Tesla and Netflix Drag Down Nasdaq and S&P, Dow Climbs Higher

Introduction

In this market update, we delve into the recent twists and turns that have affected major US stock indices, namely Nasdaq, S&P, and Dow Jones Industrial Average. We explore the impact of Tesla and Netflix’s quarterly reports on the market performance, analyze the significance of Johnson & Johnson’s positive outlook, and examine the market dynamics in the Asia session. Additionally, we shed light on key news events for the Japanese Yen (JPY), the Pound (GBP), and the oil market. Let’s dive into the exciting world of global trading and financial news!

Tesla and Netflix Earnings Impact

Tesla (TSLA.O) and Netflix, both tech giants, had a substantial impact on the stock market following the release of their quarterly reports. Tesla reported a decline in its second-quarter gross margins, plunging them to a four-year low. Adding to the pressure, CEO Elon Musk hinted at the possibility of further price reductions. Consequently, Tesla’s shares tumbled by 9.74%, marking the most significant drop since April 20.

The after-effects of Tesla’s disappointing report rippled through the market. The Dow Jones Industrial Average, driven by the optimistic earnings forecast of Johnson & Johnson, managed to extend its winning streak for the ninth consecutive day. However, the overall market sentiment suffered, causing the Nasdaq Composite to plummet by 2.05% and the S&P 500 to decline by 0.68%. This stark difference in performance highlighted the diversity and complexity of the global trading environment, presenting challenges and opportunities for investors.

Asia Session: Muted Trading Activity

During the Asia session, the dollar index (DXY) experienced relatively low volatility, fluctuating within a narrow range between 100.70 and 100.80. The lack of a significant catalyst stifled trading activity across most currency pairs, leaving investors waiting for a clear direction.

What Lies Ahead for Europe & US Sessions?

As the European day approaches, traders can expect the DXY to continue trading within a constrained range during the pre-market session. As the final trading day of the week approaches, trade activity may pick up throughout the Europe and US sessions, potentially bringing more movement and opportunities for market participants.

Japanese Yen (JPY) Expectations

Today’s key news event for the Japanese Yen revolves around the National Consumer Price Index (CPI). In recent months, inflation in Japan reached its highest level in January, maintaining an average between 3.1% and 3.5%. June’s figures showed both headline and core CPI coming in at 3.3% year on year, exceeding projections. While Japan’s inflation remains relatively strong, it faces the challenge of other major economies grappling with disinflationary trends.

Central Bank Notes:

The Bank of Japan plans to continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control to achieve a price stability target of 2%.

The central bank aims to keep the policy-rate balances’ negative interest rate at -0.1% and purchase Japanese government bonds to maintain 10-year JGB yields of around 0%.

A temporary deceleration in inflation is expected, followed by a moderate acceleration, supported by improvements in the output gap and inflation expectations.

Japan’s economy is projected to recover gradually.

The next Bank of Japan meeting is scheduled for 28 July 2023.

Next 24 Hours Bias: Medium Bullish

The Pound (GBP) in Focus

Today’s significant news event for the Pound is the Retail Sales report. The previous month saw retail sales in May increase by 0.3% month on month, and the forecast for June stands at 0.2%, signalling a third consecutive month of growth. However, the Pound faced some headwinds during the Asia session as the US dollar’s demand surged, fueled by disappointing jobless claims data, pushing the GBP/USD pair to a low of 1.2840. While the pair retraced higher later, there’s a possibility of a downward trend resumption during the day.

Central Bank Notes:

The Bank of England’s Monetary Policy Committee (MPC) voted to increase the Bank Rate by 0.5 percentage points to 5%.

Two MPC members preferred to maintain the Bank Rate at 4.5%.

CPI inflation is expected to significantly fall due to developments in energy prices.

The updated projections show that CPI inflation is expected to decline slightly above 1% at the two and three-year horizons, below the 2% target.

The next Bank of England meeting is scheduled for 3 August 2023.

Next 24 Hours Bias: Weak Bullish

Oil Market Dynamics

Oil prices remain supported despite weaker-than-expected reductions in US inventory levels. Investors look to Chinese stimulus measures to boost their economy, which in turn provides a cushion to crude oil prices. After touching a low of $74.50 per barrel overnight, WTI oil witnessed a significant rebound and currently moves toward the $76.50 level.

