US stocks jittery ahead of the Fed; Google hit with EU fine

Summary:

  • Stock indices pull back before key meeting

  • US30 prints shooting star; US500 near breakout level (2824)

  • Google shares look through large EU fine

 

Stock markets have been in a bullish mood in recent sessions, with the expectation of  further central bank supporting driving indices on both sides of the Atlantic up to their highest level of the year yesterday. However, reports not long after the European close on Tuesday that suggest the US and China trade talks may not be going as well as could be hoped caused a swift swoon, and led to the major US indices ending the day in the red.   

The US30 has been a laggard amongst the large-caps in the US in recent weeks and the market printed a shooting star on D1 yesterday. The market remains below prior resistance around 26250. Source: xStation

 

The pullback has been minimal so far, but it is worth noting that the markets are starting to look a little jittery - in particular the Dax30 has sold off hard and is now trading back below Tuesday’s low. With expectations clearly elevated going into the Fed (decision this evening at 6PM GMT) there is plenty of scope to disappoint and there’s a feeling that we may be nearing an inflexion point.

For the US500 the 2824 level remains a key line in the sand. As long as price remains above here then the breakout remains valid and further upside can be expected. However, a fall below would change the outlook and present the opportunity for shorts to seek to recoup a large amount of lost ground. Source: xStation

 

US Tech stocks have had their fair share of scrutiny over the past 12 months, with Sunday marking the 1st anniversary of the Cambridge Analytica scandal. Today, the focus is on Google, after the EU announced they had fined the parent company Alphabet 1.5B Euros following an antitrust investigation. The penalty comes after the Google unit was found to have hampered rival search advertisers between 2006 and 2016, closing the last formal EU investigation into the firm. Google's Adsense pushes ads triggered by search engines embedded websites. Rival firms to Google had claimed the product was placed on websites with the understanding that no other systems could be on the same page. While the fine is undoubtedly large, it is not at all unexpected and therefore the market reaction has been fairly subdued. The stock has actually begun slightly higher and is close to its highest level since October.

 

Despite receiving a large fine, there’s been little by the way of a negative reaction in Google, with shares opening up slightly and trading not far from their highest level in 5 months. Source: xStation

 

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Morning wrap (27.11.2020)
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