Tech gives up its advantage as fears return – North American Session Market Wrap for April 28

Log in to today's North American session Market wrap for April 28

Markets are moving into a new, delicate phase of geopolitical negotiations.

While a return to the diplomatic table is getting more realistic with concessions on both US and Iranian sides, the actual situation on the ground remains incredibly cloudy.

The physical Oil market is still feeling the heavy pressure – We are now nearing almost 60 days of conflict, and the continued closure of the Strait of Hormuz—the absolute biggest fear catalyst for global markets—is heavily dampening fundamentals.

After the Ceasefire announcements (more than two weeks ago!), US stock benchmarks exploded higher from a relative turn in sentiment, aggressively pricing in a peace trade that compounded into a euphoric run to all-time highs.

This massive bounce was highly magnified by options positioning and violent short-covering. Today, however, that honeymoon phase officially hit a wall; With WTI Crude oil aggressively retesting the $100 mark, traders are getting extremely anxious once again.

Adding massive fundamental weight to this geopolitical anxiety is the economic and corporate calendar:

With key mega-cap tech earnings getting released tomorrow, not to mention the looming FOMC policy decision, widespread profit-taking is quite logical.

Yet, looking at the tape, there seems to be a deeper kind of fatigue settling into the markets.

The tech sector is giving up its recent advantage, with Nasdaq at the bottom of US Indexes, and traders will need to see more concrete positive developments from here to avoid an inevitable, broader turn lower.

Risk assets clearly do not like the triple digits in Oil – The energy surge sparked general selloffs in equities around the globe, and even metals took a noticeable hit today as traders move to the sidelines, awaiting clarity on both earnings and the Strait of Hormuz.

Expect to see more of this if the Fed gets hawkish and/or results give a bad surprise.

Read More:

• Microsoft (MSFT) Earnings Preview – Will Q1 numbers confirm MSFT's price recovery?
• The Tech honeymoon is over ... right before earnings? – Dow Jones and US Stock Market Intraday Outlook
• Alphabet (GOOGL) Earnings Preview: Q1 earnings hinge on margins and the cloud

Tomorrow clearly is the most important session for Equity traders until the next Earnings season.

With immense profits already reported throughout last week, tomorrow welcomes the heavy money reporters, including 4 of the Mag 7s – Microsoft, Meta, Google and Amazon.

It is surprising to see that despite persistent rises in Commodities, Metals are the only major laggards of the session.

Profit-taking and position closing ahead of the FOMC is not a surprise – Tomorrow should see major volatility and this could be exaggerated depending on what happens with US and Iran

The US Dollar rallied back to the top of the FX board but movements remain surprisingly underwhelming in recent weeks.

Traders are awaiting for the key Bank of Canada and FOMC news to move the needle.

The next 24 hours will be welcome for volatility aficionados, with an absolute cascade of catalysts coming from all sides of the world.

Tonight starts the banquet with Australian CPI, testing recent AUD strength, to quickly move on to Europe, with German CPI and EU consumer sentiment.

Shortly later, the Bank of Canada will release their rate decisions and precede the FOMC in a huge Wednesday session.

And this doesn't even mention the huge numbers releasing after the close.

As always, make sure to follow talks around US-Iran negotiations that should happen over the weekend.

Safe Trades!

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