25 Jun

RBA and RBNZ have no plans to cut rates this year. Oil is trading at a 2-month high

By JustMarkets

On Monday, the Dow Jones (US30) Index added 0.67% and rose to a one-month high, while the S&P 500 (US500) Index fell by 0.31%. The NASDAQ Technology Index (US100) closed negative 1.09% and fell to a one-week low. Weakness in technology stocks on Monday weighed on the Nasdaq 100 and the overall market after Truist Advisory Services downgraded the technology sector to Neutral from Elevated, citing valuation issues.

The Dallas Fed’s survey of the US manufacturing outlook for June rose 4.3 to negative 15.1, slightly weaker than expectations of 15.0. Comments from FOMC officials were mixed yesterday. Chicago Fed President Goolsbee said that the Fed may need to consider whether restrictive policies are putting too much pressure on the economy. San Francisco Fed President Daly said that if inflation falls more slowly than expected, it would be appropriate for the Fed to keep interest rates high for longer, but if inflation falls quickly or the labor market cools more than expected, it would be necessary to cut rates. Markets estimate the odds of a 25bp rate cut at 10% at the July 30–31 FOMC meeting and 65% at the next meeting on September 17–18.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.89%, France’s CAC 40 (FR40) closed up 1.03%, Spain’s IBEX 35 (ES35) added 1.27%, and the UK’s FTSE 100 (UK100) closed positive 0.53%. European equity markets opened lower on Tuesday as cautious sentiment prevailed ahead of key US inflation data, the first presidential debate between Joe Biden and Donald Trump this week, and the French elections that begin this weekend.

Germany’s IFO Business Climate Index for June unexpectedly fell by 0.7 to 88.6 against expectations of a rise to 89.6. ECB executive board spokeswoman Schnabel said yesterday that the risk of new inflation spikes means the ECB is not committing to a fixed rate and remains data-dependent. Swaps discount the odds of an ECB rate cut by 25 bps at 5% for the July 18 meeting and 66% for the September 12 meeting.

WTI crude oil prices held just below $82 a barrel on Tuesday, at their highest levels in nearly two months, as geopolitical risks in Eastern Europe and the Middle East continue to support oil prices. The EU also imposed sanctions on more than two dozen ships carrying Russian oil and banned the transshipment of Russian liquefied natural gas (LNG) into the EU for shipment to other countries. In the Middle East, the war between Israel and Hamas showed no signs of abating as international mediation backed by the US has so far failed to reach a ceasefire agreement.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) was up 0.54% for the week, China’s FTSE China A50 (CHA50) added 0.30%, Hong Kong’s Hang Seng (HK50) was unchanged for the day, and Australia’s ASX 200 (AU200) was negative 0.80%. Hong Kong stocks were up 135 points in Tuesday morning trading. The mood was buoyed after Chinese President Xi Jinping urged the country to boost innovation, particularly in some key technologies. Meanwhile, state media outlet Global Times reported that Beijing wants the EU to drop plans to impose preliminary tariffs on Chinese electric cars after the two sides agreed to discuss a possible compromise.

The Bank of Japan (BoJ) released a summary of opinions from its June meeting, showing that members were divided on how to proceed with the next interest rate hike. One member called for an early decision due to upside risks to inflation, while others urged caution and demanded more confirmation from upcoming data. Chief currency diplomat Masato Kanda said Japan is ready to take action against volatile yen movements at “any time,” emphasizing that currency movements should be stable and reflect fundamentals.

Malaysia’s annual inflation rate rose to 2.0% in May 2024 from 1.8% in the previous three months, exceeding market estimates of 1.9% and marking the highest level since August 2023.

The Australian dollar climbed above $0.666, hitting two-week highs and receiving support from a hawkish monetary policy outlook from the Reserve Bank of Australia (RBA), which is expected to cut interest rates much later than other major central banks. Markets have all but ruled out the possibility of an RBA rate cut this year and expect total easing to be just 43 basis points by the end of 2025.

The Reserve Bank of New Zealand (RBNZ) predicted at its last meeting in May that it would not start cutting rates until the third quarter of 2025. However, investors have fully factored in the rate cut in November, and more than 130 basis points of easing are expected by the end of 2025.

S&P 500 (US500) 5,447.87 −16.75 (−0.31%)

Dow Jones (US30) 39,411.21 +260.88 (+0.67%)

DAX (DE40) 18,325.58 +162.06 (+0.89%)

FTSE 100 (UK100) 8,281.55 +43.83 (+0.53%)

USD Index 105.49 −0.31 (−0.29%)

Important events today:
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
  • – US FOMC Cook Speaks at 19:00 (GMT+3);
  • – US FOMC Bowman Speaks at 21:10 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
25 Jun

FXTM’s Corn: Lingers near 3-month low

By ForexTime 

  • Corn ↓ 9% since start of 2024
  • Bearish on H1 but RSI near oversold
  • Technical levels – 432.00 and 423.40
  • Possible breakout on horizon?

Markets remain edgy ahead of a week packed with high-risk events that could spark fresh volatility!

Ahead of the main events, FXTM’s new Corn commodity caught our attention after lingering near 3-month lows.

Prices are under pressure on the daily charts, trading around 427 as of writing.