Next 24 Hours Bias: Medium Bullish

Global Market Overview

As the trading day unfolds in different regions, let’s take a brief look at the performance of key stock markets and commodities:

Asian Stock Markets:

• Nikkei: Down 0.46%
• Shanghai Composite: Down 0.04%
• Hang Seng: Up 0.62%
• ASX: Down 0.15%

European Equities:

• DAX Futures: Down 0.35%
• CAC 40: Up 0.25%
• FTSE: Up 0.01%

US Stock Market:

• Dow Jones: Up 0.47%
• S&P 500: Down 0.68%
• Nasdaq 100: Down 2.05%

Commodities:

• Gold: $1972.90 (+0.09%)
• Silver: $25.047 (+0.36%)
• Brent Oil: $80.34 (+0.88%)
• WTI Oil: $76.34 (+0.91%)

News & Data

Here are some key news events for the day:

• (GBP) Retail Sales (MoM) (Jun) – Actual: 0.7%, Forecast: 0.2%, Previous: 0.3% at 11:30
• (RUB) Interest Rate Decision (Jul) – Forecast: 8.00%, Previous: 7.50% at 16:00
• (CAD) Core Retail Sales (MoM) (May) – Forecast: 0.3%, Previous: 1.3% at 18:00
• (CAD) Retail Sales (MoM) (May) – Forecast: 0.5%, Previous: 1.1% at 18:00
• (JPY) National Core CPI (YoY) (Jun) – Actual: 3.3%, Forecast: 3.3%, Previous: 3.2% at 05:00

GBPUSD: Technical Analysis Points Towards a Sell Outlook

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.2885, suggesting a Sell sentiment.
• EMA 20: The 20-day EMA displays 1.2947, reinforcing a Sell indication.
• EMA 50: With a value of 1.2885, the 50-day EMA aligns with a Sell recommendation.

Simple Moving Average

• SMA 5: The 5-day SMA shows 1.2881, indicating a Sell sentiment.
• SMA 20: The 20-day SMA records 1.3013, supporting a Sell stance.
• SMA 50: The 50-day SMA stands at 1.2859, signifying a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, displays a reading of 38.63, suggesting a Sell signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative condition.

Resistance And Support Levels

• Resistance: The resistance level is identified at 1.2901.
• Support: The support level is observed at 1.2844.

Summary And Trade Suggestions

Based on the technical analysis, GBP/USD presents a Sell outlook. Traders may consider entering a short position, considering the indicators, moving averages, and oscillators.

Trade Suggestion:

• Entry Point: 1.2824
• Take Profit: 1.2751
• Stop Loss: 1.2882

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EURUSD: Technical Analysis Points Towards a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1.1153, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1.1162, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1.1077, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1.1159, reinforcing the Sell recommendation.
• SMA 20: With a value of 1.1203, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1.1038, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.48, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1.1147.
• Support: The support level is identified at 1.1116.

Summary And Trade Suggestions

In summary, the technical analysis of EURUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1.1093
• Take Profit: 1.1024
• Stop Loss: 1.1147

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AUDUSD: Technical Analysis Indicates a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 0.6775, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 0.6783, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 0.6752, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 0.6789, reinforcing the Sell recommendation.
• SMA 20: With a value of 0.6814, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 0.6623, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.46, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 0.6773.
• Support: The support level is identified at 0.6743.

Summary And Trade Suggestions

In summary, the technical analysis of AUDUSD points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 0.6727
• Take Profit: 0.6693
• Stop Loss: 0.6759

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USDJPY: Technical Analysis Points Towards a Buy Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 140.46, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 139.82, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 140.16, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 140.22, reinforcing the Buy recommendation.
• SMA 20: With a value of 139.08, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 141.52, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 65.53, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 141.99.
• Support: The support level is identified at 141.29.

Summary And Trade Suggestions

In summary, the technical analysis of USDJPY points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 142.28
• Take Profit: 143.17
• Stop Loss: 141.66

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HANG SENG: Technical Analysis Points Towards a Buy Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 19015.50, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 19021.46, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 19026.94, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 18994.01, reinforcing the Buy recommendation.
• SMA 20: With a value of 19134.26, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 18955.7, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 51.8, signifying a positive signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 19128.
• Support: The support level is identified at 18831.

