Archive for Stock Market News – Page 6

17 Jul

UK100: Dips on sticky inflation data

By ForexTime

  • UK100 ↓ 1% post sticky CPI release
  • Probability of BoE rate cut in August drops to 40%
  • UK jobs data and retail sales in focus
  • UK100 index coils up in a falling wedge pattern
  • Key levels of interest include 8208.4, 8279.0, 8120, and 8083

FXTM’s UK100 declined on Wednesday after stickier-than-expected inflation data cooled bets around the BoE cutting rates next month.

The Consumer Prices Index (CPI) held at the BOE’s 2% target for a second month in June while services inflation was also unchanged at 5.7%. With CPI proving more stubborn than expected, Sterling jumped to a session high as bets for an August rate cut dropped to 40%.

Note: Over 80% of the revenues from FTSE100 companies come from outside of the UK. Meaning, that an appreciating pound results in lower revenues for those companies – weighing on the UK100 as a result. The same is true vice versa.

More volatility could be on the horizon for the UK100 due to the incoming jobs report on Thursday and retail sales on Friday. It is worth keeping in mind that, over the past year, the UK jobs report has triggered upside moves of as much as 0.6% or declines of 1.2% in a 6-hour window post-release.

Technically speaking, UK100, daily is seen consolidating into a falling wedge pattern, (a sideways movement in price bounded by two downward-sloping converging lines).

According to Thomas Bulkowski’s book Encyclopedia of Chart Patterns, price (in a falling wedge pattern) can break out either upward or downward but is usually upward.

The index bulls (those looking to see the index rally) may observe the following near-term resistance levels;

  • 8208.4 – The 21-day simple moving average
  • 8265.2 – The 50-day simple moving average
  • 8279.0 – The upper bound trend line of the falling wedge pattern
  • 8320 –  A significant round number level.

UK 100 bears on the other hand may have their sights on the following near-term support levels

  • 8120 – An important price level
  • 8083 – The lower bound trend line of the falling wedge pattern

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
16 Jul

ASML earnings preview: Set for fresh all-time highs?

By ForexTime 

  • ASML ↑ over 40% year-to-date
  • Shares could move 5.7% % ↑ or ↓ post-earnings
  • Machinery bookings & forward guidance in focus
  • Technical levels – 1120 and 1000

Shares of ASML have been on a tear this year, surpassing the $1000 and €1000 milestone across both exchanges.

Note: ASML shares can be traded on the Euronext Amsterdam and Nasdaq exchanges. 

Its position as the world’s leading manufacturer of chip-making equipment has allowed it to benefit from the A.I. frenzy with shares up over 40% year-to-date.

Prices could push higher depending on how investors react to the latest earnings report.

  • When will earnings be published?

ASML will report its earnings for the second quarter before US markets open on Wednesday 17th July.

  • Market expectations:

The company is expected to post earnings of €3.74 compared to €4.93 a year ago.

Quarterly revenues are seen falling to €6 billion from €6.9 billion in the prior year – equating to a 13% decline.

  • Why is this important?

As a leading manufacturer of chip-making equipment, its earnings and forward guidance may serve as a gauge for the AI hype.

In the first quarter, ASML disappointed investors with revenues declining by 21% year-over-year to €5.3 billion. While sales are expected to fall in Q2, much focus will be on net machinery bookings which are estimated to be around €4.56 billion. Still, growing demand for AI Chips may translate to a significant increase in new orders.

  • Potential challenges…

China is ASML’s biggest market, accounting for 49% of total sales in the first quarter of 2024.

However, this may be impacted by Dutch licensing requirements and US export restrictions. A noticeable decline in total sales in China may weigh on the business outlook.

  • How will ASML react to earnings?

Markets are forecasting a 5.7% move, either Up or Down, for ASML stocks on Wednesday post earnings.

  • What does this mean for prices?

A 5.7% move up from $1062 will take ASML shares to fresh all-time highs beyond $1120.  

While a 5.7% move down will send prices back towards the psychological $1000 level.

  • Keep an eye on TSMC’s earnings

Watch out for Taiwan Semiconductor Manufacturing Company (TSMC) which is due to release its earnings on Thursday 18th July. 

TSMC accounts for 28% of ASML’s revenue, so better-than-expected earnings from TSMC may boost ASML’s shares and vice versa.

  • Technical picture

Prices are firmly bullish on the daily charts as there have been consistently higher highs and higher lows.

  • A solid set of earnings and forward guidance that satisfies investors could push prices to all-time highs beyond 1120.
  • If the manufacturer of chipmakers disappoints, prices could slip back towards the 1000 psychological level.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
16 Jul

Will a market crash one day be pinned on the Supreme Court? An accounting expert explains why recent rulings have him worried

By Paul Griffin, University of California, Davis 

In two major rulings this past month, the U.S. Supreme Court curtailed the authority of federal agencies to draft and enforce policies that affect the nation’s financial health. One important agency, the Securities and Exchange Commission, took a particularly big hit.

Speaking as someone who has researched financial shenanigans for almost 50 years, I’m concerned that these rulings will backfire on markets and investors.

Taken together, they could lead to watered-down regulations, weakened enforcement and less oversight of the nation’s financial markets and public companies. I fear that they could ultimately be a significant factor in a future market crash.

In one case, Securities and Exchange Commission v. Jarkesy, the court rebuked the SEC — the agency that protects investors from fraud — for using in-house proceedings to discipline firms and others for breaking securities laws. Now, the SEC will need to bring accused securities fraudsters to federal court, which could be more complicated and expensive.

And in the other case, Loper Bright Enterprises v. Raimondo, the court cut back sharply on a long-standing doctrine — the Chevron rule — that gave agencies considerable freedom to craft rules and regulations, particularly when the underlying law might be ambiguous. As a result, federal agencies, including the SEC, have less power to act, ceding that power to lengthier and costlier trial proceedings.

More layers of hidden risk for investors

Both decisions could affect the nation’s financial well-being. Investors who rely on the disclosure rules and the enforcement mechanisms of the SEC for protection – now subject to legal challenge – are about to be saddled with an extra layer of hidden risk not seen in decades – in particular, more questionable accounting practices in their regulatory filings.