Note: Corn is priced per bushel. One bushel is equivalent to 60 pounds.

But before we take a deep dive into the world of Corn, here are the basics:

What is Corn?

Corn is one of the most widely grown food plants in the world.

It can be used as livestock feed, biofuel, and domestic products.

What does FXTM’s Corn track

FXTM’s Corn tracks the CME Group Corn No. 2 Yellow futures, the most liquid and active markets in grain.

Some fun facts:

  • Ancient crop originating from Mexico
  • It comes in many different colours
  • The United States is the largest producer
  • China is the biggest importer
  • ↓ almost 9% year-to-date

 

The lowdown…

Corn prices have dropped 3.5% this month, bringing its year-to-date losses to almost 9%.

A key force pressuring the soft commodity was growing concern about a supply gut. The bumper harvests back in 2023 fueled fears around global corn stocks increasing to the highest in six years.

Although corn prices have attempted to rebound amid weather-related issues, the path of least resistance points south.

The bigger picture

An abundance of supply may cap upside gains for corn prices.

According to the USDA, the world supply of corn is expected to hit 312 million metric tonnes for the 2023/2024 marketing year. This represents a 3.7% increase from the previous year with inventories projected to hit a six-year peak by September 2025.

Still, demand is also expected to pick up thanks to biofuel usage, animal feed, and a projected jump in exports.

Technical Outlook

Corn is under pressure on the H1 charts with prices trading below the 50, 100, and 200 SMA.

Although the soft commodity is respecting a bearish channel, the Relative Strength Index (RSI) is heading toward 30 – signalling that prices may be oversold.

  • Sustained weakness below 432.00 may open a path towards 423.40 and 420.00.
  • Should prices push back above 432.00, this could trigger an incline toward 436.00.

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 Soft Commodities
25 Jun

Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?

By The Ino.com Team

Despite the industry challenges, Chevron Corporation (CVX) and NextEra Energy, Inc. (NEE) are both gaining significant traction and rewarding shareholders with reliable dividends. But if you had to choose between them, which would be the better buy?

Chevron’s Dividend Strength Over 37 Years

Chevron is one of the largest integrated energy majors globally, with operations spanning oil production, transportation, and processing. This strategic spread helps cushion the inherent volatility in oil and gas markets, ensuring stability and sustained growth.

Recently, oil prices dipped after hitting seven-week highs. Brent crude futures slipped to $85.27 a barrel, while U.S. West Texas Intermediate crude dropped to $81.47 per barrel. Despite the cyclical nature of the oil sector, Chevron’s solid operational and financial performance continues to shine through.

In its latest earnings release, the company reported a double-digit increase in worldwide production and returned $6 billion in cash to shareholders. CVX beat first-quarter earnings estimates, with an adjusted EPS of $2.93, surpassing analysts’ expectations of $2.87. U.S. production surged to 1.57 million barrels of oil and gas per day, a 35% increase from a year ago, thanks to strong output from the Permian and Denver-Julesburg basins.

What truly sets Chevron apart is its financial muscle. The company’s debt-to-equity ratio is a mere 0.12, the lowest among its peers. This low leverage gives CVX the flexibility to support its operations and sustain its dividends even during downturns, providing a significant competitive advantage.

In the first quarter of 2024, Chevron’s return on capital employed exceeded 12%, reflecting efficient management and strategic investments. The company increased its quarterly dividend by 8% sequentially to $1.63 per share and repurchased nearly $3 billion worth of its shares.

With 36 consecutive years of dividend growth and a forward dividend yield of 4.16%, Chevron offers investors a compelling mix of income and growth potential. CVX has a four-year average yield of 4.35%, and its dividend payouts have grown at a CAGR of 6.4% over the past three years.

Moreover, the company aims to grow its annual free cash flow (FCF) by nearly 10% through 2027, even if Brent crude prices fall to $60 per barrel. With Brent crude currently around $83 per barrel, Chevron has ample room for growth. CVX’s strategy focuses on improving ROCE by investing in high-return areas like the Permian Basin, expected to drive substantial cash flow growth.

Increasing cash flow and robust dividend growth make CVX an attractive long-term investment. The company’s ability to navigate market fluctuations and maintain financial stability positions it as a top choice for investors seeking security and growth in the energy sector. Shares of CVX have gained over 4% over the past six months and nearly 5% year-to-date.

How Is NEE Positioned to Reward Shareholders?

NextEra Energy is a dual force in the energy sector, uniquely positioned with substantial operations in regulated utilities and renewable energy. As one of the largest regulated utility companies in the U.S., NEE enjoys stable earnings through its main subsidiary, Florida Power & Light (FPL).

FPL’s recent expansion efforts, including the addition of 1,640 megawatts of new solar capacity, underscore its commitment to clean energy and meeting the growing electricity demands. In the first quarter that ended March 31, 2024, FPL reported a net income of $1.17 billion or $0.57 per share, reflecting an increase of 9.5% and 7.5% year-over-year, respectively.

Simultaneously, NextEra Energy Resources, the company’s renewable energy arm, continues to advance in sustainable energy production. The segment had a record quarter, adding approximately 2,765 megawatts of new renewables and storage projects to its backlog. Its adjusted earnings for the quarter were $828 million and $0.40 per share, up from $732 million and $0.36 per share in the first quarter of 2023.

