By Craig Erlam
Equity markets stabilised a little in the middle of the week, with big tech earnings failing to steer them significantly one way or another.
It’s been a mixed bag from the big tech firms so far and there’s still plenty to come, with Apple and Amazon due to report after close.
Meta is up more than 14% on the day after reporting user growth that pleased investors. This came despite the difficulties it continues to face as a result of iPhone changes and a challenging ad environment.
With the stock off more than 50% from its peak in September prior to the release, the rally has come from a relatively low base. There’s still plenty for investors to be concerned about, not least from rival social media platforms that are strongly attracting the younger audience, but this small reprieve buys Meta time to address that and for ad revenue to pick up.
Twitter reported what could be its final quarterly earnings as a public company, beating expectations on earnings and monetisable daily active users while falling a little short on revenue. The share price was little changed in the aftermath of the report, which is unsurprising given Elon Musk’s proposed takeover.
No impending recession in US
What was surprising was the contraction in the US in the first quarter. That is until it became clear that it was driven by lower inventory building and higher imports, versus exports in the quarter.
The impact of both of these will be temporary and in the case of inventory, will reverse this quarter.
Underlying economic indicators remain strong, so, despite the headline number, the world’s largest economy is not heading for a recession.
Oil range tightening
Oil prices edged higher on Thursday, continuing to recover from the lows earlier this week when Brent briefly breached $100 again.
Ultimately, we continue to see consolidation in crude markets, with the range tightening and potentially setting us up for a volatile breakout in the coming weeks.
The same factors remain at play and could be the catalyst for an eventual break, be it further Chinese lockdowns, slow output growth from OPEC+, new supply disruptions, larger reserve releases, etc.
Or, of course, an escalation in tensions between Russia and the West leading to an immediate embargo.
The Kremlin has taken us down that path in the natural gas space, imposing rouble demands on buyers that have led to Poland and Bulgaria being cut off. The stand-off could spill over into oil markets.
Gold steadies after dive
The slump in gold appears to have slowed on Thursday after hitting a low around $1,870.
The strength of the dollar over the last week has been a real drag on the yellow metal which has seen a dramatic change in fortune since rallying close to $2,000 earlier this month.
With the dollar continuing to see such strong support in these turbulent times, the yellow metal may remain under some pressure. The break of the mid to late March support isn’t ideal and the next big support falls around $1,850.
Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA
Opinions are the author’s, not necessarily that of OANDA Global Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
