Global Indices Tumble Ahead of Key Economic Data

The trading week starts with global indices in the red as investors prepare for a week of further economic data. Investors will specifically monitor the US Gross Domestic Product scheduled to be released on Wednesday, and the PCE Price Index on Friday. Both announcements will indicate further how the Federal Reserve will likely change the monetary policy in May and June. A higher GDP and PCE Index will indicate higher interest rates. Higher interest rates can support the Dollar and pressure the stock market. 

The US Dollar and Swiss Franc are experiencing the most substantial price movement within the currency market during this morning’s Asian session. The US Dollar is experiencing the most significant price movement against the Pound, as is the Swiss Franc. The Pound is declining 0.15% against the Dollar and 0.27% against the Swiss Franc. Investors consider both the US Dollar and the Swiss Franc as safe-haven assets. The decline in the stock market and the rise in the two currencies indicate a clear “risk off” sentiment. 

The low-risk appetite will likely be about this week’s significant earnings reports and economic data. Amazon, Microsoft, Meta, and Alphabet will release earnings reports this week. The above companies will influence all indices but are specifically influential for the NASDAQ, which might experience higher levels of volatility.

GBP/USD

The British Pound against the US Dollar has been experiencing a reverting market for almost a whole week. The price in the early hours of the day decline but then fully corrected within the european session. Therefore, traders should be cautious about the direction of their trades and keep trade open for only a short time. Over the past 5-days, the price of the exchange rate has been experiencing impulse waves in both directions but has been leaning in favour of the Pound. 

Investors are in a difficult position; they are able to take advantage of higher interest rates which are likely to develop in the UK due to high inflation. However, inflation is significantly higher than in the rest of Europe and the US. As a result, the UK economy will likely be the first to dip into an economic recession and worsening “cost of living” crisis. The reverting price pattern between 1.23940 and 1.24515 indicates investors believe the exchange rate is accurately priced. 

GBP/USD 15-Minute Chart on April 24th 

Economists believe the Federal Reserve will again increase interest rates next week by a further 0.25%. Whether the Fed will also choose to raise interest rates one more time after that will depend on this week’s economic data and the PCE Price Index. However, according to Bloomberg, more than 90% of analysts believe the Fed will hike 0.25% and then stop for 2–3 months. 

The economic data released on Friday was firmly in favour of the US Dollar. The PMI indexes for both the services and manufacturing sectors read higher than economists expected. Both indexes were also above the significant level of 50.00. Whereas the UK’s data was less attractive and saw the monthly Retail Sales figures drop again this year. 

On Thursday, investors will now concentrate on tomorrow’s CB Consumer Confidence release for the US and GDP figures. Due to the reverting market conditions, investors are concentrating less on technical indicators such as momentum indicators. Instead, traders are focusing on breakout levels, support, and resistance points.

NASDAQ

This morning, the NASDAQ has shown a similar price movement to the US Dollar pairs, illustrating the apparent correlation between the two assets. This morning's asset is influenced by the “risk off” sentiment within the market and continues to follow a downward trend pattern. However, traders should note that buyers have formed strong retracements are times, measuring 1.15% on average. The NASDAQ’s decline over the past week has largely been attributed to Tesla stocks declining by 11.40%.

Investor's attention this week will be on the technology sector’s quarterly earning reports for the first quarter of 2023. Analysts expect this quarter's earnings to be similar to the previous quarter but expect the company to give poorer predictions for the rest of the year. The assets with the highest “weight” within the NASDAQ’s pricing are Microsoft, Apple, Amazon, Nvidia, Alphabet, and Meta. Four out of the six companies will be releasing their earnings this week.

The most influential, as stated above, are Microsoft stocks, which have experienced a slight decline over the past week, measuring 1.45%. Investors expect Microsoft’s earnings to be released tomorrow after the market closes. Over the past two quarters, the company has released higher-than-expected Earnings Per Share figures. Economists predict this week, the company will confirm an Earnings Per Share of $2.23 and a Revenue reading of a minimum of $51 billion. If the earnings data comes in higher, the stock will likely experience a price increase and will, as a result, influence the NASDAQ. 

The NASDAQ this week will also be influenced by the US GDP data and the PCE Price Index on Friday. Investors hope the data points to a weaker monetary policy, but not a recession.

NASDAQ 30-Minute Chart on April 24th 

Summary:

• The US Dollar and Swiss Franc are experiencing the most substantial price movement within the currency market.
• The decline in the stock market and the rise in the two currencies indicate a clear “risk off” sentiment. 
• Investors will specifically monitor the US Gross Domestic Product, quarterly earning reports, and the PCE Price Index.
• NASDAQ traders will focus largely on Microsoft’s earning reports due to holding the highest weight within the index. 
• Economists predict this week, the company will confirm an EPS of $2.23 and a Revenue mounting $51 billion.