Thread: Daily Market Analysis from ForexMart

Gold breaks records

The price of gold continued its growth on Tuesday, reaching a new record amid expectations of monetary easing by the world's leading central banks and increased demand for safe assets amid geopolitical tensions.

Gold futures on the Comex exchange rose 0.3% in August, reaching $2,563.6 per ounce. Since the beginning of the year, the price of precious metals has increased by 21.5%.

Signals of a decrease in inflation in the United States, along with a deterioration in the labor market, have increased expectations that the US Federal Reserve will soon begin to lower interest rates. Currently, the market forecasts a rate cut of 100 basis points by the end of the year. Three meetings of the American Central Bank are scheduled in 2024, and it is likely that at one of them the rate will be increased by 50 basis points instead of the standard 25 bp.

The slowdown in inflation is also observed in other large economies. For example, the central bank of Sweden on Tuesday lowered its key interest rate by 25 bps to 3.5% per annum. The regulator noted that the growth rate of consumer prices continues to slow down, approaching the target 2%. The Central Bank's management plans to cut the rate two or three times by the end of the year if the current inflation dynamics persists.
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Stocks Slow as Investors Brace for Big Fed, U.S. Labor News

Asian Stocks Fall on U.S. Data Expectations

Asian stocks fell on Wednesday, halting a strong rally in global stocks as they waited for important U.S. economic data. Bond yields and the dollar fell on expectations of interest rate cuts ahead of policymakers.

S&P 500 Ends Gain

The S&P 500 (.SPX), which had been on track for eight straight sessions of gains, was down 0.2% overnight. MSCI's broad index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) also lost 0.5%. Meanwhile, U.S. and European index futures showed modest gains, up around 0.2%.

Hang Seng and JD.com under pressure

Hong Kong's Hang Seng (.HSI) fell 1%, helped by a sharp 10% drop in JD.com (9618.HK) shares after its largest shareholder, Walmart, decided to sell a significant portion of its stake.

Japan's Nikkei struggles with resistance

Japan's Nikkei (.N225) fell 1% at the open, hitting resistance at 38,000 after recently rebounding from its early August decline. However, the index had partially recovered by midday, paring its losses to 0.3%.

Experts predict possible changes

The recent sell-off in stocks has bottomed out, with recession fears replaced by hopes for a softer slowdown, according to Bank of Singapore analyst Mo Siong Sim. However, he notes that markets need confirmation before they can stabilize, and that confirmation should come from new data.

US data on the horizon

Investors will continue to focus on preliminary US employment data due out later on Wednesday. The data is expected to be revised downwards, which could put pressure on interest rates. The Federal Reserve minutes are also expected to be released, which analysts believe will confirm the regulator's appetite for easing.

Index expectations and their impact on global markets

Investors will be closely watching the publication of both US and global purchasing managers' indices on Thursday. These data promise to have a significant impact on markets, shaping future expectations for economic growth and monetary policy.

Dollar Loses Ground as Gold and Yen Rise

The dollar's weakness has served as a catalyst for a sharp rise in gold prices, which have reached new records. Against this backdrop, the Japanese yen has strengthened to 145.67 per dollar, up 1.6% on the week and an 11% rebound from its 38-year low last month.

The Euro and Rate Cut Prospects

The euro has been on a strong run, up nearly 3% since early August. At $1.1132 in Asian trading, the euro hit its highest since December last year, indicating an attempt to break key chart levels.

Interest rate futures point to a strong chance of the Federal Reserve cutting its benchmark rate by 25 basis points next month, with a one-third chance of a 50 basis point cut. Investors are pricing in a rate cut of nearly 100 basis points this year and expecting a similar cut next year.

Dollar under pressure: further weakness likely

Rabobank strategist Jane Foley says the dollar's recent weakness is likely due to rising expectations for easing from the Federal Reserve. However, she warns that these hopes may be overdone, with the risk of a short-term decline in EUR/USD below $1.10.

A look ahead to upcoming speeches and regional currencies

Investors are also looking ahead to Fed Chairman Jerome Powell's speech at the Jackson Hole Symposium on Friday, which could provide further clues as to where the Fed is headed. Meanwhile, the Australian and New Zealand dollars have shown solid gains, reaching $0.6747 and $0.6157 respectively, reflecting their positive momentum amid global economic developments.

US Bonds and Commodities: Strong Positions

Equity markets continued to be supported by bonds, with the US 10-year Treasury yield falling to 3.81% and the two-year yield holding steady at 3.99%. These figures suggest cautious optimism among investors awaiting economic data.

Commodities Resilience and China's Response

Commodities prices stabilised. Brent crude futures settled at $77.12 a barrel, indicating a recovery from recent wobbles. Iron ore in the Dalian market also hit a local bottom, helped by reports that China plans to allow local governments to buy unsold homes. The move is aimed at supporting the housing market, an important signal for the global steel market, where China plays a key role.

Impact of Chinese construction on global markets

Steel markets are sensitive to any developments in the construction industry in China, the world's largest consumer of the metal. Following the news from China, shares of major miners such as BHP, Rio Tinto and Fortescue Metals were stable in Australian markets, reflecting investor confidence in a recovery in demand.

Gold holds close to records

Gold prices remain close to the record highs set on Tuesday, hovering around $2,516 an ounce. The precious metal remains an attractive asset for investors amid global economic uncertainty.

Asia's central banks: decisions awaited

In emerging markets, attention is focused on central bank meetings in Thailand and Indonesia on Wednesday. Although neither country is expected to cut rates before the US Federal Reserve, their decisions could have an impact on regional markets.

Chinese Stocks Under Pressure After Walmart News

The yen continued to strengthen, reaching 145.5 per dollar, which, along with weak sentiment in Japanese stock markets, put pressure on stocks. At the same time, news that Walmart plans to sell its stake in JD.com sent shares of the Chinese online retailer sharply lower in Hong Kong, despite the company's recent upbeat earnings report.

Obama Back on the Frontlines: Endorsing Kamala Harris

Former US President Barack Obama returned to the national political stage on Tuesday evening to throw his support behind Kamala Harris in her tight presidential race against Republican Donald Trump. The move underscores the importance of the election and Obama's determination to ensure a Democratic victory.

Awaiting Data: The Importance of Fed Minutes

Investors are eagerly awaiting the release of Federal Reserve minutes and revisions to US labor market data on Wednesday. According to Goldman Sachs, the number of revised payrolls could fall by 600,000 to 1 million, which could create a false impression of weakness in the labor market. This data will be key to further analysis of the economic situation in the country.

Labor market under close scrutiny

Of particular importance is the upcoming US labor report, which will be released on September 6. It will be closely watched, since the situation in the labor market is now the main focus of economic policy, against the backdrop of falling inflation. It is this report that will be decisive in determining the further actions of the Fed and their impact on financial markets.

Rate markets are pricing in a decline: the dollar is under pressure

Interest rate futures are fully priced in the Fed's 25 basis point rate cut in September, with about a 30% chance of a deeper cut of 50 basis points. These expectations are putting pressure on the dollar, which is showing weakness in almost all areas.

Gold and the Euro: New Horizons

Gold continues to set records, surpassing $2,500 an ounce, reflecting its status as a safe haven in uncertain times. Meanwhile, the euro has reached $1.11, unfamiliar territory for the currency and a sign of new trends in the currency markets.

Risks on the Horizon: The Importance of Powell's Speech

However, not all analysts share the market's optimism. There is a risk that the labor market data could be stronger than expected, or that Fed Chairman Jerome Powell, speaking in Jackson Hole on Friday, will not show enough flexibility in his rhetoric. These factors could significantly change the mood in financial markets and force investors to revise their expectations.

Fear and Greed Index: From Panic to Stability

The CNN Fear and Greed Index, which measures sentiment in the stock, options and credit markets, has risen from extreme anxiety to neutral in a short period of time. This recovery suggests that investors are slowly starting to calm down after the recent turmoil.

Investors on Hold: Confirmation of the Favorable Outlook

Despite the improved sentiment, market participants remain cautious and await new economic data that may confirm or refute current forecasts. Investors are seeking clarity before diving back into risky assets, preferring to first make sure that positive trends are sustainable.

This period of waiting and analysis highlights not only the importance of data, but also the instability that still hangs over the markets, requiring caution and sober calculations from financial players.
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Holding their breath: Wall Street awaits Fed decision, other big global events

Investor expectations: Stocks frozen, await Fed decision
Global stock markets paused their gains on Wednesday, stabilizing after a long rally that took them to recent record highs. Investors are awaiting confirmation that the US Federal Reserve will decide to cut interest rates, in line with their expectations.

The minutes of the Fed's July 30-31 meeting show that officials are leaning toward lowering rates at the upcoming September meeting. Fed Chairman Jerome Powell is expected to reiterate the central bank's commitment to easing policy at its annual conference in Jackson Hole, Wyoming, on Friday. The move comes after the bank successfully quelled the worst surge in inflation in 40 years.

Oil and Gold: Contrasting Trends
Oil prices fell while gold held its high, hovering near the record highs it hit on Tuesday, as the dollar weakened amid expectations of interest rate cuts.

Wall Street and Global Markets: Steady Gains
On Wall Street, the indices showed modest gains, with the Dow Jones Industrial Average (.DJI) up 0.13% to 40,889, the S&P 500 (.SPX) up 0.42% to 5,620, and the Nasdaq Composite (.IXIC) up 0.57% to 17,918.

The MSCI All Country (.MIWD00000PUS) also showed positive dynamics, adding 0.4% and almost reaching its July record. Since the beginning of the year, it has gained an impressive 13.9%.

European Markets: New Peak on the Horizon
The STOXX (.STOXX) index of 600 leading companies in Europe rose 0.3%, moving closer to its all-time high set on June 7.

Market Volatility: Investor Sentiment Under Pressure
World stocks have been volatile this month, as investors worried about U.S. employment data, which has heightened fears of a possible recession in the world's largest economy.

However, the pessimism has since given way to hopes for a soft landing, which investors see as an opportunity thanks to the expected cut in U.S. interest rates, which could begin as early as September.

Labor Market: Key Factor for the Fed
The U.S. Labor Department reported on Wednesday that job creation was significantly lower than initially expected for the period through March. The news has heightened the Federal Reserve's concerns about the health of the labor market, which in turn affects monetary policy going forward.

"The labor report confirms the futures market's assessment that the Fed is likely to cut rates at its September 18 meeting," Quincy Crosby, chief global strategist at LPL Financial, said in an email.

Futures and Bonds: Rate Cut Expectations
Futures markets have already priced in the likelihood of a 25 basis point rate cut next month, as well as a one-in-three chance of a 50 basis point cut. A 100 basis point cut is expected this year, with another 100 basis points expected next year.

U.S. Treasury yields also fell. The benchmark 10-year note shed 2.3 basis points to 3.795%, down from 3.818% late last night. The yield on two-year bonds, which is more sensitive to interest rate expectations, fell by 6.9 basis points, reaching 3.9305% from 4% late Tuesday.

Waiting for a decision: markets frozen
Thus, global markets continue to wait. Investors are focused on the upcoming Fed meeting in September, where the further course of monetary policy will be decided. Any new data on the state of the US economy could significantly affect this course, and therefore, global financial markets.

No Recession Scenario: The Fed's New Approach
Global markets find themselves in a unique situation where the prospect of a significant rate cut is not accompanied by recession risks. This is in stark contrast to five of the last seven rate-cutting cycles, when lower borrowing costs were accompanied by an economic slowdown, according to Ross Yarrow, managing director of U.S. equities at investment bank Baird.

"If we can get to a point where the Fed cuts rates, inflation comes down, and employment stays high, that would be a very positive outcome," Yarrow said. He added that such an environment could create a positive outlook for equity markets to continue to rally.

Asian Markets: Mixed Performance
Asian markets were less optimistic. The MSCI Asia-Pacific Ex-Japan Index (.MIAPJ0000PUS) fell 0.3%. In Hong Kong, the Hang Seng Index (.HSI) fell 0.7%, with JD.com (9618.HK) contributing significantly to the decline, falling 8.7% after Walmart (WMT.N) decided to sell its large stake in the company.

Japan's Nikkei (.N225) also fell 0.3%, pausing its recovery at 38,000, which had become resistance after the August collapse.

FX and Gold: Dollar Under Pressure
The weaker dollar helped gold, which neared record highs, while strengthening the yen, which has returned to 145.135 per dollar from a multi-year low hit last month.

The euro also strengthened, gaining about 3% in August to reach $1.115, its highest since December last year.

Gold and Oil: Mixed Movements
Gold prices continued to hover around $2,510 per ounce, remaining close to the record highs reached on Tuesday. At the same time, oil prices went down again: US crude oil fell by 1.69% to $71.93 per barrel, while Brent fell by 1.49% to $76.05 per barrel.

Looking Ahead: What's Next?
Overall, markets remain awaiting further actions by the Fed and their impact on the global economy. Whether the US economy can avoid a recession amid rate cuts remains an open question, but current investor sentiment is increasingly leaning towards an optimistic scenario.

Retail Sector on the Rise: JD Sports' Success
The retail sector showed strong growth, leading the leaderboard amid a significant increase in JD Sports (JD.L) shares. The UK sportswear retailer rose 5.3% after reporting a strong improvement in core sales in the second quarter, spurring investors.

Energy under pressure as oil prices fall further
The energy sector was among the laggards, falling 0.6% as oil prices fell for a fifth straight session. Investors are concerned about a possible slowdown in global oil demand, putting pressure on companies in the sector.

Key data ahead: PMIs and consumer confidence
Markets are focused on the upcoming flash purchasing managers' index (PMI) data for France, Germany, the UK and the eurozone, due between 07:15 and 08:30 GMT. These figures will help to gauge the current state of the region's economies.

Eurozone consumer confidence data is also due out today at 14:00 GMT. Later in the day, US PMI and initial jobless claims data will be released, which could have a significant impact on the market.

Key Market Moves: Aegon and Deutsche Bank
Among individual stocks, Aegon (AEGN.AS) was a notable loser, falling 4% after the Dutch insurer reported a decline in its key capital generation figure for the first half of the year. This caused concern among investors and led to a sell-off.

Meanwhile, Deutsche Bank (DBKGn.DE) shares rose 2.5% after the bank reached a settlement with more than half of the plaintiffs who had accused it of underpayment. The progress was welcomed by the market, which was reflected in the bank's share price rising.

Looking Ahead: Key Data Expectations
Investors continue to closely monitor upcoming economic data, which could be key indicators for future market developments. Particular attention will be paid to the PMI and consumer confidence indicators, which will provide an indication of the current state of the European economy and may influence sentiment in other regions.
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Fed Prepares for Rate Cut: Dollar Strengthens, Stocks Slip

US Stocks Under Pressure: What's Going On?

US stock markets had a tough Thursday as investors digested new economic data and waited anxiously for further action from the Federal Reserve. Expectations were focused on a possible rate cut, which the regulator could announce as early as Friday.

Tech Sector Slips

The three major US stock indexes ended the day with significant losses. The technology sector was particularly under pressure, which was reflected in the decline of all indices. The Dow Jones Industrial Average (.DJI) lost 0.43%, reaching 40,712 points. The S&P 500 (.SPX) fell 0.89% to 5,570, while the Nasdaq Composite (.IXIC) fell 1.67% to end the day at 17,619.

Market sentiment: The Fed and the rate outlook

Market sentiment was also complicated by data from the Federal Reserve's meeting minutes released on Wednesday. According to the document, most Fed committee members believe that, subject to the expected data, a September interest rate cut will be a likely step. This statement strengthened market expectations for the regulator's future policy.

Labor market data and economic activity

Thursday also brought fresh statistics on the labor market, which showed an increase in the number of applications for unemployment benefits in the U.S. over the past week. This indicates a gradual slowdown in the labor market. At the same time, there is a decrease in business activity, which may indicate an overall slowdown in economic growth. These signs of easing inflation could give the Fed more leeway to focus on job creation.