Financially, NEE’s performance remains robust. During the quarter, the company’s adjusted earnings amounted to $1.87 billion or $0.91 per share, reflecting an increase of 11.6% and 8.3%, respectively. Its adjusted EBITDA was $462 million, and $164 million cash was available for distribution. Moreover, its revenue and EPS have grown at respective CAGRs of 16.6% and 20.2 over the past three years.

Looking forward, NEE sees significant growth potential in the U.S. renewables and storage market, expecting it to triple over the next seven years from 140 gigawatts to around 375-450 gigawatts. With an existing 74-gigawatt operating fleet, split between FPL and Energy Resources, the company aims to expand to over 100 gigawatts by 2026, further strengthening its operational scale and creating additional value for its stakeholders.

On June 17, NEE paid its shareholders a quarterly dividend of $0.52 per share. With 28 consecutive years of dividend growth and a forward dividend yield of 2.84%, NEE offers an attractive proposition for income-oriented investors seeking exposure to the clean energy sector. Also, it has a four-year average dividend yield of 2.23% and has grown its dividend payouts at a CAGR of 10.2% over the past three years.

All said, NEE stands at the forefront of the energy transition, leveraging its dual strengths in regulated utilities and renewable energy to drive sustainable growth and value creation. The stock has gained over 21% over the past six months and over 19% year-to-date.

Should You Buy Chevron or NextEra Energy?

Analysts are bullish on these dividend-paying giants, each presenting significant upside potential. So, how do these two stack up?

Mizuho gave Chevron a Buy rating and raised the price target from $200 to $205, implying a substantial 23.59% upside from the current price of $156.64. This sentiment is echoed by other prominent analysts, with HSBC and Scotiabank setting price targets of $178 and $195, respectively. This results in an average price target of $186.95, suggesting a potential 16% upside.

On the other hand, NextEra Energy has also caught the eye of analysts. BMO Capital recently maintained an Overperform rating on the stock and raised the price target from $78 to $79, suggesting an 8.3% upside from the current price of $72.46.

In terms of dividend yield as a rough measure of value, CVX’s 4.2% yield is far more attractive compared to NEE’s modest 2.8%. While both stocks historically offered higher yields during oil downturns, NextEra Energy’s current yield is comparatively lower. This positions CVX as a stronger income play and suggests it may be the more attractive stock between the two.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?

Opinions Stock Market News
24 Jun

Trade of the Week: USDInd set for rollercoaster ride?

By ForexTime 

  • USDInd ↑ 0.9% MTD
  • US Presidential debate & PCE deflators in focus
  • Over past year PCE deflators triggered moves of 0.3% ↑ or ↓
  • Technical levels – 106.50, 105.60 & 105.20

Watch this space because FXTM’s USDInd could be jolted by economic and political forces!

It’s all about the Biden vs. Trump faceoff and US PCE deflators which may translate to heightened dollar volatility this week.

After securing a weekly close above the 105.60 resistance, prices are turning increasingly bullish. However, the next major level for bulls to crack can be found at 106.50.

Note: FXTM’s USDInd tracks the US Dollar Index.  This measures how the dollar performs against a basket of six different G10 currencies, including the Euro, British Pound, Japanese Yen, and Canadian dollar.

The lowdown…

Dollar bulls have made a return this month thanks to stronger-than-expected US data including the solid US May jobs report. Last Friday, reports revealed that both U.S manufacturing and services sectors expanded in June – further trimming rate cut bets.

The USDInd could end H1 with a bang, here are 3 reasons why:

    1) Biden vs. Trump: US Presidential debate

The spotlight shines on the first US presidential debate on Thursday, June 27th.

Investors will most likely focus on every little detail, starting from mental states, messaging, overall accuracy of information, and policies among other things. There are just over four months till the US presidential election with national polls suggesting that Biden and Trump are neck-and-neck! This could add more flavour to the upcoming debate which may shape the overall election result.

  • Whatever the outcome of this big political event, it could trigger fresh volatility for the dollar and across financial markets.

 

    2) US May PCE deflators

On the data front, the Fed’s preferred inflation gauge – the Core PCE could influence expectations about when the central bank will cut rates in 2024.

Markets are forecasting PCE deflators to cool in May with the core figure falling to 2.6% year-on-year compared with the 2.8% seen in the previous month. Ultimately, more signs of cooling price pressures could boost bets around lower US interest rates.

Traders are currently pricing in a 73% probability of a 25-basis point cut in September with a move fully priced in by November.

It will be wise to keep an eye on speeches by numerous Fed officials and other US data that could also move the USDInd.

Golden nugget: Over the past year, the US PCE deflators have triggered upside moves of as much as 0.3% or declines of 0.3% in a 6-hour window post-release.

 

  • The USDInd may slip on more signs of cooling price pressures in the United States, with dovish comments by Fed officials fuelling the downside.
  • Should the PCE deflators print higher than expected, this may support USDInd bulls as markets further push back Fed cut expectations.

 

    3) Technical forces

Prices are trending higher on the daily charts with support levels at 105.60 and 105.20.

There have been consistently higher highs and lows, while the candlesticks are trading above the 50, 100 and 200-day SMA.

