Equities report: Big Tech’s failings drag stock markets lower

All three major US stock market indexes moved lower since the beginning of this week and are seemingly on track to end the current week in the reds. On a fundamental level, we discuss financial releases stemming from the US, Meta’s recent outages and finish off with Apple’s continued negative media coverage following its €1.8B antitrust fine by the EU Commission. In this equities report, we intend to have a look at these issues and conclude our report with a technical analysis of US100 Daily index price.

Financial releases stemming from the US

The US Employment data for February is due to be released on Friday. In particular, we are keeping a close eye on the Non-Farm Payrolls figure which is expected to come in at 190k versus last month’s figure of 353k, thus implying an easing of the US labour market. Furthermore, the Average Hourly earnings rate is expected to decelerate to 4.4% yoy, implying a reduction in the purchasing ability of consumers, which may translate to a further easing in inflationary pressures in the US economy. Yet the tick-down of the rate may prove immaterial.

The easing of the US employment market as implied before, should it materialise could add pressure on the Fed to ease its tight monetary policy and thus infer that the tight financial conditions may be over, which may allow for a resurgence in increased profitability and revenue margins for US companies. On the other hand, the US Unemployment rate is expected to remain at 3.7%, thus casting some doubt to the narrative that the labour market is easing and as such could allow some leeway for the Fed to maintain their hawkish narrative. Yet, the aforementioned releases appear to be in line with the Fed’s dual mandate of maximum employment and keeping inflation at 2%.

Meta platforms hit by outages

According to various media outlets, Meta (#FB) platforms Facebook and Instagram unexpectedly stopped working during yesterday’s American session for approximately two hours. Following the outage, Meta Communications officer Andy Stone stated on X that “a technical issue caused people to have difficulty accessing some of our services”, yet at the time of this report what the “technical issue” was, has not been clarified in an official capacity by Meta. The outage on the social media platforms appears to have negatively impacted Meta’s (#FB) stock price, during the day as the vast majority of the company’s revenue is derived from advertisement revenue via its social media platforms, according to a 2023 figure by Statista. As, such should further outages impact the company, it could weigh on their stock price, as concerns about their ad revenue may arise. However, we should note that for now the issue appears to have been an isolated incident with no further outages reported at the time of this report.

Apple (#AAPL) dealt a €1.8B blow by the EU

Apple (#AAPL) has been hit with a €1.8B antitrust fine for abusive app terms. The company has been found guilty by the EU Commission of “unfair trading conditions” imposed by Apple on its music streaming competitors such as Spotify. Initially, media outlets were reporting that Apple (#AAPL) was expected to be fined roughly around €500M, as the official announcement that the actual fine is €1.8 billion appears to have taken the market by surprise. The commission’s investigation discovered that Apple “bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services” and as the fine was meant to be “sufficient to deter Apple from repeating the present or a similar infringement; “. Following the announcement, it appears that the fine imposed by the EU Commission on Apple (#AAPL) has weighed on the company’s stock price, as it could reduce the company’s current and future revenue. Furthermore, the decision could also open the door for lawsuits to be filled by the “victims” against Apple in order to obtain damage compensation, which could further weigh on the company’s stock price.

Equities Technical Analysis

US100Cash Daily Chart

Support: 17500 (S1), 16700 (S2), 15800 (S3)

Resistance: 18300 (R1), 19000 (R2), 19700 (R3)

The NASDAQ Index (#US100Cash) on a technical level, appears to be moving in an upward fashion. We maintain a bullish outlook for the index and supporting our case is the upwards moving channel which was incepted on the 5    of January and as such could imply that the bulls may still be in control of the index. However, the bullish momentum may be waning as the RSI indicator below our chart appears to be near the reading of 50, implying a neutral market sentiment. Nonetheless, for our bullish outlook to continue, we would like to see a clear break above the 18300 (R1) resistance level, with the next possible target for the bulls being the 19000 (R2) resistance line. On the other hand, for a sideways bias, we would like to see the index break below our aforementioned upwards-moving channel, whilst remaining confined between the 17500 (S1) support level and the 18300 (R1) resistance line. Lastly, for a bearish outlook, we would like to see a clear break below the 17500 (S1) support level with the next possible target for the bears being the 16700 (S2) support line.

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