- Yesterday’s Wall Street session ended in a mixed and cautious mood, as investors positioned themselves ahead of earnings releases from the largest “Mag7” tech companies after the close. The S&P 500 posted a marginal decline, the Nasdaq edged slightly higher, while the Dow Jones fell by nearly 0.6%.
- Options markets were pricing in extremely large post-earnings moves for Alphabet, Microsoft and Meta, potentially implying around $1 trillion in combined market cap swings, driven by expectations of high volatility in AI and cloud-related results. Focus was on Azure growth at Microsoft, AI spending at Meta, and whether Google could sustain its momentum in search while accelerating its cloud expansion.
- Alphabet delivered strong results, with artificial intelligence and Google Cloud playing a key role as the cloud segment increasingly drives group performance. The company reported around $109.9 billion in revenue and a significant improvement in operating profit, confirming that AI investments are translating into stronger efficiency and earnings.
- Microsoft also posted very solid results, supported by strong profitability and robust cash flow generation, which helped ease earlier concerns about cloud growth momentum and AI-related spending. The company reaffirmed its ability to scale Azure while maintaining strong overall earnings power.
- Amazon reported solid results driven by growth in e-commerce, AWS cloud services, and advertising, but market reaction remained cautious due to conservative forward guidance and rising costs linked to AI and infrastructure investments, which outweighed the strong headline figures.
- Meta delivered strong earnings, with advertising demand remaining the main growth driver alongside improving platform efficiency and a growing role of AI-related investments and tools. Despite beating expectations, market reaction was muted as investors focused more on the rising costs of scaling artificial intelligence.
- The Fed kept interest rates unchanged, confirming a cautious monetary policy stance and no immediate pressure to begin easing. The meeting also highlighted growing divergence among FOMC members, suggesting no clear consensus on the future policy path and a more data-dependent outlook. Jerome Powell also indicated that after his term as Chair ends, he will remain at the Fed as a Governor, ensuring continuity but in a less prominent role.
- Donald Trump stated that it is a good time for the Fed to cut interest rates, arguing that economic conditions and cost pressures justify monetary easing, while criticising the central bank for being overly restrictive.
- He also said he would not lift the naval blockade of the region unless Iran agrees to a nuclear deal, maintaining strong economic and military pressure and tying any de-escalation to concessions from Tehran. At the same time, he proposed forming an international coalition aimed at reopening the Strait of Hormuz and securing freedom of navigation.
- As a result of stalled peace talks and lack of progress in negotiations, Brent crude oil surged above $110 per barrel.
- Chinese PMI data showed an uneven recovery, with external demand remaining the main driver of growth as private manufacturing PMI rose to 52.2, the highest since 2020, and official manufacturing PMI stayed slightly above 50. However, domestic demand remains weak, as services PMI fell to 49.4, signalling contraction and highlighting reliance on exports rather than internal consumption.
- Japan’s March data painted a mixed picture, with industrial production falling 0.5% month-on-month versus expectations of a 1% increase, while retail sales surprised positively with a 1.7% year-on-year gain, indicating resilient consumer demand despite manufacturing weakness.
- In currency markets, the Japanese yen continued to weaken, with USDJPY breaking above the psychologically important 160 level and remaining elevated above it.
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