There’s a lot happening this week, especially on the US earnings front:
Monday, April 26
- Tesla earnings (after US markets close)
Tuesday, April 27
- Bank of Japan rate decision
- Alphabet earnings (after US markets close)
- Microsoft earnings (after US markets close)
Wednesday, April 28
- US President Biden addresses joint Congress
- Fed rate decision
- ECB President Christine Lagarde speech
- OPEC+ meeting
- Apple earnings (after US markets close)
- Facebook earnings (after US markets close)
Thursday, April 29
- Amazon earnings (after US markets close)
- Twitter earnings (after US markets close)
- US Q1 GDP, weekly jobless claims
Friday, April 30
- China PMI
- Eurozone GDP, CPI, unemployment
- US personal income/spending, consumer sentiment
As I had mentioned last Thursday:
“Corporate guidance for earnings growth over the coming weeks is likely to have an influential role in determining whether US stocks can roar higher. Investors want to ascertain whether earnings prospects are bullish enough to warrant another leg higher for US indices, and whether the Q1 performance has justified recent gains.”
The same will be applicable for these Big Tech stocks that are scheduled to unveil their latest quarterly earnings this week.
Note that Tesla, Alphabet, Microsoft, Apple, Facebook, and Amazon have a combined market cap of about $9 trillion. That’s more than half of the total value of the Nasdaq 100 index, which has a market cap of nearly $16 trillion. Hence, how these stocks move could have an outsized impact on the tech-heavy index this week. At present, markets are pricing in an average single-day move of 4% in either direction for each of these six stocks once US markets resume trading after their respective earnings releases.
A notedly optimistic earnings outlook from these tech behemoths could spur the Nasdaq 100 onto a new record high, considering that the index itself is less than one percent away from beating its 16 April peak.
Meanwhile, the futures contract is now edging its way back towards the 14,000 mark.
Amidst all these headline-grabbing earnings releases, Joe Biden is also set to address Congress for the first time as the President of the United States. As he unveils more details about his ambitious spending plans, investors would also be anxiously awaiting details about how it would be funded.
There’s been media reports last week about a doubling of the capital gains tax, adding to the proposed corporate tax hike announced earlier this month.
And with Big Tech companies front and center of the taxman’s sights, more of such details released this week could drag US tech stocks lower.
FXTM Social Media index to cross 700 and hit new record high this week?
This index is evenly weighted between its 4 constituents, namely Facebook, Alphabet, Twitter, and Snapchat. Note that Snapchat already released its latest quarterly earnings after US markets closed on Thursday, 22 April. This social media company reported better-than-expected surges in its revenue and daily active users, which grew 66% and 22% year-on-year respectively.
Such a performance pushed Snap’s share price up by 7.45% on Friday alone, which ended a losing streak for the 5 consecutive sessions prior.
Friday’s surge in Snap’s stocks helped propel the FXTM Social Media index to its highest ever closing price before the weekend.
Positive guidance out of Facebook, Alphabet, and Twitter this week might see the FXTM Social Media index push above the psychologically-important 700 line before it reaches overbought territory.
However, should markets be grossly disappointed either by the latest quarterly results or what management has to say about the coming quarters, that could deflate this index until it tests its 50-day simple moving average as a support level once more. The 610-640 range may also prove to be a key area of interest to the downside.
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