The bulls finally gave up yesterday after a six-day rally and Wall Street finished lower. The lower finish was mainly due to the weak economic data released in the country. Moreover, a six-day consecutive rally itself was enough to stimulate some profit taking after the sharp run we have seen so far for the equity markets, since it bounced from its lows.
However, the picture was completely different after the market close when Apple and Facebook released their groundbreaking earnings and smashed the analysts’ forecasts. Apple clearly proved it is still the industry leader and still has many products under its sleeves which are going to keep the earnings arena full with surprises. The company’s announcement for buying back $90 billion of shares was a smart move given the cash it has on its balance sheet, and a further announcement of stock spilt of seven to one, is going to bring a broad base of shareholders. A strategy which has worked for many companies in the past. On the other hand, Facebook shares also rallied after their earnings when company proved that they have cracked the secret of mobile advertising. The big soar which was over 70% in their profit was a clear evidence of that.
The European markets are translating these events into a higher trading session. The economic calendar is full also. We will kick off with the German IFO reading and we will not be surprised if the final is fragile given the weaker outlook for Chinese growth and the ongoing unrest in Russia. Both countries are the biggest hubs for German export. The forecast is for 110.5. Mario Draghi is also coming to the spotlight today and once again traders are going to focus on the strength of the euro and if the ECB could do anything to stop the EUR/USD pair from reaching the 1.40 level which is well within the reach.
As for the US, we do have the core durable and unemployment claims data due at 13:30 GMT and the forecast is for 0.6% and 309K respectively.
Disclosure & Disclaimer:
The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader. by Naeem Aslam