Round up of today's market news *

North American News

US Stocks Dip as Powell’s Hawkish Tone Dampens Sentiment

Market Overview
US stocks closed lower as Federal Reserve Chair Jerome Powell’s hawkish comments on interest rates weighed on investor sentiment. The S&P 500 and Nasdaq Composite each fell 0.6%, while the Dow Jones Industrial Average (DJIA) dropped 0.5%. Small caps were hit the hardest, with the Russell 2000 down 1.5%. Selling pressure increased throughout the session after Powell suggested the Fed was in no rush to cut rates, curbing expectations for a more accommodative stance.

Applied Materials Q4 and FY2024 Earnings Highlights
Following the market close, Applied Materials (AMAT) reported strong Q4 and fiscal year-end results, beating analyst expectations and reinforcing confidence in its leadership within the semiconductor sector.

Quarterly Revenue: $7.05B, up 5% YoY
Quarterly GAAP EPS: $2.09, down 12% YoY; Non-GAAP EPS: $2.32, up 9% YoY
Annual Revenue: $27.18B, up 2% YoY
Annual GAAP EPS: $8.61, up 6% YoY; Non-GAAP EPS: $8.65, up 7% YoY
Gross Margin: Q4 GAAP 47.3%; Non-GAAP 47.5%
Operating Margin: Q4 GAAP 29.0%; Non-GAAP 29.3%

Earnings and Market Highlights
Applied Materials recorded a strong Q4 with revenue growth driven by demand in AI and energy-efficient computing. Operating income and cash flow from operations reached new highs, with $2.58B in cash flow and $1.77B returned to shareholders. The Applied Global Services segment showed a notable rise in operating margin to 30.0% from 27.3% YoY.

Guidance for Q1 FY2025

Revenue: Approximately $7.15B (+/- $400M)
Non-GAAP EPS: Around $2.29 (+/- $0.18)

Segment Performance

Semiconductor Systems: Revenue at $5.18B, reflecting strong demand in Foundry and Logic sectors
Applied Global Services: Revenue at $1.64B with a 30.0% operating margin
Display: Revenue at $211M, with margins significantly down from the prior year, suggesting challenges in this segment

Market Commentary and Strategy
Positive sentiment surrounds Applied Materials’ leadership in materials engineering and investments in R&D focused on AI and energy efficiency. Despite the challenging environment, the firm’s strategic positioning in AI-driven semiconductor growth offers a bullish outlook.

Traders’ Takeaway
Applied Materials’ impressive Q4 results and optimistic FY2025 guidance underscore its resilience in the competitive semiconductor landscape, making it a strong choice for investors seeking exposure to AI and semiconductor growth trends.

US weekly initial jobless claims 221K vs 223K expected

Initial jobless claims for the week ending November 9

Prior was 221K
Four week moving average vs 227.5K prior
Continuing jobless claims 1.873m vs 1.880m expected

US October producer price index +2.4% y/y vs +2.3% expected

US October 2024 producer price index

Prior was +1.8%
PPI ex food and energy 3.1% y/y vs +3.0% expected (+1.8% prior)
PPI ex food and energy +0.3% m/m vs +0.3% expected (+0.3% prior)
Ex food, energy and trade 3.5% y/y vs +3.2% prior (revised to +3.3%)

Fed’s Powell: Economy isn’t sending signals that we need to be in a hurry to cut

Comments from Powell in Dallas

Economy not sending signals that Fed needs to be in a hurry to lower rates
Moving policy over time towards neutral; policy isn’t pre-set
Expects inflation to continue to come down on a ‘sometimes bumpy’ path
Fed committed to finishing the job on inflation
Economic strength gives Fed the ability to approach its decisions carefully
Labor market is solid, inflation is on a sustainable path to 2%
Recent US economic performance remarkably good
The Fed does have obligations to explain itself to public and congress
We’re not thinking about political parties when we make decisions

Trump transition plans to kill $7500 consumer tax credit for electric vehicles — report

Not a huge surprise

Reuters reports that Trump’s transition team is targeting ending the $7500 consumer subsidy for buying an electric vehicle, citing two sources.

