Stock rebound continues ahead of data and megacap tech earnings

• US announces tariff relief for US-built cars with 85% domestic content
• S&P 500 and Dow jones extend rally to six days, Tech earnings incoming  
• Dollar steadies on easing trade worries, month-end buying
• Oil prices fall to 2-week low on dampened demand outlook

FX: USD gave back gains printing an inside day in a relatively small ranged trading day. President Trump made some concessions on auto tariffs due to come into effect on Saturday. US JOLTS data showed a sharp drop in March but a drop in lay offs pointed to a relatively solid labour market. NFP is released on Friday. US Treasury Secretary Bessent said good progress is being on trade negotiations – interesting that we have heard a lot from him in recent days…and the market has calmed down.

EUR outperformed most of its peers, but it failed to cling onto 1.14. The power outages in Spain and Portugal looked to have been resolved. The ECB tone remains broadly dovish with one full quarter point rate cut priced in for its June meeting.

GBP pared its losses through the day with resistance at 1.3434. The UK is said to be nearing a trade deal of some kind with the US. There is little other UK news, with local elections on Thursday not going to be a market mover.

USD/JPY had a relatively quiet day with prices struggling to hold a bid. Japan was on holiday, so liquidity was inevitably thinner in the early session.

AUD again struggled around resistance just above 0.64, with the 200-day SMA above at 0.6464. CPI data is not expected to upset another RBA rate cut next month. CAD hovered around recent lows with little move after Carney’s slender election victory was confirmed. His priority will be renegotiating the USMCA deal.

US stocks: The S&P 500 gained 0.58% to settle at 5,560. The tech-laden Nasdaq finished up 0.71% at 19,565. The Dow closed 0.75% higher at 40,527. The VIX fell below 25 to just above 24, denoting calmer volatility ahead. It has spiked up above 60 on Monday April 7 when we saw forced liquidation in markets. Amazon and Alphabet lagged while Meta outperformed ahead of its results after the US closing bell tomorrow. Amazon confirmed it would not implement tariff surcharges. The Dow was boosted by Honeywell and Sherwin-Williams, which posted solid quarterly results. GM fell over 1% after it cancelled its share buyback. US consumer confidence fell to 86.0 from 93.9 in March.

Asian stocks: Futures are mixed. APAC stocks were mostly in the green but some of the gains were capped after mixed Wall Street performance. Japanese markets were closed for a holiday. The ASX 200 gained as energy, tech and resources sectors outperformed. The Hang Seng and Shanghai Comp were varied as the mainland lagged owing to uncertainty from the US-China trade war. US Treasury Secretary Bessent commented that it is up to China to de-escalate, while China’s Foreign Ministry reiterated its denial regarding a Trump-Xi call.

Gold traded lower as the recent whippy price action continued, though with prices still above $3,300.

Day Ahead – Australia CPI, Eurozone and US GDP, US Core PCE

It’s a packed data day – Australia trimmed mean inflation is set to print at 0.8%, which means an annual rate of 2.8% – within the RBA’s target band. Some economists believe there could be upside risks to this data, but a May rate cut is very likely, given heightened global uncertainty.

Consensus forecast eurozone growth at 0.2%, unchanged from the prior quarter. Hard data is stronger than soft data, with front-loading ahead of tariffs evident. But softer consumer confidence and the services sector could offset this through the quarter. The ECB is set to cut rates again at its next meeting in June.

US data comes thick and fast with GDP estimates wide. Expectations are for a 0.4% print in the first quarter, but with tariff and weather distortions likely to influence the figures. Robust consumption spending is widely forecast to be impacted at some point. The Fed’s favoured inflation gauge, core PCE, is seen tracking close to 0.1%. The annual number is predicted to fall to 2.6% from the prior 2.8%.

Chart of the Day – Nasdaq moves above 50% retrace

It’s a huge week for the tech sector and the Nasdaq, with four of the Magnificent 7 reporting earnings after the US close on Wednesday and Thursday. Microsoft and Meta release first, followed by Apple and Amazon. Three broad key themes include the tariff impact, cloud and AI spending and consumer and advertising resilience. The four megacaps represent nearly 25% of the broader S&P 500 index. For the Nasdaq, the index has rebounded to the midpoint of the year-to-date February high to recent low at 19,382. The 50-day SMA, now at 19,628, recently crossed down through the 200-day SMA (at 20,184). The major fib retracement level below (38.2%) is 18,712, with the upside level (61.8%) sitting at 20,052.

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