Fed Fears Drive Global Stock Indices Lower – BAC Reports Earnings

Fed Fears Drive Global Stock Indices Lower – BAC Reports Earnings

Bank of America  => The stock falls 3.4% on Tuesday

Oil   => WTI & Brent rise to 7-year highs

DAX =>The index falls towards 15700

Bank of America reports Q4 earnings

Bank of America is set to report Q4 earnings ahead of the US market open today. Expectations are for an increase in revenue to $22.9 billion, up from $20.2 billion reported in the fourth quarter of 2020. EPS is expected to come in at $0.76 up from $0.59. Bank of America managed to outperform its peers last year and could do so again this year given its high sensitivity to interest rates and expectations that the Fed will hike rates 3 to 4 times across the coming year.

BOA trading chart daily market update

Where next for Bank of America share price?

The Bank of America share price has been trending higher across the past year, rising to an all-time high of $50.10 on January 10. The price then rebounded lower taking out the previous high of $48.70, before dropping to the 50 sma where the price found support at $46.00. The MACD appears to be forming a bearish cross over which could suggest that there is more downside to come. Sellers would need to break below the 50 sma to open the door to $42.70 the 200 sma and the December 20 low. Should the 50 sma hold the price could rebound towards $48.70 and on towards $50.10.  

Oil steadies around a 7-year high

Oil prices jumped over 2% in the previous session and are rising a further 0.7% in early trade on Wednesday, hitting a 7 year high, as geopolitical tensions in the Middle East and Russia added to ongoing supply concerns. Attacks by the Yemen Houthi movement on fuel trucks in the UAE and a warning from the group that more attacks could follow unnerved oil markets raising geopolitical risk in the area. The warnings come when OPEC+ producers are already struggling to increase output to higher quota levels in order to satisfy rising demand. OPEC stuck to its forecast for robust oil demand in 2022, despite surging Omicron cases. API stockpile data is due to be released. Last week stockpiles fell by -1.07 million barrels.

DAX set to extend declines

The German DAX dropped 1% in the previous session as Fed tightening fears hit risk sentiment across the board. Stock indices across the globe tumbled lower and DAX traders shrugged off a sharp improvement in German investor morale. The closely watched ZEW economic sentiment index surged to its highest level since last summer on optimism that COVID cases would decline and economic growth ramps up. Today, concerns over an aggressively hawkish Fed remain and the DAX is set for another day in the red.  Attention will turn towards German inflation data, the final print for December, which is expected to confirm the 5.3% preliminary reading. 

Ger. ZEW Economic sentiment

German Inflation YoY Dec 

Actual: 51.7 (21.8)

Expected: 5.3% (0.1%)

Previous: 29.9

Previous: 5.2%

 

Support can be found at 15600 (200 sma) and 15420 (December 22 low).

Resistance can be seen at 15991 (weekly high) and 16285 (all-time high).

 


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