Big tech earnings ramp up, and the ECB rate decision is due
Apple => The stock rises to $150
Amazon =>The stock falls to $115
EUR/USD => The pair rises over parity
Apple Q4 earnings preview
Apple will report fiscal Q4 earnings after the closing bell. All eyes will be on iPhone 14 sales after the new handset went on sale late in the quarter. This number could shed light on the health of the consumer and whether slowing economic conditions are impacting the high-end electronics market. It is unlikely that Apple is immune to the deteriorating economic backdrop. Attention will also be on comments surrounding the supply chain after Apple said last quarter that supply shortages could have cost around $4 billion in lost sales. Wearables are the most discretionary products and could see the steepest fall. While Apple hasn’t offered guidance since 2020, Wall Street expects EPS of $1.27 on revenue of $88.79 billion.
Where might the Apple share price head to?
Apple’s share price has rebounded from the October low of 134 and is attempting to retake resistance at 150, a level that has offered both support and resistance on several occasions over the past year. The RSI is over 50, suggesting that there could be more upside. However, buyers need to rise over 160 and the 50 sma to extend the rebound above the 200 sma at 157, bringing the multi-month falling trendline into view at 175. On the downside, failure to retake 150 could see the pair head back toward 134. A break below here could create a lower low.
Amazon Q3 earnings preview
Amazon will report Q3 earnings after the close today. The combination of 4-decade high inflation plus tighter monetary conditions means consumers and ad companies are cutting spending, which could be bad news for Amazon. Furthermore, Microsoft’s results showed that cloud computing missed forecasts. This could be an ominous sign for Amazon’s cloud arm, which has already frozen hiring. Therefore it wouldn’t be a massive surprise if Amazon’s growth lost some momentum. Meanwhile, Wall Street expects a 15% increase in net sales to $127.64 billion. Operating income is estimated to fall to $312 billion, a 36% decline, and diluted EPS is expected to fall 11% annually to $0.28.
ECB rate decision
EUR/USD rose for a sixth straight session, rising over parity to a six-week high amid a weaker USD and as the euro looked ahead to the ECB rate decision. The ECB is broadly expected to hike interest rates by 75 basis points, marking the second straight hike of that size and the third straight hike since the cycle started. Inflation is at a record high, and the economy is slowing, with many predicting a recession by the end of the year. If the ECB adopts a very aggressive stance, it could lead the economy into recession sooner. Meanwhile, the USD fell yesterday as investors continued to bet that the Fed could take a less hawkish stance after softer than forecast data across the week. In the US session, attention will be on the release of US GDP data which is expected to show that the economy rebounded into growth after two-quarters of contraction. Weaker-than-expected growth could pull the USD lower.
| US GDP Q3 annualized | Expected: 2.4% (3%) | Previous: -0.6% |
Support can be found at 1.00 (parity) and 0.99 (50 sma).
Resistance for the pair can be seen at 1.0190 (September high) and 1.06 (August high).
