Daily Market Analysis from ForexMart

XAU/USD. Analysis and Forecast

Gold prices remain under pressure near the lower edge of their daily range, influenced by several factors. The U.S. dollar has paused its corrective pullback from the nearly three-month high reached yesterday, supported by expectations of a more gradual rate reduction by the Federal Reserve. Simultaneously, a positive risk sentiment undermines the growth of the precious metal, traditionally considered a safe-haven asset.analytics671b6a03c5cfb.jpgHowever, the ongoing decline in U.S. Treasury yields is preventing dollar bulls from adopting aggressive positions. Additionally, political uncertainty in the U.S. ahead of the presidential elections on November 5, and escalating tensions in the Middle East, may lend moderate support to the precious metal.

For trading opportunities today, focus on U.S. macroeconomic data, including durable goods orders and the revised University of Michigan Consumer Sentiment Index.

From a technical perspective, recent price action on short-term charts has formed a bearish "head and shoulders" pattern. The neckline support of this pattern is situated around the $2,707 level, which now serves as strong support. Any further selling that drives the price below the psychological level of $2,700 would pave the way for deeper losses, pulling the price down to the $2,685 support level, with the potential to extend further towards the $2,662 level.

On the other hand, the $2,740 level has emerged as an immediate strong barrier. Sustained strength beyond this region would invalidate the "head and shoulders" pattern, allowing the precious metal to target a retest of the historical high around $2,758, which was reached earlier this week. A subsequent upward movement could push the XAU/USD pair towards the psychological level of $2,800.
More analytics on our website: bit.ly/3VobLUv

Nasdaq up, Capri down: Surprise winners and losers of the week

Nasdaq Rises: Hope for the "Magnificent Seven" Inspires Investors
Friday's trading session on the Nasdaq closed on a positive note, fueled by gains in mega-cap stocks as investors eagerly awaited upcoming earnings reports from some of Wall Street's largest players. This anticipation created a notable surge of interest across the market.

Tesla Back in the Spotlight
Tesla shares became a symbol of renewed optimism on Wall Street. Brian Jacobsen, Chief Economist at Annex Wealth Management, noted that Tesla's performance strengthened investors' belief that the rally in tech giants — known as the "Magnificent Seven" — is far from over. This elite group includes the stocks of major companies that are sensitive to interest rate changes and actively involved in AI advancements.

Nvidia Takes the Lead Over Apple
Amid this tech rally, Nvidia (NVDA.O), the largest chipmaker, briefly surpassed Apple (AAPL.O), making it the most valuable company by market capitalization. This achievement highlights the high interest in AI-developing companies, further supporting the entire tech sector.

A Test of Resilience: Bond Yields and Employment Data
Investors are also closely monitoring U.S. 10-year Treasury yields, which rose again. On Friday, they approached a three-month high of 4.26%. This level of yield generally pressures the stock market, raising questions about the future of Federal Reserve interest rates. All eyes are now on next week's U.S. employment data, which may provide clues about the Fed's upcoming rate decisions.

Dow Falls: Banks and McDonald's Struggle
The Dow Jones Industrial Average (.DJI) dropped by 259.96 points, or 0.61%, to settle at 42,114.40. Meanwhile, the S&P 500 (.SPX) slipped by 1.74 points, or 0.03%, to 5,808.12, while the Nasdaq Composite (.IXIC) gained 103.12 points, or 0.56%, reaching 18,518.61.

The Dow Jones dropped primarily due to weak bank stock performance. For example, shares of Goldman Sachs (GS.N) fell by 2.27%. McDonald's (MCD.N) also lost 2.97% amid a negative reaction to news of an E. coli outbreak allegedly linked to its burgers.

Next week promises to be eventful, as the earnings results of major companies and economic data could set a new tone for Wall Street.

Stock Market in Tension: High Valuation of S&P 500 Under Pressure of Expectations
The S&P 500 (.SPX) has shown impressive annual growth of about 22%, but recent days have seen a pullback from record levels. Despite this, stocks remain highly valued, making them vulnerable in the event of unexpected disappointments in the near future.

Record Price-to-Earnings Ratio: Risk or Growth Signal?
According to LSEG Datastream, the S&P 500 P/E ratio, calculated based on expected earnings over the next 12 months, reached 21.8. This value is approaching a three-year high, highlighting investors' high expectations. High multiples, as known, can provoke a deeper correction in case of negative news, and in the coming days, investors, as noted by Chase Investment Counsel Corp. President Peter Tuz, will be "on pins and needles."

Key Market Players on the Verge of Earnings
Five of the largest tech giants from the "Magnificent Seven" group — the very companies that have consistently influenced the stock market in recent years — are preparing to release their quarterly reports. Next week, investors will closely monitor the results of leaders such as Alphabet (GOOGL.O), Microsoft (MSFT.O), Meta Platforms (banned in Russia), Apple (AAPL.O), and Amazon (AMZN.O). The outcome of their reports could set the tone for the market in the near future.

High Stakes for Tech Giants
The combined market value of these giants constitutes 23% of the total S&P 500. This means that their financial results could significantly impact the overall market, as any fluctuation in these corporations' stocks will inevitably affect the main indices.

Investors on Edge: The "Magnificent Seven" Under Close Scrutiny
Shares of the so-called "Magnificent Seven" companies are currently trading at a forward P/E ratio of 35. This is significantly above the average for other S&P 500 companies, as these tech giants have consistently outperformed in profit growth. However, experts predict that this gap will gradually narrow in the coming quarters.

High Multiples Under Pressure: Expectations in the Balance
Bryant VanCronkhite, Senior Portfolio Manager at Allspring Global Investments, noted that high valuations are only justified as long as these companies maintain stable growth. "If the justification for these high valuations weakens, there could be significant downside," he emphasized, adding that stock price fluctuations will directly depend on the consistency of growth metrics.

AI Investments: Path to Future Gains or Risky Bet?
Investors are paying close attention to these tech giants' spending on artificial intelligence. Companies with massive AI platforms, such as Microsoft, Amazon, Alphabet, and Meta, plan to increase capital spending by 40% this year. Meanwhile, other companies in the S&P 500 are expected to cut capital spending by 1% in 2024, according to BofA Global Research. This underscores the strategic importance of AI initiatives for tech leaders, but also raises questions about the potential return on these investments.

Tesla Kicks Off Earnings Season: Musk Forecasts Sales Growth
Tesla (TSLA.O) became the first of the "Magnificent Seven" to release its latest quarterly results. The company saw a boost in its stock price after CEO Elon Musk announced plans to increase car sales by 20-30% next year. This positive outlook heightened interest in the upcoming earnings reports and further fueled enthusiasm for Tesla shares, which remain influenced by the company's ambitious goals.

In the coming weeks, investors will assess whether the new investments in artificial intelligence and technology scaling justify the high expectations placed on the "Magnificent Seven," or if the market will need to adjust its hopes.

A Packed Earnings Week: Corporate Results and Key Economic Data
The upcoming week promises to be one of the busiest for the third-quarter earnings season, with over 150 companies from the S&P 500 expected to report their financial results. This is a crucial moment for the market, as many investors are counting on solid numbers that could drive further growth.

Employment Report: New Jobs Under Analysts' Spotlight
The U.S. employment report, expected on November 1, comes amid debates over whether a robust economy could prevent the Federal Reserve from cutting interest rates. Economists estimate that the U.S. economy added around 140,000 jobs in October. However, recent severe storms could complicate the data. Special attention will be on wage data, as it may provide insight into future inflation dynamics, explained Nanette Abuhoff Jacobson, Global Investment Strategist at Hartford Funds.

Treasury Yield Rises: Shifting Expectations
This week, U.S. Treasury yields reached three-month highs, indicating rising expectations of a less dovish Federal Reserve policy. Moreover, there is an increasing likelihood of higher spending under a new president. Political betting markets have recently raised the probability of a Trump victory, as the Republican candidate is associated with protectionist policies, including tariffs, that could lead to higher inflation.

Mounting Tension: Elections and the Fed's Decision
Next week marks the beginning of a series of significant events that could impact the market. From Election Day on November 5 to the Federal Reserve's announcement on November 7, investors may find themselves in a state of anxious anticipation. In such an environment, every economic report and corporate result will be critical in shaping future market sentiment.

Volatility Returns: VIX Indicator Signals Increased Risk
The Cboe Volatility Index (.VIX), known as an indicator of demand for protection against market swings, is again showing signs of strain. After dipping below the 15 mark at the end of last month, the VIX is now hovering around 19, reflecting growing unease among market participants ahead of the upcoming election.

Analysts Warn: Prepare for Swings
UBS Global Wealth Management analysts, in a Thursday note, highlighted that investors should brace for increased volatility ahead of the November 5 presidential election. As Election Day approaches, market confidence will likely remain under pressure, and any news event could trigger sharp price swings.

Vulnerable Sentiment: Market on the Verge of Change
Experts believe that the high volatility is tied to overall uncertainty and political risks that typically accompany election periods in the U.S. Investors seeking to protect their assets are increasing demand for protective options, which is reflected in the VIX's rise.
More analytics on our website: bit.ly/3VobLUv

Boeing Falls, Russell 2000 Gains: How Wall Street Reacts to Weekly News

Wall Street Up at Start of Busy Earnings Week
The U.S. stock market ended the day in the green on Monday amid growing optimism ahead of a flurry of earnings from major corporations and the final push before the November 5 presidential election. Investor confidence was boosted by the fact that energy supplies remain stable despite the escalation in the Middle East, which has not affected critical infrastructure.

Israel's Response: Focus on Defense Facilities
Israel's response to the Iranian attack earlier this month focused on military plants and strategic sites near Tehran, leaving refineries and nuclear facilities out of the strike zone. That caution has reduced the risk to global oil supplies and provided reassurance to investors worried about the impact of geopolitical tensions on the energy sector.

Earnings Week: Markets Await the Magnificent Seven
This week's key event will be the release of quarterly earnings reports from 169 companies in the S&P 500, including many of the tech leaders. Investors are particularly focused on the so-called "Magnificent Seven" — the tech giants that have driven the market to record highs. Alphabet, Meta, and Apple are set to report results in the coming days, fueling speculation about further gains.

The major indexes gained steadily on Monday, with the S&P 500 up 15.4 points (+0.27%) to 5,823.52; the Nasdaq Composite up 48.58 points (+0.26%) to 18,567.19; and the Dow Jones up 273.17 points (+0.65%) to close at 42,387.57.

Nvidia Overtakes Apple, AI Remains in Focus
Last week was a big one, with Nvidia overtaking Apple in market value to become the world's most valuable company. Investors are now eagerly awaiting data on AI spending, which could play a key role in the tech sector's performance given the huge expectations for AI in the coming years.

Corporate Earnings: A Look Ahead
"Earnings reports will be key to understanding what capital expenditures companies can afford to make next year," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. Corporate executives will be disclosing their plans for the future, which will be an important guide for investors. Microsoft and Amazon, in particular, will be in the spotlight this week when they report results.

Small Caps Take the Lead
The Russell 2000 index, which tracks small-cap companies, rose 1.63% today, outperforming the major indexes. The jump underscores investors' appetite for riskier assets as larger companies focus on earnings.

Energy Slips, Financials Gains
As crude oil prices fell 5%, the energy sector took a hit, falling 0.65%. The easing of concerns over oil supplies has dampened interest in energy, while financials have been the most dynamic sector, demonstrating the attractiveness of banking and insurance assets in the current economic environment.

Market Optimism: Stocks Rise
The New York Stock Exchange was dominated by gainers today, with nearly two gainers for every one that fell (a ratio of 1.88 to 1). An impressive number of stocks reached new highs, with the NYSE recording 147 new records and 41 new lows. The S&P 500 posted 15 new yearly highs and 2 new lows, while the Nasdaq Composite posted 101 new highs and 67 new lows.

Economic Data: What to Expect from the Fed
Markets will be watching economic data closely this week, especially the Consumer Price Index (CPI) due out on Thursday. The data is critical for the Federal Reserve as it is an indicator of inflation and could influence its future policy.

Presidential Election: A New Chapter or Continuation of Politics?
With the presidential election approaching, investors are keeping a close eye on the political situation in the United States. Despite the close forecasts, markets are considering the possibility of a second Donald Trump administration, adding an additional layer of uncertainty to the investment strategy for the coming years.

Boeing Seeks Funding as Shares Fall
Aircraft giant Boeing shares fell 2.8% after the company said it would raise up to $22 billion in additional funding. The funds are expected to support Boeing as it struggles financially with an ongoing labor strike that is having a significant impact on its business.

3M Supports Dow with JP Morgan
3M shares jumped 4.4%, providing significant support to the Dow. The gains came after analysts at JP Morgan raised their price target for the industrial conglomerate, boosting investor optimism and adding to the positive sentiment in the market.

Japanese Yen Hits Lows
The yen fell to a three-month low against the US dollar. The moves came amid political instability in Japan following the recent elections, which left the country in a state of political uncertainty that has spilled over into the currency market.

US Jobs Report: Key Data on the Horizon
Markets are eyeing US jobs data for October on Friday. The economy is expected to add 123,000 jobs and the unemployment rate will remain steady at 4.1%. The report will be a key indicator of the health of the economy ahead of the presidential election in a week.

The White House Race: In the Homestretch
Ahead of the US presidential election, polls show a tight race, with Vice President Kamala Harris holding a narrow lead over Donald Trump, 46% to 43%, according to a national survey. The November 5 vote is expected to be one of the closest and most unpredictable in recent memory.

Bond Yields Peak: Election and Data Awaiting
With political and economic data in the air, the yield on the US 10-year Treasury note has hit a three-month high. On Monday, the yield rose 4.4 basis points to 4.274%, indicating a growing appetite for longer-dated assets ahead of the election and more economic data.

'Calm before the storm' on Wall Street
"We are experiencing a kind of calm before the storm," is how Subadra Rajappa, head of US rates strategy at Societe Generale, described the current situation. According to her, investors have become cautious ahead of the presidential election, trying to minimize risks.

Oil falls: calm in the Middle East supported prices
Oil prices fell sharply as fears of an escalation in the Middle East eased. Brent crude futures closed at $71.42 a barrel, down 6.09%, or $4.63. American WTI crude also fell, by 6.13% or $4.40, to close at $67.38 per barrel. The decline put pressure on energy stocks, and the S&P 500 energy sector ended the day down 0.7%, although the major indices remained in positive territory.

Truth Social shares soar
Shares in Trump Media & Technology Group, the owner of the Truth Social platform, jumped 21.6% on Monday, continuing their recent rally. Interest in the company is growing in light of the upcoming elections and increased attention to media assets associated with Donald Trump.

Global markets are on the rise
Global markets also saw growth, with the MSCI index for world shares rising by 0.29%, or 2.44 points, to close at 847.93. The European STOXX 600 index also ended the day up 0.41%, reflecting positive investor sentiment in the global market.

Yen under pressure: political instability in Japan
The Japanese yen continues to remain under pressure due to political changes in the country. The results of the latest elections have weakened the ruling coalition, and this brings significant uncertainty to the political course and monetary policy. The Liberal Democratic Party of Japan lost its parliamentary majority, leaving the country with 215 seats in the lower house instead of the required 233, which has presented the country with new challenges in governance and financial policy.

Dollar strengthens against the yen
The dollar against the yen shows significant gains, rising 1% to reach 153.88, which was the yen's lowest value since late July. Later, the dollar corrected slightly, ending the trading session up 0.64% at 153.28. This reflects the continued interest in the dollar despite the instability that has gripped the Japanese currency following the country's political changes.

Dollar under pressure: rate against world currencies
The dollar index, which tracks its value against a basket of major world currencies, showed a slight decline of 0.08%, reaching 104.30. At the same time, the euro strengthened by 0.19%, reaching $1.0813. These indicators indicate the complex dynamics of currency markets against the backdrop of global political and economic factors, as well as the delicate balance between the American and European currency blocs.
More analytics on our website: bit.ly/3VobLUv

Alphabet Soars as Nasdaq Hits New High: How Tech Giant Breathed Life into Market

Tech Boom and Big Expectations
The Nasdaq stock index hit a new record close on Tuesday, while the S&P 500 showed positive dynamics. However, the Dow remained in the red, while investors kept a close eye on financial reports. The main event of the evening was the results of Google's parent company, Alphabet (GOOGL.O), which were released after the end of the trading day.

Alphabet, one of the so-called "Magnificent Seven" tech giants, reported earnings that beat market expectations, adding to investor confidence.

Earnings Week: Focus on the Magnificent Seven
This week has been one of the busiest this quarter for the S&P 500, with five of the "Magnificent Seven" reporting their quarterly results. The reports could help determine whether Wall Street continues to embrace the tech and AI bullishness that has driven stock indexes to new highs this year.

Yield Distortion: Focus on the Magnificent
"One of the key things the market is thinking about right now is whether there's a potential plateau in earnings growth between the Magnificent Seven, which are heavily weighted in the market, and the rest of the pack," explains Bill Mertz, head of capital markets research at U.S. Asset Management. Bank.

Market Summary: Facts and Figures
The Nasdaq Composite (.IXIC) rose 145.56 points, or 0.78%, to close at 18,712.75, surpassing its previous record close in July.

The S&P 500 (.SPX) added 9.45 points, or 0.16%, to close at 5,832.97. Meanwhile, the Dow Jones Industrial Average (.DJI) fell 154.52 points, or 0.36%, to close at 42,233.05.

Tech Prospects: New Wave or Correction?
The next earnings results from the Magnificent Seven will be crucial in assessing whether the tech and AI sector can continue to rise or whether the market will face a correction.

VF Corp on the Rise: Return to Profit
Investors reacted enthusiastically to quarterly earnings reports, carefully assessing the prospects of companies. One of the bright spots was VF Corp (VFC.N), the owner of the Vans brand. The company reported its first profit in two quarters, sending its shares up an impressive 27%. VF Corp's rally was one of the few positive signs that gave the market optimism.

D.R. Horton Disappoints with 2025 Outlook
However, not everyone had a good day. Large U.S. homebuilder D.R. Horton (DHI.N) fell 7.2% after issuing a 2025 outlook that was below analysts' expectations. Other companies in the construction sector followed suit, sending the PHLX Housing Index (.HGX) down 2.5%. The housing market remains under pressure, and sentiment in the sector is still mixed.

Ford on the decline: Profit forecast misses expectations
There was also bad news from auto giant Ford (F.N), whose shares lost 8.4% on the day. The company said it was likely to meet only the lower end of its full-year profit forecast. The news dampened investor interest and raised concerns about the auto industry's prospects amid a tough economic environment.

Visa and Chipotle report profits after the close
Payment processor Visa (V.N) and restaurant chain Chipotle Mexican Grill (CMG.N) also reported after the close. Their figures are of particular interest because they could impact investor confidence in the resilience of the services sector amid ongoing volatility.

Labor Market Worries and Surprisingly High Confidence
According to the Labor Department's JOLTS survey, the number of job openings in the United States fell to 7.44 million in September, while economists had forecast about 8 million. This may indicate a weakening of hiring activity and adds uncertainty to the economic picture. However, contrary to this, the consumer confidence index unexpectedly rose to 108.7 in October, which significantly exceeded the forecast of 99.5 and indicates continued optimism among consumers.

Communications Sector Growth Amid Utilities Fall
The leader of growth on this day was the communications sector (.SPLRCL), supported by such giants as Alphabet and Meta (banned in Russia), while utilities (.SPLRCU) fell by 2.1%.

Treasury yields cap gains
Adding to the pressure on markets was the benchmark 10-year Treasury yield, which rose to 4.3%, the highest since early July. The jump in yields points to a possible tightening of business conditions, curbing the strong gains in stock indices.

Investors brace for volatility as earnings and geopolitics play on nerves
Tough weeks lie ahead for Wall Street, as corporate earnings rise, investors must cope with the escalating situation in the Middle East and prepare for the US elections on November 5. The Federal Reserve will meet shortly after this important event to discuss further steps to regulate financial policy. These key moments, intertwined with corporate earnings, promise to add even more tension to the markets.

Selling Dominance on NYSE: Markets Record Gap
The New York Stock Exchange (NYSE) saw a 1.78-to-1 ratio of selling assets to buying assets, with 176 new highs and 75 new lows reported for the day among stocks traded on the exchange. The S&P 500 posted 19 new highs over the past 52 weeks and no new lows, while the Nasdaq Composite posted 93 new highs and 70 new lows.

Trading Activity Above Average
Trading volume on U.S. stock exchanges totaled 12.59 billion shares, above the 11.5 billion share average over the past 20 trading days. The increased activity indicates growing investor interest as investors navigate the growing volume of corporate earnings and expected volatility.

Stocks Rising: Betting on Tech and AI
US stocks have been on a steady rise this year, driven in large part by optimism around tech companies and the booming field of artificial intelligence. With such expectations, investors continue to look to long-term opportunities, even as turbulence may hit the market in the coming weeks.

Political Heat: US Prepares for Election
The decisive round of the US presidential election will take place on November 5. The race between incumbent Vice President Kamala Harris, representing the Democratic Party, and former President Donald Trump, the Republican nominee, remains tight, with polls showing a narrow gap in the ratings of the candidates. Political uncertainty is adding to the jitters in the markets, where traders and investors are closely monitoring the news.

Short-Term Outlook: Risk Reduction and Trading Turbulence
"I wouldn't be surprised to see some de-risking in the coming days and some turbulent trading leading up to Election Day next Tuesday," said Michael Brown, senior strategist at Pepperstone. In the short term, the market is likely to remain on edge, balancing between internal and external factors that promise a variety of scenarios.

Expectations ahead of the employment report: investors are waiting in anticipation
The US Department of Labor's JOLTS survey found that the number of job openings in September was 7.44 million, short of the 8 million forecast, raising concerns about the state of the labor market. Investors are already eagerly awaiting Friday's US employment report for October, which could provide some clarity and influence the Federal Reserve's next steps.

World indices: MSCI in the green, STOXX 600 in the red
Amid global uncertainty, the MSCI Worldwide Equity Index (.MIWD00000PUS) showed a slight increase of 0.02%, reaching 848.08. However, Europe's STOXX 600 (.STOXX) fell 0.57%, reflecting weak sentiment in European markets.

Bond yields and US election: Caution ahead of change
US 10-year Treasury yields neared their highest in four months as investors remain cautious about buying debt ahead of an election that could impact the country's fiscal policy. However, a successful auction of seven-year bonds saw yields ease slightly to 4.272%.

Japanese yen stabilises after three-month low
The yen, which lost ground on Monday, found support amid political instability, with the defeat of Japan's coalition government over the weekend raising uncertainty about the country's future fiscal and monetary policies. The dollar ended the day up 0.12 percent at 153.47 yen ahead of a decision by the Bank of Japan, which analysts expect to leave interest rates unchanged at its meeting on Thursday.

Political Turbulence in Japan: What's Next for the Liberal Democratic Party
With the election over, Japan is entering a difficult phase of coalition-building. The loss of the majority in the Diet by Prime Minister Shigeru Ishiba's Liberal Democratic Party and its ally Komeito is creating uncertainty for the country's budget plans and complicating the Bank of Japan's efforts to normalize rates. The political shake-up in the Japanese government could lead to increased fiscal spending, potentially putting pressure on the country's financial stability and jeopardizing the current monetary policy stance.

Opposition Leader Seeks Monetary Stability
The head of the Democratic Party for the People, Japan's main opposition force, said on Tuesday that the Bank of Japan should refrain from making any drastic changes to its current ultra-loose monetary policy. As long as real wages remain stable, he said, maintaining current financial market conditions is important for economic stability.

Currency Market: Dollar and Euro Little Changed
On the currency market, the dollar index, which measures the dollar against a basket of other currencies, added 0.01% to 104.27. The euro, meanwhile, lost 0.03% to settle at $1.0815. These fluctuations highlight investors' cautious sentiments amid global uncertainty.

Oil Prices: Weak Recovery from Crash
Oil futures ended the day slightly lower after a significant 6% drop in the previous session. While geopolitical factors continue to weigh, Axios reporter Barak Ravid reported that Israeli Prime Minister Benjamin Netanyahu is planning a meeting to seek a diplomatic solution to the conflict in Lebanon. The news has brought some stabilization to commodity markets.

Brent crude fell 30 cents, or 0.4%, to $71.12 a barrel, while U.S. West Texas Intermediate (WTI) futures fell 17 cents, or 0.3%, to $67.21 a barrel.

Online Advertising Drives Market Caps: Alphabet and Snap Lead Gains
On Tuesday, online advertising stocks enjoyed a particularly strong evening. Upbeat quarterly results from giants Alphabet (GOOGL.O), Reddit (RDDT.N) and Snap (SNAP.N) boosted investor confidence, adding more than $100 billion to their combined market value. With Amazon (AMZN.O) and Meta Platforms (banned in Russia) set to report, the market remains keen on tech and advertising stocks.

Alphabet Gains Strength as Cloud, Advertising Take Center Stage
Alphabet shares soared 4% in after-hours trading after reporting earnings that beat analysts' estimates. The company's robust growth in digital advertising and a surge in demand for cloud services linked to artificial intelligence technologies played a key role in the company's success, bolstering investor confidence that Alphabet will continue to lead the tech sector.

Snap Rebounds with Positive Results and User Growth
Online advertising niche Snap (SNAP.N) also posted strong results, beating revenue and active user estimates. The company's shares jumped 7% on the news, despite facing stiff competition from TikTok and other major platforms. Snap has had a tough year, however, with its shares down more than 30% since the start of 2024, and only a strong quarter has helped restore some of its investor confidence.

Reddit is gaining ground in the ad space: AI-powered content licensing impact
Reddit (RDDT.N) is also not far behind, with shares up 20% in extended trading after an upbeat quarterly revenue outlook. This is due to successful AI-powered content licensing deals, which have attracted new ad deals to the platform. Since Reddit went public on Wall Street in March, the company has been gradually increasing its influence, which is now starting to pay off financially.
More analytics on our website: bit.ly/3VobLUv

AI Breaks and Breaks: Amazon Spends, Microsoft Gains, Nasdaq Slips

U.S. Indexes Close Lower: 'Chip' Fever and Earnings Expectations
The American stock market ended Wednesday with a decline, as chipmakers slipped and investors paused, awaiting corporate earnings.

Microsoft: Beating the Estimates
After the market closed, Microsoft and Meta Platforms (banned in Russia) reported earnings that exceeded revenue forecasts. These positive results drew attention to upcoming reports from other tech giants, reinforcing confidence in the "heavyweights" of the tech market.

Alphabet: 'Magnificent Seven' Reports Offer a Bright Spot
Among the largest players in the top "Magnificent Seven," Alphabet also showed impressive results. Its 2.8% growth on Tuesday after beating third-quarter revenue and earnings expectations gave the market a small boost, helping to offset the negative impact from the decline in chipmaker stocks.

Chipmakers Under Pressure: AMD and Qorvo Slump
Shares of Advanced Micro Devices (AMD) and Qorvo faced significant pressure. Grim forecasts triggered drops of 10.6% and 27.3% in their stock prices, respectively.

Heavy Losses for Super Micro and Nvidia
Super Micro Computer dropped 32.6% after Ernst & Young stepped down as the company's auditor. Nvidia also ended in the red, with a 1.4% drop.

Tech Sector Hit Hard
The information technology sector saw the biggest drop among S&P 500 sectors, down 1.34%, while the communication services sector showed slight growth due to Alphabet's success.

Market Optimism Fades
According to Michael James, managing director of equity trading at Wedbush Securities, the volatility in Qorvo, Advanced Micro, and Super Micro stocks is raising questions and "dulling the rosy picture" set by Alphabet's impressive report.

Focus Turns to Earnings and Forecasts
"There will be a laser focus on earnings and company guidance reports," added James, highlighting the intense anticipation among investors.

Small Losses but Significant Expectations
Wednesday ended with small declines across major indexes. The Dow Jones Industrial Average fell by 91.51 points (0.22%) to settle at 42,141.54. The S&P 500 also slipped, down by 19.25 points (0.33%) to 5,813.67, while the Nasdaq Composite recorded the largest drop, losing 104.82 points (0.56%) to close at 18,607.93.

U.S. Economy Grows but Below Expectations
According to preliminary data from the U.S. Department of Commerce, GDP grew by 2.8% annually in the third quarter, slightly below the forecasted 3.0% growth rate. This minor gap between actual and expected results raised some concerns in the market, although the overall growth trend remains positive.

Private Sector Exceeds Job Growth Expectations
In other positive news, the private sector saw stronger-than-expected job growth. October added 233,000 new jobs, above forecasts, signaling steady recovery in the labor market and giving investors a reason for optimism, reinforcing expectations of consumer activity and economic strength.

Political Tensions: Harris and Trump Run Neck-and-Neck
With the upcoming presidential election on November 5, the race between Kamala Harris and Donald Trump is a hot topic among market participants. According to the latest polls, the candidates are running neck and neck. Investors are keeping a close eye on the election's potential impact on economic policy and the market.

Disappointing Corporate Reports: Eli Lilly and Starbucks
Eli Lilly disappointed investors, dropping 6.2% after falling short of sales forecasts for its popular weight loss and diabetes medications. Analysts expected better results, leading to a decline in the pharma giant's stock.

Starbucks reported a decline in quarterly sales, with a decrease in global demand impacting the company's profits. Investors closely monitoring the cafe chain received confirmation that global economic challenges have affected even the largest brands.

NYSE Remains Positive Despite Declines
Despite the overall market downturn, the New York Stock Exchange showed a positive balance: for each stock that declined, another rose. A total of 210 new highs and 52 new lows were recorded, indicating a mixed sentiment, with many investors remaining optimistic.

New Highs and Lows: S&P 500 and Nasdaq Show Divergent Movement
The S&P 500 recorded 24 new 52-week highs and five new lows, while the Nasdaq Composite saw 126 new highs and 98 new lows. This divergence in performance illustrates mixed investor sentiment, with investors balancing between growth expectations and concerns for the tech sector.

Amazon Up Next: Markets Brace for Earnings Report
Amazon is expected to release its financial results on Thursday, and the forecasts suggest trends similar to recent reports from other tech giants. Investors worry that aggressive investments in AI and infrastructure could impact the company's high margins, potentially reducing interest in its stock.

Tech Sector Under Pressure: AI Comes at a High Cost
Shares of major tech giants continued to decline in aftermarket trading on Wednesday. A key challenge these companies face is balancing ambitious AI initiatives with the need to demonstrate short-term returns. "Investing in AI is costly. Building capacity is expensive," commented GlobalData analyst Beatriz Valle.

Capacity Competition: Capital Expenditures on the Rise
Tech corporations are in a race to build AI infrastructure, but widespread adoption of the technology will take time. According to Visible Alpha, Microsoft's quarterly capital expenditures now exceed its annual spending level before 2020. Meta has also significantly increased its spending, with quarterly investments now comparable to its annual costs before 2017.

Microsoft: AI Spending Increases and Potential Azure Slowdown
Microsoft reported a 5.3% increase in capital spending to $20 billion in the first fiscal quarter and confirmed further increases in AI investment in the coming quarter. However, the company warned that growth in its Azure cloud business may slow due to limited data center capacity. This statement added to investors' concerns.

These investments will undoubtedly help tech giants strengthen their positions in the AI market in the long term, but for now, the question of profitability and margin growth remains open.

Investments and Their Impact: Microsoft Slows Margins for Future Gains
Head of technology research at D.A. Davidson, Gil Luria, points out, "Investors sometimes overlook that each time Microsoft makes major investments, it dampens the company's margin by a full percentage point, which can drag on for the next six years." According to Luria, the current capital expenditures could slow Microsoft's margin metrics, creating a temporary barrier to profitability.

Chipmakers Struggling to Meet Demand: AI Growth Drives Shortages
Chip manufacturers like Nvidia face challenges in meeting the growing demand for AI components. Advanced Micro Devices, which reported earnings earlier this week, emphasized that AI chip demand is surging faster than production capacity. The company warned that AI chip supply will likely remain limited into next year, leaving some orders unfulfilled.

AI Investments Echo the Early Days of Cloud Technology
These substantial investments by tech giants hark back to the times when companies actively invested in cloud technology, waiting for customers to adopt and adapt to the new technology.

High-Stakes Bet on AI Infrastructure
"We're on the verge of significant opportunities, even if building infrastructure may raise questions for investors in the short term," said Meta (banned in Russia) CEO Mark Zuckerberg, commenting on the company's current spending. He stressed that the company plans to continue making substantial investments in AI infrastructure, preparing for future demand and long-term results.
More analytics on our website: bit.ly/3VobLUv

Microsoft's Big AI Spend Weakens Wall Street, Nasdaq Dow

U.S. Indices Close in the Red: AI Costs Hit Market Optimism
All three major U.S. stock indices ended Thursday's trading session in negative territory after reports from Microsoft and Meta Platforms (banned in Russia) highlighted rising AI-related expenses that could impact future profits, dampening enthusiasm for the mega-cap companies that had driven this year's rally.

Microsoft: Record Profits Couldn't Prevent Stock Drop
Despite Meta Platforms (banned in Russia) and Microsoft (MSFT.O) surpassing profit expectations, their stocks fell significantly, with Meta dropping by 4.1% and Microsoft by 6%. This decline followed reports indicating rising AI costs, which investors perceived cautiously, seeing the potential for these costs to reduce profit margins.

The "Magnificent Seven" Lose Ground
Among other tech giants in the so-called "Magnificent Seven," both Amazon.com (AMZN.O) and Apple (AAPL.O) released their quarterly results. Amazon exceeded revenue forecasts, driven by strong growth in its cloud division, while Apple pleased investors with higher-than-expected iPhone sales and met expectations in both revenue and profit.

Amazon Up, Apple Down: Market Reacts to Earnings Reports
As a result, Amazon.com shares rose by 4.5% after market close due to solid quarterly results that exceeded Wall Street's estimates. Apple shares, however, slipped by 2% despite its positive report, remaining aligned with investor forecasts. During the regular trading session, Amazon saw a decline of 3.3%, while Apple's shares fell by 1.8%.

Alphabet Also Ends Lower
Alphabet (GOOGL.O), which reported earlier on Tuesday, also faced pressure, with its shares dropping by 1.9%.

Investors Wary: Unlimited AI Budgets Raise Questions
"The 'Magnificent Seven' are clearly hinting that their AI-related budgets remain open-ended, and this isn't a comforting message for investors," said Carol Schleif, Chief Investment Officer at BMO Family Office. "While long-term benefits for the U.S. economy could be substantial, the short-term question remains: where is the immediate profit from these investments?"

Microsoft Points to Rising Capital Expenditures
Microsoft confirmed that increasing capital expenditures are linked to its expansion of AI investments, potentially affecting its profit margin, causing uncertainty among shareholders.

Market Downturn: Major Indices Lose Ground
The market reacted with declines across all major indices. The Dow Jones Industrial Average (.DJI) closed down by 378.08 points, or 0.90%, at 41,763.46. The S&P 500 (.SPX) dropped by 108.22 points, or 1.86%, to 5,705.45, while the Nasdaq Composite (.IXIC) lost 512.78 points, or 2.76%, ending the trading day at 18,095.15.

Monthly Losses: Market Ends Extended Growth Streak
Amid September's fluctuations, the S&P 500 lost 0.99% for the month, Nasdaq fell by 0.52%, and the Dow ended with a 1.34% loss, marking the end of a five-month growth streak for the Dow and S&P.

Inflation Continues to Rise: Consumer Spending Exceeds Expectations
According to the latest Personal Consumption Expenditures (PCE) index, a key inflation indicator closely watched by the Federal Reserve, prices rose by 0.2% in September, aligning with analyst forecasts. However, the annual core inflation rate reached 2.7%, slightly above the 2.6% forecast, while consumer spending also exceeded expectations, adding further uncertainty regarding the central bank's future actions.

Intel Faces Restructuring Costs and Write-Downs
Intel (INTC.O) presented its earnings report post-market close, which showed the impact of restructuring costs and asset write-downs. Despite optimization efforts, the company's financial results fell short of expectations, leading to a restrained reaction from investors.

Market Under Pressure: NYSE Decliners Outnumber Advancers
On the New York Stock Exchange (NYSE), the number of declining stocks outpaced gainers by more than two and a half times, at a ratio of 2.66 to 1. During the trading day, the S&P 500 recorded 24 new 52-week highs and nine new lows, while the Nasdaq Composite registered 59 new highs and 159 new lows, reflecting the general negative market sentiment.

U.S. Consumer Spending Rises, Economy Strengthens
Thursday morning data indicated that U.S. consumer spending in September exceeded expectations, providing a positive signal for the economy, directing it toward a stronger growth trajectory in the year's final quarter. This increase in spending could bolster confidence in economic resilience.

Labor Costs Slow Growth
Another report showed that the Employment Cost Index (ECI), the broadest measure of labor costs, rose by 0.8% in the third quarter. This growth marked the slowest pace since mid-2021, lower than the previous quarter's 0.9% figure, indicating a potential easing in wage inflation.

Dollar Weakens as Yen and Euro Strengthen on Economic News
The dollar came under pressure against the yen after the Bank of Japan took a slightly more hawkish stance than anticipated, while the euro gained ground following data indicating faster-than-expected inflation in the eurozone in October. This factor supported arguments for a cautious approach to potential rate cuts by the European Central Bank, adding additional strength to the euro.

Dollar Index Declines, Yen and Euro Gain Ground
The dollar index, which measures the dollar's value against a basket of six major currencies, fell by 0.2% to 103.88, while the euro edged up by 0.04% against the dollar to $1.0859. Meanwhile, the dollar weakened 0.8% against the Japanese yen, reaching 152.18 yen. These currency fluctuations come amid expectations for the upcoming Fed meeting.

Rate Cut Anticipation: Markets Almost Certain
The market is nearly convinced that the Fed will implement a 25-basis point rate cut during its November 6-7 meeting. However, according to CME Group's FedWatch tool, there is only a 70% chance of an additional cut in December, reflecting investor caution.

