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Big tech in focus, Microsoft and Alphabet fail to provide boost

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By Craig Erlam  

Wednesday wasn’t the most thrilling session so far, but there is plenty still to come over the next couple of days which could see activity pick up.

Earnings from Microsoft and Alphabet could have been the catalyst that kicked things off this week, but the contrasting results appear to have left investors wondering which way to turn.

The clear difference maker was AI which gave Microsoft the edge and a strong start to trading. Google-parent Alphabet is a little behind the curve and that’s come at an early cost for its cloud business which, unlike Microsoft, saw slower growth.

It goes to show how much emphasis investors are putting on the cloud and AI that Alphabet overall reported stronger than expected revenue and earnings, but has been punished with shares falling in early trade.

There’s still a lot more to come over the next couple of days including earnings from Meta and Amazon, as well as the ECB rate decision on Thursday and US inflation data on Friday. There’s still plenty of time for fireworks, yet.

Oil steadies

Oil prices steadied on Wednesday after falling heavily over the first half of the week. Brent and WTI gave back the bulk of the gains that followed Hamas’s attack on Israel earlier this month which may suggest traders are less fearful of it turning into a wider conflict that could disrupt supplies.

Added to that has been the economic data earlier in the week that pointed to further softness in Europe, where recession is looking increasingly likely. There may also be some profit-taking in there too following such a strong surge a few weeks ago.

Gold bounces back

Gold made an impressive recovery that may have surprised a few people. It appeared to have moved into a corrective mode, similar to what happened in oil, but a swift U-turn then saw it end the day pretty flat.

Suddenly, another run at $2,000 looks a significant possibility with the yellow metal making small gains on Wednesday and sitting only around $20 from that massive psychological barrier. Clearly, the demand for safe havens in these uncertain times isn’t fading.

 

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.