The market the day before
The session on April 25, the main American stock exchanges ended in the green zone. The S&P 500 rose 0.57% to 4,296 points, the Dow Jones rose 0.7%, the high-tech Nasdaq added 1.29%. Telecoms (+1.53%) and IT companies (+1.44%) showed the best dynamics. The energy sector was among the outsiders (-3.34%).
Company news
- PS Business Parks (PSB: +11.8%) will be acquired by BX for $7.6 billion in cash. Most likely, the deal will be closed in the third quarter.
- Match Group (MTCH: +6.7%) may become a potential takeover target for Meta (Meta Platforms Inc.'s activities on the sale of Facebook and Instagram products on the territory of the Russian Federation).
- Twitter (TWTR: +5.7%) confirmed the conclusion of a final agreement on the sale of the social network to Elon Musk for $44 billion.
We expect
Investors are concerned about new anti-bullying restrictions in China, which could worsen the situation with global logistics chains, as well as increase the acceleration of inflation and tightening monetary conditions. Quarantine in some areas of China slows down the delivery of goods by road and increases congestion in Chinese ports. As a result, there are growing fears that after the lifting of restrictions in China, queues at already very busy US ports will increase significantly, especially against the background of seasonal increased demand. In such a situation, policymakers will be forced to seek compromises, since disruptions in supply chains contribute to maintaining high inflation for a long time. Thus, according to a survey by the National Federation of Independent Business, in the current conditions, about 40% of small businesses in the United States intend to increase selling prices by 10% or more. This factor, combined with the tightening of the Fed's policy, the aggravation of the geopolitical situation and the deterioration of epidemic conditions in China, provokes talk of a recession.
- Trading on April 26 on the sites of Southeast Asia ended in different directions. China's CSI 300 lost 0.81%, Hong Kong's Hang Seng gained 0.15%, and Japan's Nikkei 225 rose 0.41%. EuroStoxx 50 has been up 0.6% since the opening of the session.
- Brent crude futures are quoted at $101.6 per barrel. Gold is trading at $1900.6 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 4250-4340 points.
Macrostatistics
The following releases will be published today:
- data on durable goods orders (forecast: 1.1%, previous value: -2.1%);
- consumer confidence index (forecast: 108.5, previous value: 107.2);
- data on home sales in the primary market (forecast: 765 thousand, previous value: 772 thousand).
Sentiment Index
The sentiment index rose one point to 44.
Technical picture
The S&P 500 bounced back from the Fibonacci level. The "hammer" candle model may signal a short-term weakening of the bears' forces, but the RSI and MACD indicators do not confirm this yet. The broad market index may continue to decline to March lows if cautious investor sentiment persists. The nearest support is in the range of 4200-4250 points. In the event of a breakdown of this level, the benchmark may continue its corrective movement within the descending channel.
Reports
Alphabet's (GOOGL) quarterly report will be released today. The general market forecast assumes an increase in the corporation's revenue by 23% YoY, to $68 billion. If the actual result coincides with the expected one, its growth will be minimal since the third quarter of 2020. Many beneficiaries of the pandemic are already noting the normalization of the dynamics of financial indicators. Alphabet's revenue in 2022 may grow by 17-18% YoY, while in 2021 it increased by 41%. The corresponding expectations have already been taken into account in the GOOGL quotes, so they do not pose a risk. Investors will pay the main attention to the income from online advertising. Snap management's comments last week indicated that the online advertising market experienced a sharp short-term slowdown at the end of February, so we believe that Alphabet's revenue will be at the consensus level, although in previous quarters its growth was noticeably ahead of expectations. The dynamics of the shares will be determined by management statements based on the results of the publication, including with regard to the impact of macroeconomic factors on the business.