NAS100 Thrives on Timid Fed & Meta’s Year of Efficiency
NAS100 Analysis
The US Federal Reserve further moderated its pace of tightening on Wednesday, producing a small 25 basis points rate increase. It maintained the guidance for "ongoing increases", with Chair Powell noting that policy is "not yet in a sufficiently restrictive" setting and talking about "a couple of more rate hikes". [1]
However, markets are still pricing just one more similar move, as CME's FedWatch Tool continues to project rates to peak at 4.75-5.00%, with room for cuts towards the end of the year [2]. Even though Mr Powell maintained his hawkish stance, he was not forceful enough.
Despite initial two-way action, the frail pushback against market expectations for a pivot, sent NAS100 higher on Wednesday and stays on the front foot, also helped by the positive reaction to the overnight results of social media giant Meta Platforms.
This was a good start to this week's Big Tech Earnings, with Apple, Amazon and Alphabet reporting today after the close. Meta Platforms announced a $40 billion share buyback and lowered 2023 costs guidance by around $5 billion. Furthermore, CEO Mark Zuckerberg dubbed 2023 the "Year of Efficiency", as the troubled firm will focus on becoming "stronger and more nimble". [3]
Markets liked this messaging, since they send the stock much higher in today's pre-market, but the firm's financial left much to be desired. Q4 Revenues of $32.165 billion marked a decline over a year ago, while the Reality Labs segments – responsible for delivering the Metaverse- operated at a loss of nearly $14 billion in 2022.
NAS100 extends its gains to new 4+ month highs and the fifth straight week, after its best month since July. This brings the September highs in its croshairs (12,883-91), although it may be early to talk about a broader advance beyond 13,207.
From a technical prospective the move is overextended, with the Relative Strength Index (RSI) at the most overbought levels in over a year. A pullback to the 12K mark would not be surprising given these conditions, but a significant shift in sentiment would be required for the key for the EMA200 to be breached.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 01 Feb 2023 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20230201.htm | |
| Retrieved 01 Feb 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html | |
| Retrieved 03 Oct 2023 https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4/Meta-12.31.2022-Exhibit-99.1-FINAL.pdf |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.