Recall that in 1933 and 1934, Congress established the SEC in the aftermath of the Great Depression. What followed in the ensuing years was the formation of less risky and more informed markets.

Investors could also rely on market prices to efficiently and unbiasedly reflect all public information, rather than have to pore over complex financial statements. This led to the U.S. markets becoming the most attractive destination in the world for funds to invest in risky business projects.

The SEC later bolstered financial markets with measures under the Dodd-Frank Act of 2010 to rectify other excesses — such as overly generous credit ratings — that arguably contributed to the 2007–2008 Great Recession. Today, thanks to extensive disclosure requirements and relatively efficient enforcement mechanisms, the U.S. has perhaps the healthiest and most robust financial markets ever.

A new challenge to enforcement

Healthy and robust financial markets don’t operate out of altruism, however.

Monitoring and enforcement mechanisms are pivotal. While the SEC relies partly on the private sector to spot and discipline errant managers for violations of the securities laws – for example, through federal and state securities class action litigation – much of the effort relies on the enforcement division of the SEC.

In particular, the SEC uses “accounting and auditing enforcement releases,” or AAERs, to ensure that firms keep a clean set of books. Since 1995, the SEC has issued 3,266 AAERs, mostly to correct accounting and auditing deficiencies in company financial statements. Numerous studies confirm AAERs as evidence of financial fraud.

AAERs are also a highly efficient form of enforcement — and much less costly than a private securities class action lawsuit. Companies generally agree to settle the allegations of wrongdoing without admission of liability by taking timely steps to improve accounting and auditing and paying fines and penalties.

The payments have been substantial. For example, for 760 enforcement actions in 2022, companies paid as much as US$6.4 billion to the SEC. The announcement of an AAER action is also costly for the firm’s shareholders, with stock prices falling 50% over the next six months following an AAER announcement, according to researchers.

But the Jarkesy ruling could change everything. I don’t see why any publicly traded company would agree to settle an AAER action with fines and sanctions now that it can challenge the SEC’s arguments in a court of law.

The danger of enforcement by courts

What might be the result of removing or paring back the SEC’s key tool of enforcement?

The risk is possibly reverting to an environment like 1928 or 2007. That’s because the ruling will effectively reduce the cost of accounting or auditing violations for would-be or actual violators. It shifts the purview of deciding penalties and fines to the courts rather than in-house proceedings by the SEC, increasing the cost of enforcement to the SEC.

In short, companies will worry less about a future AAER investigation.

In addition, despite auditors’ efforts to ensure that publicly traded financial and investment firms keep a clean set of books based on generally accepted accounting principles, or GAAP, there is still much room for choice, including greater use of non-GAAP accounting rules. With less enforcement, the Jarkesy ruling will encourage more creative accounting, not less.

That creativity already skews toward optimistic earnings reports. The vast majority of earnings releases now exceed analysts’ forecasts — 77% for the S&P 500 in the first quarter of 2024. Moreover, my own research indicates that it’s not just that earning reports exceed analysts’ forecasts, but the dollar size of firms’ positive earnings surprises has grown steadily over the past decade, which is another hidden risk.

Less scrutiny, more long-term risks

Some securities lawyers say the Jarkesy decision won’t change the SEC’s behavior, since the agency has increasingly shifted proceedings to regular courts.

While that’s true for some actions, I think the largest impact will lie in SEC actions not yet undertaken. Businesses and the SEC will act differently in the future because Jarkesy makes SEC enforcement activity more expensive and more uncertain.

Expect more efforts by firms to present their financial performance in the most glowing terms possible, knowing that the cost of SEC enforcement has just increased and the detection likelihood and expected cost to a firm of violating generally accepted accounting principles or generally accepted auditing standards has just decreased.

While not all scholars agree, there are two major periods in the financial history of the United States when a financial meltdown occurred that was in part plausibly due to shoddy accounting and reporting – the Great Depression of 1929 and the Great Recession of 2007–2009.

In the years or decades ahead, should the country face another serious financial crisis leading to a recession, it will be harder to blame the accountants and investment bankers. Instead, attention may turn to two mid-2024 court decisions and the justices who wrote them.The Conversation

About the Author:

Paul Griffin, Distinguished Emeritus Professor of Management, University of California, Davis

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Stock Market News
13 Jul

COT Stock Market Charts: Speculator bets led by Russell 2000 & MSCI EAFE

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday July 9th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Russell-Mini & MSCI EAFE-Mini

The COT stock markets speculator bets were higher this week as four out of the seven stock markets we cover had higher positioning while the other three markets had lower speculator contracts.

Leading the gains for the stock markets was the Russell-Mini (7,809 contracts) with the MSCI EAFE-Mini (4,742 contracts) and the DowJones-Mini (1,067 contracts) also showing positive weeks.

The markets with the declines in speculator bets this week were the S&P500-Mini (-43,203 contracts), the VIX (-8,053 contracts), the Nasdaq-Mini (-5,559 contracts) and the Nikkei 225 (-423 contracts) also having lower bets on the week.

Stock Market Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by DowJones-Mini & S&P500-Mini

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the DowJones-Mini (73 percent) and the S&P500-Mini (57 percent) lead the stock markets this week. The VIX (49 percent) comes in as the next highest in the weekly strength scores.

On the downside, the Russell-Mini (37 percent) comes in at the lowest strength level currently and is in Extreme-Bearish territory (below 20 percent). The next lowest strength score is the Nikkei 225 (39 percent).

Strength Statistics:
VIX (48.6 percent) vs VIX previous week (57.3 percent)
S&P500-Mini (56.5 percent) vs S&P500-Mini previous week (63.0 percent)
DowJones-Mini (73.0 percent) vs DowJones-Mini previous week (71.2 percent)
Nasdaq-Mini (47.2 percent) vs Nasdaq-Mini previous week (55.9 percent)
Russell2000-Mini (37.1 percent) vs Russell2000-Mini previous week (31.6 percent)
Nikkei USD (39.3 percent) vs Nikkei USD previous week (42.9 percent)
EAFE-Mini (40.9 percent) vs EAFE-Mini previous week (36.0 percent)

Nasdaq-Mini tops the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Nasdaq-Mini (14 percent) leads the past six weeks trends and is the only market with a positive reading for the stock markets.

