Fed hikes rates, BoE up next, followed by BoJ
Nasdaq => The index rises towards 14000
FedEx => The stock rises towards $225
GBP/JPY => The pair rises above 156.00
Nasdaq rises after Fed hikes
Nasdaq charged higher in the previous session and is adding to those gains today, boosted by the Fed and a pledge of more stimulus in China.
The Fed, as expected, raised interest rates by 25 basis points to 0.5% and indicated that the central bank plans to hike rates six times more across the year to tame surging inflation. Inflation had risen to a 40 year high of 7.9% and is expected to keep rising.
Powell highlighted that the economy was strong, boosting sentiment.
Separately, Chinese policymakers have pledged more support to the Chinese economy and financial market, sending US-listed Chinese shares surging higher and supporting the tech-heavy Nasdaq. Today US jobless claims are due to be released.
| US jobless claims | Expected: 220k (3.4%) | Previous: 227k |
Where next for Nasdaq?
The Nasdaq is extending its rebound from 12950 the 2022 low.
The retaking of he falling trendline support in addition to the bullish crossover on the MACD supports further upside. Buyers will need to break above resistance at 14000 round number in order to expose the 50 sma at 14400 and the March high.
Above here the bulls could target 15000. On the flip side, support can be seen at 13400 yesterday’s low ahead of 12950.
FedEx Q3 earnings preview
FedEx is set to report Q3 earnings after the close and as the share price trades around 30% below the late May 2021 high and down 16% over the past 12 months.
The selloff in the share prices suggests that the market isn’t overly confident about the prospects for the firm as it grapples with labour shortages and surging costs. While Q2 earnings showed that operating margins fell to 7.1% from 7.4%, extra costs rose to $470 million.
However, management did say that they expected costs to ease in Q3, before dropping significantly in Q4.
With energy prices rising amid the ongoing war in Ukraine, it would appear that those projections will need to be revisited. The firm recently suspended service to Ukraine and Belarus. Revenue is expected to be $23.33 billion, up 8.5% YoY, while EPS is expected at $4.65, up 34% annually.
GBP/JPY rises with BoE & BoJ in focus
GBP/JPY rose 1.4% yesterday, marking its fourth straight day of gains as demand for the safe-haven yen fell on news of progress in Russia, Ukraine peace talks.
Both Russia and Ukraine showed that they were prepared to compromise. Discussions will continue to be monitored closely.
The pound is rising again today as it looks ahead to the BoE interest rate decision due later today. The BoE is expected to lift interest rates for a third consecutive meeting.
A hike of 25 basis points is penciled in, taking rates up to 0.75%, their pre-pandemic level, with another rate hike expected in May. The decision comes as inflation in the UK surged to 5.5% in January, a 3-decade high with energy prices still rising.
Should the BoE sound more hawkish to tame high inflation, the pound could increase further as the divergence from the BoJ becomes more apparent.
The BoJ, perhaps the most dovish major central bank, is due to announce their monetary policy decision on Friday, and they are expected to continue with lose monetary policy.
Support can be found at 155.15 (50 sma and 154.15 (100 sma).
Resistance for the pair can be seen at 157.00 (round number) and 158.20 (2022 high).
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