  • Should 105.60 prove to be reliable support, this could encourage an incline towards 106.50.
  • A daily close below 105.60 could see prices re-test 105.20.
  • Weakness below 105.20 may open the doors towards the 100-day SMA at 104.70.

Forex-Time-LogoArticle by ForexTime

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

Forex and Currency News Opinions
24 Jun

Commodity markets are under pressure from the US dollar growth. New geopolitical risks in the Middle East are on the agenda

By JustMarkets

At the end of Friday, the Dow Jones (US30) Index added 0.04% (+1.61% for the week), while the S&P 500 (US500) Index fell 0.16% (+0.75% for the week). The NASDAQ Technology Index (US100) closed negative 0.18% (for the week +0.39%). Weakness in chip company stocks pressured the broader market on Friday, even as S&P US PMI reports showed that the US economy continues to grow. The S&P US Manufacturing PMI for June unexpectedly rose 0.4 to 51.7, stronger than expectations of a decline to 51.0. In addition, the S&P Services PMI for June unexpectedly rose 0.3 to a two-year high of 55.1, stronger than expectations for a decline to 54.0. Stocks also declined as the quarterly expiration of options and futures occurred on Friday, prompting traders to roll over existing positions or open new ones. About $5.5 trillion of positions expired on Friday, according to options platform SpotGamma.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 0.50% (for the week +0.86%), France’s CAC 40 (FR40) decreased by 0.56% (for the week +1.19%), Spain’s IBEX 35 (ES35) lost 1.15% (for the week -0.03%), and the UK’s FTSE 100 (UK100) closed negative 0.42% (for the week +1.12%). The S&P Eurozone Manufacturing PMI for June unexpectedly fell by 1.7 to a 6-month low of 45.6, weaker than expectations of a rise to 47.9. The S&P Composite PMI for June unexpectedly fell by 1.4 to 50.8, weaker than expectations for a rise to 52.5.

Friday’s dollar strength pressured commodity markets. WTI crude oil fell below $81 per barrel. Nevertheless, the market remains supported by geopolitical risks in the Middle East as Israeli forces moved further into the Gaza Strip and Yemeni Houthis carried out another attack on a ship in the Arabian Sea on June 24. Meanwhile, Israel and Lebanon’s Hezbollah stand on the brink of a new conflict. Ecuador’s state oil company, Petroecuador, also declared force majeure on some Napo heavy oil shipments due to the shutdown of a major pipeline and oil wells amid heavy rains. In addition, recent data points to a decline in US crude oil inventories amid a rebound in energy consumption.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) gained 0.40%, China’s FTSE China A50 (CHA50) fell by 1.22%, Hong Kong’s Hang Seng (HK50) gained 1.01%, and Australia’s ASX 200 (AU200) was positive 0.93%. Asian stock markets opened lower on Monday, reeling from weakness on Wall Street, as shares of Nvidia and other artificial intelligence chip makers saw heavy selling after strong gains.

Singapore’s annual inflation rate for May 2024 rose to 3.1%, exceeding market forecasts of 3.0% and accelerating from April’s 2-year low of 2.7%. The annualized core inflation rate unexpectedly came in at 3.1%, the same as in the previous two months, beating the consensus forecast of 3.0%. Monthly, CPI rose by 0.7%, the highest since February, after rising 0.1% in April.

The Australian dollar weakened below $0.665, extending recent losses as the US dollar rose on strong US business activity data that dampened expectations of an interest rate cut by the Federal Reserve. Investors are also cautiously awaiting Australian inflation data this week after the country’s central bank said it discussed the need for a rate hike at its June meeting and did not consider the case for a rate cut.

S&P 500 (US500) 5,464.62 −8.55 (−0.16%)

Dow Jones (US30) 39,150.33 +15.57 (+0.04%)

DAX (DE40) 18,163.52 −90.66 (−0.50%)

FTSE 100 (UK100) 8,237.72 −34.74 (−0.42%)

USD Index 105.83 +0.24 (+0.23%)

Important events today:
  • – New Zealand Trade Balance (q/q) at 01:45 (GMT+3);
  • – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
  • – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
  • – Canada BoC Gov Macklem Speaks at 20:45 (GMT+3);
  • – US FOMC Member Daly at 21:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
23 Jun

Why Broadcom’s (AVGO) 10-for-1 Stock Split Could Attract a New Wave of Investors

By The Ino.com Team

Broadcom Inc. (AVGO), a prominent player in the semiconductor industry, announced a 10-for-1 forward stock split set to take effect on July 15, 2024, taking advantage of a rally in its shares this year. This decision comes on the heels of an outstanding second-quarter performance, underscoring Broadcom’s strategic positioning amid the burgeoning artificial intelligence (AI) revolution.

Understanding Stock Split Mechanics and Strategic Implications for Broadcom

A stock split involves dividing each existing share into multiple shares, effectively lowering the share price proportionally while maintaining the company’s total market capitalization. In AVGO’s case, each shareholder will receive nine additional shares for every one share held, resulting in a tenfold increase in the number of outstanding shares.

The primary objective of a stock split is to make shares more affordable and accessible to a wide range of retail investors by reducing the nominal share price. Given Broadcom’s share price surpassing $1,800 recently, the split aims to address perceived affordability barriers that may have deterred investors.