The Nikkei 225 (-27 percent) leads the downside trend scores currently with the Russell-Mini (-24 percent) coming in as the next market with lower trend scores.

Strength Trend Statistics:
VIX (-20.3 percent) vs VIX previous week (-2.2 percent)
S&P500-Mini (-7.9 percent) vs S&P500-Mini previous week (1.6 percent)
DowJones-Mini (-8.7 percent) vs DowJones-Mini previous week (-21.8 percent)
Nasdaq-Mini (13.9 percent) vs Nasdaq-Mini previous week (9.4 percent)
Russell2000-Mini (-24.0 percent) vs Russell2000-Mini previous week (-26.9 percent)
Nikkei USD (-26.9 percent) vs Nikkei USD previous week (-18.1 percent)
EAFE-Mini (-0.2 percent) vs EAFE-Mini previous week (0.2 percent)

Individual Stock Market Charts:

VIX Volatility Futures:

The VIX Volatility large speculator standing this week totaled a net position of -61,478 contracts in the data reported through Tuesday. This was a weekly reduction of -8,053 contracts from the previous week which had a total of -53,425 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 48.6 percent. The commercials are Bearish with a score of 46.8 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 94.6 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

VIX Volatility Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:18.847.36.1
– Percent of Open Interest Shorts:31.934.26.1
– Net Position:-61,47861,231247
– Gross Longs:87,842221,43028,736
– Gross Shorts:149,320160,19928,489
– Long to Short Ratio:0.6 to 11.4 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):48.646.894.6
– Strength Index Reading (3 Year Range):BearishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-20.321.8-5.4

 

S&P500 Mini Futures:

SP500 Mini Futures COT ChartThe S&P500 Mini large speculator standing this week totaled a net position of -55,011 contracts in the data reported through Tuesday. This was a weekly lowering of -43,203 contracts from the previous week which had a total of -11,808 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.5 percent. The commercials are Bearish with a score of 34.0 percent and the small traders (not shown in chart) are Bullish with a score of 77.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

S&P500 Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.170.013.0
– Percent of Open Interest Shorts:17.872.18.2
– Net Position:-55,011-43,07898,089
– Gross Longs:309,7581,434,315266,655
– Gross Shorts:364,7691,477,393168,566
– Long to Short Ratio:0.8 to 11.0 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.534.077.7
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-7.98.7-4.1

 

Dow Jones Mini Futures:

Dow Jones Mini Futures COT ChartThe Dow Jones Mini large speculator standing this week totaled a net position of 7,795 contracts in the data reported through Tuesday. This was a weekly boost of 1,067 contracts from the previous week which had a total of 6,728 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 73.0 percent. The commercials are Bearish with a score of 22.2 percent and the small traders (not shown in chart) are Bullish with a score of 64.5 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Dow Jones Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:25.355.215.3
– Percent of Open Interest Shorts:16.467.711.6
– Net Position:7,795-11,0613,266
– Gross Longs:22,31748,73713,525
– Gross Shorts:14,52259,79810,259
– Long to Short Ratio:1.5 to 10.8 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):73.022.264.5
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.79.6-6.5

 

Nasdaq Mini Futures:

Nasdaq Mini Futures COT ChartThe Nasdaq Mini large speculator standing this week totaled a net position of 5,217 contracts in the data reported through Tuesday. This was a weekly fall of -5,559 contracts from the previous week which had a total of 10,776 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 47.2 percent. The commercials are Bearish with a score of 35.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 95.5 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Nasdaq Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:25.156.116.1
– Percent of Open Interest Shorts:23.162.012.1
– Net Position:5,217-15,71910,502
– Gross Longs:66,337148,25742,436
– Gross Shorts:61,120163,97631,934
– Long to Short Ratio:1.1 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):47.235.395.5
– Strength Index Reading (3 Year Range):BearishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:13.9-9.90.2

 

Russell 2000 Mini Futures:

Russell 2000 Mini Futures COT ChartThe Russell 2000 Mini large speculator standing this week totaled a net position of -67,626 contracts in the data reported through Tuesday. This was a weekly rise of 7,809 contracts from the previous week which had a total of -75,435 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 37.1 percent. The commercials are Bullish with a score of 58.2 percent and the small traders (not shown in chart) are Bullish with a score of 58.8 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Russell 2000 Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:12.479.66.1
– Percent of Open Interest Shorts:27.566.54.1
– Net Position:-67,62658,7898,837
– Gross Longs:55,367356,46027,196
– Gross Shorts:122,993297,67118,359
– Long to Short Ratio:0.5 to 11.2 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):37.158.258.8
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-24.020.46.8

 

Nikkei Stock Average (USD) Futures:

Nikkei Stock Average (USD) Futures COT ChartThe Nikkei Stock Average (USD) large speculator standing this week totaled a net position of -4,792 contracts in the data reported through Tuesday. This was a weekly decrease of -423 contracts from the previous week which had a total of -4,369 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 39.3 percent. The commercials are Bearish with a score of 48.9 percent and the small traders (not shown in chart) are Bullish with a score of 65.4 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Nikkei Stock Average Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:6.065.528.5
– Percent of Open Interest Shorts:37.344.518.2
– Net Position:-4,7923,2181,574
– Gross Longs:92510,0304,358
– Gross Shorts:5,7176,8122,784
– Long to Short Ratio:0.2 to 11.5 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):39.348.965.4
– Strength Index Reading (3 Year Range):BearishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-26.922.1-0.2

 

MSCI EAFE Mini Futures:

MSCI EAFE Mini Futures COT ChartThe MSCI EAFE Mini large speculator standing this week totaled a net position of -24,608 contracts in the data reported through Tuesday. This was a weekly lift of 4,742 contracts from the previous week which had a total of -29,350 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.9 percent. The commercials are Bullish with a score of 57.1 percent and the small traders (not shown in chart) are Bearish with a score of 42.1 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MSCI EAFE Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:7.389.43.0
– Percent of Open Interest Shorts:13.184.81.8
– Net Position:-24,60819,5685,040
– Gross Longs:31,004378,66512,714
– Gross Shorts:55,612359,0977,674
– Long to Short Ratio:0.6 to 11.1 to 11.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.957.142.1
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-0.20.8-2.9

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Financial News Stock Market News
11 Jul

Spain vs. England: Stock indexes hint at Euro 2024 winners?

