Triple Witching sparks volatility 21/03/2025

HOT stories for today

 

US market wrap:
 

• On Thursday, the S&P 500 edged down 0.2%, while the Nasdaq Composite slipped 0.3%. The Dow Jones Industrial Average dipped by 11.31 points, or 0.03%. Markets opened strong with bullish momentum, but the rally stalled near Wednesday’s highs, allowing sellers to regain control. Tech stocks, especially semiconductors, faced pressure, while defensive sectors like healthcare and utilities showed modest gains.
• On Wednesday, although the Federal Reserve maintained its projection for two rate cuts this year, officials revised their inflation expectations upward and lowered their growth forecasts—reviving concerns about stagflation, where inflation rises even as economic expansion slows. Meanwhile, FedEx became the latest to warn about the state of the U.S. economy, cutting its profit outlook for the third consecutive time.

Triple Witching sparks volatility

• Markets face a major technical event Friday as triple witching takes center stage, with an estimated $4.7 trillion in options set to expire. This quarterly occurrence—when stock index futures, index options, and single-stock options all expire on the same day—can trigger a surge in volatility and heavy trading volumes as institutional investors unwind or roll over large derivatives positions.
• Analysts say the March expiration is particularly significant, as it includes contracts tied to the S&P 500 rebalance, as well as popular tech names and mega-cap stocks. These expirations may influence market direction in the short term, potentially distorting price action into the close. While some investors see this as a risk for sharp swings, others note it could provide liquidity and set the stage for a fresh positioning reset heading into Q2. With equity indexes near record highs and macro uncertainty still simmering, Friday's triple witching may serve as a final stress test for markets this week.

 
Stocks on the move: 
      

• FedEx (FDX) shares fell over 4% after the company missed Q3 earnings estimates reporting $4.51 per share versus the $4.54 expected while revenue slightly beat forecasts at $22.16 billion compared to $21.89 billion
• Micron Technology (MU) jumped 4% after issuing strong Q3 guidance with projected adjusted earnings of $1.57 per share on $8.80 billion in revenue
• Nike (NKE) rose 2% after reporting better-than-expected Q3 results posting earnings of 54 cents per share on $11.27 billion revenue beating analyst forecasts of 29 cents and $11.01 billion though sales declined 9% year over year
• U.S. Steel (X) slipped around 2% after providing weak Q1 guidance expecting losses of 49 to 53 cents per share compared to the 32-cent loss expected by analysts
• Lennar (LEN) dropped 3% in extended trading as Q2 new order guidance of 22,500 to 23,500 came in below the 23,802 expected despite Q1 earnings and revenue exceeding estimates

Today’s action

• Hong Kong markets fell sharply on Friday, with the Hang Seng Index down 1.90%, weighed by losses in healthcare and consumer cyclical sectors, as Asia-Pacific markets delivered a mixed performance amid ongoing uncertainty surrounding the U.S. economy. Japan’s Nikkei 225 rose 0.36%, while the Topix advanced 0.7%, reaching its highest level since July, according to LSEG. In South Korea, the Kospi edged up 0.14%, but the small-cap Kosdaq dipped 0.38%. Japan’s annual inflation slowed slightly to 3.7% in February from January’s 4% peak.
• U.S. stock futures dipped in early Friday trading, following Thursday’s losses across major indexes. S&P 500 futures hovered just below flat, Dow futures dropped 54 points (0.13%), and Nasdaq 100 futures declined 0.11%. Today’s focus includes a mix of key earnings, market reaction, and why Amazon’s performance could be pivotal for the broader market direction.
  Watchlist: NKE, FDX, LEN, X, TSLA, COIN, NVDA, CCL, NIO
   

Bitcoin

• As of today, Bitcoin is trading at approximately $84,206, reflecting a slight decrease of 1.75% from the previous close. The cryptocurrency reached an intraday high of $86,428 and a low of $83,601. Recent market movements have been influenced by the Federal Reserve's decision to maintain current interest rates amid ongoing inflation concerns. This stance has bolstered investor confidence, contributing to Bitcoin's recent performance. 
• Additionally, the conclusion of the SEC's case against Ripple has positively impacted the broader cryptocurrency market, with Bitcoin experiencing a 2.2% increase to $84,096 following the announcement.  Investors should remain attentive to macroeconomic developments and regulatory changes that could introduce volatility in the cryptocurrency markets.
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176
   

Forex
 

• EUR/USD may retest immediate support at the nine-day EMA of 1.0846 as it looks to re-enter the ascending triangle. The 14-day RSI remains above 50, keeping the bullish bias intact. However, a break below the 50-day EMA at 1.0612 could dampen medium-term momentum. The pair is down for a third straight session, hovering near 1.0830 during Friday’s Asian hours, with growing selling pressure suggesting a possible trend shift after falling below the ascending channel.
• The Japanese Yen (JPY) stays under light pressure in early European trade after Japan’s February CPI showed slower inflation. A mild uptick in U.S. Dollar (USD) demand, supported by the Fed’s projection of two 25-basis-point cuts this year, lifts USD/JPY above 149.00. Still, diverging BoJ-Fed policy outlooks may limit further gains.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-150
   

Basic Materials

• Gold (XAU/USD) faces mild selling pressure in Friday’s Asian session, pulling back from its record high set a day earlier. A modest rebound in the US Dollar, now near weekly highs, has prompted some profit-taking in the yellow metal. Still, expectations of Fed rate cuts and ongoing trade and geopolitical tensions may help limit the downside for gold.
• West Texas Intermediate (WTI) crude holds steady around $68.40 for a third straight session and is on pace for a second weekly gain. Fresh US sanctions on Iran, targeting a Chinese refiner and others linked to Iranian oil exports, are supporting prices. Geopolitical tensions remain elevated, with Israel launching a new ground offensive in Gaza, while OPEC+ plans a new output cut involving seven member nations, further boosting oil’s risk premium.
  Watchlist: GOLD 2600-3050, US Oil: 65.00-79.00

Key Economic Events Today:

EST time

09:05 am: USD FOMC Member Williams Speaks

Earnings

BMO (Before the US Market opens)
CCL            Carnival Corporation
CUK            Carnival Corporation
NIO             NIO Inc.
MNSO         Miniso Group
AMC (After the US Market closes): Enjoy your weekend!


The TEFS Analyst team wishes you a successful day!