Investors within the market will be focusing on the Purchasing Manager’s Indexes from the EU, UK and US. The PMI report is based on a survey from major companies regarding new orders, exports, imports and employment. A PMI reading above 50.0 indicates economic growth, and below 50.0 would indicate an economic decline. In addition, investors are eager to see the release of earning reports from major technology-based companies.
EUR/USD - PMI Reports Mixed But Investors Sell
The price of the EUR/USD has declined over the past hour due to the announcement of the latest German and French PMI reports. The price movement this morning generally started positive but has now formed a consecutive lower high yesterday at 09:00 and this morning again at 09:00. The lower highs can potentially indicate bearish price movement and even a correction back to the reversion level at 1.08346.
The main concern for investors is that the French Services PMI and German Manufacturing PMI read lower than expected by market participants. The French Services PMI declined from 49.5 to 49.2 and was 0.5 points lower than expected. The German Manufacturing PMI read 48.0 instead of increasing to 50.0, as expected. The main concern is that both figures indicate an economic contraction which contradicts economists' views. On a positive note, the German Services PMI and French Manufacturing PMI read much higher than expected.
Mr. Knot, the head of the Central Bank of the Netherlands, advises interest rate should be hiked again by 50.0 basis points in February and March. However, even though this is positive for the Euro, investors must ensure that the price movement and technical analysis support this view.
The exchange price will be influenced by the US PMI releases this afternoon and Thursday’s Gross Domestic Product for the previous quarter. Investors expect the GDP figure to slow down from 3.2% to 2.6%, but this still illustrates that the US is avoiding a “Hard Landing”. A much lower figure can significantly pressure both the Dollar or/and US Stocks.
NASDAQ Another Strong Day
NASDAQ has formed its second day of bullish price movement continuing the trend from Friday. The upcoming earnings reports from technology-based companies largely influence the price movement. Investors are largely concentrating on reports from Microsoft and Tesla. The price ended the day 2.14% higher than the market open which is almost 1% higher than the SNP500 and more than 1.40% higher than the Dow Jones. This indicates a rise in the market’s risk appetite and a better-than-expected earnings report for technology companies.
The price of NASDAQ is now trading at a 27-week high and has formed a higher high on the daily chart. Investors can watch our latest technical analysis video below for more information on technical analysis.
NASDAQ - Technical Analysis Video
One of the key drivers of the price is Microsoft's Earning Report. The market expects an improved quarter compared to the previous outlook. Wall Street expects the company revenue to increase from $49.69 billion to $53.16 billion. The higher figure can be attributed to the Christmas period, and if Wall Street’s prediction is accurate, it would have been the highest revenue in over 12 months.
Traders should also note that the Earning Per Share figure is expected to decline to $2.31 slightly. The price movement will mainly be affected if the actual figure is significantly higher or lower than expected. So far, the price of Microsoft has increased by 2% over the past week.
Yesterday, Microsoft also announced that it would further invest in Artificial Intelligence and is spending “billions” in its partnership with OpenAI. OpenAI is behind the viral chatbot tool ChatGPT which has significantly grown in popularity in 2022. Investors also hope for further information regarding this partnership and the company’s plans.
Tesla’s Earnings Report is expected to be released after the market closes tomorrow, therefore, the report may be released Thursday morning. The report is predicted to show an improved Revenue and Earning Per Share. However, traders should note that many economists have doubts after a strong decline in car sales (December 2022). Nonetheless, the stock price has significantly increased by over 14% in the past week.
Summary:
- Investors within the market will be focusing on the Purchasing Manager’s Indexes from the EU, UK and US.
- The main concern for investors is that the French Services PMI and German Manufacturing PMI read lower than expected by market participants.
- NASDAQ has formed its second day of bullish price movement and investors turn their attention to today’s Earnings Report.
- Microsoft announces further investment in Artificial Intelligence and is spending “billions” in their partnership with OpenAI.
