Hurray for big tech
Even though IT stocks led the day’s advances thanks to Microsoft’s better-than-expected quarterly earnings, the market as a whole dipped on Wednesday. After posting quarterly earnings for the third quarter that were above Wall Street’s predictions, shares of Microsoft rose by 7% as its Azure cloud business stood up better than anticipated.
Nasdaq was the show stopper. On Wednesday, the tech-heavy index rose as positive earnings from Microsoft helped to overcome worries about the impact of increasing interest rates on the US economy. While the Dow Jones dropped 0.6%, the Nasdaq jumped 1%. The S&P 500 was down 0.3%.
Regional lender First Republic Bank saw its stock drop almost 50% on Tuesday, and then another 20% on Wednesday, hitting a new record low for the second day in a row. This disaster is riding on news that the US administration was refusing to jump to its rescue after the bank reported falling deposits earlier this week.
US dollar bears are back
After an optimistic Wall Street open on Wednesday eased the lingering recession worries, safe-haven demand for the US dollar fell. The euro shot up to fresh 2023 highs versus the greenback throughout the US session.
The uptick in the IT sector was largely welcomed since it indicated that businesses were maintaining their investments in internet advertising as a leading indicator of successful businesses.
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On Wednesday, the British pound gained ground against the US dollar, reaching a new high of 1.2515 as a result of growing concerns over the health of the US economy. The dollar has taken a beating this week from disappointing economic data, and today’s news that orders for core capital goods fell more than expected in March did not help matters.
The DXY index, which compares the value of the US dollar to that of six major competitors, hit a new low of 101.013. Inflation data from the RBA showed a decline, therefore the Aussie fell 0.45% against the greenback.
Risk off sentiment is crushing the oil
As recession worries for the world’s largest economy persisted, oil prices tumbled by about 4% on Wednesday, continuing the severe losses from the previous session. The data revealed that US crude stocks declined more than predicted.
Brent crude lost $3.08, or 3.8%, to end at $77.69 a barrel. WTI crude lost $2.77, or 3.6%, to end the day at $74.30 per barrel.
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After acting as a safe haven on Tuesday, gold broke back under the $2,000 level with more than a $6 decline. The yellow metal closed the day with 0.32% in the red. Silver futures, however, reversed Tuesday’s decline, and closed 0.22% above open, keeping a grip on levels above $25.
Gold futures 1D chart, source: tradingview.com