✅ Daily Market Analysis - 03 MAY 2024

٣ مايو

Economic events:

USA - Average Hourly Earnings (MoM) (Apr)
USA - Nonfarm Payrolls (Apr)
USA - Unemployment Rate (Apr)
USA - S&P Global Services PMI (Apr)
USA - ISM Non-Manufacturing PMI (Apr)
USA - ISM Non-Manufacturing Prices (Apr)

On Thursday, the S&P 500 concluded the trading session with a favorable uptick, notably buoyed by the tech sector's robust performance. Concurrently, investors remained engaged in thorough scrutiny of diverse corporate earnings, a prelude to the forthcoming influential monthly jobs report slated for release on Friday.

The Dow Jones Industrial Average surged by 323 points, reflecting a notable 0.9% uptick, while the S&P 500 exhibited a solid 1% advancement. Furthermore, the NASDAQ Composite demonstrated particularly strong momentum, ascending by 1.5% during the session.







NDX, SPX, and DJI indices daily chart

Earlier on Thursday, data released indicated that the number of Americans filing new claims for unemployment benefits remained stable at lower levels, signaling a relatively tight labor market.

Attention is now squarely focused on Friday's eagerly anticipated April jobs report, which is expected to unveil a probable increase of 243,000 jobs in nonfarm payrolls for April, following a rise of 303,000 in March.

This latest labor market information emerges in the aftermath of the Federal Reserve's decision on Wednesday to maintain interest rates at their current levels during its most recent policy meeting. Fed Chair Jerome Powell hinted that the next adjustment in interest rates was likely to be a reduction.

Furthermore, on Thursday, Apple Inc. (NASDAQ: AAPL) disclosed its fiscal second-quarter results, surpassing Wall Street's expectations. The company's enhanced performance in its critical China market, coupled with its announcement of its largest-ever stock buyback, propelled its shares upwards by more than 7% in after-hours trading.


Apple stock daily chart


For the quarter ending March 30, Apple posted earnings of $1.53 per share on revenue of $90.8 billion, surpassing analyst forecasts of $1.50 EPS on revenue of $90.32 billion.

Although sales in greater China, a crucial market for Apple, experienced an 8% decline to $16.37 billion, the decrease was less severe than anticipated. Analysts had projected revenue in China to decrease to $15.25 billion amid escalating competition from smartphone competitors in the region.

Meanwhile, the Australian Dollar extended its winning streak, marking the third consecutive session of gains on Friday. Bullish sentiment surrounding the Reserve Bank of Australia is underpinning the strength of the Aussie Dollar, thereby bolstering the AUD/USD pair.


AUD/USD daily chart

According to a recent survey conducted by Reuters among economists, it is widely anticipated that Australia's central bank will maintain its benchmark interest rate at 4.35% during its upcoming meeting next Tuesday. This would mark the fourth consecutive occasion of such a decision and could potentially extend this stance until the end of September. Analysts are projecting only a single interest rate cut throughout the year, with the latest domestic inflation figures, which exceeded expectations, fueling speculation that the Reserve Bank of Australia might delay any plans for rate reductions.

Meanwhile, the US Dollar Index continues to experience downward pressure in the wake of cautious remarks made by Jerome Powell, the Chair of the US Federal Reserve. Powell's dismissal of the possibility of further interest rate hikes came after the Fed's recent decision to maintain the existing interest rate range of 5.25% to 5.50%.


EUR/USD daily chart

The EUR/USD pair has sustained its upward trajectory for the third consecutive day on Friday, maintaining a position around 1.0730 during the Asian trading session. This movement is indicative of the Euro's resilience, particularly notable due to its sensitivity to shifts in risk sentiment. As investor appetite for risk stabilizes in anticipation of the impending US nonfarm payrolls report, the Euro is bolstered further.

In a virtual lecture delivered at Stanford University, European Central Bank Chief Economist Philip Lane provided insights into the prevailing economic landscape. Lane acknowledged the faster-than-expected decline in inflation as projected by the ECB but highlighted a lag in the transmission of policy effects. He emphasized the ECB's adaptive stance, underscoring its commitment to flexibility and data-driven decision-making.

Concurrently, the Japanese Yen has attracted buyers for the third consecutive day, reaching a nearly three-week high against the US Dollar during the Asian trading session. Speculation regarding potential intervention by Japan's financial authorities, the second such instance this week, has contributed to the JPY's strength.

Nevertheless, the sustainability of the JPY's bullish trend remains uncertain, particularly given the widening interest rate differential between the US and Japan. Additionally, the generally positive sentiment prevailing in equity markets may act as a counterforce to the safe-haven appeal of the JPY, potentially limiting downside pressure on the USD/JPY pair.

Attention has now shifted to the forthcoming release of US employment data for April, scheduled for later in the day. This data, including Average Hourly Earnings, nonfarm payrolls, and ISM Services PMI, is eagerly anticipated as it promises to provide valuable insights into the current state of the US economy.