By ForexTime 

SPN35 index has risen 9.8% so far this year

  • UK100 index has risen 6.2% so far this year
  • Markets predict SPN35 can climb another 18.7% within 12 months
  • Markets predict UK100 can climb another 14.4% within 12 months
  • Spain favoured to beat England in Euro 2024 final

England and Spain are set to battle it out for Europe’s footballing crown this Sunday, July 14th.

In the lead up to this highly-anticipated football contest, we take the opportunity to compare how their respective stock markets have fared so far this year.

 

First, here are some basics about stock indexes.

What is a stock index?

Imagine a stock index to be a basket of stocks.

This index measures the combined performance of the stocks within that “basket”.

Hence, the index’s price should rise when the prices of the stocks in that basket are moving higher, and vice versa.

What is the SPN35 index?

FXTM’s SPN35 index tracks the performance of the IBEX 35 index.

The IBEX measures the combined performance of the 35 most-liquid stocks traded on the Spanish Continuous exchange.

This index includes big names such as Inditex (one of the world’s largest fashion retailers which owns brands such as Zara, Pull & Bear, and Massimo Dutti), energy giant Iberdrola, and Banco Santander one of the EU’s largest banks by market value.

 

What is the UK100 index?

FXTM’s UK100 index tracks the performance of the FTSE 100 index.

The FTSE 100 measures the combined performance of the 100 largest companies listed on the London Stock Exchange, including global names such as AstraZeneca, Shell, HSBC, Unilever, and BP.

 

Although these men’s national football teams will do battle at the summit, the stock markets tell a different story.

Despite their footballing conquests, neither Spain’s nor England’s benchmark stock indexes are at the top of the continental heap.

Here’s how FXTM’s European stock indices have performed so far in 2024:

  • NETH25: +19.8%
  • EU50: +10%
  • GER40: +10%
  • SPN35: +9.8%
  • UK100: +6.2%
  • FRA40: +0.9%

And when stacked against their global peers, European stock indices have mostly lagged their US and Asian peers year to date:

  • TWN: +31%
  • JP225: +26.2%
  • NAS100: +22.9%
  • US500: +18.1%

 

Still, if making the comparison solely between the two Euro 2024 finalists’ benchmark stock indexes, there’s one clear winner.

The SPN35 index has outperformed the UK100 index so far in 2024.

And this outperformance is forecasted to extend over the next 12 months.

  • SPN35 is forecasted to climb another 18.7% till mid-2025
  • UK100 is forecasted to climb another 14.4% till mid-2025

 

The stock indexes seem to affirm the same outcome as forecasted by the sports betting industry:

Spain is favoured to beat England in the Euro 2024 final.

And that’s despite England being ranked higher (5th) on the FIFA Men’s World Ranking, compared to Spain (8th).

 

Yet, to be diplomatic to England football fans however, the FX arena paints a vastly contrasting picture.

The British Pound has strengthened by 2.8% against the Euro so far this year.

Also, GBP is the only G10 currency that has a year-to-date gain versus the US dollar.

  • GBPUSD: +1.1%
  • EURUSD: -1.7%

 

Still, anything could happen in the sporting final, hence the drama.

To be clear, financial markets are far more influenced by fundamental factors, including macroeconomic data, central banks’ policy outlooks, and even political risks, rather than fleeting bouts of sporting euphoria or despair.

Similarly, football teams do not rely on stock markets when preparing for major tournament finals.

Yet no matter the outcome of the England vs. Spain Euro 2024 final, traders and investors can take heart from the fact that financial markets do not just trade once every 4 years (unlike the Euros football tournament).

The SPN35 and UK100 indexes, along with a host of other financial instruments, are available for trading across FXTM’s platforms all year round.

 

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
08 Jul

FRA40: Steady as France faces hung parliament

By ForexTime 

  • France’s Left-Wing coalition bags surprise victory
  • No outright majority means hung parliament outcome
  • FRA40 bounces from 200-day SMA
  • Key levels of interest – 7790, 7700 & 200-day SMA

FXTM’s FRA40 moved higher on Monday as markets digested the unexpected result of France’s legislative election.

The left-wing coalition won the largest amount of seats but could not secure a majority – resulting in a hung parliament outcome.

  • New Popular Front (left-wing): 188 seats
  • Macron’s centrist alliance (centrist): 161 seats
  • National Rally (far-right): 142 seats

Note: 289 seats are needed for absolute majority

With no party close to securing a majority, this could spell months of turmoil and political instability.

But this also means that neither the left nor right party can implement their plans into action, without support from others to pass legislation. This could cool fears around more spending and deeper deficits at a period where France remains under the European Union’s scrutiny for breaking budget rules.

Looking at the charts, the FRA40 bounced from the 200-day SMA on Monday morning with prices trading above 7700 as of writing. Despite the political gridlock down the road, the overall market reaction seems positive.

  • Still, bulls will need to secure a solid daily close above 7700 to encourage an incline toward 7790 and the 50-day SMA at 7900.
  • Should 7700 prove to be a tough resistance, a decline back toward 7470 and 7400 could be on the cards.

Note: FRA40 tracks the underlying CAC 40 Index 

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
05 Jul

Week Ahead: US500 set for major pullback?

By ForexTime 

  • US500 gains 15% in first half of 2024
  • April only negative trading month this year
  • US CPI, Powell Testimony & Big bank earnings in focus
  • Bullish but RSI overbought on multiple timeframes
  • Technical levels – 5600, 5500 & 5460

The UK general election is done and dusted with Labour securing a landslide victory as widely expected.

But the political risks don’t end there…

Just across the English Channel, France will hold the second and final round of its legislative elections this Sunday. And if the far-right National Rally wins an absolute majority, that shocker could see the FRA40 plunging to its year-to-date low.

Speaking of indices, FXTM’s US500 continues to dazzle markets with record highs!

