Hawkish Fed minutes and European Central Bank next
Nasdaq => The index falls to a 2-week low
Constellation Brands => The stocks trades -8% this year
EUR/USD => The pair rises above 1.09
Nasdaq holds losses after Fed minutes
The March Federal Reserve meeting minutes showed that the Fed is becoming increasingly concerned about rising inflation and believes a more aggressive monetary policy is needed to tame surging inflation.
This was, to a degree, old news as Fed speakers have been out in force over the past few weeks, speaking of the need to hike interest rates at a faster pace of 50 basis points and run off the balance sheet more rapidly, in a process which is known as quantitative tightening. The Nasdaq was already trading lower ahead of the announcement after Lael Brainard signaled the same yesterday, sending the Nasdaq 2% lower.
High growth tech stocks are the most vulnerable to higher interest rate environments, which led to the Nasdaq underperforming this week.
Where next for the Nasdaq?
The Nasdaq failed to rise meaningfully over the 100 SMA and rebounded lower, finding support at 14390.
The index currently trades caught between its 50 & 100 SMA. The bearish crossover that appears to form on the MACD suggests that the selloff could continue.
Sellers could look for a move below the 50 SMA at 14300 to spark a deeper selloff to 13890 high on 11 March.
Any meaningful recovery would need to move above 14700, a level that offered both support and resistance on several occasions across the past three months, to expose the 100 sma at 15100. It would take a move over 15275 to create a higher high.
Constellation Brands Q4 earnings preview
Constellation Brands will release its fourth-quarter results before the market opens today.
The alcoholic beverage producer is expected to report revenue of $2.01 billion, a 3% year-on-year rise in revenue. Meanwhile, diluted EPS is expected to increase 3.3% to $2.01.
The results show that demand remains strong, and inventories are recovering to standard levels. Nielsen’s recent data showed that sales volumes for the firms’ beer brands were up 7.5%.
That said, wine & spirit sales could have a more challenging time this year owing to asset sales. The latest earnings come amid speculation of merger talks with Monster Beverage, an energy drinks maker. A deal could be reached in the coming weeks resulting in a firm worth $90 Billion.
EUR/USD awaits ECB minutes
EUR/USD fell for a 5th straight session on Wednesday as worries over the Ukraine conflict weighed down the euro despite mixed data.
German factory orders tumbled, even before the Russian war ramped up, raising concerns over the economic outlook. Meanwhile, eurozone wholesale inflation kept rising, which could prompt a more hawkish ECB.
Today the minutes from the March ECB meeting will be released, and it could shed light on how concerned ECB officials are with the elevated and climbing level of inflation. The minutes come hot on the heels of the minutes from the Fed.
| German factory orders Feb
EZ producer prices YoY Feb |
Actual: -2.2% (4.5%)
Actual: 31.4% (0.8%) |
Previous: 2.3%
Previous: 30.6% |
Support can be found at 1.0875 (yesterday’s low) and 1.08 (2022 low).
Resistance for the pair can be seen at 1.0969 (March 28 low) and 1.10 (round number).
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