Mind the GAP: Another Strong Day 08/11/2024

HOT stories for today

Stocks on the move:

• Take-Two Interactive Software (TTWO) shares rose 6% after the video game company exceeded expectations in its fiscal second quarter. It reported $1.47 billion in revenue, compared to the $1.43 billion forecast by analysts from LSEG.
• Zillow Group’s (Z) stock jumped 24% after the housing market platform reported third-quarter results that outperformed expectations. Zillow posted adjusted earnings of 35 cents per share on $581 million in revenue, beating the LSEG analysts’ estimates of 29 cents per share and $555 million in revenue.
• Airbnb (ABNB) shares dropped nearly 3% after hours when the company reported third-quarter earnings of $2.13 per share, narrowly missing the $2.14 consensus forecast from LSEG. Revenue for the quarter came in at $3.73 billion, slightly above the expected $3.72 billion.
• Akamai Technologies (AKAM) saw a 6% decline in stock after issuing lower-than-expected full-year guidance. The company projected adjusted earnings between $6.31 and $6.38 per share on revenue ranging from $3.966 billion to $3.991 billion, while FactSet analysts had anticipated $6.43 per share in earnings and $3.99 billion in revenue.
• Block (SQ) shares fell 2% following a revenue miss for the third quarter, reporting $5.98 billion in sales compared to the $6.24 billion forecast by LSEG. However, Block’s adjusted earnings of 88 cents per share surpassed expectations by one cent.

Watchlist for today: AKAM, SQ, ABNB, PINS, BA, TSLA, SMCI, Z, ARM

Markets & today's action:

• Asia-Pacific markets showed a mixed performance on Thursday following the U.S. Federal Reserve's 25 basis point rate cut, with major U.S. indexes continuing their postelection surge. Investors are closely monitoring the final session of China’s National People’s Congress. New fiscal stimulus measures are anticipated to bolster the world’s second-largest economy. In Japan, official data released on Friday indicated that household spending in September declined by 1.1%, a smaller drop than the 2.1% forecasted by economists surveyed by Reuters.
• U.S. stock futures made modest gains after the S&P 500 and Nasdaq Composite reached new highs in a postelection rally, as investors considered the Federal Reserve’s recent rate cut. Futures for the S&P 500 and Dow Jones Industrial Average increased by less than 0.1%, while Nasdaq 100 futures rose by 0.14%. Investors now focus on key economic data releases, including reports on consumer sentiment and inflation expectations, due during market hours. Later, two Federal Open Market Committee (FOMC) members are set to deliver remarks, potentially offering more insights into the economic outlook.

Bitcoin

• After the Federal Reserve’s recent 25 basis point rate cut, Bitcoin surged to $76,849, showing renewed investor interest and volatility. Currently trading around $74,120.87, Bitcoin has climbed over 8% in recent sessions, fueled by optimism surrounding the rate cut and ongoing U.S. election developments. Analysts believe that the Fed’s dovish stance enhances Bitcoin's appeal as a hedge against inflation, suggesting a potential for further upside.
• Current forecasts estimate that Bitcoin could reach approximately $95,685.40 by the end of 2024 if demand continues. Some analysts even speculate that sustained interest in Bitcoin as a store of value and inflation hedge could lead to new all-time highs in the coming years. However, the cryptocurrency market will likely remain volatile given Bitcoin’s sensitivity to macroeconomic shifts, including interest rates and regulatory developments. Investors are advised to approach cautiously, balancing optimism with awareness of Bitcoin’s inherent market risks.
  Watchlist: Bitcoin: 70 000-76 850, Ethereum: 2380-2750, Solana: 155-190

Forex

• The EUR/USD pair climbed back to the 1.0800 level after the Federal Reserve cut its benchmark interest rate by 25 basis points, a move primarily anticipated by markets. This rate cut, part of the Fed’s ongoing strategy to stimulate economic growth, aligns with efforts to manage inflation and stabilize the economic outlook.
• The USD/JPY hovered around 153.20 on Thursday as the Federal Reserve’s quarter-point rate cut met market expectations. The CME FedWatch Tool shows a 66% chance of another 25 basis point cut in December, signaling potential further easing before year-end. This rate differential between the U.S. and Japan continues to influence USD/JPY movements, with investors closely monitoring economic data and Fed updates to anticipate future policy actions. Chair Jerome Powell’s commitment to a data-driven approach highlights the role of upcoming economic indicators in shaping rate expectations.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 151.20-154.50

Basic Materials

• Oil futures bounced back on Thursday, recovering losses from the previous day as traders evaluated how President-elect Donald Trump’s policies might impact the energy sector. A stronger U.S. dollar largely drove Wednesday’s decline following Trump’s election win. Additional support for oil prices came from production shutdowns in the Gulf of Mexico due to Hurricane Rafael on Thursday.
• Gold prices climbed over 1%, reaching $2,692 per ounce, following the Federal Reserve’s expected 25 basis point rate cut. The movement suggests that the rate reduction had already been priced in, as gold initially dipped to $2,643 before bouncing back. With the Fed signaling a cautious outlook on inflation and economic growth, how will this impact gold's appeal as a safe-haven asset in the months ahead?  As investors digest the Fed’s stance, will continued rate cuts boost gold further, or is the current rally already approaching its peak? Given the lingering uncertainties in the economy, could gold see sustained support from cautious investors looking for stability amid potential economic fluctuations?
  Watchlist: GOLD 2700-2790, US Oil: 66.70-72.80

The TEFS Analyst team wishes you a successful day!