We shall know soon enough

The love affair with this year’s winners is taking a breather. Microsoft joined the list of big tech names that delivered on their promises, but despite this, the stock fell in after-hours trading. The headline numbers were good: Revenue was up 15% from a year ago to $65 billion, while earnings per share rose 11% to $2.95. Both were better than the consensus estimates. The Dow Jones managed to hang onto something of a gain last night whilst the correction in the Nasdaq index continued. As much as companies were being punished if they did not seem to be investing in the future of AI, the cost of this investment and the timings of the returns are now being questioned. As an example of the investment Microsoft is making, for its just-ended fiscal year, capex was up nearly 60%, to $69 billion.

It’s a big 24 hours for Andrew Bailey and the members of the  Bank of England Monetary Policy Committee and Jerome Powell, Chairman of the Federal Open Market Committee. Later tonight, we will hear if the Fed are still on course to cut interest rates in September, as the market has now come to expect. Over here, will the Bank of England decide to go this month or wait and join the Fed in September? Or possibly not go at all. How much attention will Mr Bailey put on the decision by the new government to award such large pay increases? As Russell Crowe says in the film Gladiator, as his army waits to hear if the Barbarians will surrender, We will know soon enough. Will they go tomorrow? To me, it would make sense; why wait, what difference does another month make? They may wait, but it will be interesting to see how the voting goes. How close any decision is.

Geopolitics may also be impacting investor sentiment today as overnight Ismail Haniyeh, the political leader of Hamas, was killed in Tehran along with one of his bodyguards. According to the Telegraph, analysts on Iranian state television blamed Israel for the attack. Israel itself has yet to comment. Obviously, this news will be a concern as it risks a new escalation in the conflict. So far, the markets seem to be shrugging off the news. Equity market futures are pointing to a slightly better opening for stocks, and crude oil, which has range bound for some time between 70 and 80 dollars a barrel, remains right in the middle of that range this morning.