Eyes on Employment Report and Presidential Race
Traders and investors are focused on key events in the coming days, with October's U.S. employment report due on Friday and the presidential election set for Tuesday. Polls indicate a close race between Republican Donald Trump and Democrat Vice President Kamala Harris, adding uncertainty on the political front.

Global Indices Fall, Bond Yields Rise
The global MSCI Index (.MIWD00000PUS) closed down by 12.64 points, or 1.50%, at 832.30, and saw a 2.3% decline in October, ending a five-month winning streak. The European STOXX 600 index also ended the day in the red, down 1.2%.

Yields on U.S. Treasury bonds rose following the release of economic data. The 10-year bond yield increased by 1.8 basis points to 4.282%, nearing Tuesday's four-month high of 4.339%.

Cryptocurrency Market Under Pressure: Bitcoin Loses Ground
On the cryptocurrency market, Bitcoin, the world's largest cryptocurrency by market capitalization, fell by 3.2%, reaching $70,458. This level is about 4% below its all-time high from March, signaling short-term fluctuations amid market volatility.

Gold Retraces After Record High, Monthly Gains Remain Strong
Gold retreated slightly after hitting a new all-time high, though it wrapped up a fourth consecutive month of gains, supported by demand for safe-haven assets. Spot gold dropped by 1.6% to $2,740.45 per ounce, after reaching a peak of $2,790.15 earlier in the session. Gold prices saw a 4% increase over the month, underscoring its appeal during times of instability.

Oil Prices Surge Amid Middle East Tensions
Oil prices continued their upward movement in response to reports suggesting that Iran is preparing to launch an attack on Israel from Iraq within days. WTI crude futures surged by $1.81, reaching $70.42 by 3:00 PM ET. Brent crude futures for January delivery also rose by $1.82, hitting $73.98. U.S. crude climbed by 1.33%, settling at $69.52 per barrel, while Brent rose by 0.94%, ending at $73.23 per barrel.

This increase highlights the oil market's sensitivity to geopolitical risks and confirms its reaction to potential escalations in a region that remains a crucial energy supplier.
More analytics on our website: bit.ly/3VobLUv

Trading Signals for GOLD (XAU/USD) for November 1-4, 2024: sell below $2,766 (21 SMA - 61.8%)

Early in the American session, gold is trading around 2,750, within the uptrend channel, and below the 21 SMA, bouncing after having reached the low of 2,732.

Yesterday, after having reached the low of 2,790, gold made a strong technical correction. Today we observed a technical rebound. However, the instrument remains under bearish pressure. Hence, we could expect that if the metal reaches the 61.8% Fibonacci level around 2,766, it could be seen as an opportunity to resume selling.

On the other hand, in case gold breaks the inverted pennant pattern sharply, we could expect it to reach the 3/8 Murray area around 2,734. The instrument could even continue its fall next week and reach the 200 EMA around 2,673.

The key is to pay attention to the 61.8% retracement level. Below this area, the outlook will remain bearish for gold. Therefore, traders will have an opportunity to sell below this area.

Should XAU/USD bounce and consolidate above 3/8 Murray, we could look for buying opportunities with the target at 2,766 as this could confirm that a strong bottom is in place.
More analytics on our website: bit.ly/3VobLUv

Markets in election grip: Dow, S&P fall, Nvidia climbs steadily

U.S. Stock Market Wrap-Up: Election Anticipation and Investor Anxiety
U.S. stocks ended slightly down on Monday after a volatile trading session, with investors bracing for a decisive week as the nation prepares to choose its next president and the Federal Reserve gets set to release a key policy statement.

Final Push: Trump vs. Harris
In the final hours of the presidential race, candidates Donald Trump and Kamala Harris pulled out all the stops in an effort to secure crucial votes. Polls show a close race, and it may take several days to determine the winner.

Trump Trades Lose Steam
Some of the so-called "Trump trades" faced declines after recent polling showed Harris, a Democratic vice president, leading in Iowa. This led to a dip in the U.S. dollar, Treasury yields, and Bitcoin. Meanwhile, Trump Media & Technology Group (DJT.O) ended up with a 12.37% gain, recovering from early losses of nearly 6%.

Harris's Odds Rise in Betting Markets
Following the Iowa poll, Harris's odds against the former Republican president increased on several betting sites, which many market participants view as a predictor of election outcomes.

"We'll need until at least Thursday to determine who won, so unfortunately, this week will likely be quite volatile," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"Earnings are doing well, the Fed will likely lower interest rates, and the only true uncertainty is the election. Hopefully, it will be resolved sooner rather than later, so investors can get back to business as usual," Stovall added.

Wall Street Indices Struggle Amid Uncertainty
On Monday, major U.S. stock indexes slid into the red. The Dow Jones Industrial Average (.DJI) fell by 257.59 points, or 0.61%, closing at 41,794.60. The S&P 500 (.SPX) also declined, losing 16.11 points, or 0.28%, to settle at 5,712.69. The Nasdaq Composite (.IXIC) joined the downtrend, shedding 59.93 points, or 0.33%, and ending at 18,179.98.

Bond Yields Continue to Slide
On the bond market, ten-year U.S. Treasury yields took another hit, falling 6.4 basis points to 4.299%, following an initial drop of 10 basis points. Investors anticipate a volatile week as they await election results and policy clarity.

Russell 2000 Gains on Falling Yields
With bond yields declining, the Russell 2000 (.RUT) saw a modest 0.4% increase, as lower borrowing costs tend to benefit small-cap stocks, which are seen as more likely to gain from lower rates.

CBOE Volatility Index Rises: Fear Index Holds Steady Near Highs
The CBOE Volatility Index (.VIX), known as Wall Street's "fear gauge," climbed to 21.94, staying well above its long-term average of 19.46. It hovered near last week's two-month high of 23.42, reflecting heightened market tension over the pending election and potential economic fallout.

Fed Rate Cut Expected with Near Certainty
Heading into Thursday, investors are almost certain the Federal Reserve will cut the benchmark interest rate by 25 basis points. According to CME's FedWatch tool, there is a 98% chance of a rate cut and only a 2% chance the Fed will hold rates steady. This expectation has been priced into the market, heavily influencing investor sentiment.

Energy Sector Leads Gains Amid Oil Surge
Among the S&P 500's 11 major sectors, energy (.SPNY) led the way, gaining 1.87%, buoyed by a rise in oil prices following OPEC+'s decision to postpone production hikes.

Nvidia Replaces Intel in Dow
Chipmaker Nvidia (NVDA.O) saw a modest 0.48% gain after news that it will replace Intel (INTC.O) in the Dow Jones Industrial Average. In response, Intel's shares dropped 2.93%, weighing on the Dow.

Marriott Slips on Lowered Profit Outlook
Hotel operator Marriott International (MAR.O) declined by 1.59% after lowering its 2024 profit forecast due to weak domestic travel demand in the U.S. and China.

Constellation Energy Takes a Hit Following FERC Rejection
Constellation Energy (CEG.O) performed the worst in the S&P 500, down 12.46%. The Federal Energy Regulatory Commission denied a deal to expand capacity at Amazon's data center, which is directly connected to Talen Energy's nuclear plant in Pennsylvania, pressuring the utilities sector, which fell 1.21%.

Rising Stocks Outnumber Decliners on NYSE and Nasdaq
On Monday, advancers outpaced decliners on the New York Stock Exchange by a ratio of 1.37 to 1, while on the Nasdaq, the ratio was a narrower 1.01 to 1 in favor of gaining stocks, suggesting a mild overall bullish sentiment despite general caution.

Highs and Lows: Mixed Market Momentum
The S&P 500 registered 10 new 52-week highs and four new lows, reflecting positive expectations in select sectors. Meanwhile, the Nasdaq Composite saw 66 new highs but also 128 new lows, highlighting heightened volatility among technology and innovation stocks.