And could see more volatility this afternoon thanks to the US jobs report (Friday 5th July). But even as anticipation mounts, investors are bracing for more action in the week ahead:

Sunday, 7th July

  • FRA40: Second round of French legislative elections

Monday, 8th July

  • JP225: Japan current account

Tuesday, 9th July

  • AU200: Australia consumer confidence
  • CNH: China aggregate financing, money supply, new yuan loans
  • TWN: Taiwan trade
  • US500: Fed Chair Jerome Powell testimony

Wednesday, 10th July

  • CN50: China PPI, CPI
  • JP225: Japan PPI
  • NZD: RBNZ rate decision
  • US500: Fed Chair Jerome Powell testimony, Fed speech

Thursday,11th July

  • GER40: Germany CPI
  • JP225: Japan core machine orders
  • NZD: New Zealand food prices
  • ZAR: South Africa manufacturing production
  • UK100: UK industrial production
  • US500: US June CPI report, Fed speech

Friday, 12th July

  • SG20: Singapore GDP
  • CN50: China trade
  • JP225: Japan industrial production
  • USDInd: US University of Michigan consumer sentiment, PPI
  • US500: JPMorgan, Citigroup, Wells Fargo earnings

All eyes will be on the incoming US inflation data, Powell’s testimony and earnings announcements by big US banks which could move the US500.

With the Relative Strength Index (RSI) signalling that prices are heavily overbought, could a technical pullback be on the horizon?

Note: A pullback is a temporary pause or decline in an asset’s overall bullish trend.

 

These 3 factors may influence the US500 outlook in the week ahead:

    1) US June CPI report

The incoming US Consumer Price Index (CPI) is likely to impact bets around when the Fed will start cutting interest rates in H2.

Markets are forecasting: 

  • CPI year-on-year (June 2024 vs. June 2023) to cool 3.1% from 3.3% in the prior month.
  • Core CPI year-on-year to remain unchanged at 3.4%.
  • CPI month-on-month (June 2024 vs May 2024) to rise 0.1% from 0% in the prior month.
  • Core CPI month-on-month to remain unchanged at 0.2%.

Expectations around lower US interest rates have been one of the driving forces behind the US500 rally in 2024. This is because the index has a handful of tech stocks that remain sensitive to US rates. Digging deeper, tech accounts for 33% of the US500 value!

  • The US500 could dip if the inflation numbers print above market forecasts.
  • Should the CPI report show more evidence of disinflation, the US500 may receive a boost.

Note: Before the key US inflation data on Thursday, the US500 may be influenced by Fed Chair Jerome Powell’s congressional testimony earlier in the week. Should he strike a dovish tone, US equity bulls are likely to receive a boost, and vice versa.

 

    2) Big bank earnings

It’s that time of the year again…

Second quarter earnings season kicks off on Friday 12th July, led by the biggest US banks.

Heavyweights such as JPMorgan, Wells Fargo and Citigroup and will be under the spotlight. Investors will closely comb over their earnings for fresh insight into the health of US banks which can be used to gauge the health of the US economy.

When factoring in how financial stocks make up over 12% of the US500, the incoming bank earnings could spark some volatility.

  • US500 may push higher if bank earnings beat estimates.
  • Should earnings disappoint, US500 bears could return to the scene.

 

    3) Technical forces

The US500 is firmly bullish on the weekly and daily timeframe. However, the Relative Strength Index (RSI) is above 70 – indicating that prices are heavily overbought.

Note: US500 tracks the underlying S&P 500 index

After recently hitting record highs, the index is trading around unchartered territories.

  • Should 5500 prove to be reliable support, bulls could challenge 5600.
  • A decline below 5500 may open a path toward 5460 and 5400.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News
29 Jun

COT Stock Market Charts: Speculator bets led by S&P500 & Nasdaq

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday June 25th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by S&P500-Mini & Nasdaq-Mini

The COT stock markets speculator bets were slightly higher this week as four out of the seven stock markets we cover had higher positioning while the other three markets had lower speculator contracts.

Leading the gains for the stock markets was the S&P500-Mini (48,863 contracts) with the Nasdaq-Mini (11,220 contracts), the Russell-Mini (7,827 contracts) and the Nikkei 225 (288 contracts) also showing positive weeks.

The markets with the declines in speculator bets this week were the VIX (-11,606 contracts) with the MSCI EAFE-Mini (-2,331 contracts) and the DowJones-Mini (-2,038 contracts) also registering lower bets on the week.

Stock Market Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by the DowJones-Mini

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the DowJones-Mini (59 percent) leads the stock markets this week. The S&P500-Mini (55 percent) and Nasdaq-Mini (51 percent) come in as the next highest in the weekly strength scores.

On the downside, the Nikkei 225 (38 percent) comes in at the lowest strength level currently with the next lowest strength score is the MSCI EAFE-Mini (41 percent).

Strength Statistics:
VIX (49.1 percent) vs VIX previous week (61.6 percent)
S&P500-Mini (55.0 percent) vs S&P500-Mini previous week (47.7 percent)
DowJones-Mini (59.5 percent) vs DowJones-Mini previous week (62.8 percent)
Nasdaq-Mini (50.6 percent) vs Nasdaq-Mini previous week (33.2 percent)
Russell2000-Mini (49.6 percent) vs Russell2000-Mini previous week (44.1 percent)
Nikkei USD (38.4 percent) vs Nikkei USD previous week (35.9 percent)
EAFE-Mini (40.7 percent) vs EAFE-Mini previous week (43.1 percent)

Nasdaq-Mini & MSCI EAFE-Mini top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Nasdaq-Mini (7 percent) leads the past six weeks trends for the stock markets. The MSCI EAFE-Mini (3 percent) was the next highest positive movers in the latest trends data.

The DowJones-Mini (-26 percent) leads the downside trend scores currently with the Nikkei USD (-18 percent) coming in as the next market with lower trend scores.

