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US Stock Markets Flourishing on Positive Earnings Reports and Flexible Interest Rate Hikes
29.07.2022

The stock market continues to see high levels of volatility as earning reports continue to be released. The latest earning reports to have been released include that of Apple, Amazon, and ExxonMobil. Overall, the price movement of US Indices continues to grow with pre-market prices increasing in value.

The market also continues to evaluate the scenario regarding the US Gross Domestic Product figures, and their influence on monetary policy. Most economists believe that the central bank will continue to increase interest rates for the time being but it is unlikely that they will stick to the 75 basis points which we have experienced over the past 2 months. The fact that the Federal Reserve is predicted to not be so restrictive has supported the stock market over the past 48 hours.

Throughout the remainder of the afternoon, the market will be waiting for the release of the Canadian Gross Domestic Product as well as the US PCE Price Index which is predicted to be slightly higher than the previous month at 0.5%.

EUR/JPY

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The EUR/JPY continues to move within a bearish price trend with the Japanese Yen successfully forming stronger impulse waves and weaker corrective waves. The price is breaking out of each new swing low and has even passed the support level formed on the 8th of July.

The release of the Eurozone’s Consumer Price Index appeared to offer some support to the price of the Euro this morning. However, it is unclear whether this will be enough to support the currency in order to build another bullish trend. Eurostats released the Flash and Core CPI figures, both of which came in slightly higher than expected.

With regards to the Japanese Yen, the market is mainly focused on the central bank. The deputy governor of the Japanese Bank advised that the national economy has not yet recovered to early 2020 levels. This is primarily due to rising inflation caused by high fuel prices. According to the bank, large-scale stimulus should be maintained. Mr. Amamiya does not intend to tighten monetary policy for the time being, as expected. However, the governor has also advised that the central regulator should be prepared to abandon the current "dovish" course if the situation requires it.

Investors are also alarmed by a new increase in the incidence of coronavirus in Japan, but the government continues to advise that they do not currently plan further lockdowns.

Crude Oil

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The price of crude oil continues its symmetrical triangle pattern which we have been speaking about over the past 48 hours. However, the price has managed to form 2 higher swing highs and 3 lower swing lows, potentially indicating that it may be able to find enough momentum to build a strong upward trend. It should be noted though, that the size of the retracements is significant when compared to the impulse waves.

The price of crude oil had originally reacted negatively to the lower GDP figure, as recessions and lower economic activity are known to lead to lower demand. However, the price has gained momentum again today, possibly due to the worsening supply scenario in Europe and the lower petroleum stock in the US. If the level of supply does continue to deteriorate, the price may potentially find further support.

Amazon Stocks

The price of Amazon Stocks have significantly increased in value in pre-market trading, as the company presented its Q2 financial report. Both positives and negatives could be taken from the financial report, however, most economists have deemed the announcement as satisfactory. Operating cash flow decreased by 40% compared to last year, amounting to $35.60 billion. Amazon’s sales figure rose 7% to $121.2 billion, up from $113.1 in the previous period. The net loss was $2 billion, or $0.20 per share, compared with a profit of $0.76 per share a year earlier. According to the company’s management, this is due to a bad investment in automaker Rivian Automotive.

Generally speaking, it was predicted that the company would not perform well. This is partially why the stock prices have decreased over the past few months. However, some figures showed better-than-expected performance and the market seems to have reacted positively.

Key Takeaways:

  • US Indices continue to grow with positive earnings reports
  • The bulls seem to be in control of the EUR/JPY
  • BOJ is ready to alter its monetary policy if required
  • European CPI figures came in higher than expected
  • Crude oil rising today as investors shrug off lower GDP figures
  • US petroleum stock continues to decrease
  • Amazon earnings report is considered satisfactory
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