Microsoft is trading 3.6% higher after the company delivered its latest earnings report (but before the CEO's earnings call). Investors remain optimistic that growth in cloud segments justifies premium price of the stock

Adjusted earnings per share came in very close to expectations at $2.32 versus expectations of $2.29. Revenue was slightly below expectations at $52.75 billion (vs. $52.94 billion).

Microsoft's overall revenue grew just 2% year-over-year in the quarter ended Dec. 31, the slowest pace since 2016. Revenue in Microsoft's Intelligent Cloud segment was $21.51 billion, up 18% and slightly above the expected $21.44 billion. Revenue from Azure and other cloud services, which Microsoft does not report in dollars, increased 31%, in line with expectations falling sharply from 35% (previous quarter).

The overall report is not positive, but apparently good enough for investors to be optimistic about Microsoft - including the OpenAI hype. Expectations were likely lowered after Microsoft CEO Satya Nadella already said he expects two years of slow growth and Microsoft recently made layoffs. 

Concerns about the current health of corporate America, including growth prospects, rose after Microsoft warned of slowing revenue growth in its cloud computing and other "fast" growing businesses. Microsoft was the latest company to report slowing growth in the latest quarter and expressed no optimism that corporate profits will resume rapid growth in the near term. Other major names such as 3M and chipmaker Texas Instruments also disappointed investors.

Microsoft initially posted gains on positive reports/false estimates about Microsoft's latest earnings report. But the positive reports were premature and were replaced by more worrisome reports as corporate earnings showed strong signs of slowing. In the latest quarter, Microsoft's total revenue grew just 2% year over year - the slowest growth for Microsoft since 2016.

Investors also increased their safe-haven bets after Berlin's decision to approve the re-export of German-made tanks and to send its own tanks from German military stocks heightened concerns about an escalation of the war between Russia and Ukraine. In Europe in particular, yields on the main 10-year German and French bonds fell by at least five basis points. The euro also experienced slight headwinds, but remains strong overall as the ECB is expected to continue raising interest rates quickly and decisively.

After the historic year-opening rally, which pushed growth stocks in particular into a very overbought territory, equities(as well as Indices) have plenty of room to move lower. 

Investors are also reassessing the Fed's prospects for further rate hikes. China's reopening measures and optimism have led to an easing of financial conditions in the U.S. and pose a new inflation risk as commodity prices and Chinese demand have surged.

GBP remains weak as new data shows a sharp drop in factory costs, further fueling speculation that the Bank of England is nearing the end of its rate hike cycle and may even cut rates by year-end. 

Oil prices are little changed. Worsening risk sentiment and a slightly stronger USD are weighing on commodity prices. Gold and cryptos are also lower after hitting multi-month highs in recent sessions. 

Asian markets remain optimistic as China opened its economy, which also helped AUD. I do not expect optimism in China to sustain the early year rally and expect profit taking to increase.

Hints: USD, JPY and CHF may benefit from worse risk sentiments. EUR and CAD will most likely be neutral. AUD, GBP may drop some gains during Asian market tomorrow