Crucial week ahead for stocks, as we enter the Earnings frenzy - Market Overview

Crucial week ahead for stocks, as we enter the Earnings frenzy - Market Overview

We are entering an important week. A third of the USA500 companies report their results, including Microsoft, Apple, Amazon, Alphabet and Facebook.

Meanwhile, throughout the past week, the Stock Exchanges seem to have entered a phase of slight profit-taking, with the market risk sentiment remaining positive. The ultra-expansive monetary policies and the determination of the governments to implement fiscal stimulus policies with a massive increase in public spending impact the economic figures, supporting the stock markets.

There is only one factor of concern for investors – the possible increase in tax collection to finance spending. The only correction we witnessed last week came after the Biden administration's announcement that they were considering raising the corporate income tax. This week, we could probably see some more news about this topic, potentially impacting the market.

A week full of earnings

Apart from Microsoft, Apple, Amazon, Alphabet and Facebook, Tesla is scheduled to report its results this week. Elon Musk’s company has become an indicator of risk appetite like bitcoin.

In addition to these earnings reports, the Fed meets on Tuesday and Wednesday, while on Friday, the Advance GDP report is due for publishing, which is the inflation measure preferred by the Fed. In Europe, the GDP for the first quarter will be unveiled.

Today the ifo data has been published in Germany showing a figure lower than expected - 96.8 vs 97.8. The IFO institute stated that the situation produced by the pandemic is causing bottlenecks in supply chains as well as increases in logistics and production prices, which is the main cause of the lack of progress in the IFO index. To this must be added the worsening of infections in Germany and the strict measures to restrict mobility that are seriously affecting the German economy and the European economy as a whole.

For the reasons mentioned above, the euro area GDP, due for next week, could reveal negative numbers, which would technically put the European economy into recession.

However, these poor prospects are not having any effect on the price of the euro. It continues to gain territory against the dollar, technically breaking to the upside, exceeding the intermediate resistance zone located at 1.2070. EUR/USD is currently trading around 1.2100. The critical reference level that acts as resistance is located at 1.2150.

Sources: ft.com, investing.com.

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.

JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors