Daily Game Plan

by Contributor
on November 7, 2024

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  ET 8:30 a.m: US Initial Jobless Claims, 10:00 a.m.: US Sept. Wholesale Inventories, 10:30
a.m.: EIA Natural Gas Storage, 2:00 p.m.: Fed Rate Decision, 2:30 p.m.: Fed’s Powell speaks, 3:00 p.m.: US Sept. Consumer Credit

Highlights and News:  

  • US JOBLESS CLAIMS 221,000 IN NOV. 2 WEEK; EST. 222K, US CONTINUING CLAIMS 1.892M IN OCT. 26 WEEK; EST. 1.873M
  • Hurricane Rafael crossed the southeastern Gulf of Mexico where it’s expected to weaken, though some oil and gas facilities have been
    evacuated.
  • Binance founder Changpeng Zhao, says he’s OK with not leading the crypto exchange due to his plea deal.

 

World stocks rose on Thursday following a record increase in U.S. shares overnight, while U.S. Treasuries faced pressure as investors processed a second Donald Trump
presidency, ahead of policy decisions from the Fed and other major central banks. U.S. stock futures pointed higher after all major Wall Street indexes reached all-time highs, driven by expectations of significant fiscal spending under a Republican sweep.
Analysts noted that stocks are benefiting from anticipated corporate tax cuts and deregulation, while bond markets reacted negatively, with rising yields reflecting concerns about fiscal expansion amid already high U.S. debt-to-GDP ratios. As the Federal Reserve
meeting loomed, markets were confident of a 25 basis-point rate cut but tempered expectations for further easing in December. Meanwhile, Bitcoin pulled back after reaching a record high, and crude oil prices stabilized despite earlier losses due to dollar
strength and geopolitical risk associated with a hurricane developing in the Gulf Coast.

 

EQUITIES:  

US equity futures rose, reflecting traders’ optimism about Donald Trump’s return to the White House and its implications for the Federal Reserve’s interest rate strategy. Notable premarket
movers include AppLovin, which surged 30% after exceeding third-quarter expectations, and Lyft, which jumped 24% following a strong fourth-quarter forecast. Conversely, Digital Turbine plummeted 38% after cutting its full-year revenue forecast, while SolarEdge
fell 16% due to a $1 billion writedown and disappointing guidance. Other significant movements included Dutch Bros rising 17% on an improved revenue outlook and Qualcomm increasing by 6% following a bullish sales forecast. Other significant movements included
Bumble dropping 6% amid concerns about its turnaround strategy despite posting in-line results.

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.4%, Russell 2000 -0.3%, DJI +0.06%.

European stocks rebounded on Thursday as investors shifted their focus to anticipated interest rate cuts from the US Federal Reserve and the Bank of England. The Stoxx Europe 600 Index
rose by 0.6%, driven by a recovery in automakers and strong performance from mining stocks, while healthcare and telecom sectors lagged. This uptick followed a previous decline, where concerns over tariffs after Donald Trump’s electoral victory had negatively
impacted car manufacturers. Notable stock movements included RWE AG, which saw gains due to activist investor interest, and Banco BPM SpA, which rose after announcing a takeover bid for Anima Holding SpA. Meanwhile, Germany’s DAX Index increased by 1.2% amid
political turmoil as Chancellor Olaf Scholz called for a snap election following coalition disagreements. Analysts expressed optimism about European markets potentially recovering as they await central bank decisions, with expectations of a quarter-point rate
cut from both the Fed and the BoE later in the day, reflecting a broader trend of underperformance compared to US equities this year. DAX+1.3 %, FTSE -0.16%, Stoxx 600 +0.6%, CAC 40 +0.5%.

Asian equities gained, bolstered by a rally in China amidst rising expectations for additional stimulus from Beijing following the recent U.S. presidential election
results. The MSCI Asia Pacific Index climbed as much as 1%, reaching its highest level in over two weeks, with significant contributions from major companies like Toyota, TSMC, and DBS. Chinese stocks rebounded sharply due to strong export data and speculation
surrounding the National People’s Congress meeting, which is expected to address economic stimulus measures to counter potential risks from Donald Trump’s second presidency. While sectors such as consumer goods and property saw increases, Indian software exporters
faced declines. Overall, most major markets in the region advanced, with notable rises in mainland China, Hong Kong, and Singapore, while Japan’s Topix also gained. Investors are closely watching upcoming Federal Reserve decisions and earnings reports from
major Asian firms, including Tencent and SoftBank, as they navigate the implications of Trump’s victory on trade policies and market dynamics.Topix +1.0%, Nikkei -0.25%, China’s CSI 300 +3.0%; Hang Seng +2.02%; Kospi +0.04%; ASX 200 +0.33%.

 

 

FIXED INCOME: 
 

Treasuries showed a mixed performance in early trading, with the yield curve steepening as the 2s10s and 5s30s spreads approached the upper end of Wednesday’s ranges,
while German bunds experienced deeper curve-steepening losses amid expectations of increased bond sales following Chancellor Scholz’s call for a snap election. The U.S. session is focused on the upcoming Federal Reserve rate decision, with swaps indicating
a 25-basis point cut is likely. While front-end and belly yields remained relatively stable, the U.S. 10-year yield rose slightly to 4.435%, lagging bunds by 7 basis points. The German 2s10s spread steepened by approximately 1.5 basis points, with long-end
yields falling about 8 basis points. Additionally, the economic calendar includes key data releases such as productivity, unit labor costs, and jobless claims ahead of next week’s anticipated high-grade bond sales estimated at around $35 billion.

 

 

METALS: 

 

Gold prices rose on Thursday as investors anticipated an interest rate cut from the U.S. Federal Reserve later in the day. A note from Citigroup Inc. analysts states
gold is likely to trade weakly in the near term as US equities rally on lower tax and regulation prospects, and as machine-based selling exaggerates the downside. Elsewhere, China’s central bank refrained from purchasing gold for its reserves for the sixth
consecutive month in October, according to official data. Gold +0.6%, Silver +0.5%

ENERGY:   

 

Oil prices dipped following a volatile trading session on Wednesday as investors assessed the implications of Donald Trump’s election victory on the crude market,
with Brent futures falling toward $74 a barrel and West Texas Intermediate hovering around $71. The U.S. dollar surged post-election, applying downward pressure on commodities priced in dollars, and Citigroup noted that Trump’s win could lead to increased
supply and new trade tariffs on China, which may dampen growth. Despite recent fluctuations, the market has remained relatively stable around current levels for the past six weeks, with Vitol Group indicating that while there are concerns about potential oversupply
in 2025, it is too early to draw definitive conclusions. Analysts highlighted conflicting factors affecting the market, including the possibility of stricter sanctions against Iran and increased U.S. oil production, while Hurricane Rafael posed a temporary
threat to Gulf Coast oil production but is expected to weaken before making landfall. WTI -1.1%, Brent -0.8%, Nat Gas +0.5%.

 

CURRENCIES:   

The dollar edged lower, having experienced its largest one-day rally in two years, as investors prepared for several central bank decisions, including that of the Federal Reserve. Sterling
rose ahead of a Bank of England meeting, while both the Swedish and Norwegian crowns gained after their central banks announced expected decisions. Meanwhile, the euro rose despite a political crisis in Germany, and other currencies reacted variably to central
bank announcements and economic data. US$ Index -0.4%, GBPUSD +0.6%, EURUSD +0.4%, USDJPY -0.6%, AUDUSD +1.2%, NZDUSD +1.1%, USDCHF -0.17%.

Spot Bitcoin -1.4%, Spot Ethereum +4.6%.

 

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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