Two trades to watch: Nasdaq, HSBC

Nasdaq edges lower with Microsoft and Alphabet earnings in focus

After a weak start yesterday, the Nasdaq managed to finish the day 1.3% higher, and futures are rising again today.

Yesterday, the index was in focus as Elon Musk reached an agreement to buy Twitter for $44 billion in an apparent U-turn by the board.

US tech earnings begin in earnest today with the release of results from Microsoft and Alphabet. Big tech is expected to see growth deteriorate in 2022 amid rising inflation, a higher interest rate environment, and ongoing supply chain disruption. However, Microsoft is an exception and is forecast to deliver record growth; even so, the share price has underperformed.

Google parent Alphabet is expected to report EPS of $25.63 on revenue of $68.13 billion.

MSTF is expected to report EPS of $2.18 on revenue of $49.03 billion.

The performance and outlook for these two tech giants will be key is deciding where the tech heavy Nasdaq goes from here.

Where next for the Nasdaq?

After facing rejection at 15260, mildly above the 200 SMA, the price fell lower. The falling below the 50 SMA combined with the bearish RSI keeps sellers optimistic about further downside.

The price found a low yesterday of 13180, which can now be considered the near-term support, with a break below here opening the door to 12950, the 2022 low.

Buyers will be looking for a move over 13750, a level that has offered support and resistance on several occasions across this year. A move above here exposes the 50 sma at 14140, which could lead to the creation of a higher high and lift the price towards 14650.

HSBC falls as profits tumble

Europe’s largest bank reported a 27% fall in pre-tax profits in the first three months of this year to $4.2 billion, down from $5.78 billion a year earlier. The results were, in fact, ahead of forecasts of $5.72 billion.

While stronger lending and personal banking operations helped boost earnings, a rise in expected credit loss to $600 million, on the back of the fallout from the Russian war and China’s real estate woes, hit earnings, particularly when compared to last year when the bank unlocked ECL to the tune of $400 million.

HSBC disappointed investors by removing the prospect of further buyback this year, blaming the volatility in some investments.

The bank, which makes around 60% of its profits from Asia, faces plenty of headwinds with COVUD cases and lockdowns threatening growth in Asia while surging inflation and higher interest rates threaten to slow global growth.

Where next for HSBC share price?

The HSBC share ran into resistance at 530p before falling lower in recent sessions. The share price trades around 8% over the past week.

The share price has fallen through its 50 sma, which along with the bearish RSI suggests that there could be more downside to come.

For now, the price is testing support at the 100 sma, a break below here is needed to bring horizontal support at 475 into focus. A break below here could open the door to 436p the 2022 low.

Should the 100 sma support hold, buyers will look towards 500p the early January high, and yesterday’s low as the next level of resistance before exposing the 50 sma at 510p.