Financial market research and analysis

Asian shares edged broadly lower overnight amid lingering concerns over the health of the global economy. Weak data from Germany in the previous session, South Korea’s economy unexpectedly contracting and the Japanese central bank pledging to keep interest rates at record lows until 2020 all served as signs of weak economies across the globe.

The move lower in Asia came after the S&P slipped back from Wednesday’s record highs on mixed earnings and falling oil prices. The Nasdaq also ended the session 0.2% lower after reaching another intraday record high and the Dow closed 59 points in the red.

Caterpillar dropped 3% despite posting better than expected earnings. Words of warning over its Chinese business from the CFO was sufficient to knock investor confidence. At&T dived 4% as first quarter revenue disappointed. On the plus side eBay and Domino's rolled out earnings that topped expectations.

After the close, earnings from the closely watched tech sector were encouraging, although investors are nervous that strong corporate data is not enough. Economic statistics across the globe also need to show more signs of life for the current rally to be sustained.  European bourses are pointing to a stronger start after the opening bell.

Microsoft’s cloud boosts earnings

Microsoft beat both sales and earnings expectations on Wednesday thanks to its expanding cloud services. Revenues rose 14% to $30.6 billion, whilst earnings rose 20% to $1.14; sales at the cloud product division jumped at impressive 73%. Cloud is clearly the way forward for Microsoft and demand for these services is expected to remain strong. Shares jumped 3% in aftermarket trading to hit a market cap of $1 trillion for the first time.

Facebook flies higher

Facebook was another crowd pleaser. There was a lot to like in Facebook’s results after the firm posted robust quarterly sales and signalled that it could be close to resolving the US privacy investigation. First quarter sales soared 26% in a clear sign that users and advertisers have not been put off by the continual scandals such as privacy breaches and fake news that Facebook has been facing. Facebook remains resilient thanks to its 2.7 billion average monthly users and its ability to allow advertisers to precisely target this sprawling audience with ads. Facebook shares jumped to $202.25 in after market trading after closing the session at $182.58.

Dollar is King

The dollar index is easing back in early trade on Thursday after rising to a high of 98.18 overnight – its highest level since May 2017. The USD/JPY surged to its strongest level this year overnight, whilst EUR/USD dropped to its lowest level since June 2017. Whilst there was no particular catalyst for this noticeable move higher, US stocks hovering around record highs and a dovish chorus from global central banks is clearly relevant. Investors will look towards US durable goods and US jobless claims for further clues as to the health of the US economy. Both indicators are expected to be supportive of the buck.

Opening calls

FTSE to open 11 points higher at 7482

DAX to open 7 points higher at 12320

CAC to open 4 point higher at 5580

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