Summary And Trade Suggestions

In summary, the technical analysis of Hang Seng points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 19244
• Take Profit: 19572
• Stop Loss: 19043

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BRENT CRUDE OIL: Technical Analysis Points Towards a Buy Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 79.96, indicating a Buy signal.
• EMA 20: The 20-day EMA is at 79.37, signalling a Buy sentiment.
• EMA 50: The 50-day EMA currently sits at 78.17, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 79.83, reinforcing the Buy recommendation.
• SMA 20: With a value of 79.67, the 20-day SMA also supports a Buy sentiment.
• SMA 50: The 50-day SMA registers at 77.77, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 61.42, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Positive stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 80.47.
• Support: The support level is identified at 79.84.

Summary And Trade Suggestions

In summary, the technical analysis of Brent Crude Oil points towards a Buy sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a long position.

Trade Suggestion:

• Entry Point: 80.72
• Take Profit: 81.47
• Stop Loss: 80.18

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GOLD: Technical Analysis Points Towards a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 1969.14, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 1962.83, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 1949.42, suggesting a Buy indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 1971.93, reinforcing the Sell recommendation.
• SMA 20: With a value of 1964.91, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 1938.72, affirming a Buy indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 52.85, signifying a Buy signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Negative stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 1972.26.
• Support: The support level is identified at 1961.61.

Summary And Trade Suggestions

In summary, the technical analysis of gold points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 1957.62
• Take Profit: 1945.20
• Stop Loss: 1967.38

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LITECOIN: Technical Analysis Points Towards a Sell Sentiment

Exponential Moving Average

• EMA 5: The 5-day EMA stands at 93.06, indicating a Sell signal.
• EMA 20: The 20-day EMA is at 93.92, signalling a Sell sentiment.
• EMA 50: The 50-day EMA currently sits at 95.00, suggesting a Sell indication.

Simple Moving Average

• SMA 5: The 5-day SMA shows a value of 93.11, reinforcing the Sell recommendation.
• SMA 20: With a value of 93.56, the 20-day SMA also supports a Sell sentiment.
• SMA 50: The 50-day SMA registers at 96.26, affirming a Sell indication.

RSI (Relative Strength Index)

The RSI, calculated over a 14-day period, stands at 44.57, signifying a Neutral signal.

Stochastic Oscillator

The %K value of the Stochastic Oscillator suggests a Neutral stance.

Resistance And Support Levels

• Resistance: The resistance level is observed at 93.89.
• Support: The support level is identified at 91.97.

Summary And Trade Suggestions

In summary, the technical analysis of Litecoin points towards a Sell sentiment. Considering the indicators, moving averages, and oscillators, it seems favourable for traders to enter a short position.

Trade Suggestion:

• Entry Point: 90.73
• Take Profit: 87.57
• Stop Loss: 93.21

Conclusion

As global markets continue to witness a mix of ups and downs, investors must carefully navigate the complexities and uncertainties to make well-informed decisions. Tesla and Netflix’s earnings, coupled with positive outlooks from Johnson & Johnson, have set the tone for the current market sentiment. Meanwhile, currencies like JPY and GBP face their unique challenges, while the oil market remains resilient amidst external factors. Stay tuned for further updates and developments in the financial landscape!

FAQs

What caused the decline in Nasdaq and S&P?

The decline in Nasdaq and S&P was primarily triggered by Tesla and Netflix’s quarterly reports, which disappointed investors and led to a sell-off in these tech-heavy indices.

What contributed to the Dow’s climb?

The Dow’s upward trajectory was supported by positive earnings from Johnson & Johnson, leading to a nine-day winning streak for the index.

Why was the trading activity muted in the Asia session?

The lack of a significant catalyst resulted in muted trading activity across most currency pairs during the Asia session.

How did the Japanese Yen perform in the latest CPI report?

In June, both the headline and core CPI for Japan came in at 3.3% year on year, surpassing projections and indicating relatively strong inflation.

What is the Bank of Japan’s outlook for the economy?

The Bank of Japan expects the economy to recover gradually, with inflation projected to accelerate moderately in the future.

What is the next major event for the Pound (GBP)?

The next significant event for the Pound is the Retail Sales report, which will indicate the retail sector’s performance.