Positive quarterly profits support market sentiment

Risk appetite puts pressure on the US dollar

By Raed Alkhedr | @raedalkhedr | 3 July 2023

  • A state of optimism dominates the markets following positive quarterly profits

  • European stocks witnessed significant increases during the trading session

  • The US dollar retreated once again after the release of positive economic data from China

Bank of America announces better-than-expected profits

Bank of America announced on Tuesday its first-quarter profits, which exceeded expectations as the US Federal Reserve continued to raise interest rates. The earnings per share were $0.94, compared to expectations of $0.81, and the bank's revenues reached $26.3 billion, up from $24.53 billion in the third quarter.

The bank's CEO confirmed that the sector's performance was strong during the specified period, with the bank seeking to strengthen its relationship with its customers and its commitment to providing a stable environment in changing economic conditions.

European stocks rise after positive quarterly profits

European stocks witnessed significant increases during today's trading session due to the optimism that dominated investors. Strong economic data in China and positive quarterly profits for many companies, such as Johnson & Johnson, helped to overcome concerns arising from recent strong interest rate policies implemented by central banks.

J&J, whose financial results are a leading indicator for many health companies, reported that its sales in the first quarter grew by 5.6% compared to the same quarter last year. The company's earnings per share reached $2.68, while revenues increased from $23.67 billion to $24.75 billion. These positive results helped to drive up the overall optimism in the European stock market.

Selling pressure dominates the US dollar once again

The US dollar witnessed significant declines during today's trading session as investors' risk appetite improved after positive economic data was released from China this morning. The data showed a 4.5% year-on-year increase in China's gross domestic product during the first quarter of 2023, which helped to boost market sentiment.

As a result, the US dollar index fell by 0.37% to levels of 101.70. The decline in the dollar supported the Japanese yen, with the USD/JPY pair falling again to levels of 133.00, while the GBP/USD pair rose to levels of 1.2440. This selling pressure on the US dollar reflects the ongoing impact of positive economic developments in China on global currency markets.