Overheated market starts to cool down 10/12/2024

HOT stories for today

Stocks on the move:

• MongoDB (MDB) shares rose more than 9% after the database company raised its fourth-quarter forecast. MongoDB now expects adjusted earnings per share between 62 cents and 65 cents, surpassing analysts' projections of 58 cents per share, according to LSEG.
• Vail Resorts (MTN) shares gained nearly 3% after the ski resort operator reported a narrower-than-expected loss for the fiscal first quarter.
• C3.ai (AI) shares surged almost 15% following the enterprise AI software company’s fiscal second-quarter report, which showed an adjusted loss of 6 cents per share. This was better than the 16-cent loss per share analysts anticipated, according to LSEG.
• HealthEquity (HQY) stock declined about 5% after the health savings account custodian’s fiscal year revenue forecast of $1.275 billion to $1.295 billion fell short of FactSet's expectation of $1.32 billion.

Today’s action

• European markets are expected to open weaker as optimism fades, following losses on Wall Street. Meanwhile, Chinese stocks saw gains on Tuesday, supported by a rally across Asia-Pacific markets. This positive movement was fueled by Beijing's pledge to implement "more proactive" fiscal policies and "moderately loose" monetary measures next year to drive domestic consumption.
• In the U.S., stock futures showed minimal movement, with S&P 500 futures slipping 0.05% and Nasdaq 100 futures down 0.02%. Investors are also awaiting the release of the National Federation of Independent Business's small business survey later in the day. Earnings reports from companies such as GameStop and Dave & Buster’s Entertainment are also expected to draw attention.

Wahtclist: GME, ORCL, NVDA, TSLA, AI, MDB, HQY

Bitcoin

• The leading cryptocurrency, Bitcoin, experienced a 3.9% decline, settling at $96,179.07. Analysts suggest imminent downturns may not mirror last week's 10% drop, as the selling intensity has diminished since Bitcoin surpassed the $100,000 threshold.
• Daniel Cheung, co-founder of Syncracy Capital, noted that traders adopt a short-term approach, frequently securing profits. He anticipates market pullbacks will present "buy the dip" opportunities for longer than anticipated. Over the past day, the total cryptocurrency market capitalization has decreased by 5.41%, now standing at $3.44 trillion. Sentiment, a blockchain analytics firm, added that if retail traders "react with fear" and sell off their holdings too quickly, it could paradoxically spark an aggressive market recovery. They emphasized that timing the cryptocurrency market remains "challenging," underscoring the inherent unpredictability of trading in this volatile sector.
  Watchlist: Bitcoin: 90 000-104 000, Ethereum: 3000-3923, Solana: 220-265

Forex

• EUR/USD edged down by roughly a tenth of a percent on Monday, slipping back from the 1.0600 mark after encountering technical resistance at this key level last week. Traders are bracing for mid-week events, with the European Central Bank (ECB) rate decision on Thursday and the U.S. Consumer Price Index (CPI) inflation data on Wednesday likely to set the tone for the pair.
• The Japanese Yen (JPY) rebounded from a one-week low against the U.S. Dollar (USD) during Tuesday’s Asian session. However, the currency's recovery is tempered by skepticism over the Bank of Japan’s (BoJ) willingness to hike rates in December. Meanwhile, expectations of a less dovish Federal Reserve could bolster the USD, supporting USD/JPY. A softer risk sentiment and concerns over potential global trade disruptions and geopolitical tensions also support the safe-haven JPY.
  Watchlist: EUR/USD: 1.0300-1.0650, USD/JPY: 149-157

Basic Materials

• West Texas Intermediate (WTI), the U.S. crude oil benchmark, edged higher to near $67.90 during Tuesday’s Asian session. The price recovery is driven by heightened geopolitical tensions in the Middle East following the political upheaval in Syria after President Bashar al-Assad's downfall. Additionally, China’s recent policy adjustments support WTI prices, while a cautious Federal Reserve stance may help limit significant downside risks.
• Gold (XAU/USD) moved closer to a two-week high on Tuesday but struggled to maintain momentum during the Asian session. The precious metal draws support from geopolitical uncertainties and growing bets on a potential pause in the Federal Reserve's rate-cutting cycle. Despite these tailwinds, expectations that U.S. President-elect Donald Trump’s policies may spur inflation and strengthen the U.S. Dollar (USD) are capping the upside for the non-yielding asset. From a technical perspective, the setup remains favorable for further gains in the near term.
  Watchlist: GOLD 2530-2790, US Oil: 65.00-73.00

The TEFS Analyst team wishes you a successful day!