UK Spring Budget, Inflation, Fed Powell & Tencent makes for a busy day
FTSE => The index rises to a 3-week high
Tencent => The stock trades up 30% in 7 days
EUR/USD => The euro holds above $110
FTSE advances ahead of the Spring Budget
FTSE closed higher for the past five days and is set to continue to rise for a sixth straight session today. Commodity stocks have broadly supported the UK index as oil prices and commodity prices rally on the fallout from the Russian war. Heavyweight banks are also benefitting from higher interest rates. Today the index is rising amid an overall upbeat mood in the market. Meanwhile, the US will announce fresh sanctions on Moscow. Domestically the focus will be on the Chancellor’s Spring Budget. Rishi Sunak is expected to bring at least some support to households and businesses as the cost-of-living spirals higher. UK inflation data is due to be released before Chancellor’s statement, expected to rise to a fresh 30 year high.
| UK CPI YoY February | Expected: 5.9% (0.4%) | Previous: 5.5% |
Where next for FTSE?
The FTSE continues to extend its rebound from the 2022 low.
The move above the 50 & 100 sma, plus the MACD crossing above the zero line, keeping buyers optimistic of further gains. Resistance can be seen at 7570, a level which capped gains on several occasions during 2022, ahead of the 7600 round number. A break above this number opens the door to 7690, the post-pandemic high. On the downside, support can be seen at 7400 the November high and 7200 the February 24 low.
On the downside, support can be seen at 7400 the November high and 7200 the February 24 low.
Tencent Q4 earnings preview
Tencent is due to report Q4 earnings at 12:00GMT today.
The conglomerate is expected to reveal its slowest top-line growth yet, with revenue increasing just 8.7% to RMB 145.3 billion, while EPS is expected to decline 10% to RMB 3.06. The gaming sector continues to adjust to new regulations, and the challenging macroeconomic climate hits advertising.
The international business and newer areas such as the cloud remain bright spots and continue to deliver a strong performance. Since March 16, Tencent’s share price has rallied 30% following a pledge by Beijing to support businesses. Even so, the share price has lost around half of its value over the past year.
EUR/USD edges higher ahead of Fed Powell & EZ consumer confidence
EUR/USD advanced 0.1% in the previous session and edged a few pips higher on Wednesday.
The pair gained, boosted by the upbeat mood in the market, despite the ongoing Russian war and Fed speakers sounding more hawkish than before.
Today the pair is attempting to build on yesterday’s gains, helped by firmer equities. Data-wise, eurozone consumer confidence is expected to show that morale fell in March as the Russian invasion continued. Fed Powell is also due to speak and is expected to reiterate his hawkish position.
| EZ Consumer confidence | Expected: -12.3 (3.5) | Previous: -8.8 |
Support can be found at 1.10 (round number) and 1.0960 (trend line support).
Resistance for the pair can be seen at 1.11 (round number) and 1.1137 (last week’s high).
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