25.04.25 - Extended rally led by Tech earnings

The tech rally continues following a series of earnings reports. After the market closed yesterday, Google reported first-quarter results, with earnings reaching USD 34.5 billion, up 46% year-over-year. A significant contributor to this surge was USD 11.2 billion in "other income," representing a 293% increase from the prior year. This figure was notably driven by USD 8 billion in unrealized gains from the company’s investment in a private company.

The previous evening, Texas Instruments and ServiceNow also fueled optimism in the tech sector with solid earnings and upbeat commentary. Their outlooks offered no indication of weakening demand.

Markets: Nasdaq back in the leading, up three consecutive days, closing 2.8% higher last night and up 0.5% in the futures trading this morning. Interest rates, gold and the US dollar, all are taking a breather from their recent trends.

My view: Individual corporate earnings continue to be the primary driver of market gains. However, I remain doubtful that this rally has much further to run, unless we see unexpectedly positive economic data or real progress in trade negotiations that could lead to a preliminary agreement. The news flow on this front remains inconsistent: while US officials frequently reference ongoing talks with China, Beijing denies any substantial engagement.
Meanwhile, this week has been relatively quiet in terms of economic releases. Later today, the consumer sentiment index may shed some light on the stability of consumer spending and broader demand trends.

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