Strength Trend Statistics:
VIX (-14.0 percent) vs VIX previous week (-11.4 percent)
S&P500-Mini (-6.0 percent) vs S&P500-Mini previous week (-15.6 percent)
DowJones-Mini (-26.5 percent) vs DowJones-Mini previous week (-11.6 percent)
Nasdaq-Mini (6.5 percent) vs Nasdaq-Mini previous week (-12.8 percent)
Russell2000-Mini (-12.7 percent) vs Russell2000-Mini previous week (-14.1 percent)
Nikkei USD (-18.3 percent) vs Nikkei USD previous week (-15.2 percent)
EAFE-Mini (2.7 percent) vs EAFE-Mini previous week (-8.8 percent)

Individual Stock Market Charts:

VIX Volatility Futures:

VIX Volatility Futures COT ChartThe VIX Volatility large speculator standing this week equaled a net position of -61,035 contracts in the data reported through Tuesday. This was a weekly lowering of -11,606 contracts from the previous week which had a total of -49,429 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.1 percent. The commercials are Bearish with a score of 49.4 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 80.7 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

VIX Volatility Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:18.645.76.5
– Percent of Open Interest Shorts:33.330.47.1
– Net Position:-61,03563,589-2,554
– Gross Longs:76,905189,46627,000
– Gross Shorts:137,940125,87729,554
– Long to Short Ratio:0.6 to 11.5 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):49.149.480.7
– Strength Index Reading (3 Year Range):BearishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-14.017.3-13.4

 

S&P500 Mini Futures:

SP500 Mini Futures COT ChartThe S&P500 Mini large speculator standing this week equaled a net position of -65,247 contracts in the data reported through Tuesday. This was a weekly advance of 48,863 contracts from the previous week which had a total of -114,110 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.0 percent. The commercials are Bearish with a score of 33.5 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 83.1 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

S&P500 Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:13.870.913.5
– Percent of Open Interest Shorts:17.173.27.9
– Net Position:-65,247-46,099111,346
– Gross Longs:271,9081,400,848266,961
– Gross Shorts:337,1551,446,947155,615
– Long to Short Ratio:0.8 to 11.0 to 11.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):55.033.583.1
– Strength Index Reading (3 Year Range):BullishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-6.03.75.3

 

Dow Jones Mini Futures:

Dow Jones Mini Futures COT ChartThe Dow Jones Mini large speculator standing this week equaled a net position of -514 contracts in the data reported through Tuesday. This was a weekly decline of -2,038 contracts from the previous week which had a total of 1,524 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.5 percent. The commercials are Bearish with a score of 36.3 percent and the small traders (not shown in chart) are Bullish with a score of 57.1 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Dow Jones Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:19.160.616.0
– Percent of Open Interest Shorts:19.762.213.8
– Net Position:-514-1,3451,859
– Gross Longs:16,17051,41513,578
– Gross Shorts:16,68452,76011,719
– Long to Short Ratio:1.0 to 11.0 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):59.536.357.1
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-26.525.9-8.1

 

Nasdaq Mini Futures:

Nasdaq Mini Futures COT ChartThe Nasdaq Mini large speculator standing this week equaled a net position of 7,395 contracts in the data reported through Tuesday. This was a weekly boost of 11,220 contracts from the previous week which had a total of -3,825 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 50.6 percent. The commercials are Bearish with a score of 32.5 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 96.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Nasdaq Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.552.716.7
– Percent of Open Interest Shorts:24.560.112.2
– Net Position:7,395-18,26010,865
– Gross Longs:67,869129,88641,034
– Gross Shorts:60,474148,14630,169
– Long to Short Ratio:1.1 to 10.9 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):50.632.596.4
– Strength Index Reading (3 Year Range):BullishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:6.5-7.97.2

 

Russell 2000 Mini Futures:

Russell 2000 Mini Futures COT ChartThe Russell 2000 Mini large speculator standing this week equaled a net position of -50,021 contracts in the data reported through Tuesday. This was a weekly rise of 7,827 contracts from the previous week which had a total of -57,848 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 49.6 percent. The commercials are Bearish with a score of 48.5 percent and the small traders (not shown in chart) are Bullish with a score of 50.4 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: New Sell – Short Position.

Russell 2000 Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.378.16.2
– Percent of Open Interest Shorts:26.367.74.7
– Net Position:-50,02143,6496,372
– Gross Longs:59,883327,13226,052
– Gross Shorts:109,904283,48319,680
– Long to Short Ratio:0.5 to 11.2 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):49.648.550.4
– Strength Index Reading (3 Year Range):BearishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-12.713.0-8.0

 

Nikkei Stock Average (USD) Futures:

Nikkei Stock Average (USD) Futures COT ChartThe Nikkei Stock Average (USD) large speculator standing this week equaled a net position of -4,901 contracts in the data reported through Tuesday. This was a weekly increase of 288 contracts from the previous week which had a total of -5,189 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 38.4 percent. The commercials are Bullish with a score of 53.8 percent and the small traders (not shown in chart) are Bullish with a score of 53.8 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Nikkei Stock Average Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:5.467.527.1
– Percent of Open Interest Shorts:41.638.619.8
– Net Position:-4,9013,918983
– Gross Longs:7349,1513,667
– Gross Shorts:5,6355,2332,684
– Long to Short Ratio:0.1 to 11.7 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):38.453.853.8
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.318.0-7.1

 

MSCI EAFE Mini Futures:

MSCI EAFE Mini Futures COT ChartThe MSCI EAFE Mini large speculator standing this week equaled a net position of -24,818 contracts in the data reported through Tuesday. This was a weekly fall of -2,331 contracts from the previous week which had a total of -22,487 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.7 percent. The commercials are Bullish with a score of 55.4 percent and the small traders (not shown in chart) are Bullish with a score of 51.6 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MSCI EAFE Mini Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:7.689.22.8
– Percent of Open Interest Shorts:13.684.91.1
– Net Position:-24,81817,8706,948
– Gross Longs:31,609369,93511,558
– Gross Shorts:56,427352,0654,610
– Long to Short Ratio:0.6 to 11.1 to 12.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.755.451.6
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:2.7-3.43.6

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Financial News Stock Market News
28 Jun

Week Ahead: FRA40 braced for French elections

By ForexTime 

  • H2 kicks off with French/UK elections, ECB forum & NFP
  • FRA40 ↓ 5.4% since Macron call for snap election
  • National Rally currently leading polls
  • Index bearish on D1 but RSI near oversold
  • Key points of interest – 7700, 200-day SMA, 7470

An exceptional list of high-risk events may rattle global markets in the week ahead!

