Microsoft shares jumped 16% after its quarterly results, adding $450bn in market capitalisation in the largest one-day increase on record. Azure cloud revenue rose 43% in the fourth quarter, while paid Copilot users climbed 50% to 30m. Total revenue increased 18% to $90bn, and capital spending came in below expectations, driving the biggest single-day gain since October 2008. Elsewhere, Meta\u2019s AI spend was put at $145bn and its shares fell 8% after a weaker revenue outlook, while Apple pointed to a strong sales forecast but cited component shortages as its stock slipped about 6% in after-hours trading. Amazon\u2019s AWS, around a fifth of group sales, posted 37% revenue growth, lifting the shares about 10%.<\/p>\n
In FX, USDJPY logged its biggest intraday fall since December 2023, dropping as much as 3.3% before settling around 159.5, with market pricing implying Japanese intervention and US support. In commodities, USOIL fell 6% and XAUUSD rose 1%. The Fed held rates on a 9-3 vote, turning attention to next Friday\u2019s non-farm payrolls, with unemployment seen at 4.2% and payroll growth at 88k, ahead of an August decision.<\/p>\n
We are seeing unprecedented divergence in mega-cap tech, highlighted by Microsoft’s historic $450 billion market cap surge alongside Meta’s AI-driven cash burn. To capitalize on this massive earnings dispersion, derivative traders should utilize long straddles on upcoming tech releases like AMD and Palantir, where implied volatility may still underprice actual moves. Historically, tech dispersion index levels rise sharply during transitional AI CapEx cycles, making relative value option plays highly lucrative right now.<\/p>\n
With USDJPY tumbling over 3% to 159.5 amid suspected joint US-Japanese intervention, we expect yen volatility to remain elevated in the coming weeks. Traders should look to buy near-the-money USDJPY put options to position for further sudden downside, especially with US Treasury backing now quietly confirmed. When Japan intervened with 9.8 trillion yen in early 2024, it triggered a multi-week unwinding of the carry trade, a pattern we could easily see repeat if this support holds.<\/p>\n
The Fed’s recent 9-3 split decision to hold rates steady means macro traders must tread carefully ahead of the upcoming non-farm payrolls. Given that the consensus expects a soft 88k jobs addition and a steady 4.2% unemployment rate, we recommend trading short-term SOFR futures and Treasury options to hedge against a dovish pivot. Federal Funds futures are currently pricing in a high probability of an August hold, but any deviation in the jobs data will spark violent adjustments in the yield curve.<\/p>\n
We also suggest close monitoring of the options market for Tesla and SpaceX as the latter prepares for its highly anticipated first public earnings release. Given speculation surrounding a potential merger or deep partnership, implied volatility in Tesla options is bound to spill over. Smart derivative traders should establish calendar spreads on these names to exploit the inevitable post-earnings volatility crush while preserving capital.<\/p>\n\n\n\n