This bull market started with tech and it might die with tech.

Amazon shares surged higher today on strong cloud revenue but Apple posted slowing sales, including of the iPhone and that has led to a heavy round of profit taking. Shares are down 4.6%.

The entire summer run-up in Apple has now been erased and the fear is that we could get a deeper retracement, perhaps to the 38.2% or 50% levels of the one-way trade that started at the turn of the year. That would imply a further 7-12% decline.

Here is a sense of how revenues have trended in the past year, despite an inflationary environment:

• Rev.: $81.8B, -1% y/y
• iPhone: $39.7B, -2% y/y
• Mac: $6.8B, -7% y/y
• iPad: $5.8B, -20% y/y
• Services: $21.2B, +8% y/y

The bull case for Apple has been rising services fees but if you’re selling less hardware, then there isn’t a platform for people to buy the services on.

The decline in Apple shares has contributed to a turnaround in the broader market with the S&P 500 now down 21 points to 4480 from a high of 4540. That’s a 1% reversal.

This article was written by Adam Button at www.forexlive.com.

The US dollar has recovered some of the selling after non-farm payrolls as equities give back gains. Notably, Treasury yields remain near the lows of the day, led by a 13 bps fall in 7-year notes.

The dollar has been dragged around by fixed income this week but its stocks behind this move. The S&P 500 is now up just 4 points on the day at 4506 from a high of 4540.

The dollar bounce is strongest against commodity currencies but the euro is starting to move as well.

This article was written by Adam Button at www.forexlive.com.

The meeting was scheduled for 1130 GMT, so the timing does tie in to that. But with no policy change discussions on the agenda, it shouldn’t be one to impact oil prices today.

This article was written by Justin Low at www.forexlive.com.

Here’s a snapshot of the equities space at the moment:

• Eurostoxx +0.1%
• Germany DAX -0.3%
• France CAC 40 +0.1%
• UK FTSE -0.3%
• S&P 500 futures +0.1%
• Nasdaq futures +0.3%
• Dow futures flat

That’s hardly indicative of a more positive risk sentiment, the one that we saw from Asia and early trading in Europe. There are more tentative tones now and if the US jobs numbers later do come in hot, we might just see equities make it four red days in a row to start August trading.

This article was written by Justin Low at www.forexlive.com.

Last
week, the Fed hiked the interest rates by
25 bps as widely expected keeping everything unchanged. Fed Chair Powell
reiterated their data dependency and kept all the options on the table. The
economic data since the FOMC meeting has been pretty solid and the labour
market indicators keep on running hot. This week we got a selloff that began
with the rating agency Fitch downgrading US credit
rating to AA+ from AAA and then extended further as the US ADP report
came in hot again.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite is experiencing a deeper correction as it struggles to extend to the
14649 high. The price currently sits at the previous resistance turned support, but the
sellers may be targeting the upward trendline where
the buyers should step in more aggressively.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD on the
last leg higher which is generally a sign of weakening momentum often followed
by pullbacks or reversals. The buyers should pile in here around the 13885 support where we
have also the confluence with the
50% Fibonacci retracement. The
sellers, on the other hand, should pile in more aggressively if the price
breaks lower and target the trendline first, and eventually the 13174 support.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current bullish setup with the price that may even print a little
inverted head and shoulders
pattern right at the support. What happens here will probably lead to a big
move afterwards, so buyers and sellers will watch this level carefully after
the NFP report today.

Upcoming
Events

Today, all eyes will be on the US NFP
report. The Fed will see another NFP report before the next meeting so this one
won’t decide what they are going to do but it can change market expectations,
nonetheless. It’s hard to see what the market is going to do with this data,
but a strong report should weigh on the Nasdaq Composite as the market would
expect the Fed to remain hawkish and weak readings are likely to cause a
selloff as the market may start to fear a recession on the horizon. The
technicals here should be more helpful to manage risk and position in line with
the flow.

This article was written by FL Contributors at www.forexlive.com.

Headlines:

• Not much appetite among major currencies for now, awaiting the US jobs report
• Underlying inflation has likely peaked in 1H 2023 – ECB
• Japan banking regulator says sees no big impact from BOJ shift for now
• Eurozone June retail sales -0.3% vs +0.2% m/m expected
• Germany June industrial orders +7.0% vs -2.0% m/m expected
• Germany July construction PMI 41.0 vs 41.4 prior
• UK July construction PMI 51.7 vs 48.0 expected
• BNP Paribas lowers BOE terminal rate forecast to 5.50%

Markets:

• USD leads, CHF lags on the day
• European equities mixed; S&P 500 futures up 0.2%
• US 10-year yields flat at 4.192%
• Gold down 0.1% to $1,931.15
• WTI crude up 0.6% to $82.05
• Bitcoin down 0.5% to $29,132

It was a bit of a sideways session as markets are waiting on the US non-farm payrolls later today.

Major currencies saw little appetite as the dollar keeps steady but mostly little changed overall. Meanwhile, equities were optimistic early on as tech shares were buoyed by Amazon’s earnings beat. But gains were tempered during the session, with European indices now trading close to flat levels while US futures are just slightly higher.

Treasury yields are also little changed in general as traders are waiting on the US jobs report later to see if they would want to pile on to the selling that we have seen so far this week in bonds.

The non-farm payrolls later is the first key hurdle highlighted by Powell at the FOMC meeting last week. As such, this could just be marking the calm before the storm later especially if the numbers continue to run hot.

This article was written by Justin Low at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.

• There are two substantial base effects that will bring inflation down this year
• The economy has been much more resilient, that is good news
• We were sitting here in November saying it was going to be a long recession
• And that has not transpired
• Unemployment has remained historically very low

He’s not wrong in the sense that at the turn of the year, it was all doom and gloom for the UK economy and things have definitely held up better than anticipated. But what will be worrying is that we are now seeing a downturn in the economy and a lot of the same issues have not gone away or abated significantly. Inflation is still high (especially services inflation), wages are running hot, and the cost-of-living crisis is still ongoing.

This article was written by Justin Low at www.forexlive.com.

• There is more than one path for rates that may deliver inflation back to target
• We will judge what is most appropriate based on evidence
• We have to balance the risks; there are risks both ways
• Economic projections have weakened since May

He doesn’t want to give much away but he’s not explicitly pushing back against the current market pricing either. I would think that all else being equal, another rate hike in September is likely but anything after will have to be reassessed. In a sense, the BOE is just one meeting behind falling in line with where the Fed and ECB are right now.

This article was written by Justin Low at www.forexlive.com.

• Food inflation appears to have peaked
• We expect inflation to fall to around 5% in October
• Services inflation brings „unwelcome news“ since May though

He is still just reading from the statement mostly for now. We’ll get to the Q&A later for the more interesting bits and pieces.

This article was written by Justin Low at www.forexlive.com.