The increased accessibility can broaden AVGO’s investor base, potentially stimulating demand for its shares. Consequently, a higher number of outstanding shares resulting from the stock split typically leads to higher trading volumes. This enhanced liquidity can benefit both existing and new investors, allowing for easier entry and exit from positions.

Comparison with NVIDIA’s Recent Similar Move

Broadcom’s stock split mirrors a similar move by NVIDIA Corporation (NVDA), its rival in the AI hardware market. With more individual investors gaining access to Nvidia’s shares post-split, which came into effect at the close of trading on June 7, increased trading activity and demand were observed, potentially driving share prices higher.

NVIDIA’s stock is trading above its 50-day and 200-day moving averages of $99.28 and $68.61, respectively. NVDA’s successful split this month was preceded by significant market gains, highlighting the strategic timing of Broadcom’s decision to capitalize on investor sentiment surrounding the AI and semiconductor sectors.

Historically, stock splits are viewed as a bullish signal. According to data from BofA research, total returns for companies announcing stock splits are about 25% in the 12 months after a stock split compared to 12% gains for the S&P 500 index.

Broadcom’s Unprecedented Growth Amid the AI Boom

With a $839.05 billion market cap, AVGO is a technology leader that develops and supplies semiconductor and infrastructure software solutions. The company manufactures sophisticated networking chips for handling vast amounts of data used by AI applications such as OpenAI’s ChatGPT, positioning it as one of the beneficiaries of increased enterprise investments in the boom.

According to Grand View Research, the global AI market is projected to reach $1.81 trillion by 2030, growing at a CAGR of 36.6% during the forecast period (2024-2030). As AI continues to revolutionize industry verticals, including automotive, healthcare, retail, finance, and manufacturing, chipmakers like Broadcom are at the forefront, providing the essential chips that power AI applications.

Broadcom’s second-quarter results were primarily driven by AI demand and VMware. For the quarter that ended May 5, 2024, AVGO’s net revenue increased 43% year-over-year to $12.49 billion. Its revenue surpassed the consensus estimate of $12.01 billion. Revenue from its AI products was a record $3.10 billion during the quarter. Broadcom reported triple-digit revenue growth in the Infrastructure Software segment to $5.29 billion as enterprises increasingly adopted the VMware software stack to build their private clouds.

AVGO’s gross margin grew 27.2% from the year-ago value to $7.78 billion. Its non-GAAP operating income rose 32% year-over-year to $7.15 billion. Furthermore, the company’s non-GAAP net income came in at $5.39 billion or $10.96 per share, up 20.2% and 6.2% year-over-year, respectively. Its EPS exceeded the analysts’ expectations of $10.84.

Also, the company’s adjusted EBITDA grew 30.6% from the prior year’s quarter to $7.43 billion. It reported a free cash flow, excluding restructuring and integration, of $4.45 billion, up 18% year-over-year. As of May 5, 2024, AVGO’s cash and cash equivalents were $9.81 billion.

After an outstanding financial performance, Broadcom raised its fiscal year 2024 guidance. The company expects full-year revenue of nearly $51 billion. Its adjusted EBITDA is expected to be approximately 61% of projected revenue.

Favorable Analyst Estimates

Analysts expect AVGO’s revenue for the third quarter (ending July 2024) to grow 45.6% year-over-year to $12.92 billion. The consensus EPS estimate of $12.11 for the current quarter indicates a 14.9% year-over-year increase. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

For the fiscal year ending October 2024, Street expects Broadcom’s revenue and EPS to grow 43.4% and 13% year-over-year to $43.37 billion and $47.74, respectively. In addition, the company’s revenue and EPS for the fiscal year 2025 are expected to increase 15.3% and 25.6% from the previous year to $59.22 billion and $59.95, respectively.

Bottom Line

As AI continues to revolutionize several sectors, chipmakers such as Broadcom are at the forefront, offering essential semiconductor and infrastructure software solutions powering this technology. Driven by robust AI demand and VMware, AVGO reported solid second-quarter performance, exceeding analysts’ estimates for revenue and earnings.

The management expressed confidence in the company’s growth prospects by raising the company’s fiscal year 2024 guidance for revenue to $51 billion and adjusted EBITDA to 61% of revenue. Moreover, AVGO’s strong financial health enabled it to approve a quarterly dividend of $5.25 per share, payable on June 28, 2024.

The company pays an annual dividend of $21 per share, which translates to a yield of 1.17% on the current share price, while its four-year average dividend yield is 2.69%. Its dividend payouts have grown at CAGRs of 12.9% and 17.5% over the past three and five years, respectively. Broadcom also raised its dividend payouts for 13 consecutive years.

In the last quarterly earnings release, AVGO announced a ten-for-one forward stock split of its common stock, making ownership of Broadcom stock more accessible to investors. The company’s decision to execute a stock split represents a strategic move to enhance shareholder value and broaden investor participation.

By making its shares more accessible and increasing liquidity, Broadcom positions itself to attract a diverse array of investors keen on capitalizing on the AI-driven semiconductor boom. The stock split is a pivotal catalyst that could propel AVGO’s growth trajectory forward, cementing its status as a critical player in the evolving tech industry.

