Equities report: US equity bears seem to hesitate

Equities report: US equity bears seem to hesitate

  • 19.03.2025 15:12
  • fxstreet.com
  • Keywords: danger, success

US equity markets remain uncertain, with economic concerns and Fed policy key factors. Alphabet's $32 billion Wiz acquisition may stabilize its shares. Technical analysis suggests bearish trends in Nasdaq.

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Estimated market influence

Alphabet

Alphabet

Positivesentiment_satisfied
Analyst rating: Buy

Acquired Wiz for $32 billion, aiming to strengthen cloud business.

Wiz

Positivesentiment_satisfied
Analyst rating: N/A

Cybersecurity company acquired by Alphabet for $32 billion.

Context

Business Insights and Market Implications Summary

Fundamentals Weighing on Equities

  • US GDP: Atlanta GDP rate for Q1 25 improved to -1.8% but remains in contractionary territory.
  • Employment Market: Easing US employment market and inflation could negatively impact corporate revenue figures.
  • Global Trade Tensions: Escalating tensions with the EU over tech regulations and US-led trade wars (particularly affecting Canada and Mexico) weigh on markets.

Fed’s Interest Rate Decision

  • Market Expectations: Rates expected to remain unchanged, but two potential rate cuts by year-end are being priced in.
  • Key Factors:
    • Easing inflation and employment support rate cuts.
    • Trump’s policies may have inflationary effects.
    • Fed’s statement, new dot plot, macroeconomic projections, and Powell’s press conference will influence market direction.

Alphabet’s Acquisition of Wiz

  • Deal Details: $32 billion acquisition, the most expensive in Alphabet’s history.
  • Strategic Intent: Aims to strengthen Alphabet’s cloud business.
  • Market Impact: Expected to halt Google’s share price decline and provide support.

Technical Analysis of Nasdaq

  • Support Levels:
    • S1: 19120
    • S2: 18310
    • S3: 17255
  • Resistance Levels:
    • R1: 19910
    • R2: 20535
    • R3: 21250
  • Market Sentiment:
    • Nasdaq hit R1 resistance on Monday and corrected lower.
    • Sideways motion with bearish tendencies indicated by RSI near 30 and position relative to Bollinger bands.
    • Bears may dominate, leading to a potential break below S1 toward S2. Bullish outlook is less likely but possible if bulls regain momentum.

Competitive Dynamics

  • Tech Sector: Alphabet’s acquisition highlights strategic focus on cybersecurity and cloud business to counter competition.
  • Global Trade: Escalating trade tensions could impact global tech companies, particularly those operating in the US and EU markets.

Regulatory Impacts

  • Tech Regulations: Tensions with the EU over tech regulations may lead to increased regulatory scrutiny and compliance costs for US tech firms.

Long-Term Effects

  • Economic Uncertainty: Lingering concerns about US economic outlook could drive long-term market volatility.
  • Fed Policy: Fed’s rate decisions will significantly impact corporate borrowing costs and investor sentiment in the coming quarters.