Here comes the big tech earnings

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Equity markets were largely red for most of the trading session as earnings recession fear kicked in, with big technology firms reporting a string of earnings.

Major indices were largely flat, with the Nasdaq paring some losses and closing down by 0.3%. S&P 500 and Dow were up 0.1% and 0.2%, respectively.

It is a slow start to the earnings season, with multiple economic data releases on the horizon too. Even as we finish this week’s corporate earnings, we will see the FOMC meeting, which is expected to have another rate hike. The same sentiment follows for the European Central Bank.

First Republic earnings beat but deposit shadowed prospect

While the first quarter earnings result was decent, there were concerns about a plunging deposit, although the management conveyed the deposit level as stable.

This comes as major banks in America put a combined $30 billion into the bank to help shore up its deposit and ignite a wave of confidence in the banking system.

Yet the total deposit level stood at $104.5 billion, far from what he expected, $140+ billion. It has since then taken steps to reduce the outflow and executive compensation as it looks to condense its office space and embark on a layoff to stay resilient.

We continue to see progress in the healing of regional banks as we await more clues on the health of the general economy.

What’s on the menu today?

At 9.30 pm, we will have the Building Permits data. We expect a decline from 1.55M to 1.413M.

The CB Consumer Confidence for April will be released at 10 pm. We should see a modest drop from 140.2 to 140.0.

Concurrently, New Home Sales for March should see a slight decline from 640K to 630K as mortgage rates see some softening, possibly helping to boost some recovery sentiment unless the economy sours aggressively.

Our Outlook on current low volatility

It is the black-out period for Fed officials; hence, we should not see any FOMC members giving talks. In general, we are still mildly bullish on the overall sentiment.

Even as Tesla and Netflix reported lacklustre earnings last week, the SPY had held up pretty well. If we observe the daily chart, it has tended to bounce off the 410+ level and swing up to 412, exhibiting incredible strength.

Some had attributed some robust underlying momentum to the options trading with DTE0. As we look ahead for other mega tech earnings, we will also be cautious as VIX is low and could burst up.

It is 25 April, Tuesday, 8.45 am in Singapore and 8.45 pm in New York. A brand new day of opportunities awaits us, friends. We hope you have a delightful day.