Wall Street's outlook on the election outcome 06/11/2024

HOT stories for today

Stocks on the move:

• Solar stocks are declining as concerns grow that a potential Trump victory could threaten the Inflation Reduction Act, a major driver of the U.S. clean energy surge through tax credits for solar expansion. The Invesco Solar ETF dropped 7% in overnight trading on Robinhood. First Solar, a solar panel manufacturer, slid 8%, while residential solar companies Sunrun and Sunnova fell 6% and 2.6%, respectively. Enphase, an inverter producer, dipped 5%, with Nextracker down nearly 5%.
• In contrast, Tesla shares soared 8% overnight as investors speculated that a Trump win might favor prominent supporter CEO Elon Musk. Additionally, Trump Media & Technology Group, a social media company closely associated with Trump, surged 40% in overnight Robinhood trading. 

Watchlist for today: DJT, TSLA, SMCI, QCOM, FSLR, NVDA, HOOD

Markets & today's action:

• European stocks are poised to open lower on Wednesday as global markets closely watch the U.S. election vote count. In Asia-Pacific, markets were mixed following Wall Street's overnight surge ahead of election results. Japan made gains, as the Nikkei 225 rose 2% and the Topix added 1.5%. Bank of Japan's minutes showed openness to rate hikes if economic conditions align. South Korea’s Kospi dropped 1%, and the Kosdaq fell 1.3%. Hong Kong’s Hang Seng index declined 2.7%, while China’s CSI 300 remained stable amid volatile trading.
• U.S. stock futures climbed overnight, with the Dow Jones up 640 points (1.5%), S&P 500 futures gaining 1.4%, and Nasdaq 100 futures rising 1.4%, as investors speculated on a possible Trump advantage. Investors also monitor Congressional results, as a divided or partisan Congress could bring significant spending and tax policy shifts.

Bitcoin

• Bitcoin surged overnight to a record high of $75,000 as investors bet on former President Donald Trump gaining an edge in the U.S. election. But isn’t this euphoric move a bit early? The rally picked up as Trump took an initial lead in the Electoral College, with NBC News projecting wins for him in North Carolina and Georgia—though other key swing states remain too close to call. Could this momentum shift if the results change?
• Meanwhile, NBC News also suggests Republicans might reclaim the Senate, adding to the market’s excitement. Coinbase rose 3% in after-hours trading, while MicroStrategy advanced 4%. Could these gains continue if election outcomes shift, or are markets jumping the gun? 
  Watchlist: Bitcoin: 70 000-75 500, Ethereum: 2380-2750, Solana: 155-190

Forex

• The EUR/USD pair faces significant selling pressure on Wednesday, plummeting to its lowest point since early July, around the 1.0720-1.0715 range in the Asian session. Spot prices, however, regained a few pips in the past hour, now trading slightly above the mid-1.0700s, though still down 1.50% on the day.
• The Japanese Yen (JPY) recoups part of its steep intraday losses against the U.S. Dollar, pulling the USD/JPY pair down to the mid-153.00 range as the European session nears Wednesday. Yen sellers exercise caution amid concerns that Japanese authorities may intervene to bolster the domestic currency. Additionally, hawkish minutes from the Bank of Japan’s (BoJ) recent meeting, signaling a commitment to further rate hikes if economic and inflation projections align, lend additional support to the JPY.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 151.20-154.50

Basic Materials

• Gold held steady on Tuesday after touching a new five-day low earlier as uncertainty lingers around the U.S. presidential election. The election outcome could be pivotal for the U.S. Dollar, influencing Gold prices; some analysts even view it as a potential "win-win" for the metal. On the technical side, XAU/USD appears to be entering a short-term downtrend. After finding support around $2,724 earlier in the day, Gold rebounded to the $2,730s, bolstered by a slightly softer U.S. Dollar amid election uncertainty. A weaker Dollar generally benefits Gold, as it is typically priced in USD.
• Crude Oil, meanwhile, is testing the $72.00 mark for a potential breakout after gaining over 3% on Monday. Tropical Storm Rafael, set to hit a production-sensitive area, could reduce U.S. oil output by roughly 1.7 million barrels daily. As the U.S. heads into election day, the U.S. dollar index remains steady and sideways as markets await the presidential decision. 
  Watchlist: GOLD 2700-2790, US Oil: 66.70-72.80

The TEFS Analyst team wishes you a successful day!