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MARKETS TODAY: Yen Shift, Meta Stock Performance

April 25, 2024

The USD/JPY pair has surpassed the 155.00 mark, a level highlighted by ex-Deputy Finance Minister Michio Watanabe as pivotal.

A chart from the VT markets trading app showing the exchange rate of USD/JPY reaching above the 155.00 level

SEE: USD/JPY breaks the 155.00 level on the VT Markets trading app

This move comes as the market anticipates key economic data from the U.S., such as GDP and PCE figures. Historically, such breaches have led to a rise in the pair, which might continue unless Japan’s Ministry of Finance steps in. In the past, interventions by the Ministry have caused rapid declines in USD/JPY.

The Bank of Japan (BoJ) is maintaining a watchful eye on inflation trends, as stated by Governor Kazuo Ueda, with current readings still below their targets.

With the upcoming BoJ meeting, traders should look for clues in the medium-term inflation forecasts. A shift from previous dovish policies could impact the yen’s trajectory, especially in the context of rising oil prices that exacerbate economic pressures in Japan.

Meta’s Performance and Future Outlook

Meta Platforms, Inc. recently reported earnings that exceeded expectations, with a Q1 EPS of $4.71 and revenue of $36.46 billion. Despite these strong results, a cautious Q2 revenue forecast between $36.5 billion and $39 billion, which falls short of the $38.24 billion midpoint estimate, led to a 15% decline in Meta’s stock.

Additionally, Meta’s CFO Susan Li noted that the full-year expenses are now projected to be between $96 billion and $99 billion, reflecting increases mainly due to infrastructure and legal costs. This adjustment might influence investor confidence, as increased expenses could weigh on profitability.

Strategic investments in AI, AR, and VR technologies are a focal point for Meta, spearheaded by CEO Mark Zuckerberg. Despite these sectors not yet being major revenue drivers, their development is essential for long-term growth. Comparatively, Meta’s stock has outperformed Google’s over the last year, which may be attributed to better market positioning and strategic initiatives such as dividends and stock buybacks.

Recent challenges, such as controversies around Meta’s AI chatbot, underscore the risks associated with new technology ventures. Nonetheless, Meta’s initiative to open-source its Horizon operating system for AR/VR headsets, and partnerships with firms like Lenovo and Microsoft, could broaden its influence in the AR/VR arena.

A big maybe in the air is the potential U.S. ban on TikTok – which could also provide a boost to Meta, as it might attract users and creators to its platforms, such as Instagram, further enhancing its market position in the digital space.

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