Mortgage Rates and the Housing Market Recovery

With the economy slowing, mortgage rates have already begun to decline. This has spurred an unexpectedly strong rebound in existing home sales last month, one of the few positive signs in the current environment.

Experts' Forecasts

According to Steve Englander, market strategist at Standard Chartered Bank, the Fed minutes show that the Fed is close to achieving its inflation target. At the same time, rising unemployment increases the likelihood that the Fed will cut rates by 50 basis points in the near future.

As such, markets are anxiously awaiting the Fed's policy statements on Friday, which could shape the future of the U.S. economy and financial markets.

Expectations of a Victory over Inflation

Standard Chartered Bank's Steve Englander noted in his letter that while the Fed is not yet declaring a complete victory over inflation, it is clearly demonstrating confidence that this moment is near. Such statements heighten investor attention to the Federal Reserve's upcoming moves and their potential impact on markets.

Global Markets: A Sharp Reversal

Global stock markets, which have recently shown impressive gains after volatile swings, are under pressure again. The global stock index (.MIWD00000PUS) fell 0.6%, reflecting growing concerns among investors about the future developments in financial markets.

Europe: Growth Against the Trend

Despite the general nervousness in global markets, European stocks (.STOXX) managed to show positive dynamics, increasing by 0.35%. The leaders of growth were companies from the retail and healthcare sectors, which took advantage of the favorable market situation. Stocks were also supported by data from the euro zone, which showed an unexpectedly strong level of business activity in August.

Asian Markets in the Green

Asian stock markets also showed growth. MSCI's index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) rose 0.3%. That's a sign of some optimism in the region despite overall volatility in global markets.

Oil is recovering

Oil prices, which had been falling on concerns about global demand, have started to rise again. U.S. crude and Brent have gained about 1.4% in a day, signaling investors are returning to energy-related assets.

Bond yields and the dollar: new trends

Eurozone bond yields rose after data showed better-than-expected service sector results in August. However, wage pressures in the region have eased, adding nuance to the overall economic picture.

The dollar, which recently hit a 13-month low against the euro, has started to recover. The dollar index rose 0.4%, indicating a return of confidence in the US currency ahead of a key speech by Fed Chairman Jerome Powell scheduled for Friday. Investors will be closely watching his comments, which could influence the future direction of the dollar.

As a result, global markets continue to show mixed dynamics, with expectations of further central bank action and the impact of macroeconomic data on investor sentiment taking center stage.

The impact of a US rate cut on the global economy

A potential rate cut in the United States could create a more favorable environment for central banks in other countries, giving them more room to maneuver. On Thursday, the Bank of Korea hinted at the possibility of a rate cut in October, while Bank Indonesia said it was prepared to cut rates in the last quarter of this year. However, there is a view in financial markets that the easing process in the US will last longer than in other parts of the world, which could have a significant impact on the global economy.

Market Expectations: Rate Outlook

Interest rate futures show that investors expect the US Federal Reserve to cut rates by 25 basis points next month, with a 50 basis point cut also possible. Forecasts indicate that US rates could fall by about 213 basis points to around 3.2% by the end of 2025. In comparison, Europe is expected to cut rates by a smaller amount, about 157 basis points, which would take the rate to around 2.09%.

US Treasury yields recover

US Treasury yields have started to recover after hitting two-week lows in the previous trading session, supported by a rise in yields in European bond markets. The yield on the US 10-year note rose 8.6 basis points to 3.862% from 3.776% the day before. The yield on the 2-year note also showed significant gains, rising 9.4 basis points to 4.0161% from 3.922% late Wednesday.

FX: Euro and Pound Performance

The euro, which had been steadily rising for the month, suddenly fell 0.4%. Meanwhile, the British pound showed interesting dynamics: it hit a fresh 13-month high against the dollar earlier in the day and strengthened against the euro. This happened against the backdrop of the publication of data that confirmed a steady increase in business activity in the UK in the second half of 2024. However, by the end of the day, the pound rate had slightly corrected and amounted to $ 1.3086.

Thus, global financial markets continue to react to the actions of central banks, as well as to macroeconomic data, which entails changes in bond yields and exchange rates. Investors' attention remains focused on the upcoming Fed decisions and their possible implications for the global economy.

Gold under pressure: what is behind the price drop?

Gold prices have sharply declined by more than 1%, which is associated with a stronger dollar and rising yields on US Treasury bonds. These factors put significant pressure on the precious metal, which is traditionally seen as a safe haven for investors in times of economic instability.

Central banks at the Jackson Hole Economic Symposium

Against the backdrop of such changes, key representatives of central banks from around the world gathered in Jackson Hole for the annual economic symposium. All eyes are on Fed Chairman Jerome Powell on Friday, where his words will determine how quickly and decisively the Fed will begin its easing cycle.

Anticipating the Fed's decision: Cautious forecasts

According to analyst Ladner, Powell is likely to calm markets by signaling a rate cut in September. However, he said the Fed chairman will be cautious in his comments, not making any firm statements about the size of the cut — 25 or 50 basis points. He is expected to try to set the market up for a more modest 25 basis point cut.

Those expectations were reinforced by statements from other key Fed figures. On Thursday, Kansas City Fed President Frank Schmidt, Boston Fed President Susan Collins and Philadelphia Fed President Patrick Harker all said they believed a rate cut was imminent and could begin soon.

Investors on edge: Volatility index rises

The CBOE Volatility Index (.VIX), often used as a gauge of market anxiety, rose sharply to 18, its highest intraday reading in a week. However, the index later eased slightly to settle at 17.56.

Tech sector under attack

Among the 11 major S&P 500 sectors, tech (.SPLRCT) was the biggest loser, falling 2.1%. At the same time, the real estate sector (.SPLRCR) was among the leaders of growth, which indicates a shift in investor interests amid the current market uncertainty.

Snowflake: Optimistic forecast and unexpected decline

Amid general instability, it is worth noting individual fluctuations in company shares. For example, Snowflake (SNOW.N) improved its forecast for annual revenue from products, but this did not help to keep the company's shares from falling. Despite the positive forecast, the shares of the cloud data company fell by 14.7%, as the margin forecast remained unchanged, which disappointed investors.

Thus, amid expectations of Fed decisions and general market turbulence, investors continue to look for stable positions, which is reflected in both the movement of large indices and individual stocks.

Zoom confidently gains heights

Shares of Zoom Video Communications (ZM.O) made an impressive leap, rising by 13.0%. The sharp rise came as the company improved its full-year revenue forecast. At a time when many companies are struggling, Zoom is demonstrating its ability to not only hold its ground, but to grow, which has caught the attention of investors.

Advance Auto Parts Slide: Negative Outlook

On the back of Zoom's success, Advance Auto Parts (AAP.N) shares have seen a sharp decline, losing 17.5% of their value. This happened after the company revised its full-year profit forecast downwards. This move disappointed investors, which led to such a significant decline in quotes.

Market in the Red: Stock Market Sentiment

The mood on the stock markets was clearly not optimistic on Thursday. Declining stocks outnumbered advancing ones on the New York Stock Exchange (NYSE) 2.16 to 1. The same was true on the Nasdaq, where for every one advancing, 2.25 fell.

New Highs and Lows amid Volatility

The S&P 500 posted 58 new 52-week highs on the day, despite the overall trend being down. At the same time, there was only one new low. The Nasdaq Composite also saw activity, with 83 new highs, but also a high number of new lows, at 68.

Trading Activity amid Declining Volume

Trading activity on U.S. exchanges declined, with total trading volume at 9.79 billion shares, below the 20-day average of 11.89 billion shares. The decrease in volume may indicate investor uncertainty and the expectation of further signals from the market.