Trump has mentioned ending it so it’s not a big surprise.

Fed’s Barkin: Fed does watch carefully if 10-year yield driven by inflation expectations

Comments from the Richmond Fed President

There is still more demand for housing than supply
The better way to address the imbalance is more supply, not suppressing demand
Companies still feel labor is short on a long-term basis, are not firing but job growth is slowing
The current level of unemployment is fine, whether it is normalizing or weakening is something still to be determined
Fed is trying to normalize its balance sheet, not use it to tightening financial conditions
Fed does watch carefully what part of the 10-year yield appears driven by inflation
The jury is still out on how recent labor settlements will impact overall wages
Uncertainty is one of the reasons to be gradual and cautious about declaring victory over inflation
Fed will have to feel its way to neutral, depends on if inflation seems to be settling or not

Fed’s Kugler: If disinflation progress stalls, it could call for a pause to rate cuts

Comments from Fed Governor Kugler

Welcomes easing in inflation expectations
We need to pay attention to both sides of our mandate
Must be mindful of both sides of the mandate right now
If labour market sputters, appropriate to gradually reduced rates
But if disinflation progress stalls, it could call for a pause to rate cuts
There has been ‘considerable progress’ on easing inflation pressures
But housing and other factors may complicate things

Investment bank bullish on Fed rate cuts; inflation concerns linger

UBS analysts optimistic about further Fed rate cuts despite inflation worries. Market expects slower pace of cuts.

UBS points:

Economic data signals a stronger-than-expected economy. Concerns about inflation remain

Market expectations lean towards a slower pace of Fed rate cuts
Fed officials view the current rate as restrictive but are balancing employment and inflation goals. A major inflation surprise would be required to shift policy outlooks.
The Fed is likely to continue rate cuts, with a potential 25 basis point cut in December and further easing expected in 2025.

Commodities

Gold trades like the new Bitcoin – TDS

The cards were set well before election night, with evidence overwhelmingly suggesting the melt-up in Gold was underscored by a liquidity vacuum, with the US election being the focal point, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Significantly deeper-than-normal Gold consolidation

“The event risk has unleashed pent-up selling activity, and while price action may screen oversold, liquidations thus far have not been extreme. CTAs have shed only 10% of their max size and could be set to sell an additional -15% of their max size over the coming sessions in a continued downtape.”

“Given simultaneously extreme positioning cues from macro funds (Earth to macro funds!) and Shanghai traders — who are also now selling at their fastest clip in years, clocking in at more than 35t of notional Gold sold into a seasonal demand upswing over the last month — and still lackluster buying activity in physical markets, we expect continued pressure on Gold prices and a significantly deeper-than-normal consolidation.”

“While price action in Silver has remained relatively contained, given its cleaner positioning set-up, the outlook for CTA flows has now notably deteriorated, with our simulations now suggesting incoming selling activity in nearly every scenario for market prices over the coming week, barring a big uptape. Silver might catch-down to Gold before precious metals find a floor.”

Crude Oil Set for a Green Close Despite Long-Term Bearish Forecast

Market Overview
Crude Oil prices are holding steady, with WTI at $68.74 and Brent Crude at $72.57 as traders assess a cautious market backdrop. The International Energy Agency (IEA) report released Thursday reinforced a longer-term bearish outlook, revising down the 2025 oil demand forecast and signaling persistent supply concerns. This follows OPEC’s report earlier in the week, which also cast a dim light on future oil demand due to economic headwinds.

Key Market Influences
The US Dollar Index experienced a mild pullback after US Producer Price Index (PPI) data came in slightly stronger than expected, providing some room for oil prices to stabilize. The IEA’s latest report underscores a steady oil oversupply trend, largely driven by new offshore projects in Brazil, Guyana, and Norway, which are set to expand non-OPEC capacity further. Additionally, a rare purchase of West African crude by a private Chinese refiner hints at a shifting market dynamic as independent Chinese processors diversify beyond Iran and Russia, according to Bloomberg.

US Inventory Data and Forecasts
In the US, the Energy Information Administration (EIA) will release weekly crude inventory data later today. Analysts anticipate a build of 1.86 million barrels, following last week’s increase of 2.149 million barrels. This inventory expectation is likely already priced in, though a higher-than-expected build could add further downside pressure.

