Inflation & Earnings: Pound Rallies, Netflix & Goldman Stumble

Investors experience the first day of multiple earning releases from different sectors of the US economy. Companies such as Johnson and Johnson, Netflix, and Goldman Sachs all released their quarterly earnings reports for the first quarter of 2023. All US-based indices ended the day more or less unchanged but showed more signs of bearish price movement. All global indices are trading lower during this morning’s futures market, but this may change depending on the ongoing earnings season.

Oil prices steadily declined this morning because investors expect higher interest rates next month. In addition, supply disruption in the Mediterranean will likely ease after a recent conflict in the eastern Mediterranean has been resolved. So far, crude oil prices have declined by 0.75% this morning. Other commodities, such as Gold, are also falling as the Dollar climbs. 

The US Dollar this morning is experiencing an attempted correction against most currencies after a decline earlier this week. The US Dollar Index has again increased to 101.94. However, the Pound is experiencing the strongest bullish price movement after the UK Office of Statistics confirmed inflation remains above 10%. UK inflation remains significantly higher than that of the US, Europe, and other major economies. The Pound has increased by 0.47% against the Dollar and 0.43% against the Euro. Investors are investing in the Pound, anticipating higher interest rates for longer. 

GBP/USD - Pound Rallies After Inflation Data

The latest inflation rate is the sole driver for the bullish solid price movement that investors are experiencing on the Pound pairs. Markets expected UK inflation to decline to 9.8%, which would have been a 10-month low. However, the Consumer Price Index unexpectedly declined from 10.4% to 10.1%. This puts significant pressure on the Bank of England to maintain its hawkish policy, as did the earnings data from yesterday. As a result, investors are looking to take advantage of higher interest rates and returns. 

When looking at technical analysis, the price is increasing above the previous swing highs from yesterday and Monday, forming a trend pattern. The price has also crossed above longer-term moving averages, and the stochastic oscillator has crossed upwards. All indications are that the price will increase in the medium term. However, in the short term, price action indicates a retracement to 1.2445. This is also where the 100-day Moving average is hovering.

GBP/USD 15-Minute Chart on April 19th 

NASDAQ - Goldman Sachs and Netflix Disappoint

The NASDAQ ended the day with no gains or losses but is experiencing weakness during this morning’s Asian session. This morning’s weakness is mainly due to the latest earnings reports from Netflix and Goldman Sachs. Netflix bears the 17th highest weight of the 100 companies within the NASDAQ; therefore, the price movement is highly influential. Goldman Sachs is not a component, but significantly influences the overall stock market sentiment and performance. The two companies with the highest “weight”, in other words, the most influential for the NASDAQ, are Microsoft and Apple. 

NASDAQ 30-Minute Chart on April 19th 

According to analysts, Netflix’s earnings were mixed, but the primary data investors monitor missed expectations. Netflix’s Revenue and Earnings Per Share came in as Wall Street expected, which is positive for the stock and company. However, the main concern for investors is that there were fewer subscribers than we were expecting. The company only added 1.75 million subscribers, compared to over 7 million in the previous quarter. The stock declined after the report was made public. 

On the other hand, Goldman Sachs saw much higher Earnings Per Share, which read 9% higher. However, the Revenue was 3.30% lower than analysts were expecting. The main concern for investors is that the bank’s fixed-income trading revenue fell 17%. The stock ended the day 1.70% lower than the market open price.  

Investors will now be turning their attention to Tesla’s Earning Report, which is scheduled to be released after the market closes. Therefore, the report may be released tonight or early hours tomorrow. Yesterday, the stock price declined by 1.45% as investors expected lower revenue figures and Earnings Per Share. However, this cannot be confirmed until the report is made public. 

Dow Jones

The Dow Jones saw one of the highest levels of volatility due to Goldman Sachs’s quarterly report. The company is the highest weighted within the Dow Jones and, therefore, the most influential. The price is similarly declining this morning, as is the NASDAQ. Look at our latest technical analysis video to analyze Dow Jones’s price movement.

Summary:

• The Pound is experiencing the strongest bullish price movement after the UK Office of Statistics confirmed inflation remains above 10%.
• The US Dollar Index has again increased to 101.94 but shows weakness. 
• Netflix misses subscriber expectations, but Revenue reads as expected. Stock traders await the release of Tesla’s Quarterly report tonight. 
• Goldman Sachs sees mixed earnings. The main concern for investors is that the bank’s fixed-income trading revenue fell 17%.