Headlines

*Asian shares slip after BoJ maintains dovish tone

*ECB not unanimous on hike, didn’t want to signal future pace

*Apple dodges tech rout even with a holiday slowdown warning

*Amazon shares initially fell 20% after disappointing earnings, weak outlook

FX: USD bounced from a bottom near 109.50 as support at 109.29 held firm. The DXY had lost over 5% in five trading days. The 50-Day SMA sits just above at 110.88. The 10-year US Treasury yield fell below the key psychological 4% level. It is currently trading around its 21-day SMA at 3.96%.

EUR/USD gave back all of its gains from Wednesday as it fell through parity. The 100-day SMA at 1.0081 worked as resistance. Support is seen at 0.9952 and long-term trendline support. GBP/USD couldn’t hold above 1.16 and ended the session at 1.1565. USD/JPY dropped to a low at 145.10 before finishing at 146.29. The pair has bounced again this morning on the BoJ standing pat and is above 147.

AUD/USD and NZD/USD both slid with the former hitting resistance at 0.65. The 50-day SMA at 0.5865 capped gains in the kiwi. USD/CAD rebounded off 1.35 support. Gold struggled to push above the 21-day SMA at $1668 and has turned lower.  

Stocks: US equities againended a mixed bag. The Nasdaq and S&P 500 were dragged lower by tech with the former dropping 1.88% and the benchmark broader S&P falling 0.61%. Shares in Meta tumbled 24.6% after it reported another quarter of declining revenues. After the bell, Amazon reported weaker-than-forecast sales. But the Dow bucked the downward trend for a second day in a row and rose 0.61%.

Asian stocks traded mostly lower but off their worst levels after the mixed lead from the US.Tech stocks hurt the Hang Seng and ASX 200. The Nikkei drifted off its worst levels after the BoJ maintained its uber-dovish policy whilst upping inflation forecasts.

S&P 500 futures were hit again after the bell as Amazon tanked by around 20%. Apple earnings were better received and helped futures climb off their lows. European equity futures are weaker with cash markets down over 1% this morning.

Event Takeaway – “Dovish 75bp hike” from ECB

Even though the ECB hiked by a jumbo-sized 75bps yesterday, the bank importantly sent signals that it may slow the pace of rate rises. President Lagarde emphasised a meeting-by-meeting and data dependency approach going forward. There was also no discussion about ending the QE investment policy.

Money markets have lowered their expectations for more rate increases by around 25bps. The peak rate is now seen at around 2.5% from 2.75% before the meeting. There are roughly 55bps of tightening priced into the mid-December meeting. Speculation around an ECB pivot is now growing, even though we may get ECB hawks on the wires briefing against this idea. Will the ECB be more worried about growth than inflation come December, armed with their new forecasts?

Chart of the Day – Apple back to support

The recent string of US Big Tech earnings has not done much to help support the recent rally in US stocks. It was the turn of Meta to crater after it joined other megacap tech companies this week in warning that a slowdown was hitting its advertising business. But Apple has bucked this trend with a revenue beat driven by a new all-time high of active devices. This came even after a 10% negative y/y impact from the strong dollar.

The stock is very modestly in the green in the after-market having dropped over 3% yesterday. The recent rally in stocks saw prices break out of the descending bear channel from the August highs. But the 100-day SMA at $151.25 and the 50-day SMA at $152.17 has capped the upside. The 21-day SMA at $143.66 will be important having acted as resistance since late August.