Stocks Set to Slide after Poor Earnings Numbers
US stock futures have taken a hit after post market announcements from both Telsa and Netflix showed a slowing in the market. The major indices had enjoyed a relatively quiet but stable day with the Dow finishing up 0.3%, the S&P 0.24% and the Nasdaq close to flat. However, Asian markets will kick off on the back foot after the earnings releases, which showed large drops in expected sales for both headline companies. The dollar increased against most of the majors, with the pound noticeably falling as much as 1.3% in the biggest intraday drop in more than four months, this aided strongly by a lower-than-expected CPI print in the UK. The yen and Aussie were also among some of the poor performers on the day. US treasuries gained and both Oil and Gold remained steady at current levels.
Bank of England Hikes are Having Effect
Yesterday’s CPI result in the UK has given the market some evidence that the Bank of England’s tightening regime is starting to see results on what has been, hot running inflation in the island nation. Cable and gilt yields took a heavy hit as would be expected but now investors – and indeed the MPC – have to consider how much more the bank needs to do in terms of further hikes – and this is where things could get very tricky. Further hikes could lead to the dreaded ‘hard landing’ yet those numbers are still pretty big, the RPI punching above 10% again. One thing looks certain and it’s not unusual for seasoned traders but there will be more volatility and therefore plenty of trading opportunities ahead for both the cable and sterling on the crosses.
Another Busy day ahead for Traders
Earnings season in the US will continue to throw a few curveballs at the market as it has done so already today, especially with the post-market announcements, but traders will get back down to fundamentals today with some key data to be released. Early in the trading day, the focus will be firmly on the Australian market with the latest employment numbers being released – market expectation for a 15k increase in the monthly data with the unemployment rate set to remain at 3.6%. There is little on the horizon in the London session, but the New York Day has the usual weekly employment claims as well as the Philly Fed Manufacturing Index and the latest Existing Home Sales numbers.