Trading Volume: Slightly Below Average, But Significant
U.S. trading volumes reached 11.31 billion shares, just under the 20-day average of 11.71 billion. This may indicate a cautious stance among market participants ahead of major events like the Fed meeting and presidential election.

Air France KLM Faces Downgrade and Stock Pressure
Shares of Air France KLM (AIRF.PA) fell after Morgan Stanley downgraded the airline from "equal weight" to "underweight." On Tuesday, the stock dropped roughly 2% at the start of the trading session.

Challenging Cash Flow Outlook for Air France KLM
Morgan Stanley noted that while Air France KLM's stock isn't overly expensive by historical standards, it trades at a notable premium to its peers among national carriers. This premium, combined with challenging free cash flow prospects, suggests a cautious outlook for the airline.

Third-Quarter Earnings in Europe: Surpassing Expectations but China Concerns Linger
Despite economic challenges, many European companies are surpassing low market expectations for third-quarter earnings, with investors rewarding top performers. However, concerns over weak demand in China continue to temper enthusiasm, prompting caution.

Lowered Forecasts Ease the Bar for Earnings Growth
Data from LSEG I/B/E/S shows that analysts revised down profit growth expectations by 380 basis points in the two months before the earnings season. Normally, such adjustments are around 100 basis points, but the substantial drop in projections has made it easier for companies to exceed expectations.

STOXX 600: More Companies Beating Expectations
So far, around 50% of companies in the STOXX 600 (.STOXX) index have reported their earnings, with approximately 56% exceeding forecasts. Citi equity strategists note that this figure aligns with the quarterly average, indicating that European firms are holding steady despite market turbulence.

U.S. Elections Add a Layer of Uncertainty for Europe
The upcoming U.S. elections add another layer of uncertainty, with analysts expecting that the resulting volatility could continue to impact European stocks as investors wait to see how the election outcome might influence the global economy.

Market Dynamics Shift: Reward for Outperformance and Penalties for Misses
This quarter, companies that have exceeded expectations are being notably rewarded by investors. On the other hand, those missing forecasts are feeling the pressure as the market takes a tougher stance on underperformance.

European Banks Boosted by High Interest Rates
European banks have enjoyed another strong quarter as persistently high interest rates continue to support profit margins. Even as the European Central Bank signals potential rate cuts, investor sentiment remains positive.

Higher Structural Rates: A Win for Banks
"Interest rates will structurally remain higher than in previous cycles," remarked Thomas McGarrity, head of equity at RBC Wealth Management. He believes this will benefit banks significantly, allowing them to sustain strong margins. "We're in a favorable position and won't be backing down," McGarrity added.

Financial Sector's Profit Growth Among the Highest
Data from LSEG I/B/E/S shows that the financial sector saw 20.6% profit growth in the third quarter, ranking it third among major sectors after utilities and basic materials. So far, 80% of financial companies have reported earnings that beat analyst expectations.

Economic Stagnation Hits Small and Mid-Caps Hardest
Meanwhile, Europe's economy remains in a state of stagnation. The industrial sector, particularly reliant on energy, faces challenges from rising costs and weak global demand. For small- and mid-cap companies focused on the domestic market, these issues create significant headwinds and unstable growth prospects.

European Stocks Historically Undervalued: Attractive Ratios for Investors
Currently, European stocks remain historically undervalued. The average 12-month forward P/E ratio stands at 13.6x, lower than the long-term average of 14.3x. Mid-cap stocks appear even more attractive, trading at a forward P/E of 12.7x compared to the long-term average of 15x. This undervaluation makes European assets appealing to investors seeking growth potential in stable markets.
More analytics on our website: bit.ly/3VobLUv

XAU/USD. Analysis and Forecast

Gold faced strong selling pressure today, dropping to the key level of $2,700—its nearly three-week low—within an hour before the European session.

The Republican candidate, Donald Trump, leads in the U.S. presidential race and is likely to become the 47th President of the United States. This development triggered aggressive selling of the yellow metal and a sharp rally in the U.S. dollar.

Additionally, concerns over deficit spending and expectations for less aggressive monetary easing by the Federal Reserve pushed U.S. Treasury yields higher, contributing to divestment from gold.

Technical Analysis

The $2,725–$2,720 level continues to act as immediate strong support. A break below this region could accelerate the decline, potentially testing levels below the key $2,700 level. This level aligns with the lower boundary of the short-term upward trend channel, extending from late July into early August. A decisive break below this threshold would pave the way for a deeper correction from the recent all-time high reached last week, likely dragging the XAU/USD pair toward the next significant support zone around $2,675.

On the other hand, the $2,750 level now serves as the immediate hurdle. A move above this level could lift the price to the next barrier at $2,790 or the all-time high reached last month. Beyond this, the key $2,800 level is expected to act as a critical pivot point. Sustained strength beyond this threshold would set the stage for resuming the well-established upward trend.

Market Sentiment

Adding to the pressure, the risk-on sentiment—evidenced by a strong rally in U.S. stock futures—indicates that gold, as a safe-haven asset, faces a downward path of least resistance.
More analytics on our website: bit.ly/3VobLUv

Trump 2.0 - Markets Explode: Dow, S&P, Nasdaq Hit Record Highs!

Trump Back in the White House: Record Growth on Wall Street

On Wednesday, U.S. stock indexes showed a sharp rise, reaching record levels, after Donald Trump won the 2024 U.S. presidential election in a sensational victory. Four years after leaving the political arena, he returned, surprising many analysts and investors.

Strong Start: Dow, S&P 500, and Nasdaq Reach New Highs
The Dow Jones, S&P 500, and Nasdaq Composite indices ended the day at historic highs. Investors responded enthusiastically to the prospect of tax cuts and possible deregulation, anticipating that the new president will continue to express his views on a wide range of issues, from the dollar's exchange rate to the state of the stock market. However, increases in import tariffs, which Trump may initiate, raise concerns about inflation and budget deficits.

"Trump Trades" in Action: Bond Yields and Record Bitcoin
Investor optimism led to higher yields on U.S. government bonds, with the base yield on 10-year treasury bonds reaching a four-month high at 4.479%. Bitcoin also saw record highs, exceeding the $76,000 mark. The dollar also showed significant growth, recording its largest single-day percentage gain since September 2022.

Investors' Forecasts and Expectations
"Investors seem to have been adjusting their portfolios to capture some of the risk exposure in anticipation of an outcome that seemed unlikely," said Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott in Philadelphia.

Trading Results: Wall Street Celebrates
The Dow Jones Industrial Average (.DJI) added 1,508.05 points, or 3.57%, reaching 43,729.93. The S&P 500 (.SPX) rose by 146.28 points, or 2.53%, to 5,929.04, and the Nasdaq Composite (.IXIC) gained 544.29 points, or 2.95%, reaching 18,983.47.

Record Market Gains: Dow and S&P See Largest Single-Day Growth in Two Years
The impressive gains in the Dow and S&P 500 on Wednesday marked the largest single-day jump since November 2022. The Nasdaq index also hit a peak unseen since February, confirming the market's positive sentiment amid political shifts. This growth reflects investor expectations for economic reforms and policy changes with Trump's return.

Financial Sector Leads the Way
The financial sector stood out, surging by 6.16% and becoming the strongest of the 11 major sectors in the S&P 500. Banking stocks showed substantial growth as banks may benefit from deregulation. The S&P 500 Bank Index (.SPXBK) increased by 10.68%, setting a new two-year high.

Small-Cap Stocks Also See Gains
The Russell 2000 index, which tracks small-cap companies, also rose by 5.84%, marking the largest increase since November 2022. This growth highlights expectations that small businesses will receive support through promised tax incentives and deregulation, reducing risks associated with import tariffs. However, experts warn that small companies remain vulnerable due to their reliance on credit and sensitivity to interest rate changes.

