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Mixed earnings reports for US companies

Mixed earnings reports for US companies

However, the financial markets continued to exhibit a pessimistic mood due to Ukraine border tensions and Fed’s imminent rate hikes.

The results published during the session were all over the place, with earnings above expectations for American Express and below for Johnson & Johnson. After the market closed, Microsoft's data was released, beating expectations with revenues of 51.73 billion, mainly due to the company’s cloud business. Still, the stock dropped 5%.

Buy on the rumor and sell on the news? Very possible. But it is more likely that the gloomy market sentiment due to geopolitical tension and uncertainty about what the Federal Reserve would do today weighs more heavily on investors' decisions.

The US central bank in the spotlight

The consensus is that tapering will end in March and that the Fed is also targetting a rate hike for the March meeting.

But voices as reputable as Bank of America are emerging, warning that the Fed could announce the latest round of asset purchases at this January FOMC meeting, potentially deciding to take a more aggressive turn such as reducing the balance sheet drastically. Additionally, after the March meeting where the first rate hike should occur, the Fed could announce that all the following sessions will be broadcast live, leading the markets to anticipate increases of more than 1% for this year.

If this second scenario occurs, the US dollar could benefit the most from the foreseeable widening of the interest rate differential against the rest of its competitors. Yesterday's US Treasury bond yields rally, which took the 10-year to 1.80%, had an immediate bullish effect on the dollar, dragging EUR/USD to 1.1267, the lowest levels since late December.

The average market forecasts lean towards a EUR/USD bearish, with a first target at the 1.1185 zone - the November lows. The pair could continue to retreat towards the 1.1000-1.1050 levels in the medium term.

Sources: Bloomberg, Reuters.

Le informazioni contenute nel presente documento sono redatte da Miguel A. Rodriguez e non costituiscono né devono essere interpretate come suggerimenti di investimento. Le informazioni di cui al presente documento costituiscono comunicazioni di marketing generali a scopo informativo e, in quanto tali, non sono state preparate nel rispetto dei requisiti di legge che promuovono le ricerche di investimento indipendenti. Inoltre, non sono soggette ad alcuna limitazione sulle transazioni condotte in anticipo rispetto alla divulgazione delle ricerche di investimento in questione.

Gli utenti / lettori non dovrebbero fare affidamento esclusivamente sulle informazioni qui presentate e dovrebbero fare le proprie ricerche / analisi anche leggendo la ricerca reale sottostante.

Key Way Investments Ltd non influenza né ha alcun input nella formulazione delle informazioni qui contenute. Il contenuto è generico e non tiene conto di circostanze personali individuali, esperienza di investimento o situazione finanziaria attuale.

Pertanto, Key Way Investments Ltd non accetta alcuna responsabilità per eventuali perdite di trader a causa dell'uso e del contenuto delle informazioni presentate nel presente documento. Le prestazioni passate e le previsioni non sono un indicatore affidabile dei risultati futuri.