Market Overview

28 April 2022

Market Winners Will Not Be Known Before the Champions League Finals

The mostly strong corporate reports seem to be trying to launch a counterattack against the red sea of stock index losses. More than 150 companies from the S&P 500 broad market index have delivered their quarterly earnings reports, and more than 80% of them beat consensus profit expectations of analyst polls. Yet even those incredible financial achievements have so far only partially allowed for the retrieval of the initial defeat score in quote price moves, which now resemble the scenarios from recent Champions League matches that were played this week between the Spanish and English clubs.

The results of the miraculous efforts of the famous Madrid and Castellon clubs were not sufficient against the pressure of Manchester City and Liverpool, which both had undisputable advantages, at least in the first semi-final matches. Real top-class players, Karim Benzema, Luka Modrić, and Vinicius Junior managed to recover three goals out of four, while Unai Emery's zealous team were defeated by the red team. However, the wave of pressure from the grandees of the Premier League was much stronger, but only the matches on May 3-4 seem to promise blue skies over the European football battles and the global market battle of the greens with the reds, when the mysteries of the second leg matches and the Federal Reserve (Fed) meeting will be exposed almost simultaneously.

Yet, the common market herd and even well experienced wizards, including fund managers and gurus, are too scared to bet on any positive outcome as the ideas of possible slowdowns or even stagflation threats are amplified by high uncertainty in the afterbite of the Fed's nine-trillion Dollar balance sheet reduction, as well as the magnitude of the nearest interest hike. There is too much speculation around the chances of a decline in corporate profits, even for those companies that felt sustainable in the opening quarter of the year, and an adequate explanation from the Fed could remove at least some of those repeated objections.

In the meantime, the audience of the stock market arenas jumped up in ecstasy when Microsoft and Visa "score a goal" for the greens, helping themselves to recover by 4.8% and 6.47% up respectively on Wednesday, which added at least a couple of percent to the composite Wall Street's indices. Later on the same market indicators were dragged down by the depressive Google-parent Alphabet and Boeing reports. It is remarkable that even Microsoft and Visa, that initially soared by 3-5%, lost their gains due to the overall sceptical sentiment in the market.

On Wednesday Facebook owner Meta announced that the number of daily active people on the platform amounted to 2.87 billion on average in March, while monthly active users reached 3.64 billion, with both figures increasing by 6% year-over-year leading to Meta quote's jumping by 17.3% on pre-market trading on Thursday. Advertisement impressions grew by 15% on an annual basis while the average price per ad declined by 8%, according to Meta Platforms CEO, which is another sign of a mixed attitude of global business to investment prospects.

Yes, Facebook's announcement seems to have had a positive impact on the depressive market mood, so that S&P 500 futures struggled to add about 1.5% in Asian and European hours on Thursday. This attitude is transmitted to major European indices in almost the same proportion, which may be seen as the first positive sign of the week. But the whole battle in investors' minds is ahead, as Apple and Amazon reports are coming soon, gasoline prices and other costs are still high as a kite, and the final verdict of the American and European regulators on interest rates is still clouded.



Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Lysakov Sergey
Market Focus
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