Earnings season ramps up

Bank of America Q2 earnings preview

US major banks have seen a pretty rough start to earnings season, having missed earnings expectations. JP Morgan was notably cautious in its outlook and suspended its share buyback program. As with its peers, the amount that Bank of America sets aside for bad loan reserves will be in focus for the bank, which also needs to rebuild its buffers after underperforming in the latest Federal Reserve stress test. The Street is expecting EPS to fall 27% to $0.75, against tough comparisons from last year. From its $25 billion share buyback, BoA still has $17 billion to return. However, like JP Morgan, the program could be halted if cash needs to be directed elsewhere.

Where next for Bank of America share price?

Bank of America shares have been trading in a falling channel since early March. The stock trades down 36% since the March high, falling to a low last week of 29.67, which should now be treated as an initial support. The price rebounded from this low, recapturing the 20 sma, which keeps buyers hopeful of further upside. Resistance can be seen at 33.36, the late June high, ahead of the 50 sma at 33.90, and a move over 337.30 could create a higher high. Meanwhile, failure to hold above the 20 sma could see the price falls back to 29.67, the 2022 low. A break below here creates a lower low and brings support at 28.60 in play.

IBM Q2 earnings preview

IBM is due to release its latest quarterly earnings after the market closes. Consensus estimates are for EPS of $2.27 on revenue of $15.09 billion. The firm is part way through a significant turnaround, and there are signs that more sales are being derived from its cloud business. In its Q1 quarterly report, earnings beat forecasts with strong cloud demand, fuelling optimism that momentum towards cloud-based software continues. Arvind Krishna became CEO last year and focuses on AI and the cloud. This year IBM shares are up 5%, outperforming the NASDAQ, which trades over 25% lower.

AUD/USD rises cautiously ahead of RBA minutes

AUD/USD fell 0.93% last week in a broadly risk off trade. Risk sentiment took a hit following US inflation data which showed that consumer prices jumped by more than expected to a 40-year high. This data, plus an unexpected rise in wholesale inflation, fueled bets of a more aggressive Federal Reserve. Meanwhile, the Aussie fell on safe-haven flows and falling commodity prices. At the start of the week, the pair is edging higher, with attention on the release of the minutes to the July RBA meeting where the central bank hiked rates by 50 basis points for a second straight meeting. The market will scrutinize the minutes for clues about where the RBA sees inflation heading and the likelihood of more outsized rate hikes. A hawkish RBA could lift the AUDUSD from multi-years lows towards 0.70.

Support can be found at 0.67 (round number) and 0.6681 (2022 low).

Resistance for the pair can be seen at 0.6850 (20 sma) and 0.6980 (50 sma).