In a report released on June 16, William Stein from Truist Financial maintained a Buy rating on AVGO, with a price target of $2,045. Further, Oppenheimer’s Rick Schafer increased the price target on Broadcom from $1,500 to $2,000 while maintaining a Buy rating on the stock.

In addition to Oppenheimer’s rating update, other analysts adjusted their price targets for AVGO. Goldman Sachs’ Toshiya Hari raised the price target from $1,550 to $1,850 and maintained a Strong Buy rating. Also, JP Morgan’s Harlan Sur raised the price target from $1,700 to $2,000 and maintained a Strong Buy rating on the stock.

In conclusion, for investors eyeing opportunities in the dynamic intersection of AI and semiconductor sectors, Broadcom’s ten-for-one stock split presents a compelling avenue to consider, backed by sound fundamentals and strategic foresight.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Why Broadcom’s (AVGO) 10-for-1 Stock Split Could Attract a New Wave of Investors

Opinions Stock Market News
22 Jun

FX, Stocks, Commodities, Cryptos… Learn How to Know When This Key Price Pattern is Over (Video)

By Elliott Wave International

“12345-ABC.” That’s a basic Elliott wave pattern in a nutshell. That “12345” is a so-called impulse, and it’s a key price pattern to know, because impulses point in the direction of the larger trend. In this clip from a recent Trader’s Classroom lesson, host Favio Poci shows you step-by-step how to spot an impulse and know when it’s likely over. (Market in focus: EUR/CHF, but you can apply this to any liquid market.)

Continue Your Education on Impulse Waves with this FREE Online Course!

For a very limited time, you can get free access to our online course, “How to Spot and Capitalize on Impulse Waves.” ($99 value)

In about 1 hour, you’ll learn:

  1. “What do I look for?” — just what, exactly, should you look for on a price chart? See an easy way to spot an impulse wave.
  2. “What does it tell me?” — Impulse waves are great at showing you the direction of the larger trend (which, as you know, is “your friend”!)
  3. “Are there variations?” — Most impulse waves are simple, but some are… well, different. You’ll see how to quickly distinguish one from another.

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This article was syndicated by Elliott Wave International and was originally published under the headline FX, Stocks, Commodities, Cryptos… Learn How to Know When This Key Price Pattern is Over (Video). EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Opinions Stock Market News
21 Jun

DELL and NVDA are jointly building an artificial intelligence factory. SNB cuts rate for the second time in a row

By JustMarkets

At the end of yesterday, the Dow Jones (US30) Index was up 0.77%, while the S&P 500 (US500) Index decreased by 0.25%. The NASDAQ Technology Index (US100) closed negative 0.79%. Stocks initially went up on Thursday, with the S&P 500 and Nasdaq 100 setting new record highs amid gains in chipmaker stocks. Chipmakers initially rose Thursday after Dell Technologies (DELL) CEO tweeted that his company is building an artificial intelligence factory with Nvidia (NVDA) to power Elon Musk’s xAI’s Grok supercomputer. However, a 5% drop in Qualcomm (QCOM) shares triggered a prolonged liquidation in chip stocks, negatively impacting the broader market.

Minneapolis Fed President Kashkari said it will probably take a year or two for the US to return to an inflation rate of 2%, suggesting he favors keeping interest rates on hold for longer. Weekly US initial jobless claims fell by 5,000 to 238,000, indicating a weaker labor market than expected at 235,000. US housing starts in May unexpectedly fell by 5.5% m/m to a 4-year low of 1.277 million, weaker than expectations for a rise to 1.370 million. May building permits, an indicator of future construction, unexpectedly fell by -3.8% m/m to a nearly 4-year low of 1.386 million, weaker than expectations for a rise to 1.450 million. Markets estimate the odds of a 25 bps rate cut at 10% at the next FOMC meeting on July 30-31 and 60% at the next meeting on September 17-18.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose 1.03%, France’s CAC 40 (FR40) closed 1.34% higher, Spain’s IBEX 35 (ES35) added 0.94%, and the UK’s FTSE 100 (UK100) closed positive 0.82%.

Eurozone new car registrations for May fell 3.0% y/y to 912,000. Eurozone Consumer Confidence for June rose by 0.3 to a 2-1/3 year high of 14.0, weaker than expectations of 13.8. May German PPI was unchanged m/m and fell by 2.2% y/y, weaker than expectations of 0.1% m/m and 2.0% y/y.

As expected, the Bank of England (BoE) left the bank rate unchanged at 5.25% on Thursday, with seven officials voting to keep the rate unchanged and two voting to cut it. The BoE said the decision not to cut rates was “finely balanced,” suggesting policymakers may be open to a rate cut in the coming months. UK retail sales rose by 2.9% month-on-month in May 2024, recovering from an upwardly revised 1.8% decline in April and well above forecasts for a 1.5% rise. That’s the biggest increase in four months.

The Swiss franc weakened by nearly 0.5% to nearly 0.89 per US dollar after the Swiss National Bank (SNB) cut its key interest rate by 25 bps to 1.25% for the second consecutive meeting. Policymakers noted a reduction in underlying inflationary pressures to keep monetary conditions accommodative. Swiss inflation was 1.4% in May.