Outlook
Despite the current stabilization, the IEA’s outlook and ongoing capacity growth cast a bearish shadow on crude prices in the medium-to-long term. For now, oil prices appear well-positioned for a positive close this Thursday, but challenges remain as oversupply and muted demand expectations continue to shape market sentiment.

EIA weekly crude oil inventories +2089K

US oil inventory data

Prior was +2149
Crude oil inventories +2089 K vs +750K exp
Gasoline inventories -4407K vs +586K exp
Distillates inventories -1394K vs +234K exp
Refinery utilization +0.9% versus expectations of +0.6%

EIA weekly nat gas inventories +42 bcf vs +44 bcf expected

Oil private survey of inventory shows headline crude oil draw vs build expected

This is from the privately surveyed oil stock data ahead of official government data tomorrow morning out of the US.

Crude -777,000 (exp. 1 million)
Gasoline +312,000
Distillates +1.136 million
Cushing -1.859 million
SPR +0.6 million

UBS maintain a US$2900 target for gold

Expect the USD to give back recent gains

UBS is sticking to its bullish gold forecast.

says the move higher for equities and lower for gold is a ‘highly optimistic’ view for lower policy and political risk, this is premature
expect US yields and US dollar to move into downtrend, which will support gold
gold fundamentals, as a hedge and diversity play, are intact

Gold eyes fifth straight day of losses, closes in on key technical juncture

The precious metal is down 0.6% again today to $2,557

The pullback in gold continues to play out since the post-election period. The precious metal is now down for a fifth straight day in what is already easily its worst weekly showing so far this year. It has more or less been a case of waiting for said pullback to reach some key technical levels on the charts. And we’re just about there already in trading today.

The 100-day moving average is the key technical focus right now and that is seen at roughly $2,543. The last time gold actually had a brush against the key level was all the way back in February. And the last time that gold traded back below either that or its 200-day moving average was all the way back in October last year.

That underscores the breathtaking momentum that has been in play for gold all through this year so far.

As such, this makes the 100-day moving average an even more important technical juncture now. A break there will not only signify a break in the bullish bias in gold. However, it could set off another wave of selling that leads to an even bigger pullback.

EU News

European equity close: It was a big bounce-back day as the volatility continues

Big moves in Europe

It’s been a less-volatile week in US equities as the market digests the election but there have been some big moves in Europe with uncertainty high around trade policies and German politics. Today was a nice rebound after two days of selling.

Closing changes:

Stoxx 600 +1.1%
German DAX +1.3%
France CAC +1.3%
UK FTSE 100 +0.5%
Spain IBEX +1.3%
Italy’s FTSE MIB +1.9%

Eurozone Q3 GDP second estimate +0.4% vs +0.4% q/q prelim

Latest data released by Eurostat – 14 November 2024

Prior +0.3%
GDP +0.9% vs +0.9% y/y second estimate
Prior +0.6%

Eurozone September industrial production -2.0% vs -1.4% m/m expected

Latest data released by Eurostat – 14 November 2024
Prior +1.8%; revised to +1.5%

Looking at the details, the drop here is largely driven by a decline in capital goods (-3.8%) and energy production (-1.5%). The former is seen declining back after a surge higher in August (+3.8%). The declines for the month are partially offset by increases in output for durable consumer goods (+0.5%) and non-durable consumer goods (+1.6%). The production for intermediate goods was flat on the month.

Spain October final CPI +1.8% vs +1.8% y/y prelim

Latest data released by INE – 14 November 2024

Prior +1.5%
HICP +1.8% vs +1.8% y/y prelim
Prior +1.7%

ECB’s Schnabel: Asset purchases are more powerful for stabilizing markets than the economy

Schnabel learns something about QE

Warns against relying on stable macroeconomic relationships
Inflation risks have shifted from downside to upside since pandemic
Natural interest rate (r*) uncertainty has increased significantly
Phillips curve relationship becoming more state-dependent
Our recent experience has also taught us that central bankers should be careful not to tie their hands too much by providing explicit forward guidance.

