Election Day: how will the market react? 05/11/2024

HOT stories for today

Stocks on the move:

• Hims & Hers Health (HIMS) jumped 8% after surpassing third-quarter earnings estimates and raising its outlook, crediting strong subscriber growth and improving profitability. Looking ahead, its fourth-quarter revenue guidance also exceeded analyst expectations.
• Palantir Technologies (PLTR, +13.72%) reached new all-time highs in after-hours trading after beating earnings and revenue projections. Revenue grew 30% year-over-year this quarter, and management expects continued momentum.
• Constellation Energy (CEG) saw shares fall 13% this morning despite reporting solid earnings and signing a 20-year power contract with Microsoft to restart the Three Mile Island Unit 1 nuclear power plant. The setback came because the Federal Energy Regulatory Commission (FERC) rejected Talen Energy’s proposal to boost capacity at its Susquehanna nuclear plant. This regulatory pushback reminded investors in this highly regulated, capital-intensive sector that progress can be unpredictable.

Markets & today's action:

• Asia-Pacific markets showed mixed performance on Tuesday as investors anticipated the U.S. presidential election and a possible rate cut from the Federal Reserve later this week. Hong Kong’s Hang Seng Index gained 0.98%, and China’s CSI 300 rose 1.53%. Meanwhile, Australia’s S&P/ASX 200 slipped 0.56% as the Reserve Bank of Australia held its cash rate steady at 4.35% for the eighth consecutive meeting, aligning with Reuters’ forecasts. In Europe, stocks looked set for a subdued opening as global markets braced for the U.S. presidential election.
• Stock futures were flat on Tuesday morning, with markets waiting for clarity on the election outcome. Prolonged uncertainty over the results could increase market volatility. Beyond the election, investors are also focused on the Federal Reserve’s November rate decision, due Thursday, and fresh insights from Chair Jerome Powell on future policy. According to the CME Group’s FedWatch Tool, traders are assigning a 98% probability to a quarter-point cut following September’s half-point reduction. Earnings season continues, with results expected Tuesday from Super Micro Computer and Yum Brands.

Watchlist for today: DJT, HIMS, PLTR, VRTX, DD, YUM, RACE

Bitcoin

• Is Bitcoin’s volatility—a measure of anticipated price swings—showing signs of stagnation as traders await the U.S. election? Bitfinex analysts suggest this could be the “calm before the storm.” In their Nov. 5 report titled Calm Before the Storm?, Bitfinex analysts noted that Bitcoin (BTC) options’ implied volatility is trading in the low 40s, indicating a lack of confidence in any major price movements. Could this cautious stance be temporary?
• Meanwhile, Bitcoin's volatility index—a forward-looking measure from crypto derivatives exchange Deribit—spiked to a three-month high of 65.7 on Nov. 3, only to ease to 63.2. This dip suggests that while volatility recently increased, the market may still be holding back, possibly bracing for more significant shifts once election results are clear.
  Watchlist: Bitcoin: 66 800-70 200, Ethereum: 2355-2540, Solana: 154.80-170

Forex

• The EUR/USD pair trades positively around 1.0880 in early Tuesday’s European session, though the overall outlook remains bearish below the 100-day EMA, accompanied by a declining RSI indicator. Could resistance at 1.0931 hold, or will the pair aim for a downside target near 1.0800? The Euro finds some support near 1.0880 as uncertainty around the U.S. presidential election puts pressure on the Dollar.
• Meanwhile, the Japanese yen (JPY) weakened against the U.S. dollar in Tuesday’s Asian session, lifting the USD/JPY from a one-week low to the mid-152.00s. With its potential for more expansionary fiscal policies, will Japan's political landscape limit the Bank of Japan’s ability to raise rates, keeping the Yen under pressure?Whatchlits: EUR/USD: 1.0820-1.0920, USD/JPY: 151.50-154

Basic Materials

• Crude oil prices rose by over $1 per barrel at the start of the week after reports that OPEC+ had chosen to delay a scheduled partial easing of its production cuts. The group initially planned to reintroduce about 180,000 barrels per day in December, dependent on favorable pricing conditions. If oil prices were high, the supply increase would proceed; however, the rollback has been postponed, with prices still weak.
• Although this move by OPEC+ was largely expected, it immediately affected prices. Brent crude currently trades at $74.37 per barrel, while West Texas Intermediate stands at $70.75 per barrel. Gold prices (XAU/USD) have recovered from earlier losses and are now steady around $2,735. Safe-haven demand supports gold amid the tight U.S. presidential race and Middle East tensions. Meanwhile, the unwinding of the "Trump trade" and expectations of further Fed rate cuts due to a slowing U.S. labor market have pushed down Treasury yields. This pressure on the U.S. Dollar has helped limit any downside for non-yielding gold.
  Watchlist: GOLD 2700-2795, US Oil: 66.70-72.50

The TEFS Analyst team wishes you a successful day!