for bulls is that BABA stock finds support at $85.70. This price level has worked since October of last year. A break there would send BABA stock hurtling down to long-term support at $73.28. The MACD indicator has been in a bearish crossover for weeks and look unlikely to show any promise in the near future. If BABA recovers, bulls will not join in until at least the stock clears $105.
BABA daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
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.