Thus, the current market fluctuations continue to demonstrate complex sentiments among investors, where fears and caution dominate against the backdrop of individual successful companies.
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Fed Makes Move: Rate Cut Sparks Sharp Rise in Wall Street Stocks

US Stocks Rise Sharply as Fed Chairman's Comments Hint at September Rate Cut
US stock markets posted significant gains on Friday as Federal Reserve Chairman Jerome Powell reiterated market expectations for a possible rate cut in September.

Powell: Now is the time to cut rates
During a highly anticipated speech at the Jackson Hole Economic Symposium, Powell said now is the time to cut the federal funds target. He noted that concerns about rising inflation have eased, allowing the Fed to be more flexible in its monetary policy.

"We have not seen a deterioration in the labor market, and we do not want to see one," Powell said in a speech that many analysts took as a clear signal to cut rates at the Fed's upcoming meeting. If the decision is made, it would be the first rate cut in four years.

Experts are confident that the Fed is ready for decisive action
The market reacted to these statements immediately. Detrick, the director of one of the analytical companies, expressed the opinion that the September meeting will open a series of further rate cuts that could continue until the end of the year. According to him, the Fed has made it clear that it is moving to an active phase of monetary easing.

Market soars: growth leaders and historical records
After the publication of Powell's statement, all three major US stock indexes experienced a significant rise. Large-cap companies such as Nvidia, Apple and Tesla stood out in particular, with their shares showing the greatest growth.

Small-caps and regional banks did not stand aside either, with indices rising by 3.2% and 4.9%, respectively. As Detrick noted, the financial sector has reached historical highs, and this rise confirms that the economy does not have serious threats on the horizon that could weaken the positions of regional banks and financial companies.

A week on the rise: markets continue to grow
At the end of the week, all three major US indices recorded positive dynamics, supported by the best weekly gain this year, demonstrated last week.

Week of anticipation: what data will influence the Fed's decision
Ahead of the September meeting of the US Federal Reserve, where the key interest rate decision will be made, analysts are expecting the receipt of a number of important economic data.

The key ones will be the revised figures for the gross domestic product (GDP) for the second quarter from the Commerce Department and the report on personal consumption expenditures (PCE), which contains the PCE price index, the Fed's main indicator of inflation.

All S&P 500 sectors are in the green: real estate leads
All 11 key sectors of the S&P 500 index ended the trading session in positive territory. The real estate sector stood out in particular, showing the most significant gain, rising by 2.0%. This growth was provided by confident investments and positive market sentiment, which supported the overall upward trend.

Workday Surprises Market: Shares Soar on Good News
HR software company Workday (WDAY.O) beat market expectations for quarterly revenue. Moreover, the company announced its intention to buy back its own shares for $1 billion. The news caused a real boom in the market: Workday shares jumped by 12.5%, becoming the leader in growth on the Nasdaq exchange.

Ross Stores and Intuit: Contrasts in the Retail Sector
Discount retailer Ross Stores (ROST.O) also showed positive dynamics, rising by 1.8%. This happened after the company raised its profit forecast for the 2024 fiscal year, which strengthened investor confidence.

At the same time, shares of Intuit (INTU.O), known for its Turbo Tax product, fell by 6.8% after publishing a quarterly report that did not meet expectations. The disappointing results caused a sharp decline in investor interest in the company.

Markets on the move: Stocks continue to rise
On the New York Stock Exchange (NYSE), the number of advancing stocks significantly exceeded the number of declining ones — the ratio was 8.08 to 1. On the Nasdaq, the situation was also in favor of advancing stocks, where there were 3.68 advancing ones for every declining one. This trend confirms investors' confidence in the stability of the economy and the upcoming decisions of the Federal Reserve.

S&P 500 and Nasdaq continue to break records: the market is on the rise
The American stock market is once again showing confident growth, confirming the positive sentiment of investors. The S&P 500 index recorded 81 new 52-week highs, without recording a single new low. At the same time, the Nasdaq Composite noted 149 new highs and 51 new lows, which underlines the high activity in the market.

Trading Volumes and Indices: Steady Gains on Wall Street
Trading activity on U.S. exchanges showed good results, although the total volume of transactions amounted to 10.57 billion shares, slightly below the average of the last 20 trading days (11.88 billion). Despite this, the key indices continued to rise.

The Dow Jones Industrial Average rose by 1.14%, reaching 41,175 points. The S&P 500 added 1.15% and stopped at 5,634, very close to its all-time high. The Nasdaq Composite showed the biggest gain among the major indices, increasing by 1.47% and reaching 17,877 points.

European and Asian Markets: Mixed Results
European exchanges also saw gains. The broader STOXX 600 index rose 0.5% to hit its highest in three weeks. The gain also put the index on track to end a third straight week of gains.

In Asia, the picture was mixed, with stocks outside Japan down slightly, 0.1%, while Japan's Nikkei rose 0.4%. The gains were supported by positive investor reactions to inflation data and comments from Bank of Japan Governor Kazuo Ueda, who has signaled a willingness to raise interest rates if economic data and inflation are in line with expectations.

Global Trends: MSCI Reaches New Levels
The impact of recent events on the global economy was reflected in the rise in the MSCI World Index, which rose about 1.1%. Despite the recent turmoil in early August, the index has risen above its all-time peak reached in mid-July, signaling a recovery in global markets and investor confidence in the stability of the global economy.

Traders Raise Rates as Rate Cut Expectations Increase
Following Fed Chairman Jerome Powell's speech, traders have increased their expectations for a rate cut in September. Fed funds futures now offer a 37% chance of a 50 basis point cut, up from 25% the day before. A total of 106 basis points of rate cuts are expected by year-end.

Powell: Fed Policy Future Dependent on Data
Jerome Powell stressed in his speech that the Fed's policy direction is clear, but the timing and speed of rate cuts will be determined by economic data and changing risks. These statements were an important signal for the market, prompting investors to revise their forecasts.

Treasury Bonds and Currencies: Yields and the Dollar Fall
U.S. Treasury yields fell amid growing expectations for a rate cut. The 10-year yield fell 5.9 basis points to 3.803%, while the 2-year yield, which is more sensitive to changes in interest rate expectations, fell 9.7 basis points to 3.9132%. Amid these changes, German bunds remained steady, yielding at 2.226%.

There was also significant volatility in currency markets. The US dollar weakened, while sterling strengthened, reaching a more than two-year high. The euro also showed gains, rising to $1.1189, its highest in a year.

Japanese yen strengthens despite inflation data
The Japanese yen also strengthened, as the dollar fell 1.36% to 144.27 and comments from Bank of Japan Governor Kazuo Ueda indicated that he was prepared to raise rates if economic conditions were as expected. However, data released in Japan earlier showed that core inflation accelerated for a third month in a row, but the slowdown in demand-driven price growth does not yet indicate the need for an immediate change in interest rate policy.

FX Play: Dollar Weaker Amid Rate Cut Expectations
The currency market is always based on relative expectations, and the prospect that the Federal Reserve will soon begin cutting rates along with other major global banks has led to a weakening of the dollar, said Uto Shinohara, managing director and chief investment strategist at Mesirow in Chicago. According to him, the market is already pricing in future changes in Fed policy, which reduces the attractiveness of the dollar against other currencies.

Oil Market: Sharp Price Jump After Decline
Oil prices have jumped sharply by more than 2%, recouping earlier losses associated with a rise in U.S. crude inventories and a decrease in China's oil demand forecasts. This recovery demonstrates the volatility of the oil market, where everything from inventory data to demand expectations can cause significant changes in prices.

Gold Is Back on the Rise: The Price of an Ounce Nears a Record
Gold continues to strengthen its position, showing a gain of about 1.1%, reaching a price of $2,510 per ounce. This value is close to the record high, which was set just a few days earlier on Tuesday at $2,513 per ounce. Investors continue to invest in gold, seeing it as a safe haven asset in the face of economic uncertainty.
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Market Tectonics: Boeing and PDD Holdings Pull Down, Oil Stocks Rally Ahead

Tech Giants Slip as Market Awaits Nvidia's Quarterly Report
The S&P 500 ended lower on Monday, despite investors' growing expectations for Nvidia's upcoming quarterly report. The AI chipmaker saw its shares fall amid uncertainty surrounding its report, which is due out this week.

