Risk appetite rebounds ahead of big tech earnings
Alphabet => The stock trades at a 9-month low
Microsoft => The stock trades down 9% this year
USD/JPY => The pair rises above 1.28
Alphabet Q1 earnings preview
Big tech earnings kick off today in earnest. Google parent company Alphabet is due to report Q1 earnings after the closing bell today. The company relies mainly on online advertising revenue and has proved to be more resilient than some of its social media peers to changes in the industry, such as the privacy changes that Apple introduced. While the cloud side of the business, Google Cloud, is the fastest-growing part of the business, it still lags behind the growth seen by rivals Microsoft and Amazon and has failed to turn a profit. Expectations across 2022 are for solid revenue growth but a small increase in earnings. Comparisons for last year a particularly tough.
Where next for Alphabet’s share price?
After reaching an all-time high of $3030 in February, Alphabet has been trending lower, falling to a 9-month low yesterday. It trades below its falling trendline, 50 & 200 sma, and the 50 SMA crossed below the 200 SMA in a death cross bearish formation. This, combined with the bearish RSI, keeps sellers hopeful of further downside. Support can be seen at $2340, the May 21 high, ahead of 2200, the May ’21 low. On the upside, buyers need to retake resistance at 2500 to expose the 50 sma at $2670 and the 200 sma at $2770.
Microsoft Q3 earnings preview
Microsoft Q3 results are due after the close today. The tech giant is expected to report an 18% rise in revenue to $49.1 billion and post a 12% increase in EPS to $2.19. The core cloud business is expected to remain the key driver of growth, with analysts penciling in revenue growth in the region of 25% for the cloud business area alone. Meanwhile, Dynamic 365 and LinkedIn are expected to see the top-line rise of 16%, marking the slowest growth in a year. Microsoft shares have underperformed big tech rivals since the selloff this year, but the company is still expected to post faster earnings growth than its peers.
USD/JPY rises ahead of BoJ rate decision
The Japanese yen outperformed its major peers and was the top G10 performer yesterday. The yen even gained ground against the US dollar, which rallied to a two-year high against major peers. USDJPY fell -0.5% yesterday as the yen received a boost from haven flows, as rising COVID cases in China sparked fears of further lockdowns, and as commodity prices fell, which eases pressure on commodity importer Japan. Today the pair is rebounding ahead of U.S. economic data, which will include durable goods orders and home sales. The BoJ is due to announce its interest rate decisions; the central bank is not expected to adjust its monetary policy. Dovish BoJ comments could send the yen lower.
Support can be found at 127.00 (round number) and 125.00 (March 28 high).
Resistance for the pair can be seen at 129.40 (2022 high) and 130.00 (psychological level).