Daily Market Outlook, October 24, 2024
Munnelly’s Macro Minute…
"Tesla Earnings Provides Late Relief For Investors After A Hatrick Of Daily Declines ”
Tesla's better-than-expected profits gave investors some last minute relief overnight. After reporting strong third-quarter earnings and surprising analysts with a forecast for a 20–30% increase in sales next year, Tesla's stock surged 12% in after-hours trade. Futures on the S&P 500 increased by 0.3%, while those on the Nasdaq increased by 0.7%. The so-called Magnificent Seven tech firms saw significant losses ahead of their quarterly reporting, and U.S. markets had been down for three days in a row.
Asian stocks fell on Thursday, the dollar stayed close to three-month highs, and U.S. rates increased as market anxiety persisted due to the outcome of the U.S. election. Higher U.S. Treasury rates, the uncertainty surrounding the U.S. election, and mounting anticipation of a more cautious Federal Reserve easing tempo all combined to limit risk sentiment. Market anxiety is exacerbated by growing expectations of Donald Trump's potential return to the White House. In Asia, the Nikkei in Tokyo recovered from previous losses to gain 0.2%. Declines in Chinese equities put pressure on MSCI's broadest index of Asia-Pacific stocks outside of Japan, which fell 0.3%. The Hang Seng index in Hong Kong lost 1.2%, while the blue chips in China slid 0.5%.
The yen weakened across the board after Bank of Japan Governor Kazuo Ueda stated that it was still taking time to achieve the central bank's inflation goal. The case for a strong yen remains compelling, but the normalisation process is rarely smooth. The market has repriced expectations for Fed rate cuts, and the US economy continues to grow at a solid pace. The translation of the US/Japan 2y OIS spread to the currency looks exaggerated, and factors like potential Trump tariffs may be influencing price action. Carry might seem appealing, but the sustainability of swap spread levels is questionable. A cautious approach to the USD/JPY rally seems prudent at current levels.
Markets in Europe on Thursday will focus on preliminary Purchasing Managers' Index (PMI) readings, particularly from the euro zone, where growth prospects have become a concern. Business activity in the bloc is expected to remain in contractionary territory, keeping pressure on the European Central Bank (ECB) to cut rates sooner. ECB President Lagarde said the bank would need to be cautious in further easing, although sources indicate policymakers are debating whether rates need to go below neutral to stimulate the economy. Futures pricing shows traders expect rates to fall below 2% by June next year. This has weighed on the euro, which is down over 3% this month and on track for its steepest monthly decline since April 2022. PMI figures for the UK and US will also be released, with growth likely to fare better than in the euro zone.
Overnight Newswire Updates of Note
BoE’s Bailey: UK Inflation Cools Faster
China Struggles to Overcome US Chip Design Control
Bears Target China’s Yuan Amid Trump Hopes
Ueda: BoJ Normalization Concerns Me Constantly
Japan Finance Chief Warns on Yen’s Slide
Japan Factory Activity Declines For 4th Month
Australia October Manufacturing PMI Drops To 46.6
T-Mobile Raises Subscriber Forecast After Strong Quarter
IBM Drops as Consulting Sales Disappoint
Tesla Shares Surge on Better-than-Expected Profit
Boeing Workers Reject Latest Contract Offer
Kering Predicts Lowest Profit Amid Gucci Woes
(Sourced from reliable financial news outlets)
As the US elections draw near, the financial markets are bracing for potential volatility, presenting both opportunities and challenges for traders. To help navigate this crucial period, we have launched the US Elections - Traders Hub, a comprehensive resource tailored to meet the needs of traders at every level.
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0735 (280M), 1.0750-55 (4.0BLN), 1.0775-85 (3.63BLN)
1.0800-10 (2.7BLN), 1.0830 (230M), 1.0850 (980M)
1.0865-80 (1.32BLN), 1.0895-00 (2.42BLN)
USD/CHF: 0.8600-10 (682M), 0.8740 (238M). EUR/CHF: 0.9475 (494M)
GBP/USD: 1.2900-05 (835M)
EUR/GBP: 0.8325 (400M), 0.8335-40 (1.0BLN), 0.8350-60 (760M)
AUD/USD: 0.6605 (1.6BLN), 0.6640-50 (1.43BLN)
NZD/USD: 0.6065-75 (1.4BLN), 0.6090 (700M). AUD/NZD: 1.0975 (606M)
1.1040 (334M). USD/CAD: 1.3745-80 1.62BLN), 1.3800-10 (1.7BLN)
1.3850-60 (552M), 1.3925 (817M)
USD/JPY: 149.90-00 (1.2BLN), 150.50 (216M), 150.90-00 (950M)
151.50 (991M), 151.75 (250M), 152.00 (1.53BLN), 152.45-50 (946M)
AUD/JPY: 100.00 (625M)
CFTC Data As Of 18/10/24
Euro net long position is 1750 contracts
Japanese Yen net long position is 34,110 contracts
Swiss Franc posts net short position of -26,161 contracts
British Pound net long position is 85,802 contracts
Bitcoin net short position is -1,872 contracts
Equity fund managers raise S&P 500 CME net long position by 8,773 contracts to 1,050,355
Equity Fund speculators trim S&P 500 CME net short position by 4,760 contracts to 324,051
Speculators trim CBOT US 10-year Treasury futures net short position by 95,064 contracts to 865,065
Technical & Trade Views
SP500 Bullish Above Bearish Below 5750
Daily VWAP bearsih
Weekly VWAP bullish
Below 5720 opens 5660
Primary support 5660
Primary objective 5950
EURUSD Bullish Above Bearish Below 1.0950
Daily VWAP bearish
Weekly VWAP bearish
Above 1.1030 opens 1.1120
Primary support 1.0750
Primary objective 1.0750
GBPUSD Bullish Above Bearish Below 1.31
Daily VWAP bullish
Weekly VWAP bearish
Below 1.31 opens 1.29
Primary support is 1.29
Primary objective 1.29 - TARGET HIT NEW PATTERN EMERGING
USDJPY Bullish Above Bearish Below 148
Daily VWAP bullish
Weekly VWAP bullish
Below 146.50 opens 144
Primary resistance 152 - TARGET HIT NEW PATTERN EMERGING
Primary objective is 152
XAUUSD Bullish Above Bearish Below 2680
Daily VWAP bullish
Weekly VWAP bullish
Below 2600 opens 2550
Primary support 2550
Primary objective is 2800
BTCUSD Bullish Above Bearish Below 63000
Daily VWAP bearish
Weekly VWAP bullish
Below 62000 opens 59000
Primary support is 50000
Primary objective is 70000
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!