The second half of 2024 kicks off with elections in France and the United Kingdom, to the ECB forum and US jobs report among other key data:

Sunday, 30th June

  • CN50: China manufacturing & non-manufacturing PMIs
  • USDInd: New York Fed President John Williams speech
  • FRA40: First round of French legislative elections

Monday, 1st July  

  • CN50: China Caixin manufacturing PMI
  • AU200: Australia retail sales, Melbourne Institute inflation
  • EU50: Eurozone Manufacturing PMI
  • FRA40: France Manufacturing PMI
  • GER40: Germany Manufacturing PMI, CPI
  • UK100: UK Manufacturing PMI
  • US500: ISM Manufacturing

Tuesday, 2nd July

  • AU200: RBA meeting minutes
  • EU50: Eurozone CPI, unemployment, ECB President Lagarde speech
  • US500: Fed Chair Jerome Powell speech

Wednesday, 3rd July

  • CN50: China Caixin service PMI
  • EU50: Eurozone Services PMI, PPI
  • USDInd: US FOMC minutes, ISM services, initial jobless claims, Fed speak

Thursday, 4th July    

  • GER40: Germany factory orders
  • EU50: ECB meeting minutes
  • UK100: UK general elections
  • US Markets closed – Independence Day holiday

Friday, 5th July

  • CAD: Canada unemployment
  • EU50: Eurozone retail sales
  • FRA40: France trade, industrial production
  • GER40: Germany industrial production
  • SG20: Singapore retail sales
  • TWN: Taiwan CPI
  • US500: US June NFP report

FXTM’s FRA40 demands our attention due to the first round of French parliamentary elections over the weekend.

The FRA40 tracks the underlying CAC 40 index, which represents the 40 largest companies listed on the Paris Stock Exchange.

The lowdown…

The French political scene was thrown into chaos on June 9th after President Macron unexpectedly dissolved parliament following his defeat by the far right in EU elections.

Since then, the FRA40 has tumbled as much as 6.5% and heading for its biggest monthly loss in almost two years.

The bigger picture

In a two-round process on 30th June and 7th July, France will go to the polls to elect a new parliament after Macron called for snap elections.

If one candidate gains more than 50% of the vote, representing at least 25% of registered voters, they automatically win the elections. But this is an unlikely outcome given the current polls.

Any party that has obtained more than 12.5% of the vote can advance to the second round.

  • National Rally (far-right): 36%
  • New Popular Front (left-wing): 29%
  • Renaissance and allies (centrist): 21%

Note: President Macron belongs to Renaissance and allies.

Taking a deeper dive

President Macron will remain president regardless of how the election plays out.

However, he could be stuck with a prime minister and a government from a different party. This is the crux of the matter, especially when considering how unaligned Macron and the National Rally are on economic policies.

What does this mean?

This snap election could not have come at a worse time for the French economy.

Just last month its credit rating was downgraded by S&P Global Ratings, while the economy continues to experience subdued growth. If Macron is rendered powerless and unable to push reforms, this could mean more trouble for the French economy as political uncertainty becomes a key theme.

How will the elections impact the FRA40?

Investors have already been given a taste of how political jitters can rock the FRA40.

  • A shock outcome that sees an absolute majority for either the National Rally or New Popular Front could send the FRA40 tumbling as uncertainty over France’s policy future intensifies.
  • An outcome where all 3 parties make it into the second round of voting may also trigger volatility.

Technical outlook

The FRA40 is under intense pressure on the daily charts with prices respecting a bearish channel. Although the candlesticks are trading below the 50, 100 and 200-day SMA, the Relative Strength Index (RSI) is signalling that prices are approaching oversold levels.

  • Sustained weakness below the 200-day SMA, may signal a decline toward 7470, 7400 and 7290.
  • Should prices push back above the 200-day SMA, bulls could challenge 7700 and 7790.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
27 Jun

Is It Time To Unload Nvidia?

Source: Streetwise Reports (6/26/24)

Some financial experts say yes, others no. Read on to learn the rationale behind the conclusions and stance of several.

The movement of Nvidia Corp.’s (NVDA:NASDAQ) stock during June, rising to its all-time high and then plunging, has investors debating now whether to jump into it, bolster their existing position, or abandon it altogether. Whereas financial analysts and other experts generally agree the information technology (IT) stock has been overbought since early June, they differ, some radically, in their current recommendations on it.

“Nvidia has likely become one of the most overheated stocks we’ve witnessed in a quarter century,” Eric Fry of Fry’s Investment Report said in an InvestorPlace interview.

On June 18, Nvidia ousted Microsoft Corp. (MSFT:NASDAQ) from its spot as the world’s most valuable company, and last week, Nvidia’s stock peaked at US$140.76 per share. Since, it dropped to third place, therein suffering a loss of about US$500 billion ($500B) in value, Seeking Alpha reported on June 25. However, NVDA maintains about a 140% year-to-date gain and thus is the second-best performer in the Standard & Poor’s (S&P) 500 Index.

Is it OK To Buy?

None of the factors behind the stock’s recent descent into its current correction constitutes a sound reason to “turn gloomy on Nvidia,” Garfield Reynolds, Bloomberg’s Markets Live Asia team leader, wrote in a June 24 article. The five causes were expiring options, insider sales, the stock’s technically overbought state, investor reassessment of the stock after it dethroned Apple Inc. (AAPL:NASDAQ) and Microsoft, and a long squeeze.

“The bull case for the artificial intelligence (AI) darling along with the broader tech sector remains strong over the short to medium term, at the very least,” he wrote.

It would take a major event, such as a broad economic slump or a big earnings miss, to keep Nvidia down for long, asserted Reynolds.

Certainly, numerous analysts recommend Nvidia as a Buy. According to TipRanks, of the 41 analysts who rated the stock at some point in the last three months, 38 have it Buy, three Hold, and none Sell. Zacks Investment Research, for instance, has a Strong Buy rating on it.

“Even with those concerns about overconcentration lingering,” he added, “the selloff would need to extend significantly further to change the narrative away from the consensus call that the AI revolution will keep going and that Nvidia stands to benefit hugely as a result.”

As such, Reynolds expects new buyers of the stock on future price dips, he wrote.

Certainly, numerous analysts recommend Nvidia as a Buy. According to TipRanks, of the 41 analysts who rated the stock at some point in the last three months, 38 have it Buy, three Hold, and none Sell. Zacks Investment Research, for instance, has a Strong Buy rating on it.

In a June 22 article, The Motley Fool’s Edward Shelton suggested that investors should consider three points when deciding what to do regarding Nvidia.

