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Disappointing earnings season

Disappointing earnings season

Last Friday, the indices experienced one of the biggest falls in recent history

The week ended without the markets recovering or at least stopping the sell spiral. Unlike the earnings figures published in the third quarter, the latest readings are showing disappointing results in some big banks, mainly due to the increase in salary costs. Technology stocks were also in focus, as is the case with Netflix, which revealed that it is expecting a substantial decrease in the number of subscribers this year. These numbers had previously skyrocketed, favored by the confinement measures during the pandemic.

We will know the figures published by other large companies such as IBM, today, or Microsoft and Tesla in the next few days.

This Wednesday's Federal Reserve meeting is not helping improve the market's mood either. Expectations are growing that the FED will announce some further steps towards tighter monetary policy. An early end to tapering that would allow it to start rate hikes as soon as next month or acceleration in shrinking the Fed's balance sheet are touted.

The yield on US treasury bonds fell. This is due to flows of bond purchases in search of safe-haven assets driven by the escalation of geopolitical tension in Ukraine. The market is increasingly concerned about a potential war escalation in Eastern Europe with serious consequences for the global economy. In case diplomacy is not successful, the sanctions with which Russia is threatened would have a devastating effect not only be for Russia, but for the commercial relations of this country with Europe and especially for the natural gas supply, in these times when one of the main problems affecting the economy is the unprecedented rise in energy prices.

The most affected index by the falls was Nasdaq, with losses of 2.51% on the day.

Technically, it has closed below the 14,500 area, so the upward trend of the index can be considered over, and the way is open for more losses with the next reference level around 14,050.

GráficoDescripción generada automáticamente

Oil

Oil was pushed higher due to an increase in purchases for storage and reserves as a preventive measure against a potential escalation of tension with Russia. Oil recently broke above the highs reached in October 2021. However, it is correcting lower with daily RSIs at overbought levels in the last two days. Everything will depend on the evolution of the conflict in Ukraine. If the situation eases, crude oil should correct deeper, leaving a potential daily double top around the area of $85-$87 per barrel.

Interfaz de usuario gráfica, Gráfico, Gráfico de líneasDescripción generada automáticamente

Sources: Bloomberg.com, reuters.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

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