Meanwhile, investors are keeping a close eye on upcoming inflation data for clues about potential changes in the Federal Reserve's interest rate policy.

Nasdaq Slips, Dow Jones Surges
The tech-heavy Nasdaq also slipped, while the Dow Jones Industrial Average managed to stay afloat, helped by giants like Caterpillar and American Express. Despite the overall decline, the Dow ended the day with a small but positive gain, helped by a nearly 1% gain in those stocks.

Nvidia Expectations Are Peak
Nvidia, the leader in AI chips, is set to report its quarterly results on Wednesday. Investors are pinning their hopes on the company's results, which have risen an impressive 160% year-to-date, accounting for a significant portion of the S&P 500's 18% gain.

"Risky Investing in Focus"
"Nvidia is in the spotlight this week as a barometer for 2024 risk investing," analyst McMillan said. He stressed that Nvidia's success or failure could have a major impact on the market, given the company's importance in the AI sector.

Cautious Expectations
Still, there is growing anxiety among investors. Some fear that if Nvidia's guidance falls short of lofty expectations, it could derail the current rally in AI stocks like Microsoft and Alphabet.

"There is a concern that Nvidia could disappoint," warns Jake Dollarhide, CEO of Longbow Asset Management. "When the market finds confidence without considering the possibility of negative news, that's when the news comes."

Market Under Pressure: PDD Holdings and Tesla Slip
Shares in PDD Holdings, the U.S. unit of the Chinese company behind the popular Temu platform, have plunged nearly 29% after the company failed to meet investor expectations for its second-quarter earnings. The significant drop has raised concerns in an already tense market.

Tesla hit by new tariffs
Tesla also found itself in the spotlight, losing 3.2% of its market value. The reason was the unexpected move by Canadian authorities, who, following the example of the United States and the European Union, announced the introduction of a 100% tariff on the import of Chinese electric cars. This move could seriously affect Tesla's sales in the region and threaten its market position.

Stock indices: S&P 500 and Nasdaq in the red, Dow Jones afloat
The major stock indices ended the day in different directions. The S&P 500 index fell by 0.32%, stopping at 5,616.84 points. The tech-heavy Nasdaq suffered more, losing 0.85% and ending the session at 17,725.77 points. Meanwhile, the Dow Jones Industrial Average managed to stay in positive territory, adding 0.16% to close at 41,240.52.

Tech Down, Energy Up
Of the 11 sectors in the S&P 500, six ended the day lower. The information technology sector was the most pressured, falling 1.12%. Consumer discretionary was also under pressure, losing 0.81%. However, amid geopolitical tensions in the Middle East and related oil supply disruptions, the energy sector showed the opposite dynamics, jumping 1.11%.

Boeing Slips Amid NASA News
Boeing shares fell 0.85% after it became known that NASA has chosen SpaceX as the primary partner to return astronauts to Earth next year, choosing its vehicle over Boeing's Starliner.

Positive Signals from the Fed: Wall Street on the Rise
Stock markets rose on Friday, with the S&P 500 approaching its all-time highs. This happened amid statements by Federal Reserve Chairman Jerome Powell that it was time to lower borrowing costs. Powell emphasized that the reduced risk of inflation and stabilization of labor demand created the conditions for such a decision, which was a positive signal for investors.

Bets on a decrease: The market awaits the Fed decision
There is some expectation in the money market, with traders estimating the probability of a 25 basis point cut in September at 70%, and a 50 basis point cut at 30%. These forecasts are based on data from the FedWatch tool from CME Group, which closely tracks investor sentiment.

Inflation Indicators in Focus
Friday's July personal consumption spending data, a key measure of inflation for the Federal Reserve, could be a key factor in its policy outlook. The data could provide insight into the trajectory of the Fed's monetary easing, which could in turn impact market sentiment.

Corporate Earnings: Dell, Salesforce, and Other Giants
Investors will be focused on earnings this week from companies like Dell, Salesforce, Dollar General, and Gap. These reports could provide insight into the health of the corporate sector and provide additional guidance to the market.

Stock Market Balance
On the stock market front, the S&P 500 showed a modest 1.1-to-1 advantage over declining stocks. Overall, declining stocks outnumbered advancing stocks in the U.S. by 1.2-to-1, suggesting some volatility among market participants.

Volumes remain low
Trading activity on US exchanges was below average, with volumes of 9.5 billion shares compared to the average of 11.9 billion shares over the past 20 sessions. This may indicate that investors are taking a wait-and-see approach amid uncertainty about the Fed's future moves.

Global markets on hold
World stock markets also reacted to expectations of an imminent cut in US interest rates. Despite rising oil prices, caused by tensions in the Middle East, markets closed in the red. European stocks ended the day slightly lower, while London, closed for a public holiday, showed sluggish results. Japan's Nikkei also slid amid a stronger yen, ending trading down almost 0.7%.

Indices closed mixed: Dow Jones rises, Nasdaq falls
US stock indices ended the trading session with mixed results on Monday. The Dow Jones Industrial Average rose 0.16% to 41,240.52. Meanwhile, the S&P 500 lost 0.32% to end at 5,616.84 and the Nasdaq Composite fell 0.85% to end the day at 17,725.77. The MSCI World Index also fell 0.20% to end at 829.64.

Market Digests News: Reaction to Powell's Comments
Stock markets continue to react to a flurry of news, including recent comments from Federal Reserve Chairman Jerome Powell. "We saw a rally on Friday driven by Powell's comments and some strong durable goods orders data," said Ben MacMillan, principal and chief investment officer at IDX Insights in Florida. However, he added that historically, rate cuts often foreshadow weakness in the stock market because the cuts come for a reason.

Oil Futures Rise Amid Market Jitters
Brent crude futures ended the day up 3.05% to $81.43 a barrel. U.S. crude also posted significant gains, rising 3.5% to $77.42 a barrel. This reflects market volatility and investor anxiety amid global economic uncertainty.

Durable Goods Orders Beat Expectations
New data from the U.S. Commerce Department showed a sharp rise in orders for durable goods such as toasters and airplanes. These orders increased 9.9% in July, a significant rebound from a decline in June and beating analysts' forecasts. The surge signals a rebound in demand for U.S. manufactured goods.

Powell signals possible easing
Jerome Powell stressed at a symposium in Jackson Hole on Friday that the Fed is ready to ease monetary policy, noting the need to prevent further weakness in the labor market. His remarks drew interest from investors expecting lower interest rates to support the economy, but also hinted at possible challenges ahead.

European Central Bank remains cautious: Progress in tackling inflation, but risks remain
European Central Bank chief economist Philip Lane gave a cautiously optimistic assessment of the current situation at a symposium in Jackson Hole. According to him, the ECB has made significant progress in reducing eurozone inflation to its target of 2%, but stressed that it is too early to guarantee a final victory. The comment reflects the central bank's caution about the next steps in monetary policy.

Bond yields rise as market braces for rate hike
On the back of Lane's comments, the yield on the benchmark 10-year Treasury note rose 1.3 basis points to 3.82%. Two-year notes, which are more sensitive to interest rate changes, also rose 2.7 basis points to 3.94%. This suggests that markets are beginning to price in potential policy changes.

Market Expectations: Rates Under Closer Attention
Fed funds futures are fully pricing in a quarter-point rate hike at the Fed's upcoming Sept. 18 meeting, and are also offering a 39.5% chance of a more dramatic 50 basis point move. Investors are looking for 103 basis points of easing by the end of the year and another 122 basis points in 2025.

ECB Continues Rate Cuts
The European Central Bank has already started its easing cycle, cutting rates by 25 basis points in July. Two more such cuts are expected this year. Ben McMillan of IDX Insights expects the ECB to cut rates by 75 basis points this year, but he believes the market may adjust its expectations towards a less aggressive rate cut.

Key Economic Data on the Horizon
Key data on personal consumption and core inflation in the US are due on Friday, along with preliminary inflation data from the EU. These reports could be crucial for determining the direction of monetary policy in September, and most analysts expect them to support the idea of rate cuts.

