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Stocks rise ahead of big tech earnings; dollar drops

Fawad Razaqzada Fawad Razaqzada 26/01/2021
Stocks rise ahead of big tech earnings; dollar drops Stocks rise ahead of big tech earnings; dollar drops
Stocks rise ahead of big tech earnings; dollar drops Fawad Razaqzada
It looks like the US dollar’s latest recovery attempt has been futile amid investors’ insatiable risk appetite, which is continuing to underpin foreign currencies, commodities and, above all, the stock markets. The S&P 500 has hit a new record, with Nasdaq holding just a few points below its all-time high.
 
The prospect of an extra $1.9 trillion in fiscal stimulus has for now offset some concerns over valuations. The Biden administration will have to work hard to head off Republican concerns that the spending is excessive. Some Republicans want the focus to be on vaccine distribution rather than handing out more cash. But although there are questions surrounding the timing and scale of new fiscal aid, investors seem convinced that the aid is coming, nonetheless.
 
Investors are also positive that the fourth quarter technology earnings will beat Wall Street expectations. Big tech earnings are on the way, starting with Microsoft and AMD tonight after the close. Apple, Tesla and Facebook will be among the reporters on Wednesday.
 
 
European markets rebound after weak start to the week

In Europe, stocks had made a slow start to the week and fell quite noticeably on Monday, with sentiment here hurt by tempering in the vaccine optimism due to the delays. Airlines and hospitality sector struggled on Monday. But today, the European indices managed to bounce back and the DAX closed in on record highs again while the FTSE held the key 6650 support.

Could European stocks outperform?

I reckon European stocks, which have lagged their US counterparts so far in the recovery, could start to shine more brightly going forward. With a Brexit deal secured and COVID vaccines being rolled out (with relative success in the UK), investors are likely to look through the short-term economic risks arising from the current lockdowns. While virus cases have started to fall, there is still a long way to go as lockdowns are unlikely to end until deaths start falling and in any case until more people are vaccinated.

Company news:
 
  • Beyond Meat shares soar 37% at the open after company teams up with PepsiCo to make plant-based snacks and drinks
  • Shares of Moderna were in focus after surging more than 12% Monday when the drugmaker said it was on track to deliver 100 million doses of its COVID-19 vaccine by March
  • Johnson & Johnson reported stronger-than-expected earnings and revenue, sending its shares higher
DAX bull flagging

Although the focus is clearly on US stock markets tonight and in particular on Microsoft, the DAX index has caught my attention today. The German index is in the process of forming a bullish-engulfing-like candle on the daily after finding good support off the support trend of the bull flag pattern. If the index manages to now break through the resistance trend of the flag, a strong continuation should be on the cards in the days ahead, especially as the recent consolidation has allowed momentum indicators to work off their overbought conditions through time rather than price. So a new all-time high looks imminent.  

DAXSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Mohammed Zidan
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Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

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Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

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Fawad Razaqzada
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Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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