Risk aversion on Russian energy threats and tech earnings due

Meta => The stock 50% lower this year
Spotify => The stock trades around its all-time low
EUR/USD => The pair falls a 2-year low

Meta Q1 earnings preview

Meta, the owner of Facebook, Instagram, and WhatsApp, is due to report Q1 earnings after the close today after the share price had plunged close to $350 million in value since its last update when it disclosed that it lost users for the first time ever.

The big question for the market is whether this was just a one-off or whether it is part of a concerning new trend. Expectations are for EPS to fall for a second straight quarter to $3.13, down from $3.30 in the same quarter a year earlier, on revenue of $28.2 billion.

Risk aversion on Russian energy threats and tech earnings due chart

Where next for Meta share price?

Meta share price has lost over 50% of its value so far this year, shedding 18% in April alone.

The stock trades below its 50 & 100 sma. However, the RSI is tipping into oversold territory which means that we could see some consolidation before further downside.

Sellers will be looking for a break below $173 a resistance from early 2019, with a break below here opening the door to $160 the June ’19 low, and $137 the March ’20 low.
Buyers will look for a move over the 50 sma at $208, which has capped gains as the stock moved lower. It would take a move over $238, the April high, to form a higher high and for buyers to gain traction.

Spotify Q1 earnings preview

Spotify is due to report earnings hot on the heels of the disappointing numbers from Netflix, which lost subscribers in Q1 for the first time in a decade.

The overriding fear is that as households rein in spending amid rising energy and foods costs and surging inflation, subscription services such as Netflix or Spotify will be the first to go. Wall Street is looking for 2.7 million new premium subscribers, while the free version, supported by ads, is expected to grow faster.

However, there are concerns that with costs rising and the outlook darkening, the firm could look to rein in ad spending. Expectations are for revenue to grow 21% to €2.6 billion and an operating loss in the quarter. The stock trades around its all-time low ahead of earnings.

EUR/USD falls on oil & gas supply concerns, USD strength

EUR/USD tumbled 0.6% yesterday in risk-off trade, breaking below 1.0636, the 2020 low.

Deteriorating Russia – EU relations over energy are dragging on the common currency, as Russia is to cut gas to Poland and Bulgaria. While the EUR is moving lower, the USD is finding support from haven flows amid fears over further lockdowns in China and expectations that the Fed will move faster to tighten monetary policy and reign in inflation.

Meanwhile, the ECB remains divided over the next move, with ECB Christine Lagarde pushing back on the prospect of a July rate hike. Today, risk flows will continue to drive the pair, in addition to German consumer confidence, which is expected to weaken, and another speech by ECB’s Lagarde.

Ger. consumer confidence

US pending home sales 

Expected: -16.3 (3.1%)

Expected: -1.5% (2.6%)

Previous: -15.5

Previous: -4.1%


Support can be found at 1.06 (round number) and 1.0565 (April ’17 low).

Resistance for the pair can be seen at 1.070 (round number) and 1.0760 (April 15 low). 

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