U.S. 10Y touches 5%, AI stocks tumble and oil stays above US$105 markets brace for tomorrow’s Fed decision Global markets enter Tuesday with three pressure points converging: U.S. borrowing costs briefly crossed 5%, oil remains above US$100, and the AI trade suffered a sharp reset overnight . The S&P 500, Dow and Nasdaq all closed lower Monday, while the Philadelphia semiconductor index plunged 5.9% . For Malaysian investors, there was one encouraging counterpoint: the FBM KLCI rebounded 0.66% to 1,698.01 , snapping four consecutive losing sessions despite the difficult global backdrop. 30-second market snapshot Market / Asset Latest 🇺🇸 S&P 500 7,619.98, -0.48% 🇺🇸 Dow Jones 52,421.20, -0.29% 🇺🇸 Nasdaq 26,186.41, -0.56% 🇲🇾 FBM KLCI 1,698.01, +0.66% 💵 USD/MYR ~4.04–4.05 🇺🇸 U.S. 10Y Treasury briefly >5%; ~4.98% later 🥇 Spot gold ~US$4,313/oz, -0.8% 🛢️ Brent US$105.68/bbl, +~1% ₿ Bitcoin ~US$79,150, +~2% Monday The dollar strengthened Mo...
Alibaba (BABA.US) shares have come under pressure, declining nearly 30% since October highs and about 6% year-to-date, as investors turn cautious ahead of its upcoming fiscal third-quarter earnings.
Weak Earnings Outlook Clouds Sentiment
Alibaba is expected to report results this week, with consensus estimates pointing to US$42.2 billion in revenue and US$1.59 earnings per ADR.
While revenue is projected to grow over 9% year-on-year, profitability tells a different story. Earnings are expected to drop sharply by 46%, reflecting margin pressures and a more challenging operating environment.
Notably, analyst sentiment has deteriorated, with 11 out of 15 analysts cutting earnings forecasts during the quarter, and none revising estimates upward — a clear sign of weakening confidence.
Technical Signals Mixed but Improving
From a technical perspective, Alibaba’s chart suggests a market in transition.
The stock initially rebounded from a falling wedge pattern in January, typically a bullish reversal signal. However, that recovery has since faded.
Currently, Alibaba appears to be forming a potential inverted head-and-shoulders pattern, with a key breakout level (pivot) around US$156. A confirmed breakout could signal a trend reversal, though the pattern remains unconfirmed.
Momentum indicators remain weak:
Relative Strength Index (RSI) is near oversold levels, indicating subdued buying pressure
MACD remains bearish, though showing early signs of improvement
Short-term moving averages (EMA) are still negative, but nearing a potential bullish crossover
Options Market Positioning for Upside
Some traders are positioning for a rebound using bull call spread strategies, reflecting expectations of a post-earnings recovery.
A typical setup involves:
Buying a US$145 call
Selling a US$155 call
This strategy limits downside risk while targeting upside if the stock approaches or exceeds US$155.
Key Catalyst: Earnings and Guidance
The upcoming earnings release will be critical in determining near-term direction.
Investors will focus on profit margins, cloud business performance, and forward guidance, particularly as macro uncertainties and regulatory concerns continue to weigh on Chinese tech stocks.
Investor Takeaways
Alibaba shares have declined nearly 30% since October, reflecting weaker sentiment ahead of earnings.
Revenue growth remains positive, but earnings are expected to fall sharply by 46%, signalling margin pressure.
Analyst downgrades dominate, with no upward revisions, indicating cautious expectations.
Technical indicators suggest a potential bottoming process, with a key breakout level at US$156.
Options traders are positioning for limited-risk upside, highlighting expectations of post-earnings volatility.
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