Equities rally on earnings and investor optimism

Equity markets are off to a flying start after a raft of strong US corporate earnings reports boosted investor optimism, sending the world's leading indices well into positive territory. Everything from the Nasdaq Composite to Japan's Topix bounded higher and European bourses too and following suit.

Peter Garnry, Saxo's head of equity strategy, says that the Netflix share's 9% advance (on the back of a huge surge in its global subscriber base) was a key driver behind the overnight 1.8% gain in the Nasdaq 100. Among other releases, Goldman Sachs delivered a massive positive surprise with a 25% increase in EPS and a 15% surge in revenue, driven by a rebound in fixed income trading and debt underwriting. 

In FX, the US dollar outlook remains cloudy, says John J Hardy, Saxo's head of forex strategy. As has been typical in recent days, the greenback is studiously avoiding any definitive directional move. Elsewhere, we see USDCHF through its 200-day moving average and EURCHF is nearing the key 1.200 level.

Finally, in the fixed income market, the yield on the 10-year Treasury is stable at 2.83%, despite the rally in equities, says Althea Spinozzi, of Saxo's fixed income trading desk. But the ever-flattening yield curve scenario persists and the spread between 2-year and 10-year maturities has hit a record low of 43.54 – its lowest point since 2017.