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Stock Futures Point to A Higher Open Ahead of ADP Data

Stock Futures Point to A Higher Open Ahead of ADP Data

U.S. and European futures are trading higher as traders feel optimistic about the U.S. economy and ongoing earnings seasons. Yesterday, we saw smashing earnings from Alphabet Advanced Micro Devices, and their earnings are fuelling the bull rally further today.

Economic Data 

Firstly, we have the OPEC meeting today, and traders are hoping for more supply from the OPEC cartel. However, OPEC will likely get only a slight increase in supply. Brent and Crude oil prices will remain highly volatile today, and the consensus is that we are highly likely to see the Brent oil price touching the $100 mark.

Later in the day, we also get to see the US ADP Non-Farm Employment data, which will drive the price action for the U.S. futures. It is widely anticipated that the employment data isn’t going to print an impressive reading today due to the adverse influence of Omicron and the fact that the Fed is withdrawing liquidity from the market. A highly disappointing number may bring the bears back in the battleground who are struggling against the bulls as U.S. equities are scoring decent gains for the past few days.

Earnings 

Alphabet’s stock is the one to watch today. Alphabet announced a sales increase of 32%, demonstrating that the company could resist the pandemic and inflationary pressures.

The results are the culmination of a year of outperformance. Last year, the stock increased by 65 per cent, outperforming all other Big Tech companies and more than double the S&P 500. Google’s advertising income for the quarter was $61.24 billion, up 33% from $46.2 billion in the same time last year.

The company’s cloud division also outperformed expectations, with sales increasing 45 per cent to $5.54 billion. The cloud operating loss was $890 million for the quarter, down from $1.14 billion the previous year. It did, however, increase from the third quarter, when the unit lost $644 million. Alphabets’ revenue for divisions, including self-driving vehicle business Waymo and life sciences subsidiary Verily, was $181 million, a modest decrease from the previous year. The Traffic Acquisition Costs (TAC) came in higher than the projected $13.43 billion.

The most important news was the stock spit news. This was long coming as we saw a similar move by Apple and Tesla a few years ago. The stock split does not affect the company’s fundamentals. It aims to reduce the price of each share, a move that firms frequently undertake when their stock is worth thousands of dollars.

The current split will give existing shareholders 19 shares of Alphabet for every share they hold. If the split were to take effect as of Tuesday’s closure, the price of each share would have fallen from $2,572.88 to $128.64.

Geopolitical Tensions

Investors are closing paying attention to geopolitical tensions, which tend to derail the current optimism among investors. President Putin has accused Western nations of not paying attention to key Russian security concerns. The U.S. has already confirmed that it is ready to take stringent measures, including strong sanctions against Russia if it attacks Ukraine.

Over 100,000 Russian troops remain stationed at different sites along Russia’s border with Ukraine; there are growing fears that Putin will permit his forces to attack Ukraine. Russia has rejected any plans for an invasion, but confidence in Russia has been low since it invaded Crimea from Ukraine in 2014 and backed pro-Russian rebels in eastern Ukraine.

Cryptocurrencies and Metaverse 

Bitcoin bulls feel a bit more optimistic as the price challenged the 39K price level and inched closer to the 40K price mark yesterday. Those who do not believe in cryptocurrency certainly look hard at the Metaverse space. Sales of real estate in the metaverse surpassed $500 million last year, and it will be no surprise if these numbers will increase four to five times this year. Although we had a poor start for cryptos this year, the real estate sales in January this year were ten times more than last year.

Asian Markets 

Asian equities surged in response to a recovery in U.S. markets, fuelled by a positive outlook for corporate profits and indications that Federal Reserve members prefer gradual monetary policy tightening. Equities climbed in Japan and Australia, only a few Asian markets were open due to the Lunar New Year break. Treasuries in the United States were barely changed, while the dollar index fell.