US futures
Dow futures -0.04%, S&P futures 0.12% & Nasdaq futures 0.02%
In Europe
FTSE 0.95% & DAX -1.1%
- Meta jumps, Tesla rises, Microsoft falls
- Fed leaves rates unchanged as expected
- USD falls to a 4-year low after Trump’s comments
- Oil jumps as US-Iran tensions rise
Fed leaves rates unchanged, Meta jumps 9%, Microsoft falls
U.S. Stocks are modestly higher, with the S&P 500 approaching 7,000 again, as investors take on risk despite mixed mega-cap earnings, tensions with Tehran, and slightly more hawkish signals from the Federal Reserve.
In the meeting yesterday, the Federal Reserve left interest rates unchanged 3.5% to 3.75% and signalled that there is no rush to cut rates further. Policymakers highlighted the improving economic outlook for the US, with economic activity expanding at a pace and some signs of stabilisation in the labour market. With this backdrop, the Fed will likely keep rates unchanged for longer.
Longer-term Treasury yields are nudging higher amid rising oil prices. Oil has jumped as Trump threatened Iran that it would face consequences if it did not agree on nuclear weapons isn't agreed soon.
Precious metals continue their impressive rally, with gold nearing $ 5,600 per oz and silver reaching $ 120 per oz. The rise in precious metals and oil is also being supported by the US dollar's decline to near a four-year low.
On the data front, U.S. jobless claims came in at 209K, down from 210K the previous week and missing forecasts of 205K. Recent jobless claims have remained low, suggesting the market keeps in its “low hire, low fire” phase.
Corporate news
Meta is rising 9% after the social media giant beat earnings and revenue expectations and impressed with its current quarter guidance. Meta posted Q4 EPS of $8.88 on revenue of $59.89 billion, ahead of expectations of $8.23 on revenue of $58.59 billion. Meta also guided for Q1 sales of $53.5 to $56.5 billion, ahead of analysts' expectations of $51.41 billion. While full-year 2026 CapEx was higher than expected, the solid revenue and profit beat helped ease investor concerns. The high spending comes as Meta aggressively spends on its AI infrastructure, including data centres to support its AI products.
Tesla is rising over 2% after posting better-than-expected Q4 results. The EV maker posted EPS of $0.50 on revenue of $24.9 billion, which was ahead of EPS expectations of $0.45 and $24.79 billion. However, Tesla's revenue for the year fell 3%, marking the first time on record that the company has reported an annual decline. Elon Musk said Tesla will end Model S & X production as it shifts toward robotics revenue, noting that the future isn't about cars but about robots and AI.
Microsoft is falling 7% on slowing Azure cloud growth and light margin guidance. While the tech giant beat consensus on the top and bottom line, cloud growth moderated, and capax was $37.5 billion, well ahead of the $34.3 billion expected. EPS was $4.14 versus $3.97 expected, and revenue came in at $81.27 billion versus $80.27 a billion expected.
S&P 500 forecast – technical analysis.
The S&P 500 extended its recovery from 6780, briefly peaking above 7000 before easing. Buyers will look to test the 7000 level again, with a rise above here looking probable over the coming sessions, bringing 7050 as the next logical target. Immediate support is at 6835, the 50 SMA and the rising trendline. A break below here and 6780 creates a lower low and opens the door to 6730.
FX markets – USD falls, EUR/USD jumps
The USD remains under pressure near a four-year low after the Federal Reserve provided limited support to the greenback. Concerns over Fed independence and policy uncertainty from the Trump administration are weighing on the USD.
AUDUSD is rising, outperforming its major peers, boosted by renewed optimism surrounding monetary policy in Australia. Hotter-than-expected inflation data has strengthened the case for an imminent RBA rate hike, potentially as soon as next week.
EUR/USD is rising above 1.1950, supported by improving economic sentiment in the eurozone. The European Commission's economic sentiment indicator rose to 98.2 in January, up from 97 in December, and inflation expectations have eased, although they remain above long-term averages.
Oil jumps as US-Iran tensions rise.
Oil prices are up for a third straight day, reaching a four-month peak of $65 a barrel amid escalating geopolitical tensions and a weaker U.S. dollar.
President Trump has sent an “armada” of warships towards the Middle East and warned Iran that time was running out to agree to a nuclear deal.
Iran produces 3.3 million barrels per day of oil and exports around 1.5 million barrels per day, making it the 4th-largest producer in OPEC. Concerns over military action in the region have raised fears that supply could be affected, thereby increasing the risk premium on oil prices.
Should Iran retaliate, the Strait of Hormuz will also be in focus, a clear choke point for oil, with 20 million barrels a day passing through it.
Should tensions de-escalate, oil prices could fall quickly as the risk premium evaporates.
However, it is also supporting oil prices as the weaker U.S. dollar, which trades around a four-year low, making oil USD-denominated commodities cheaper for buyers with foreign currencies.
