Spreads
Spreads
Spreads
Spreads
Spreads
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Investor worries over First Republic Bank overshadowed excitement around Big Tech earnings, causing the Dow Jones Industrial Average to lose more than 200 points. First Republic Bank slid nearly 30%, extending losses after falling almost 50% on Tuesday. The regional bank reported a 40% drop in deposits to $104.5 billion in the first quarter, reigniting concerns about the health of the banking system.
Despite some market participants growing hopeful that e-commerce giant Amazon’s cloud business could show strong revenue growth, Alphabet shares finished down 0.1% after trading up earlier in the day. However, Microsoft climbed more than 7% to trade at its highest point in over a year after beating Wall Street’s expectations on the top and bottom lines in its latest quarter. This earnings week saw the Technology Select Sector SPDR Fund (XLK) add about 1.5% as investors increased their exposure to Big Tech.
Data released Wednesday morning showed that demand for long-lasting goods like appliances and computers was higher than economists expected in March, in a sign that the economy is showing resilience.
On Wednesday, the overall market saw a decline of 0.38%, while the Information Technology sector experienced a price increase of 1.73%. The biggest price declines were seen in the Utilities sector with a drop of 2.37%, followed by Industrials at 1.87% and Health Care at 1.41%. The Financials sector had a decline of 0.96%, while the Consumer Staples and Real Estate sectors both experienced declines of around 0.7%. The Communication Services sector saw a price decline of 0.62%, while the Energy and Materials sectors experienced larger declines at 1.28% and 1.18%, respectively.
Major Pair Movement
The US dollar index dropped by 0.37% on Wednesday, reversing the previous day’s trend of safe-haven flows into the dollar and yen. The focus shifted back to expectations of H2 rate cuts by the Federal Reserve, contrasting with anticipated rate hikes by the European Central Bank (ECB) and the Bank of England (BoE). Market volatility remained high, reflecting uncertainty over global economic conditions, geopolitical tensions, and the regulatory response to the US banking crisis.
The EUR/USD pair rebounded from its early intraweek low of 1.0960 on EBS, reaching a 13-month peak at 1.1096. The Federal Reserve is expected to hike rates by 25bps next week, followed by two 25bp cuts by year-end, while the ECB is fully priced for a 25bp hike in its May 4 meeting, followed by two more 25bp hikes by September, with no real rate cuts until 2024. The UK’s inflation rate of 10.1% presents a challenge for the BoE, but the sterling’s uptrend seems less strong than the EUR/USD pair. Late equity market and oil weakness may trigger renewed demand for the yen and dollar, with high beta pairs such as AUD/USD vulnerable unless upcoming US data alleviates recession concerns.
Economic Data
| Currency | Data | Time (GMT + 8) | Forecast |
| USD | Advance Gross Domestic Product | 20:30 | 2.0% |
| USD | Unemployment Claims | 20:30 | 247K |
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