Japanese Yen Strengthens Against Dollar
In the forex market, the Japanese yen strengthened to a three-week high against the US dollar, reaching 143.45 yen per dollar. However, the dollar then partially recovered its positions, increasing by 0.14% to 144.56 yen. This increase in the yen indicates increased investor interest in safe assets amid global economic uncertainty.

Dollar gains strength: index strengthens amid euro weakness
The dollar index, which tracks the exchange rate of the American currency against six major currencies, including the euro and the yen, showed a rise of 0.24%, reaching 100.84. At the same time, the euro weakened by 0.28%, falling to $1.1159. This movement reflects the strengthening of the dollar amid global economic uncertainty and demand for safer assets.

Gold continues to rise: investors seek safe havens
Gold prices continue to show steady growth, approaching their historical highs. Spot gold rose 0.31% to $2,518.27 an ounce amid increased demand for safe-haven assets. U.S. gold futures also showed positive dynamics, rising 0.28% to $2,515.50 an ounce. The gains highlight investors' desire to protect their capital amid instability in financial markets.
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Nvidia rally saves Wall Street, Asia shares fall on weak PDD Holdings, Nongfu Spring earnings

Wall Street Rises: Records Ahead of Nvidia Earnings
The S&P 500 ended slightly higher on Tuesday, while the Dow Jones closed at a record high. Investors are eagerly awaiting Nvidia's quarterly earnings report on Wednesday, which could shed light on where the market is headed. Additionally, economic data due later this week could provide further clues about a possible interest rate cut.

Tech Bigs in Focus
The tech sector has been mixed, especially ahead of earnings from Nvidia (NVDA.O), the semiconductor giant that has been at the center of Wall Street's recent rally in artificial intelligence stocks. Nvidia shares rose 1.5% to become the most traded stock on U.S. markets, according to LSEG.

Nvidia shares have risen an astonishing 159% since the start of 2024, making the company the leader in the AI tech race. With competition and costs rising among giants like Microsoft (MSFT.O) and Alphabet (GOOGL.O), investors are watching Nvidia closely for more data on the state of the industry.

Expectations are high: Nvidia in focus
"Nvidia has an extremely high bar to meet, not just in terms of its financials but also in terms of its vision for the future of AI. This could have a significant impact on the entire tech sector, which has recently seen a downturn," said Ross Mayfield, an investment strategist at Baird.

Apple and Amazon: Opposite Directions
Apple (AAPL.O) shares ended the session up slightly 0.4%, while Amazon (AMZN.O) shares fell 1.4%.

The S&P 500 Index rose 0.16% to close at 5,625.80, underscoring investors' cautious optimism ahead of major market events.

Nasdaq and Dow Jones: Steady Gains Amid Expectations
On Tuesday, the Nasdaq Index rose 0.16% to 17,754.82, while the Dow Jones Industrial Average edged up 0.02% to end the day at a record high of 41,250.50. This was the second straight day that the Dow Jones has set a new high, underscoring the market's resilience.

Tech and Finance: The Gainers
Of the S&P 500's eleven major sectors, six ended the day with positive dynamics. The leader was the information technology sector (.SPLRCT), which added 0.63%. In second place was the financial sector (.SPSY), which rose 0.48%. The results suggest that investors continue to bet on leading industries despite economic uncertainty.

Consumer Confidence and the Labor Market: Contrasting Signals
Data released on Tuesday showed that U.S. consumer confidence hit a six-month high in August. However, despite the optimism, consumers showed concerns about the labor market, especially after the country's unemployment rate rose to a nearly three-year high of 4.3% last month.

Awaiting Key Economic Data
Investors now turn their attention to Friday's release of personal consumption spending data for July, which could provide further clues about the possible pace of interest rate cuts. Ahead of that event, traders are actively speculating on the likelihood of the Federal Reserve cutting rates by 25 or 50 basis points in September, based on data from the CME Group's Fed Watch tool.

Economic Outlook: Recession Risks Rising
Meanwhile, UBS Global Wealth Management raised its chances of a U.S. recession to 25% from 20%, citing a weakening labor market. The move reflects growing concerns about a possible economic slowdown despite continued gains in stock markets.

Paramount Global: Slump as Deal Drops
Paramount Global (PARA.O) shares plunged more than 7% after Edgar Bronfman Jr. decided to drop his bid for the company. The move cleared the way for Skydance Media to take control of Shari Redstone's media empire, sending the stock sharply lower amid uncertainty about the future.

Tesla: Slump as Trade Barriers Rise
Tesla (TSLA.O) shares fell 1.9% after the Canadian government announced a 100% tariff on imported electric vehicles made in China. The measure will affect all electric cars coming from China, including those made by Tesla, raising investor concerns about a potential decline in demand in the region.

Super Micro Computer under pressure: Hindenburg Research steps in
Super Micro Computer (SMCI.O) shares fell 2.6% after Hindenburg Research said it had taken a short position in the AI-focused server maker. The announcement added to the tension around the company, sending its stock sharply lower, underscoring the influence of big players on market volatility.

Housing: High mortgage rates under pressure
The PHLX Housing Index (.HGX) fell 1.2% amid data showing single-family home prices fell in June. Rising mortgage rates continue to weigh on housing demand, raising concerns about the future of the sector.

Market balance: Declines dominate
Amid mixed economic data, decliners outnumbered advancers in the S&P 500 (.AD.SPX) by 1.1 to 1. However, the S&P 500 posted 50 new highs and just one new low, while the Nasdaq posted 62 new highs and 57 new lows, indicating continued uncertainty among investors.

Trading Volumes: Market Activity Declines
Trading volumes on U.S. exchanges were below average, with 8.6 billion shares traded, well below the 11.9 billion average over the past 20 sessions. This decline in activity may indicate that investors are waiting for more concrete cues to inform their decisions.

Global Markets: Nvidia Results Awaited
Global stock markets were poised for new records on Wednesday, but further developments depended on the upcoming results from semiconductor investor favorite Nvidia. Meanwhile, the British pound hovered near a 2.5-year high amid expectations that the U.K. could lag the U.S. in cutting interest rates.

Asia Pacific: Mixed Results
MSCI's broadest index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) fell 0.2%. Meanwhile, Japan's Nikkei (.N225) was unchanged, indicating that investors in the region are cautious amid global economic challenges.

Oil: Uncertainty on Chinese demand
After the recent surge in tensions in the Middle East, oil prices have come under renewed pressure. The main factor was growing concerns about weak demand from China, which has caused a pullback in prices. Brent crude futures are trading just below $80 a barrel, reflecting uncertainty in global markets.

Nvidia: A Game-Changing Giant
Nvidia's (NVDA.O) market value continues to soar, driven by its leading role in developing artificial intelligence hardware. Since 2019, the company's shares have risen a whopping 3,000%, and its market cap has reached $3.2 trillion. This makes Nvidia a key player whose moves affect the entire market.

Nvidia's Market Impact: Forecasts and Expectations
According to Capital.com analyst Kyle Rodda, Nvidia's results not only determine the future of the company itself, but also set the tone for the entire tech sector. "Nvidia's revenue outlook serves as an indicator of the level of investment in AI, as well as the prospects of other large tech companies," Rodda said.

Global Markets: Moderate Growth and Caution
The S&P 500 (.SPX) showed a slight increase of 0.2% in the latest session, but Asian futures remained stable. Nasdaq 100 futures fell 0.1%, while FTSE futures rose 0.2%, reflecting mixed sentiment in markets.

Hong Kong: Consumer stocks fall
In Hong Kong, the Hang Seng (.HIS) index fell 1.1%, led by declines in consumer stocks. Particularly hard hit was water maker Nongfu Spring (9633.HK), whose shares fell 12% after weak financial results. This came amid a negative outlook from discount online retailer PDD Holdings, adding to the negative sentiment.

