Investors await reports from major technology companies

Shares of Tesla Inc fell by 2% after the automaker raised its 2023 capital spending forecast to boost production. Microsoft Corp (MSFT), Alphabet (GOOGL) Inc, Amazon.com Inc (AMZN) and Meta Platforms Inc (META) will report this week. The rally in these stocks has supported Wall Street this year, so investors are concerned about whether growth can continue given the gloomy economic outlook. Traders are concerned that the rally could end as earnings begin to reflect the growing impact of high-interest rates and tightening economic conditions.

Germany, the largest economy in the Eurozone, managed to avoid a recession this winter. Business sentiment is improving, but manufacturing activity is still stagnant. This is a green flag for the ECB because the better the economy feels, the bolder the monetary policy can be tightened. ECB spokeswoman Schnabel said yesterday that a 50 bp rate hike at the May meeting is still an option. The deciding factor will be Eurozone GDP data this week and inflation data ahead of the May meeting.

UK property owners are becoming more cautious about raising prices. Rightmove stated that real estate sales have returned to pre-pandemic levels. March data showed that the number of homes for sale increased for the second month, and the average time to find a buyer for the property was reduced to 55 days.

The UK oil and gas industry is preparing for a new strike after the British Labor Union announced that more than a thousand workers would begin a two-day strike over wage problems. The 1,300 workers are expected to go on a 48-hour strike beginning Monday. This could disrupt oil and gas production for companies such as BP, CNRI, EnQuest, Harbour, Ithaca, Shell, TAQA and TotalEnergies.

Orders in China for overseas travel during the upcoming May Day holiday indicate a continued recovery in travel to Asian countries. This has increased the optimism of oil traders, who expect an increase in oil demand in Asia’s largest economy.

According to a leading defense think tank, global military spending hit a record high of $2.24 trillion in 2022 as Russia’s invasion of Ukraine triggered a surge in military spending in Europe and the United States. The largest increase in military spending was seen in Europe (+13%). Finland’s military spending increased by 36% and Lithuania’s by 27%. In April, Finland, whose border with Russia is about 1340 km long, became the 31st member of NATO. Sweden, which has avoided military alliances for more than 200 years, also wants to join NATO.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.10%, China’s FTSE China A50 (CHA50) decreased by 1.17% for the day, Hong Kong’s Hang Seng (HK50) ended the day down by 0.58%, India’s NIFTY 50 (IND50) gained 0.68%, and Australia’s S&P/ASX 200 (AU200) closed negative by 0.11%. Losses in US technology stocks spread to the Asian market, as most regional tech stocks are dependent on large US companies.

Bank of Japan Governor Kazuo Ueda said yesterday that the Bank of Japan should maintain monetary easing as trend inflation is still below 2%, and consumer inflation is likely to approach its peak and slow down in the coming months. It is becoming clear that the Bank of Japan will not change the monetary policy setting at its first meeting under the new governor.