Big Tech see-saw flips positive, yen swings wildly
A look at the day ahead in U.S. and global markets from Mike Dolan
A volatile week for Wall Street megacaps looks set to end with a positive twist as Microsoft MSFT.O and Alphabet GOOGL.O earnings wowed the gallery overnight, while the yen plunged anew in Asia as the Bank of Japan left policy on hold.
After a day in which Meta's META.O outsize spend on artificial intelligence appear to spook investors and sent both its stock and the wider tech sector into tailspin, its rivals appeared to steady the ship overnight.
Google-parent Alphabet announced its first-ever dividend and a $70 billion stock buyback, sending its stock surging nearly 16% after the bell. Microsoft beat estimates for its quarterly revenue and profit, driven by gains from adoption of artificial intelligence across its cloud services, and its shares jumped more than 4% in extended trade.
Snap was another outsize move, with its shares SNAP.N soaring nearly 30% in Frankfurt after the owner of the photo messaging app beat expectations for quarterly revenue and user growth.
It wasn't all sweetness and light, however, and chipmaker Intel's INTC.O shares dived more than 8% after it forecast second-quarter revenue and profit below market estimates and was seen to be trailing in the booming market for AI components.
Nevertheless, the upshot for the wider market has seen Nasdaq futures jump back more than 1% overnight and S&P500 futures were up about 0.8% - with Friday's earnings diary topped by Big Oil names such as Exxon Mobil and Chevron.
Asian and European bourses also rallied on Friday and the VIX .VIX stock market volatility gauge remained in check near Thursday's lowest point in about two weeks.
But much of the macro market focus in Asia today has been on the plummeting and increasingly volatile Japanese yen JPY= - which skidded more than 0.5% to another 34-year low at 156.82 per dollar as the Bank of Japan stood pat on its still-easy monetary policy.
It swung wildly in London trading hours as traders grew wary of official action to stem its slide, although no actual intervention was detected yet and it retained much of the day's losses.
The Bank of Japan kept interest rates around zero and highlighted a growing conviction that inflation was on track to durably hit 2% in coming years, signalling its readiness to hike borrowing costs later this year.
But the yen dropped amid a lack of clear guidance on the future rate hike path and the still yawning rate gap between Japan and the rest of the developed world.
With the dollar actually softer against other major currencies after Thursday's surprising miss in the headline U.S. gross domestic product reading, yen weakness against the dollar was pervasive elsewhere too. EURJPY=
The U.S. economy grew at its slowest pace in nearly two years in Q1 but the number was partly depressed by a surge in imports and this sign of solid domestic demand and an acceleration in inflation gauges for the quarter reinforced expectations that the Federal Reserve would not cut interest rates before September.
Nevertheless, Treasury yields US10YT=RR backed off recent highs on Friday as traders awaited the release of Fed's favored PCE inflation gauge for March later in the day.
Although the headline rate of PCE inflation is expected to have ticked up a notch to 2.6% last month, the core rate is forecast to have slipped to 2.7%.
In dealmaking, Anglo American AAL.L rejected rival miner BHP Group's BHP.AX 31.1 billion pound ($39 billion) takeover proposal on Friday, saying the bid significantly undervalued the London-listed miner and its future prospects.
Key diary items that may provide direction to U.S. markets later on Friday:
* US March PCE inflation reading, Dallas Fed trimmed mean PCE, University of Michigan's final April sentiment index
* US corporate earnings: Exxon Mobil, Chevron, AbbVie, Colgate Palmolive, T Rowe Price, Aon, HCA Healthcare, Roper Technologies, Charter Communications, Centene, Ball, LyondellBasell, Phillips 66
* German Chancellor Olaf Scholz hosts NATO Secretary-General Jens Stoltenberg in Berlin in preparation for the alliance's 75th anniversary
Microsoft leads Big Tech's AI spending spree https://reut.rs/49TwGSA
Share of PCE price index increasing more than 3% https://reut.rs/3y2j8Ha
US GDP contributors https://reut.rs/49YJrLH
BOJ keeps rates steady https://reut.rs/4aSLW3u
Inflation in Tokyo falls below central bank's target https://reut.rs/4a282j6
By Mike Dolan, editing by Gareth Jones mike.dolan@thomsonreuters.com
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
