Markets rattled by Fed’s projections 19/12/2024

HOT stories for today
 

Stocks on the move:

• Micron Technology's (MU) shares fell 15% after the semiconductor company issued weaker-than-expected guidance for the second quarter. Despite this, the company reported revenue that matched expectations and surpassed quarterly earnings estimates.
• Lamb Weston (LW) shares slipped 3.5% as the food processing company faced ongoing pressure from an activist investor advocating for a sale to Post Holdings.
• Homebuilder Lennar (LEN) saw its stock decline 8.4% after reporting quarterly earnings of $4.06 per share, below the $4.15 per share forecast by analysts polled by FactSet. Higher mortgage rates stemming from elevated interest rates in the most recent quarter impacted the company's performance.

Today’s action

• Asia-Pacific stocks and currencies declined Thursday in a broader market sell-off following the U.S. Federal Reserve’s third consecutive rate cut and its guidance suggesting fewer reductions ahead. The Japanese yen weakened before the Bank of Japan (BOJ) reaffirmed its decision to keep its policy rate unchanged at 0.25% for the third consecutive meeting. Meanwhile, Hong Kong lowered its base interest rate by 25 basis points per the Fed’s move.
• Stock futures showed little movement Wednesday night as markets digested the Federal Reserve’s revised interest rate outlook. The session was marked by volatility, driven by investor concerns over next year’s policy direction. Futures tied to the Dow Jones Industrial Average rose 62 points, or 0.15%. S&P 500 futures hovered near flat, while Nasdaq 100 futures dipped 0.18%. Economic data releases today, including GDP figures, unemployment claims, and the Philadelphia Fed manufacturing index, are expected to influence market movements.

Wahtclist: MU, LEN, LW, TSLA, DRI, KMX, ACN, NVDA

Bitcoin

• Bitcoin saw a dramatic drop today, falling from $105,500 to $100,227 following the U.S. Federal Reserve’s announcement of a 0.25% cut in its benchmark interest rate. The sharp sell-off has rattled traders, with Bitcoin stabilizing between $100,900 and $101,150 at the reporting time.
• Market analysts pointed out that Bitcoin is forming a bearish engulfing candlestick pattern on the weekly chart, signaling a potential downtrend continuation. However, with several trading days left in the week, conditions remain uncertain, leaving room for significant shifts in sentiment and pricing. The decline highlights growing unease in the cryptocurrency market, where Bitcoin's volatility often reflects broader macroeconomic concerns. With uncertainty looming, one question remains: could this dip be a temporary blip, or is it the start of a longer-term bearish trend?
  Watchlist: Bitcoin: 100 000-108 000, Ethereum: 3500-4200, Solana: 200-250

Forex

• The EUR/USD pair slipped to 1.0370 during Thursday’s Asian session, as dovish remarks from the European Central Bank (ECB) weighed on the Euro. Meanwhile, the Federal Reserve’s hawkish 25-basis-point rate cut, lowering the federal funds rate to a 4.25%-4.50% range, supported the US Dollar, pressuring the pair further. Key economic data from the US, including weekly jobless claims, existing home sales, and Q3 GDP figures, are due later in the day, which could influence market sentiment.
• The Japanese Yen (JPY) dropped to a one-month low against the US Dollar following the Bank of Japan’s (BoJ) decision to keep interest rates steady. Elevated US Treasury yields, driven by the Fed's cautious approach to monetary easing, further weakened the JPY. This pushed the USD/JPY pair past the 155.00 psychological level. While the risk-off environment may support the safe-haven JPY, its upside potential against the USD appears limited for now.
  Watchlist: EUR/USD: 1.0300-1.0650, USD/JPY: 149-157

Basic Materials

• West Texas Intermediate (WTI), the US crude oil benchmark, traded near $69.50 during Thursday’s Asian session, registering modest gains. According to the Energy Information Administration (EIA), a drop in crude inventories supported the price, though the decline was smaller than expected. However, concerns about sluggish demand from China and the Federal Reserve’s cautionary tone weighed on the broader outlook for WTI.
• Gold prices (XAU/USD) saw modest gains, trading above $2,600 with an increase of over 0.40% for the day ahead of the European session. The precious metal attracted haven flows amid a post-Federal Open Market Committee (FOMC) equity sell-off. Despite this, the Fed’s hawkish stance continues to push US Treasury yields to multi-month highs, capping significant upside for gold. Traders await US Q3 GDP data and the upcoming Personal Consumption Expenditures (PCE) report on Friday for further direction.
  Watchlist: GOLD 2530-2790, US Oil: 65.00-73.00

The TEFS Analyst team wishes you a successful day!