Record highs set as US markets brace for earnings and Fed meeting

Big-cap tech hits $10 trillion, over half of Nasdaq 100

By Ahmed Azzam | @3zzamous | 30 January 2024

Market open
  • US records: Markets surge positively

  • Tech earnings awaited: Microsoft, Alphabet, AMD, Amazon, Apple, Meta earnings in focus

  • ECB rate talk: Speculation on ECB rate cuts

  • Fed meeting & jobs: Ongoing Federal Reserve meeting, attention on potential job vacancy decline

US markets reach new heights

In a promising start to the trading day, US markets displayed a slight upward trend, with the S&P500 achieving fresh record highs. Investors eagerly anticipate tomorrow's Federal Reserve rate meeting and today's release of earnings reports from tech giants Microsoft, Alphabet, and AMD, all scheduled after the closing bell. Additionally, the closely watched earnings releases from Amazon, Apple, and Meta are set for Thursday.

Tech giants' massive impact

The robust finish in the US market could potentially propel European markets to open at or near recent record highs later this morning. The recent surge in the share prices of prominent companies, particularly in the technology sector, has set a remarkably high bar. Notably, the combined market capitalization of Apple, Amazon, Alphabet, Meta Platforms, and Microsoft now exceeds $10 trillion, representing over 50% of the total market cap of the Nasdaq 100.

ECB faces rate cut speculations

As European markets brace for the day, attention is also directed toward economic indicators that might influence market expectations. Today's economic numbers from Europe have the potential to accelerate expectations of the first rate cut from the European Central Bank. While the ECB previously signaled a reluctance to cut rates before the summer, recent dissenting opinions challenge this consensus.

Portuguese ECB governing council member Mario Centeno's statement urging an earlier initiation of rate cuts, supported by similar sentiments from Slovakian member Peter Kazimir, reflects a growing dovish sentiment. Although Kazimir remains data-dependent and less certain about timing, there is a suggestion that June is a more plausible timeframe than April.

The focus on Europe intensifies with the release of Q4 GDP numbers from the continent's four largest economies, which may expedite the anticipated rate cut. Market expectations now lean towards an April meeting for the first rate cut, causing EUR/USD to dip below 1.0800 for the first time in six weeks. This potential shift challenges the ECB's steadfast assertion that Europe is not in a recession, despite recent disappointing PMI and economic indicators suggesting otherwise.

Fed meeting and job market watch

In addition to European developments, all eyes are on the Federal Reserve's ongoing rate meeting, set to conclude tomorrow. Today's JOLTS data, expected to reveal a modest decline in US job vacancies for December, adds another layer of anticipation. While the figure is projected to hover around 8.72 million, a decrease from November's 8.79 million, it remains well above pre-pandemic levels, signaling the ongoing recovery despite a potential three-year low.