Big techs drive NASDAQ to new highs 03/12/2024

HOT stories for today

Stocks on the move:

• Zscaler Inc. (ZS) shares fell 7.2% after the cloud security firm issued fiscal second-quarter guidance that disappointed investors. The company expects adjusted earnings of 68 to 69 cents per share, aligning with analysts' forecasts compiled by LSEG but falling short of exceeding expectations.
• In contrast, Credo Technology Group (CRDO) shares soared 32.8% following a strong earnings report and positive revenue guidance for the current quarter. Credo reported adjusted earnings of 7 cents per share on $72 million in revenue for the second fiscal quarter, surpassing analyst expectations of 5 cents per share and $67 million in revenue, per LSEG.
• Cloudflare (NET) and Okta (OKTA) shares rose approximately 6% and 4%, respectively, after Morgan Stanley upgraded both cybersecurity stocks to "overweight" from "equal weight." Morgan Stanley highlighted the companies’ “idiosyncratic opportunities” as key drivers for the upgrade.

Watchlist: TSLA, OKTA, NET, ZS, CRDO, SMCI, MSTR, MSFT

Today’s action

• European markets are set to open higher on Tuesday, buoyed by gains in Asia-Pacific markets and Wall Street, where the S&P 500 and Nasdaq Composite achieved fresh record highs. Japan’s Nikkei 225 climbed 2.22%, while Hong Kong’s Hang Seng Index advanced 0.73%. However, attention is turning to France’s political turbulence. Prime Minister Michel Barnier faces a potential ouster after invoking a constitutional rule to pass a social security bill without parliamentary approval, triggering no-confidence motions from both right- and left-wing parties. If successful, it would mark the first time a French government has been removed by such a vote since 1962, contributing to European political uncertainty.
• In the U.S., stock futures remained flat early Tuesday after the S&P 500 ended the first session of December at a record high. Investors are eyeing the October job openings report and speeches by Federal Reserve officials Adriana Kugler and Austan Goolsbee for signals on future monetary policy. On the earnings side, Salesforce (CRM) and Okta (OKTA) will report their quarterly results after the market closes.

Bitcoin

• Bitcoin (BTC) currently trades between $96,125 to $96,557, signaling a consolidating market with mixed signals across different timeframes. A notable increase in sell volume during the recent downturn suggests potential capitulation, while the relatively weak recovery volume raises questions about the strength of bullish momentum. Immediate support for Bitcoin is at $94,700, while resistance stands at $96,500. Traders are encouraged to exercise caution and wait for clear bullish signals, such as the formation of higher lows and increased buying volume, before entering new positions. To mitigate short-term risks exits near $96,500 or stop-loss levels below $94,000 are recommended.
• In the broader cryptocurrency market, XRP is showing positive movement, with prices climbing, while Ether (ETH) is experiencing a decline. This mixed performance highlights the varied sentiment among major cryptocurrencies, adding layer of complexity for traders and investors navigating the current market conditions.
  Watchlist: Bitcoin: 90 000-99 590, Ethereum: 3000-3500, Solana: 220-265

Forex

• BRICS nations (Brazil, Russia, India, China, and South Africa) have long sought to reduce reliance on the U.S. dollar, but progress has been limited, with most trade among members still conducted in dollars. President-elect Donald Trump has warned of 100% tariffs on BRICS countries if they challenge the dollar's dominance by adopting alternative currencies. While de-dollarization gains attention, experts see a unified BRICS currency as unlikely due to economic and political divides, leaving the dollar firmly entrenched in global trade.
• The EUR/USD pair continues to decline, trading near 1.0490 as political instability in France, including a potential government collapse, weighs on the euro. Meanwhile, stronger-than-expected U.S. Manufacturing PMI data for November has boosted the dollar.
• The Japanese yen sees limited selling pressure but remains supported by speculation of a December rate hike by the Bank of Japan. Geopolitical risks, including Trump’s tariff threats and lower U.S. bond yields, also favor JPY strength.
  Watchlist: EUR/USD: 1.0300-1.0650, USD/JPY: 150-157

Basic Materials

• WTI crude oil prices remain range-bound below $68 per barrel, stabilizing after recent drops to a two-week low. Mixed market signals, such as reduced concerns about supply disruptions and a stronger U.S. dollar, are exerting downward pressure. Traders are hesitant ahead of Thursday’s OPEC+ meeting, where production decisions and key upcoming U.S. economic data could influence market dynamics.
• Similarly, gold prices are steady, trading just below $2,650 per ounce amid contrasting forces. Anticipation of a more hawkish Federal Reserve is supporting the U.S. dollar, weighing on gold. On the other hand, fears of trade tensions, geopolitical uncertainties, and suppressed U.S. bond yields offer some support. Cautious sentiment prevails as investors monitor these developments. WTI and gold markets reflect a wait-and-see approach, with participants focused on pivotal events and data.
  Watchlist: GOLD 2530-2790, US Oil: 65.00-73.00

The TEFS Analyst team wishes you a successful day!