WTI crude oil prices held above $81 a barrel on Friday and rose more than 3% for the week, posting a second consecutive weekly gain as lower US crude inventories and escalating conflict in the Middle East boosted oil prices. Data released on Thursday showed US crude inventories fell by 2.547 million barrels last week, beating forecasts for a 2 million barrel decline.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.16%, China’s FTSE China A50 (CHA50) was down 0.26%, Hong Kong’s Hang Seng (HK50) lost 0.52% on Thursday, and Australia’s ASX 200 (AU200) was little changed for the day. In China, local indices continue to decline for the sixth consecutive week as an uneven economic recovery and a lack of strong political support dampen investor sentiment. Earlier this week, the People’s Bank of China (PBoC) left key lending rates unchanged despite market pressure for further policy easing.

Japan’s core consumer price index, which excludes fresh food but includes fuel costs, rose by 2.5% year-on-year in May 2024, up from April’s 3-month low of 2.2% and marking the first increase since February amid a surge in energy prices, particularly electricity, as the government scrapped subsidies altogether. Meanwhile, the US Treasury Department added Japan to a list of countries monitored as currency manipulators.

S&P 500 (US500) 5,473.17 −13.86 (−0.25%)

Dow Jones (US30) 39,134.76 +299.90 (+0.77%)

DAX (DE40) 18,254.18 +186.27 (+1.03%)

FTSE 100 (UK100) 8,272.46 +67.35 (+0.82%)

USD Index 105.65 +0.40 (+0.38%)

Important events today:
  • – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
  • – Australia Services PMI (m/m) at 02:00 (GMT+3);
  • – Japan National Core Consumer Price Index at 02:30 (GMT+3);
  • – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
  • – Japan Services PMI (m/m) at 03:30 (GMT+3);
  • – UK Retail Sales (m/m) at 09:00 (GMT+3);
  • – German Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • – German Services PMI (m/m) at 10:30 (GMT+3);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – Canada Retail Sales (m/m) at 15:30 (GMT+3);
  • – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
  • – US Services PMI (m/m) at 16:45 (GMT+3);
  • – US Existing Home Sales (m/m) at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
21 Jun

The yen is falling again: the devaluation scenario remains the main one

By RoboForex Analytical Department

The Japanese yen is weakening against the US dollar again. The USD/JPY pair is rising to 158.97.

The currency pair is now again close to the levels when the Bank of Japan and the country’s authorities conducted currency interventions. Japan’s top currency diplomat, Masato Kanda, stated that the government is prepared to take measures against speculative movements of the national currency.

Among the significant news items, attention is drawn to the information that the US has added Japan to the list of countries being monitored for currency manipulation.

Following its regular committee meeting last week, the Bank of Japan refused to agree on reducing large-scale bond purchases. It plans to present a plan to wind down such a program at a meeting in July. The market interpreted this decision in different ways, but mostly negatively.

Inflation in Japan rose from 2.5% in April to 2.8% year-on-year in May, the maximum value since February of this year. The core consumer price index accelerated to 2.5% year-on-year despite being 2.2% earlier. Meanwhile, the forecast was not met and stood at 2.6%.

Technical analysis of USD/JPY

On the H4 USD/JPY chart, the market has achieved a wave of growth to 158.80. Today, a consolidation range is forming around this level. With the exit from this range downwards, we will consider a correction to the level of 158.40. An upward exit will open the potential for a growth wave to 159.35, the main target. This scenario is technically confirmed by the MACD indicator. Its signal line is above the zero level and is directed strictly upwards.

On the H1 USD/JPY chart, the market continues to develop a consolidation range around 158.80. With the exit down, we will consider the development of the correction towards at least 158.40. After the completion of this correction, we expect the beginning of a new growth structure to the level of 159.35. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is below level 50 and is preparing to decline to level 20.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
21 Jun

Week Ahead: Yen headed for intervention “danger zone”?

By ForexTime

  • JPY is worst-performing G10 currency vs. USD in 1H24
  • USDJPY’s 160 price area triggered largest-ever JPY intervention in late-April
  • Besides intervention risk, traders watching Friday’s US/Japan inflation data
  • Bloomberg model: 77% chance of 156.69-160.58 trading range next week

 

The Yen is returning closer towards its 34-year low against the US dollar.

This widely-traded FX pair posted its 6th straight day of gains, with the Yen set for its longest losing streak against the US dollar since March.

Already the Yen is set to wrap up the first half of 2024 with the title of worst-performing G10 currency against the US dollar, by a mile.

 

Why is the Yen so weak?

USDJPY’s stunning ascent has been primarily driven by the surprise reluctance by both the US and Japanese central banks to change their policy stances:

  • The Bank of Japan has not been as quick to HIKE interest rates so far this year
  • The US Federal Reserve has not been as quick to CUT interest rates so far this year
Recall that a currency tends to weaken when its country’s interest rates are lower than its peers, and vice versa.

This persistent policy divergence has resulted in a still-wide spread between US Treasury yields and their Japanese counterparts, which greatly favours USD demand over JPY.

In other words …

With Japan’s interest rates staying lower-for-longer, while the Fed’s benchmark rates remain higher for longer, that has resulted in a resilient US Dollar and a weaker Japanese Yen, i.e. soaring USDJPY.

 

What should traders look out for?

