The market mood today

Nike Q2 earnings preview.

Nike is set to reveal Q2 earnings later today. Wall Street expects revenue growth of 10.7% year on year to $12.6 billion as it benefits favorable consumer trends for sports and leisure wear. Meanwhile, diluted EPS is forecast to decline 20% to $0.66. Nike has topped profit estimates for the past nine quarters. Demand in the US could remain strong as the US consumer has proved to be resilient despite high inflation. However, the picture in China could be more important and is expected to show a rebound in sales in Q2 after declining 16% in Q1 owing to Covid restrictions. Guidance is expected to be upbeat as excess inventory worries and margin concerns ease despite a challenging macro backdrop. 

Where might the Nike price head to?

After running into resistance at 115, the December high, the price rebounded lower, falling below its 100 & 200 sma. This, combined with the bearish RSI, keeps sellers hopeful of further downside. Sellers could look for a fall below 98.80, the 50 sma, and the July low. A break below here exposes 92.65, the falling year-long trendline support, and the mid-October high. On the flip side, buyers could look for a rise over 110 the 200 sma to bring 115.00 back into focus. A rise over here creates a higher high.

EuroStoxx 50 falls ahead of consumer confidence data

Euro Stocks 50 is falling, paring gains from the previous session.  A surge of Covid cases is China leaves the market wondering how it will re-open. The index rose yesterday, helped higher by a stronger-than-forecast IFO German business climate data, which pointed to a less severe recession. Today the focus remains on the economic calendar with the release of German wholesale inflation and eurozone consumer confidence. German PPI is expected to continue cooling to 30% YoY, down from 34.5% in October. Meanwhile, consumer confidence is expected to improve slightly in December, up from a 5-month high in November, a sign of resilience in households as the region heads into recession. Upbeat data could help lift the euro.

USD/JPY falls on BoJ tweak

USD/JPY is pushing higher after the BoJ tweaked its ultra-loose monetary policy, fueling hopes of an eventual end to its dovish stance. The BoJ, widened the range within, which it allows the yields on its benchmark government bond to fluctuate. The move raises expectations that the central bank will move away from its dovish policy as inflation sits at a 40-year high.  Looking ahead, US housing data will be in focus with the release of housing starts and building permits. There is plenty of housing data due to be released this week which will provide a clear picture of the extent that the housing market is slowing as interest rates rise, increasing mortgages.

Support for the pair could be seen at 130.40 (August low) and 126.70 (May low).

Resistance could be seen at 133.70 (December 2 low) and 137.50 (last week’s high).

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