- US Banks beat earnings expectations but warn of financial stress amongst lower and middle-income consumers over the upcoming months.
- Producer Inflation unexpectedly remains high, but investors opt to take advantage of the lower price.
- Political experts advise Trump’s chances of winning this year’s elections are significantly higher after the recent assassination attempt.
- All currencies indexes decline as the US Dollar attempts to win back some lost ground.
USA100 – Large US Banks Voice Caution As Consumer Demand Falls!
The NASDAQ rose on Friday despite the US inflation data reading higher than what investors would have preferred. According to analysts, investors preferred to take advantage of the lower purchase price and Thursday’s 2.20% decline. Investors potentially may still look to increase exposure in stocks and indices to price in a rate cut and strong earnings data.
The Producer Price Index read 0.2% vs 0.1% expectation. Though investors were concerned that the Core Producer Price Index was more than double previous expectations. However, the positive news is that the US inflation rate fell from 3.3% to 3.0%, the lowest since June 2023. Today investors will focus on the release of the Empire State Manufacturing Index which could benefit from a slightly higher reading. In addition to this, the Fed Chairman will speak at 16:00 GMT which may also trigger volatility depending on comments.
None of the earnings reports released Friday were part of the NASDAQ index, but they surely grabbed investors’ attention. JP Morgan, CitiGroup and Wells Fargo all beat earnings and revenue expectations, however, all stocks depreciated in the session that followed. Particularly Wells Fargo which fell more 6.00%.
The main cause was the forward guidance given by all 3 banks regarding the economic conditions in the upcoming months ahead of the elections. Profits at Citi’s US consumer lending division, which encompasses credit cards, plummeted by 74% compared to last year. The bank’s chief financial officer, Mark Mason, noted that consumer spending is generally declining, with account balances now falling below pre-Covid levels. In addition to this, JP advises lower income consumers are likely to struggle over the next 3-4 months.
Nonetheless, in terms of technical analysis, the price of the NASDAQ is again trading above the 75-Period EMA and 100-Period SMA. In addition to this, the RSI trades above the 50.00 level which indicates buyers are regaining control of the market. Buy signals are likely to strengthen as the price crosses above the $20,471.10 and $20,552.77 levels.
EURUSD – The Dollar Gains As The Exchange Rate Rises To Previous Resistance Level!
The EURUSD currently trades with an extremely low spread and a bearish price gap. The US Dollar Index is currently trading 0.15% higher while the Euro Index is 0.16% lower. However, on the medium-term timeframe the Euro is witnessing significant gains against the Dollar after rising for 3 consecutive weeks. However, this has brought the exchange rate to the previous resistance level of the price range. Therefore, technical analysts are considering whether this may be the point where the EURUSD retraces lower.
Currently, the support and breakout level can be seen at 1.08823 and if the price falls below this level potentially can prompt a short-term sell signal. A short-term sell signal potentially can indicate a decline to the 1.08667 level. The Empire State Manufacturing Index this afternoon potentially can support momentum to form a breakout if the index reads higher than current expectations.
Michalis Efthymiou
Market Analyst
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