Traders, especially Yen bears, are entering the final trading week of 1H24 with memories from end-April, which was the last time USDJPY was seen around these current levels.

Starting April 26th, the Japanese government had spent a record US$62.2 billion to defend its currency.

That record intervention contributed to USDJPY’s largest one-day price swing since 2022, as the FX pair breached 160, only to plummet to as low as 154.52.

That was a painful lesson for Yen bears (those hoping that USDJPY can move higher), although another showdown appears to be shaping up.

Hence, if we do see another round of intervention on the Yen, that could translate into massive profits for Yen bulls (those hoping for lower USDJPY).

 

Beyond the threat of another round of government intervention, the coming week also features scheduled events that could rock USDJPY:

Monday, June 24

  • NZD: New Zealand May trade balance
  • JPY: BoJ Summary of Opinions
  • SG20 index: Singapore May CPI
  • TWN index: Taiwan May unemployment, industrial production
  • GER40 index: Germany June IFO business climate
  • US30 index: Speech by San Francisco Fed President Mary Daly

Tuesday, June 25

  • AU200 index: Australia June consumer confidence
  • CAD: Canada CPI
  • USD index: US June consumer confidence; speeches by Fed Governors Lisa Cook and Michelle Bowman

Wednesday, June 26

  • AUD: Australia May CPI
  • GER40 index: Germany July consumer confidence

Thursday, June 27

  • JP225 index: Japan May retail sales
  • CNH: China May industrial profits
  • TRY: Turkey rate decision
  • SEK: Sweden rate decision
  • EU50 index: Eurozone June economic confidence
  • USD: US weekly initial jobless claims; 1Q GDP (final)
  • Nike earnings
  • Biden vs. Trump: US Presidential election debate

Friday, June 28

  • JPY: Tokyo June CPI; May jobless rate and industrial production
  • EUR: Germany June unemployment; France June CPI
  • GBP: UK 1Q GDP (final)
  • USD index: US May PCE deflators, personal income and spending; June consumer sentiment (final)

 

 

USDJPY set for freaky Friday?

Two events out of either side of the Pacific may hold greater potential to rock USDJPY on the final trading day of 1H24:

 

1) Tokyo June consumer price index (CPI)

Here’s what economists expect:

  • CPI year-on-year (June 2024 vs. June 2023): 2.3%
    If so, that would be slightly higher than May’s 2.2% year-on-year figure.
  • CPI year-on-year (excluding fresh food): 2.0%
    If so, that would be slightly higher than May’s 1.9% year-on-year figure.
  • CPI year-on-year (excluding fresh food and energy): 1.6%
    If so, that would be slightly higher than May’s 1.7% year-on-year figure.

Over the past 12 months, the 6 hours after these Tokyo CPI releases had seen upwards moves for USDJPY as much as 0.38%, or declines as much as 0.3%.

 

 

2) US May PCE Deflators

(this is the Fed’s preferred measure of inflation)

Here’s what economists expect:

  • PCE Deflator month-on-month (June 2024 vs. May 2024): 0.0%
    If so, that would be a notable drop from May’s 0.3% month-on-month figure.
  • PCE Deflator year-on-year (June 2024 vs. June 2023): 2.6%
    If so, that would be slightly lower than May’s 2.7% year-on-year figure.
  • PCE Core Deflator month-on-month (excluding food and energy prices): 0.1%
    If so, that would be slightly lower from May’s 0.2% month-on-month figure.
  • PCE Core Deflator year-on-year (excluding food and energy): 2.6%
    If so, that would be lower than May’s 2.8% year-on-year figure.

Over the past 12 months, the 6 hours after these US PCE Deflators had seen upwards moves for USDJPY as much as 1%, or declines as much as 0.35%.

 

 

POTENTIAL SCENARIOS:

  • USDJPY may fall if we see higher-than-expected Tokyo inflation (which is a frontrunner to the National CPI due later) which could allow the Bank of Japan to hike rates – a thought which should prompt a stronger Yen.On the US dollar side of the USDJPY equation, lower-than-expected US inflation might pave the way for the Fed to lower interest rates this year – potentially prompting the US dollar to weaken.

 

  • USDJPY may rise if we see lower-than-expected Tokyo inflation, which could further deter the Bank of Japan to hike rates – a thought which should prompt an even weaker Yen.On the US dollar side of the USDJPY equation, higher-than-expected US inflation might further delay the expected Fed rate cuts for later this year – potentially prompting a stronger US dollar.

 

 

Key levels

POTENTIAL RESISTANCE

  • 160.00
    The closer USDJPY moves towards this psychologically-important number, the louder the echoes of April’s intervention may haunt traders.Though to be clear, Japanese government officials have often warned that it’s the magnitude of the move, rather than a specific number, that invokes intervention.

Hence, an only gradual break above 160 may well prolong this battle between Yen bears and the Japanese government.

 

POTENTIAL SUPPORT

  • 158.427 – 157.80 region
    If traders grow wary of the intervention threat, that may prompt some profit-taking and push USDJPY back towards recent peaks-turned-support
  • 21-day SMA
  • 156.787: mid-May cycle high

 

According to the Bloomberg FX forecast model, there’s a 77% chance that USDJPY will trade between 156.69 – 160.58 before we enter July.

Forex-Time-LogoArticle by ForexTime

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

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