Dubai: The record breaking rally in the Dow index may witness a bump-up this week.
About 155 companies including Facebook, Amazon, Coca-Cola, contributing to around $9 trillion in market capitalisation and 35 per cent of the index, are expected to announce their first quarter results.
“The focus again shifts back to US earnings season and the low profit estimates means that probability of disappointment is lower. This could mean the bull market in equities is likely to continue,” Vijay Valecha, Chief Market Analyst, Century Financial said. Data from Refinitiv show that 77 S&P 500 companies have reported with 77 per cent topping expectations, compared to 65 per cent beat rate since 1994.
However, analysts fear an earning recession in the coming quarters. They have downgraded expectations to a 2 per cent growth in earnings in the second quarter from 9.2 per cent in October last year.
The Dow Jones Industrial Average has continued its gaining momentum. The Dow index gained 1.59 per cent last week to hit a high of 26,602.42, just 400 points away from the peak of 26,951.81. The S&P 500 index is also 32 points lower than the peak of 2,940.91. The Dow index has gained 13.86 per cent so far in the year, while the S&P 500 index has accumulated 15.88 per cent in gains since January 1.
Oil may continue to stay in a range.
Last week, Brent crude traded slightly lower at $71.95 per barrel even as oil explorers curtailed activity in US fields for the first time this month.
West Texas Intermediate rose 0.38 per cent to be at $64. WTI has gained 15 per cent in the past three months.
“Oil is still trapped within its sideways trading range with prices oscillating around the $64 level. The break out of this pattern will show us what’s next for Oil’s direction so we will remain neutral in the short term,” Konstantinos Anthis, Head of Research at ADS Securities said. Oil has climbed about 40 per cent this year as the Organisation of Petroleum Exporting Countries and allied producers curbed output.
“The biggest obstacle for higher prices is the same factors that got them here in the first place. US sanctions against Iran and Venezuela could get tighter, but it could trigger an end to the Opec+ deal. Russia and other major producers have hinted that they could ramp up production,” Alfonso Esparza, Senior Market Analyst at OANDA said.
Gold prices touched $1,270.63 an ounce, the lowest level since Dec. 27 last week.
“Gold is hanging at a critical support at $1,275 level, a break below this level could open doors to the $1,250 level, and eventually to $1,230 level. To the upside, it first needs breaks above the 14 day SMA at the $1,290 level, then it could open up the doors to $1,300 levels,” Valecha said. Gold has shed 1.5 per cent so far in the year because of a stronger dollar.