Interest Rate Risk: A Challenge for Small Business
Rising U.S. Treasury bond yields may pose additional challenges for small businesses, which typically rely more on borrowed funds. "If interest rates continue to rise and reach levels seen last October, around 5%, it could be problematic not only for small companies but for the entire market," Mark Luschini cautioned.

Fear Index Hits New Low as Inflation Concerns Persist
The CBOE Volatility Index, known as Wall Street's "fear gauge," fell by 4.22 points, reaching a six-week low of 16.27. This decline reflects market participants' confidence in stability, despite rising concerns over future inflation and potential interest rate hikes under Trump's economic policy.

Real Estate and Utilities Under Pressure
Sectors sensitive to interest rates saw a decline: real estate stocks fell by 2.64%, and utilities lost 0.98%. These industries were among the few showing a downturn, as investors weighed the potential for tighter Federal Reserve policy and its impact on future borrowing costs.

Central Bank Policy Adjustments Expected
In light of the current conditions, many analysts predict that the Federal Reserve will cut rates by 25 basis points, a decision likely to be confirmed at the meeting concluding Thursday. However, traders have started adjusting their expectations, reducing bets on a December cut and the number of rate reductions expected next year, following CME's FedWatch index.

"Trump-Friendly" Stocks Rise: Media Group and Tesla in the Spotlight
Stocks that analysts believe may benefit from Trump's second term started to rally. Trump-affiliated Media & Technology Group rose by 5.94% after a volatile session, while Tesla surged by an impressive 14.75% following support from CEO Elon Musk, who expressed backing for Trump's campaign.

"Election Echoes" Throughout the Market
"The results of these elections are leaving traces in everything happening in the markets right now," noted Paul Christopher, Head of Global Investment Strategy at Wells Fargo Investment Institute. Trump's promises to adjust tariffs, cut taxes, and deregulate business have encouraged investors to invest in assets that are likely to benefit from such an economic policy.

Currencies in Focus: Mexican Peso and Euro Under Pressure
Currency markets faced significant fluctuations as investment flows reflected concerns over Trump's potential trade policy. The Mexican peso dropped to a two-year low, while the euro was headed for its biggest daily decline since 2020, underscoring fears about possible tariffs.

Record Trading Volume: Yuan and Peso Take the Lead
Trading intensity reached new highs. By 10 a.m. Central Time, CME Group (CME.O) recorded unprecedented online trading activity for the offshore Chinese yuan, reaching a historic level of $33 billion. The Mexican peso also attracted increased attention, with the volume of futures contracts exceeding the usual average by 43%, highlighting investors' interest in instruments sensitive to tariff policy changes.

Political Support for "Trump Trades"
The strengthening position of Republicans in the Senate boosted investor confidence in supporting Trump's economic agenda. Although the vote count in the House of Representatives was still ongoing, a Republican victory could provide Trump with support for implementing key economic decisions, sparking market excitement.

Long-Term Global Economic Impact
Experts believe that the election results may have a far-reaching impact on U.S. tax and trade policy and could alter the status of the country's major financial institutions, which will inevitably affect assets worldwide.

Treasury Bonds Under Pressure: Inflation and Debt Concerns
Sales of U.S. Treasury bonds increased as investors anticipate higher consumer prices due to potential tariff hikes and expect government spending to raise debt levels. The yield on 10-year bonds reached a four-month high, pausing at 4.48%, before slightly pulling back.

Trump's Economic Agenda: Inflation and Deficit on the Horizon
According to David Kelly, Chief Global Strategist at JPMorgan Asset Management, if Donald Trump successfully implements his economic initiatives, this could lead to budget deficits, tax cuts, and inflation due to new tariffs. "High inflation and increased deficits will inevitably push long-term interest rates up," the expert emphasized.

Cryptocurrencies Soar: Bitcoin Hits Record Highs
The cryptocurrency market responded positively to potential regulatory changes: Bitcoin surged to a new record as investors see Trump's victory as a chance to ease control over digital assets. BlackRock Investment Institute noted that Trump's second term could be accompanied by deregulation, including banking policy relaxation, which may boost the crypto market.

Record Overnight Trades: Robinhood Rides the Wave
Trading began before dawn. Robinhood Markets (HOOD.O) recorded the largest overnight session since this feature launched in May 2023. Trading volume was 11 times the average as traders eagerly bought shares of companies likely to benefit from Trump's policies: from Coinbase Global (COIN.O) and iShares Bitcoin Trust ETF (IBIT.O) to companies linked to Trump and his supporter Elon Musk.

Contrasting Sectors: Energy and Crypto Rise, "Green" Stocks Decline
Political shifts have driven up shares of cryptocurrency, energy companies, and private prison operators. However, renewable energy stocks faced pressure as markets assess the likelihood of continued support under the new administration.

Congressional Control: What's Next for Trump's Economic Program
Now, investors are watching closely to see if Republicans can retain the House majority after securing the Senate. If Republicans maintain control in Congress, it could greatly facilitate Trump's agenda, potentially impacting a wide range of economic decisions.

Market Leaders and Laggards: Advances Outpace Declines
On the New York Stock Exchange, advancing stocks significantly outnumbered declining ones by a ratio of 1.51 to 1, while on the Nasdaq, the ratio was 1.84 to 1, emphasizing the optimistic market sentiment. The S&P 500 recorded 138 new 52-week highs and 12 lows, while the Nasdaq Composite set 456 new peaks, with 115 companies hitting new lows.

Record Trading Volume
Total trading volume on U.S. exchanges reached 18.68 billion shares, significantly exceeding the 20-day average of 12.16 billion. Such activity reflects unprecedented investor interest in the potential impacts of Trump's return as the market anticipates economic reforms and policy shifts.

Europe Under Pressure: Germany in the Crosshairs
The uncertainty over U.S. politics comes at an unfortunate time for the European Union. The potential victory of Republicans led by Donald Trump has heightened concerns over sweeping tariffs on European goods, which could reach 10%, dealing a blow to exporters. Germany, whose main export market is the U.S., faces particular risks, especially in the automotive sector, where higher tariffs could significantly erode the competitiveness of German manufacturers.

European Markets Decline: STOXX 600 and DAX Under Pressure
News of possible tariff threats triggered a negative reaction on European stock markets. The pan-European STOXX 600 index fell by 0.54%, while Germany's leading DAX index dropped by 1.13%. Investors are reassessing their portfolios amid ongoing political uncertainty.

Focus on Central Bank Decisions
On Thursday, attention will be split between political changes and key monetary policy decisions. The U.S. Federal Reserve, the Bank of England, Sweden's Riksbank, and Norway's central bank are all set to announce their rate decisions, which could significantly impact global markets, heightening volatility and awareness of economic shifts.

Spotlight on the Fed: Rate Cuts and Powell's Commentary
The Federal Reserve is expected to cut the interest rate by a quarter point at this meeting. However, investors' main focus will be on what Fed Chairman Jerome Powell says about new inflation risks linked to potential tariffs and immigration restrictions proposed by the Trump administration. Experts believe that the regulator's future steps may depend on how quickly inflationary pressures mount.

Interest in Bank of England Forecasts
The Bank of England is also considering a quarter-point rate cut, and analysts are focused on potential signals regarding future inflationary pressures. The new government budget, which could drive inflation, is a source of concern for markets, and investors are closely watching for any financial forecasts from U.K. authorities.

Sweden and Norway: Diverging Paths
The Swedish Riksbank is expected to make a more significant cut, lowering the rate by half a point. Meanwhile, Norway's central bank will likely maintain a wait-and-see approach, keeping rates unchanged as the market faces continued uncertainty.
More analytics on our website: bit.ly/3VobLUv