Equities report: One of the worst IT outages in history

The bullish tendencies of S&P 500, Nasdaq and Dow Jones seem to have moved lower over the past week. In this report, we are to discuss primarily the fundamentals surrounding US stockmarkets but also the upcoming earnings releases and finish off the report with a technical analysis of US100’s daily chart.

One of the worst IT outages in history

This past Friday, an update by cyber security firm CrowdStrike left millions of Microsoft computers paralyzed in an event that has been dubbed the largest IT outage in history. In particular, Microsoft estimated that the outage affected roughly 8.5 million computers around the world, crippling critical infrastructure such as banks and hospitals in addition to airlines, with many still struggling to restore their systems. The global outage appears to have negatively impacted Microsoft’s (#MSFT) stock price, despite not being at fault for the issue. Overall, we would not be surprised to see Microsoft’s stock price claw back some of its losses.

Financial data released and what lies ahead

We highlight the US Core PCE rates for June which are set to be released this Friday. The US Core PCE rates are the Fed’s favourite tool for measuring inflationary pressures in the US economy. The current expectations by economists are for the Core PCE rate for June to come in at 2.5%, which would be lower than the prior rate of 2.6%, thus should the rate come in as expected, it may imply that inflationary pressures in the US economy are easing. In turn, easing inflationary pressures may increase pressure on the Fed to ease its restrictive monetary policy stance which could loosen the tight financial conditions surrounding the US economy. Such a scenario could provide support for the US stock markets. On the flip side, should the Core PCE rates unexpectedly rise, implying persistent or even an acceleration of inflationary pressures in the US economy, it may have the opposite effect, which in turn could weigh on US stock markets.

Tesla misses EPS estimates

Tesla announced their earnings for Q2 of 2024 on Tuesday. The company reported an earnings per share figure of $0.52 which was lower than the forecasted EPS of $0.61 in addition to announcing that their profit margins were sharply lower. The announcement by the company appears to have weighed on its stock price, despite beating revenue estimates. As such should the company fail to increase its profitability margins in the future, it may further weigh on its stock price. On the flip side, should the profit margins increase, it may provide support for the company’s stock price.

Deutsche Bank reports its first loss in four years

Deutsche Bank (#DeutscheBank) following its earnings announcement earlier on today, brought an end to a 15-quarter profit streak after posting a Net loss of €143 million. The ending of Deutsche Bank’s streak appears to have occurred after the bank set aside 1.3 billion euros as a provision for an investor lawsuit which in turn may scrap the bank’s plans for its stock buyback program. The announcement appears to have weighed on the bank’s stock price, despite the loss being “solely due to the legal provision” according to the bank’s CEO Christian (Per Reuters).

Earnings season releases

As for next week’s earnings, we make a start on Monday with McDonalds (#MCD), on Tuesday we get PayPal (#PYPL), Starbucks (#SBUX) and Airbus (#Airbus), on Wednesday we get Meta (#FB), HSBC (#HSBC) and Boeing (#BA) and lastly on Thursday we get Ferrari (#RACE) and Intel (#INTC). We are interested in seeing Boeing’s (#BA) earnings report and Intel’s (#INTC) in particular.

التحليل الفني

US100 Cash Daily Chart

Support: 19500 (S1), 18900 (S2), 18200 (S3)

Resistance: 19970 (R1), 20700 (R2), 21500 (R3)

The NASDAQ appears to be moving in a downwards fashion, after breaking below our upwards-moving trendline which was incepted on the 19th of April. We opt for a bearish outlook for the index and supporting our case is the RSI indicator below our chart which currently registers a figure near 40 implying a bearish market sentiment, in addition to the aforementioned break below of our upwards moving trendline. For our bearish outlook to continue we would require a clear break below the 19500 (S1) support level, with the next possible target for the bears being the 18900 (S2) support base. On the flip side, for a bullish outlook, we would require a clear break above the 19970 (R1) resistance level, with the next possible target for the bulls being the 20700 (R2) resistance ceiling. Lastly, for a sideways bias we would require the index to remain confined between the 19500 (S1) support level and the 19970 (R1) resistance line.

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