One, Nvidia stock being overbought does not preclude it from climbing further. Case in point, he said, is the stock’s last pullback, in March, of 20%, after which the price soared to its highest point ever.

Two, NVDA is not in a bubble, despite what analysts say, because the fundamentals support its valuation.

Three, the company’s earnings per share (EPS) guidance for 2025 of US$3.61 could be conservative. Should earnings turn out to be higher (some analysts predict US$5), the stock would look cheap.

Ballanger Says Think Twice Before Buying

According to Michael Ballanger, editor & publisher of GGM Advisory Inc., investors should take seriously Nvidia’s recent shift into a correction. The stock is coming down from its peak “with a full bearish moving average convergence/divergence (MACD) rollover and ‘sell signal’ now complete,” he described in a June 24 email alert.

A sector rotation out of tech stocks and into more conservative Dow Jones Industrial Average blue chip stocks is underway, he noted, but the whiplashing of this a long-time market leader into a correction could be a harbinger of what is to come.

“If ‘AI’ starts to correct,” Ballanger warned, “the entire market is going with it, including the Dow and the S&P 500.”

Newsletter Writers Say Do Not Buy Now

Chris Johnson, Money Morning qualitative specialist, implied that it might be better to wait to Buy Nvidia as there is a good chance the stock will present a short-term opportunity to do so on a future pullback.

“If ‘AI’ starts to correct,” Michael Ballanger of GGM Advisory Inc. warned, “the entire market is going with it, including the Dow and the S&P 500.”

These opportunities often arise with heavily traded stocks after they experience persisting overbought conditions and the pullbacks that typically follow.

“Investors looking for a deeper correction in the stock should consider the US$100 price target as an ideal price for longer-term support for Nvidia shares,” he noted in a June 24 article. (At close today, the tech company was at US$126 per share.)

Kimberley Koenig with Investor’s Business Daily flat out advised against buying Nvidia right now. Instead, she recommended on June 25, “Wait for selling to subside and another base to form or follow-on buy point to present itself to buy the AI chip stock.”

One Expert Says Sell It All Today

The advice of Technical Analyst Clive Maund, based on his interpretations of the stock’s 10-year and two-year charts, is to sell Nvidia.

“The main takeaways for us are that Nvidia should be ‘avoided like the plague’ simply because it has gone up so much and is massively overbought,” he wrote in a June 23 report. “Anyone holding should, of course, take profits soon.”

He explained that on the charts, the MACD indicator shows the stock has become “insanely overbought.” However, he noted, “Recent volume does not look terminal as it has not (yet) risen to become climactic, and the accumulation line remains strong.” These indicators suggest that rather than immediately plunging, the stock may form a large top pattern over some months, during which time it could even creep higher.

Eric Fry of Fry’s Investment Report suggested investors follow the lead of the country’s billionaires and unload not just Nvidia stock but also the other tech giants’ stock now because, he said, an entire tech market crash is coming.

“There’s an undeniable tension gripping the markets right now, and if your gut is telling you that something monumental is lurking just over the horizon, trust me, your instincts are dead on,” he said.

Fry likened Nvidia stock today to Cisco stock in the 1990s. Though Cisco then had nearly twice the earnings power of Nvidia today, he said, when the dot-com bubble burst, it dropped about 87% from its peak.

Yes, there is room for growth in the AI market, and yes, Nvidia could be an AI star over the long term, said Fry. However, world-changing stocks go through their own boom and bust periods.

“I do want people to be aware of the cyclical risks involved here, at these crazy valuations,” he added.

Fry forecasted a future “tidal wave of selling to engulf the tech titans of Wall Street — Nvidia, Apple, Microsoft, Google, Meta and more” — in what he’s calling The 2024 Tech Reset. Billionaires, including Jeff Bezos, Warren Buffet, Elon Musk, and Mark Zuckerberg, have already started selling tech stocks, even their own company’s stock. They are moving their money into next-gen stocks, which Fry defined as “stocks of businesses that are essential for the growth and prosperity of society as a whole.”

This massive selloff Fry predicted will cause tech stocks to plummet from their record highs and will, in the process, drag down thousands of other stocks, he warned. It will “erase years of investors’ gains, in the blink of an eye.”

Sector to Hit $29 Trillion by 2030

Currently IT is facing some challenges, and in the short term “the demand environment remains uncertain as enterprises add more scrutiny to the budgeting process and reduce discretionary IT spending,” CIBC wrote in a June 20 report. The current environment has dampened the expectation held since last year that demand would start improving in H2/24.

The report asserted that the initial “gen AI boom” is in the rear-view mirror, and what is happening now is a “period of resetting expectations.” Despite most companies knowing they need AI strategies, they are still deciding on what these will be, the analysts said.

The long-term outlook for IT is brighter. Growth for the IT market is forecasted up to 2030, at a 15% compound annual growth rate, according to Exactitude Consultancy, a market research and consulting services firm. By 2030, the market is projected to increase to US$28.99 trillion ($28.99T) in value from US$10.9T in 2023.

Streetwise Ownership Overview*

Nvidia Corp. (NVDA:NASDAQ)

Institutions: 67.7%
Retail: 28.02%
Management & Insiders: 4.23%
Strategic Investors: 0.05%
67.7%
28.0%
4.2%
*Share Structure as of 6/26/2024
Source: Thomson Reuters

 

Accelerated advancement in AI, cloud computing, the Internet of Things and cybersecurity is the primary growth driver, noted Exactitude.

Ownership and Share Structure

According to Reuters, 4.23% of the company is held by management and insiders.

0.05% is with strategic investors. Milestone Resources Group Ltd. has 0.02%, with 4.39 million, and Banco Santander SA has 0.01%, with 2.10 million.

67.70% is held by institutions. The VanGuard Group Inc. has 8.63%, with 2,122.88 million shares. BlackRock Institutional Trust Company N.A. has 4.82%, with 1,186.45 million. Fidelity Management & Research Company LLC. has 4.51%, with 1,109.18 million.

The rest is with retail investors.

Nvidia has 24.6 billion (24.6B) shares outstanding and 23.5B free float traded shares.

The company’s market cap is US$3.1 trillion. Its stock has traded between US$39.23 and US$140.76 per share over the past 52 weeks.

 

Important Disclosures:

  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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