Tabcorp: Biggest drop in 15 years
Shares in Australian gambling company Tabcorp suffered a sharp decline, falling 17% to their lowest in four years. This was the biggest decline since 2008. The collapse was triggered by the company's warning that rising compliance and other costs would mean it would miss its profit targets.

Asian Markets: Stability Amid Currency Swings
In Asia, debt and currency markets were broadly stable. However, the Australian dollar briefly jumped to its highest since January at $0.6813. The gain was fueled by slightly better-than-expected inflation data, which sparked short-term optimism among investors.

Global Currencies: Dollar Slips
In global markets, the dollar's weakness, fueled by expectations of a US rate cut, helped other currencies gain. With short-term US interest rates above 5.25%, investors were starting to speculate that this is where the biggest declines will occur. In Asia, the dollar steadied at 144.42 yen and also strengthened 0.3% to $1.1145 per euro.

Interest Rate Outlook: Is a Cut Imminent?
Interest rate futures are now pricing in the possibility of a 100 basis point rate cut in the US this year. Last week, Federal Reserve Chairman Jerome Powell reiterated the possibility of a cut soon, saying "the time is now." The statement supported investor expectations for looser monetary policy in the near future.

BoE: Cautious Approach, Strengthening Pound
Unlike the US, the Bank of England has remained cautious in its actions, making sterling the best-performing currency in the G10 so far this year, up 4.1%. Sterling hit its highest in more than two years on Tuesday, hitting $1.3269, before retreating to $1.3227 in Asian trading.

UK Inflation: A Persistent Threat
Rabobank senior strategist Jane Foley said in a note that UK services inflation remains "uncomfortably high," adding pressure on the Bank of England and keeping the pound high. This confirms the need for further measures to combat inflation risks in the country.

BoE rates: Caution above all
Experts believe that the Bank of England is likely to cut interest rates no more than once a quarter. This view contrasts with the outlook of the US Federal Reserve, which is expected to make four successive 25 basis point rate cuts from September to January. This approach reflects the Bank of England's caution in the face of economic uncertainty.

Bond markets: Narrow gap
The rates market was stable, with the 10-year US Treasury yield at 3.83% and the two-year yield at 3.87%. Notably, the gap between the two was the narrowest in three weeks, indicating a convergence of long-term and short-term yield prospects. This could signal a stabilization in investor expectations for future interest rate movements.

Bitcoin and Gold: Mixed Movements
Cryptocurrency markets came under severe pressure as heavy selling in New York sent Bitcoin down 4% to $59,450. Meanwhile, gold held its ground at $2,517 an ounce, showing resilience amid market volatility. The mixed movements highlight growing instability in the financial sector and investors' differing perceptions of safe haven assets.
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Blackwell Delay, Stock Drop: What's Happening at Nvidia?

Nvidia: Investor Expectations Were Not Met

Nvidia's (NVDA.O) quarterly guidance on Wednesday disappointed investors who had been counting on a continued run for the company, a symbol of success in generative AI. While Nvidia delivered impressive results, it was not enough to meet lofty market expectations.

The company's shares fell 6% in after-hours trading, dragging down other chipmakers. The report was a moment of truth for the tech sector, where even Nvidia's strong results have drawn mixed reviews. Despite impressive financials, including strong growth and profits, investors were left scratching their heads.

Strategy in Question

Carson Group chief market strategist Ryan Detrick noted that the problem was the scale of expectations. "The bit size this time was much smaller than we've seen in the past," he explained. Even the company's updated guidance failed to excite investors in the same way it had in previous quarters, he said. "Nvidia remains a standout with 122% revenue growth, but it appears the bar was set too high this earnings season," he added.

Guidance Underperforms

While Nvidia's revenue and gross profit guidance for the current quarter were close to analyst expectations, they failed to continue the trend of recent quarters in which the company has consistently beaten Wall Street estimates. This eclipsed even the impressive figures for revenue and adjusted profit in the second quarter, as well as the announcement of a $50 billion share buyback.

Nvidia has shown more than 200% revenue growth over the past three quarters, but each success puts more pressure on the company. As Wall Street continues to raise its targets, Nvidia now faces a challenge that is becoming increasingly difficult to overcome.

Nvidia is betting on Blackwell

Nvidia announced that it has begun shipping test samples of its new chips, codenamed Blackwell, to partners and customers. These chips have been finalized and are ready for market. The company expects their sales to bring in several billion dollars in the fourth quarter, which should support the current financial results.

However, even such ambitious plans could not save the market from a wave of sell-offs. Shares of chipmakers such as Advanced Micro Devices (AMD.O) and Broadcom (AVGO.O) fell almost 4%. Asian giants SK Hynix and Samsung also felt the impact, falling 4.5% and 2.8%, respectively, in Thursday morning trading.

Market on Edge: What Nvidia's Decline Means

Nvidia's fate largely determines the dynamics of the entire tech sector. The company's shares have soared more than 150% since the start of the year, adding $1.82 trillion to its market value and pushing the S&P 500 to new all-time highs. However, if the stock continues to slide after the close of trading on Wednesday, the company could wipe out as much as $175 billion in market value.

The outlook has raised concerns among investors about potential ROI issues in generative AI, with some beginning to question whether tech giants can continue to invest so heavily in the data centers needed to support AI without risking their bottom lines. These concerns have already begun to reverberate through the market, dampening the recent AI-related gains in stocks.

AI Giants: What's Next for Them?

Nvidia's biggest customers, such as Microsoft, Alphabet, Amazon, and Meta Platforms (a banned organization in Russia), are expected to spend more than $200 billion on capital expenditures in 2024. Much of that money is being spent on building AI infrastructure.

But even those investment plans haven't kept the tech giants' stocks from falling. They were down less than 1% in over-the-counter trading on Wednesday, reflecting growing tensions in the market. Whether Nvidia and other tech leaders can live up to investors' lofty expectations remains an open question.

Investors are starting to worry about the future of AI

The once-unshakable generative AI market is starting to raise more and more questions among investors. "The entire market is now kind of tied to Nvidia's success, and that's becoming increasingly worrisome," eMarketer analyst Jacob Borne said. It seems like any swing in Nvidia's performance could have a significant impact on the overall perception of the AI sector.

Regulators are ramping up the pressure

Nvidia is also facing increasing pressure from regulators. In its latest quarterly report, the company reported requests for information from regulators in the US and South Korea. The requests cover various aspects of Nvidia's business, including GPU sales, supply chain allocation, base models, and partnerships and investments in AI companies.

Previously, the company had only mentioned similar requests from regulators in the EU, UK, and China. In this context, it is particularly noteworthy that the French antitrust authority is preparing to charge Nvidia with alleged anti-competitive practices. US media have also reported that Nvidia is being investigated by US regulators for possible attempts by the company to tie its networking equipment to popular AI chips.

Profit outlook: high, but under pressure

Despite the challenges, Nvidia continues to deliver strong financial results. In the third quarter, the company expects adjusted gross margins of 75%, with possible deviations of 50 basis points. For comparison, analysts predict a slightly higher figure of 75.5%, which, however, is not much different from the second quarter, where Nvidia posted a profit of 75.7%.

Even taking these figures into account, Nvidia's gross margins remain significantly higher than those of its competitors. In particular, AMD showed an adjusted profit of 53% in the second quarter. The gap is due to the high prices of Nvidia's chips, which continue to lead in speed and performance. However, the question remains whether the company's strong performance can be sustained amid mounting regulatory pressure and growing investor anxiety.

Nvidia's Outlook: Falls short of lofty expectations

Nvidia is forecasting revenue of $32.5 billion for the third quarter, with a 2% margin of error, slightly above the average analyst estimate of $31.77 billion, according to LSEG. The company posted revenue of $30.04 billion in the second quarter, significantly beating expectations of $28.70 billion. Adjusted earnings per share were 68 cents, also above the 64 cents expected.

Impressive Growth in the Data Center Segment

One of the keys to Nvidia's success is its rapid growth in data center sales. In the second quarter, this segment brought in $26.3 billion for the company, up 154% year-over-year and well above the $25.15 billion forecast. Compared to the first quarter, revenue in this segment increased by 16%.

