Global stocks sink ahead of Apple, Amazon, and Alphabet earnings
Global stocks declined today as traders focused on corporate earnings from some of the biggest companies in the world. In Europe, the DAX index declined by 2.80% while the FTSE 100 and Stoxx 50 are down by 1.85% and 2%, respectively. In the United States, futures tied to the Dow Jones and the S&P have fallen by almost 1%. Earlier today, Royal Dutch Shell announced a multibillion-dollar loss while Credit Suisse profit rose by 24%. In Germany, Volkswagen made a loss of almost $1 billion forcing the company to cut its dividends. Later today, Apple, Alphabet, and Amazon, which have a combined market cap of more than $3 trillion will release their earnings.
The euro declined slightly as traders reflected on the mixed economic data from Europe. In a report earlier today, the German statistics office said that the country’s economy contracted by 11.7% in the second quarter, in what was the worst quarter in decades. The economy contracted by 10.1% on a QoQ basis. The country’s unemployment rate remained unchanged at 6.4%. Meanwhile, the industrial sentiment in Europe improved slightly to -16.2 while sentiment in the services industry improved to -26.1.
The US dollar gained against most currencies as traders reflected on the Fed interest rate decision. In its July meeting, the bank left interest rates unchanged in the range of 0% and 0.25%. It also left the open-ended quantitative easing policy in place and pledged to do more. The currency also reacted to the first preliminary Q2 GDP data from the US. The data from BLS showed that the economy contracted by 32.9% in the quarter. That was better than the 34.1 that analysts polled by Reuters were expecting. Meanwhile, data showed that initial jobless claims rose to 1.43 million as more states put brakes on their reopening process. This was higher than the 1.42 million that was reported last week.
The EUR/USD pair is trading at 1.1747, which is lower than this week’s high of 1.1805. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. The signal line of the MACD has formed a crossover with the mainline, which is a bearish signal. However, it is also forming a bullish pennant pattern. Therefore, the pair is likely to continue rising as bulls aim to move above the 1.1800 resistance.
The GBP/USD pair spiked to an intraday high of 1.3015, which is the highest it has been since March this year. On the four-hour chart, the price is significantly higher than the 50-day and 100-day exponential moving averages. Also, the accumulation and distribution indicator has moved to the highest level since April. The RSI has remained above the overbought level of 70. Therefore, it seems like bears are in total control, which means that the price will continue to move higher. Still, there is a possibility of a pullback happening.
The DAX index declined sharply today as traders reacted to weak earnings from Germany. The index is trading at €12,477, which is the lowest it has been since July 10. The price is along the 50-day EMA but is also slightly above the 100-day EMA. More importantly, the index moved below the ascending trend line that is shown in white. Therefore, it seems like bears are now in charge, which will see the index continue falling to the 38.2% retracement level at €11,667.