3 Things You Need to Know About the Market Today: Amazon Miss, Jobs Report, China Slowdown
1, Amazon Falls on Guidance as Exxon and Chevron Report
Amazon.com, 4-Hour Chart Analysis
The three most valuable public companies, Amazon (AMZN), Microsoft (MSFT), and Apple (AAPL) now all reported quarterly earnings, with the online retailer publishing its numbers yesterday after the bell. Amazon’s report was mixed, with better-than-expected earnings for the key holiday quarter but with a sales guidance that was below the Street’s expectations.
The shares of the company are set to open almost 5% lower, and with that the three giants would almost equal in market cap, al being worth around $800 billion according to the market. The company predicts first-quarter revenues between $56 and $60 billion, and although the AWS segment continues to boost the company, but the growth in the legacy business will likely slow, and the accelerating costs will hurt the all-important margins.
The energy sector is in focus in pre-market trading with regards to earnings, with the two giants of the segment Exxon (XOM) and Chevron (CVX) both reporting, and after a turbulent quarter for crude oil and the whole market, expectations are relatively muted. The companies proved resilient to price-volatility following the cleansing of the segment in 2014-15, but investors want to know how they see the coming quarters both from a demand- and supply-perspectives.
2, Non-Farm Payrolls Beat while Wages Miss on Jobs Friday
VIX (US Volatility Index), 4-Hour Chart Analysis
After last month blowout jobs report and this week’s better-than-expected ADP payrolls number, expectations were high regarding the government’s employment numbers. While the jobs market is considered a lagging economic indicator, the strongest wage growth of the business cycle and the still healthy job creation means that the consumer economy could still pull its weight in the coming months, even as global manufacturing is slowing rapidly.
Although wage growth slowed considerably in January, to a monthly 0.1% vs. 0.3% expected, the NFP gain of 304,000 is eye-popping even considering the negative revision of last month’s reading. This combination could push stocks even higher in the coming days, and the Dollar could see further short-term downside, but with the clouds gathering above global economy, we believe that stocks will likely be back under pressure soon.
The Volatility Index (VIX) hasn’t been confirming the new highs in the major indices, holding up above the support zone hat developed since the October regime change, and bulls would need a clear move below 16, to maintain the recovery, and the coming days will be crucial for the stock market.
3, Chinese Manufacturing PMI Signals Contraction amid Trade Hopes
USDCHN, 4-Hour Chart Analysis
China continues to provide mixed headlines, with the current round of trade talks with the US reportedly going well, at least with regards to strictly trade matters. The issues of Intellectual Property and government subsidies are still the bigger hurdles, but the progress on the talks and the global risk rally led to a nice bounce in the Yuan against the weaker USD.
That said, the economic numbers continue to be worrying and the today, the Caixin Manufacturing PMI came in at 48.3, well below the expected 49.5, clearly signaling contraction in the key sector. While the Chinese leadership is trying every monetary tool to revive growth, even the official numbers are turning lower, and the corporate reports all show a broad-based slowdown in the economy.
We will have the US ISM manufacturing PMI coming out just after the opening bell, and with the Eurozone PMI also plunging lower in recent months, a lower-than-expected (the consensus estimate is 54.1) reading could cause another global risk-off shift.
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