In addition, Nvidia continues to generate significant revenue from the sale of chips to gaming and automotive companies, which also supports the company's overall financial results.

The market reacts to forecasts

Despite such significant gains, shares of some other companies, such as Broadcom and Advanced Micro Devices, fell by about 2%, while Microsoft and Amazon fell by almost 1%. This is due to the general tension in the market caused by Nvidia's forecasts, which turned out to be less ambitious than investors expected.

If the downward trend in Nvidia shares that began on Wednesday continues on Thursday, it could be a serious blow to the company, although not as severe as the 11% drop recorded earlier this year.

Demand for AI Chips: High Expectations and Harsh Reality

Relentless demand for AI chips has allowed Nvidia to beat analyst estimates multiple times in previous quarters, driving investor expectations to new heights. However, today's more subdued forecasts have eclipsed even the company's impressive second-quarter revenue growth and strong adjusted profit, not to mention its massive $50 billion share buyback.

The question remains: Can Nvidia continue to meet rising market expectations, or will its financials face greater challenges in the future?

Over-Expectations: Nvidia Fails to Meet Market

Despite its impressive financial performance, Nvidia is facing a situation where even good results fail to meet investors' wildly high expectations. "They beat expectations, but when expectations are that high, it's hard to meet market expectations," says JJ Kinahan, CEO of IG North America and president of online broker Tastytrade. His words reflect the sentiment of many market participants who expected Nvidia to deliver on its promise.

Fall Volatility: Market Ahead of Unstable Season

A weak reaction to Nvidia's earnings report could set the tone for market sentiment heading into what has historically been a volatile fall. According to CFRA, the S&P 500 has fallen an average of 0.8% in September since World War II, making it its worst month of the year. The stats are adding to investor anxiety, especially in the context of the current market volatility.

Investors will also be focused on next week's U.S. employment report, which could shed light on whether the weakness in the labor market that rocked stock markets in early August has been overcome.

AI Rally: Is Confidence Losing?

The optimism surrounding AI technology has been fueled in large part by Nvidia's incredible run, which has helped fuel Wall Street's strength over the past year. However, confidence in the rally has begun to fade in recent weeks as earnings results have disappointed many investors.

Tech giants like Microsoft and Alphabet have been particularly hard hit, failing to meet high expectations. Investors have also expressed concern about the companies' significant spending on new AI technologies. This spending, aimed at maintaining their leadership in AI, has raised concerns about its impact on future profitability. Microsoft and Alphabet shares have remained under pressure since their earnings reports last month, reflecting growing skepticism in the market.

The market is heading into a potentially challenging period, where inflated expectations and historical volatility could weigh heavily on investors. Questions remain about whether tech leaders can continue to deliver on expectations, creating uncertainty heading into the fall.

Nvidia Outlook: Steady Growth Amid High Expectations

Nvidia provided guidance for its fiscal third quarter, expecting revenue of $32.5 billion, with a potential for variation of 2%. That number is well above the average analyst estimate of $31.8 billion, according to LSEG, and represents an impressive 80% growth compared to the same quarter last year.

Gross Margin: Ambitious Targets

The Santa Clara, California-based company is also targeting adjusted gross margin of 75%, with a potential for variation of 50 basis points. That's slightly below the average analyst estimate of 75.5%, reflecting the market's high expectations for the leading chipmaker.

Market reaction: Pre-earnings correction

Nvidia shares were down 2.1% on Wednesday ahead of its quarterly earnings report. However, despite this temporary dip, the company remains one of the leaders of the AI rally, with shares up 150% since the start of 2024. This phenomenon makes Nvidia one of the main beneficiaries of the current AI-driven boom on Wall Street.

Stock valuation: A comparative analysis

Interestingly, despite its impressive growth, Nvidia shares trade at a price-to-earnings multiple of 36 times earnings, below the average of 41 times over the past five years. Meanwhile, the S&P 500, which is often used to gauge major market trends, is trading at 21 times expected earnings, above the five-year average of 18 times. Nvidia's guidance continues to surprise and excite investors, but it also highlights the mounting pressure and high expectations for the company. Nvidia faces some tough quarters ahead, and the entire market will be watching to see if the company can meet and exceed the expectations it has set for itself.
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USD/JPY: Analysis and Forecast

During the Asian session today, following the release of the CPI (Consumer Price Index) data from Tokyo, the Japanese yen attempted to regain its recent gains against the U.S. dollar. The rise in inflation in Tokyo strengthens the Bank of Japan's aggressive monetary policy stance, which supports the yen and pressures the USD/JPY pair downward. However, during the European session, the dollar began to reclaim its strength.

The downward potential for the USD/JPY pair is limited as the U.S. dollar, following yesterday's stronger-than-expected economic data, is trying to maintain its recent gains. However, dovish comments from the Federal Reserve could restrain the further growth of the U.S. dollar.

Today, traders should focus on the U.S. PCE (Personal Consumption Expenditures) index for insights into the future direction of U.S. interest rates and potential trading opportunities.

From a technical standpoint, the pair is above the downward trendline, indicating a weakening of the bearish bias. However, the RSI (14-day Relative Strength Index) remains above 30, confirming the bearish trend.

Additionally, the USD/JPY pair may test the downward trendline at the 144.50 level.

A break below this level could see the pair move toward the seven-month low recorded on August 5, with further support at 140.25.

Regarding resistance, if the pair consolidates above the 145.00 level, it could open the path to 146.00, and a move into the 146.500 supply zone could increase the likelihood of a bullish trend.
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Hot forecast for EUR/USD on September 9, 2024

It seems almost unbelievable, but the United States Department of Labor reported a decrease in the unemployment rate from 4.3% to 4.2%. This is even though employment growth over recent months should have led to an increase in unemployment, which had been occurring consistently for several months. Considering the population size, growth rate, and age demographics, employment in the United States should increase by just over 200,000 jobs per month to maintain a stable unemployment rate. However, it increased by only 1,717,000 jobs over the last twelve months, or approximately 143,000 jobs monthly. The United States Department of Labor also publishes data on the number of new jobs created outside of agriculture. This figure indicates the maximum potential for employment growth. According to the latest data, 142,000 jobs were created. Over the same previous twelve months, 2,358,000 jobs were created, or about 196,000 per month, which is also not enough. Thus, even if we assume that the employment data is not entirely accurate, there still aren't enough new jobs to stabilize the labor market.

Moreover, only 673,000 new jobs were created in the last five months, or about 135,000 monthly. With such figures, unemployment should only rise, as observed in previous months. But now, inexplicably, it has decreased.

Nonetheless, despite apparent inconsistencies and troubling questions, the dollar somewhat strengthened its positions. Considering the ongoing election campaign and the fact that the majority of American media clearly support the Democrats, one should not expect further development of this issue. On the contrary, leading media outlets will point to the decrease in the unemployment rate without any questions or the like, citing it as an argument in favor of Kamala Harris. Thus, the oddities with the labor market data will quickly be forgotten, at least in the media space, thereby creating a basis for strengthening the dollar.

The EUR/USD pair showed significant volatility towards the end of last week. The lever for speculators has been the information and news flow, particularly the U.S. Department of Labor's report. As a result, the quote initially jumped above the 1.1150 mark, then plummeted below 1.1100.

In the 4-hour chart, the RSI technical indicator has lost strength due to high volatility. However, it is worth noting that towards the close of trading, the indicator stabilized below the average level of 50, indicating an increase in the volume of short positions on the euro.

Regarding the Alligator indicator in the same time frame, the moving average lines are intertwined with each other. In this case, the indicator is in confusion.

Expectations and Prospects
Based on the inertial-speculative cycle, the movement towards the upper area of the psychological level of 1.1000/1.1050 is not ruled out. This price area serves as a support for sellers in the market. However, the speculation factor, which will continue this week, should be noted. Thus, price movements can quickly change directions.

The complex indicator analysis points to a downward cycle in the short-term and intraday periods. Indicators point to an upward trend in the medium term.
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