Tech Giants' Earnings in Focus as NASDAQ Soars

Last night, all eyes turned to the Federal Reserve’s interest rate decision as the US Dollar tumbled again and stocks saw their best day since November 2022. Most markets reacted clearly to the Fed’s decision to increase interest rates by only 0.25%. The US Dollar Index, which confirms the price of the US Dollar against six currencies, declined to a 10-month low. 

The US Dollar index declined during this morning’s Asian Session to 101.00. The stock market also strongly reacted to the Fed’s decision and investors are showing a clear “risk-on” appetite. Most global indexes rose after the announcement, but most eyes are on the NASDAQ which has also been the best-performing index of 2023.

NASDAQ Climbs as Investors Anticipate Major Company Earnings

The NASDAQ this year is being included in our market analysis articles and webinars more than any other asset. Investors can clearly see why as we enter February and look back at the charts. The price of the Index rose by almost 14% this year and yesterday formed its strongest day yet. The price of the NASDAQ also climbs 0.61% during this morning’s futures session, which is rare due to minimum order flow. This again shows the strong sentiment in the financial trading markets. 

When looking at technical analysis, most indications point to an upward trend. The price opened this morning on a positive market gap, and we have now formed 2 higher impulse waves and higher swing lows. All Moving Averages and the Stochastic Oscillator cross upwards which again signals a bullish trend. The NASDAQ has officially passed the most recent resistance level and is more than 3.20% lower than the next resistance level. This still gives the asset room to grow further. However, investors should be cautious that the price is overbought on the RSI.

NASDAQ 4-Hour Chart on February 2nd 

Even though technical analysis is a significant part of our analysis and decision-making process, it is also vital for investors to look at what is driving the price. The influencing factors are twofold for the NASDAQ and other US indexes. 

The price is firstly largely influenced by the Federal Reserve’s Rate Decision. Due to previous signals from the Federal Open Market Committee members, the market had already priced in a lower rate hike. This is partially why the stock has climbed since late December. However, this has been made clear as the chairman had an optimistic tone about inflation and the economic outlook. 

The Chairmen, Jerome Powell, advises markets that the regulator is happy with the decline in inflation and that the current trend continues. In addition, Mr. Powells, confirms the economic slowdown is positive, and the economic outlook remains encouraging. The 50-year Unemployment Rate low and high job vacancies continue to support the possibility of a “soft landing”. 

A soft landing refers to a decline in GDP and economic conditions but refraining from a full recession. This triggered a positive reaction from NASDAQ investors. In addition, traders have also upped their interest in the NASDAQ after Meta (Facebook) confirmed a higher revenue than originally expected. Meta’s revenue climbed to $32.16 Billion which is 1.50% higher than expected. Meta also confirmed a higher-than-expected Revenue per User. 

Investors will now turn their attention to tonight’s earning reports from Apple, Alphabet (Google), and Amazon. The following earning reports will likely increase market volatility over the next 2 US trading sessions. 

1. Markets expect Apple to release its earnings after today’s market close. Earnings Per Share are expected to read $1.93. 
2. Google schedules the release of its earnings report after the market closes. Earnings Per Share are expected to read $1.14.
3. Amazon has their figures booked for after today’s market close. Earnings Per Share are expected to read $0.15.

 EUR/USD

The EUR/USD has now formed its third consecutive day and has climbed to the highest exchange rate since early April 2022. The exchange rate price has formed a slight retracement this morning, which is understandable as we edge closer to the European Central Bank’s rate decision and press conference. 

The EUR/USD sees similar indications from technical analysis as mentioned above for the NASDAQ. This is due to the partial correlation between the US Dollar and the NASDAQ. The EUR/USD is currently retrieving buy signals from regression channels and crossovers, but investors looking to buy should focus on the impulse waves and areas at low risk of retracements or corrections.

EUR/USD 2-Hour Chart on February 2nd 

The European Central Bank over the past 2 months has been the most hawkish of the world’s top 4 central banks (Fed, ECB, BoE, and BoJ). The European Central Bank hiked by 50 basis points in December and is expected to follow a similar path this afternoon. Investors should also note that the price was also influenced by the hawkishness of the bank’s members. In December, more than ⅓ of members voted for a 75 basis point hike. 

Investors will be focusing on if the ECB does indeed hike by 0.50%, as expected by investors. However, the market will evaluate the press conference that will follow. The press conference may indicate how high the ECB is willing to go and if another 0.50% is on the table for the next month. Lastly, the President of the European regulator will also have to answer questions about whether the European economy will still likely experience a recession. 

Dow Jones - Technical Analysis Video

Check out our latest technical analysis video for Dow Jones. The Dow Jones has been the worst-performing US index, forming a lower high on larger timeframes. What is technical analysis indicating may happen next?

Summary:

• The US Dollar tumbles as the Federal Reserve hikes 0.25% and remains less hawkish than other competitors. 
• EUR/USD breaks through December’s resistance level as the ECB’s rate decision approaches. 
• NASDAQ remains the best-performing US index and has climbed by almost 14% this year. 
• Meta beats earnings expectations. 
• Investors turn their attention to earning reports for Apple, Alphabet, and Amazon. 
• Market participants expect the ECB to hike 0.50% and remain more hawkish than the Fed and the Bank of England.