Full Quote:

Asset purchases have proven to be a powerful tool for market stabilisation, while their cost-benefit ratio is less favourable when it comes to stimulating the economy near the effective lower bound. QE should therefore be used more cautiously in the future.

Economists expect Eurozone economy to be hit by Trump tariffs early next year

The findings from Reuters’ latest poll regarding the ECB and the Eurozone economy

37 of 44 economists expect Trump’s proposed tariffs to be implemented early next year
34 of 39 economists expect said tariffs to significantly impact the Eurozone economy

As a result of those expectations, economists are also anticipating the ECB to stick with further rate cuts going into next year. For December, 69 of 75 economists expect a 25 bps rate cut with another 2 expecting a 50 bps rate cut.

As for year-end 2025, 43 of 63 economists are seeing the ECB deposit rate to reach 2.00% or lower as the rate cut cycle continues.

ECB accounts: It is still too early to declare victory in the fight against inflation

The ECB releases the accounts of its October monetary policy meeting

Disinflationary process is well on track
Inflation had turned out lower than expected in September
Upside risks to inflation are also now seen as lower
Inflation would probably reach 2% target somewhat earlier
But still too early to declare victory in the fight against inflation
A few members initially expressed a view that they would have preferred to accrue more information and to wait until December
The closer rates are to neutral territory, the more cautious one would have to be that monetary policy itself did not become a factor in slowing down the pace of disinflation

ECB’s de Guindos: All indicators on core inflation pointing to right direction

Remarks by ECB vice president, Luis de Guindos

Inflation has come down quite a lot
Recent data on prices are heading towards our 2% goal
If inflation converges towards our goal, then monetary policy will respond accordingly

BOE’s Mann argues for holding rates firmly until more evidence of diminished inflation

Comments from the Bank of England hawk

I see the need for activist policy, rather than gradualist
Activist policy means holding bank rate firmly until sufficient evidence of diminished inflation persistence, then can move forcefully
I expect elevated volatility in macroeconomic variables over coming years
US political developments have not made disorderly trade scenarios less likely and there will be consequences for the UK

Bank of England’s Bailey: The UK must preserve free trade

Comments from Bailey at the annual Mansion House speech

Urges UK not to counter protectionism with tariffs
We must welcome opportunity to rebuild EU relations
UK potential growth fell from 2.6% (1990-2008) to 1.3% (2009-2019), further dropping to 0.7% (2020-2023)
Main culprit: Weak productivity growth
UK consistently at bottom of G7 investment/GDP ratio since late 1990s
Labor supply issues compounded by aging population
Brexit has weighed on potential supply, particularly in goods trade
AI offers hope but won’t be immediate “magic solution”

Asia-Pacific-World News

PBOC sets USD/ CNY reference rate for today at 7.1966 (vs. estimate at 7.2326)

PBOC CNY reference rate setting for the trading session ahead

In open market operations (OMOs):

PBOC injects 328bn yuan via 7-day RR, sets rate at 1.5%

19bn yuan mature today
net injection is 309bn yuan

China’s annual production of new energy vehicles surpassed 10 million units on Thursday

12 million expected for the year as a while

Chinese media, Global Times, citing a state media report (CCTV):

China’s annual production of new energy vehicles surpassed 10 million units on Thursday, info via China Association of Automobile Manufacturers.
the first country to reach this milestone globally
output for the whole year is expected to reach 12 million

Australian October unemployment rate 4.1% (vs. 4.1% expected)

Employment report from Australia for October 2024

The latest Labour Force report from the Australian Bureau of Statistics, for October 2024.

Employment +15.9k

expected +25.0k, prior +64.1k

Unemployment Rate 4.1%

expected 4.1%, prior 4.1%

Participation Rate 67.1%

expected 67.2%, prior 67.2%

Full Time Employment +9.7k

prior +51.6k

A slightly softer employment report than we are accustomed to. Not a bad one. But a miss for jobs added, and the participation rate saw a tic knocked off.

employment to population ratio remained at 64.4%
underemployment rate decreased to 6.2%
monthly hours worked increased to 1,972 million.

RBA Bullock says rates are restrictive enough, staying there until confident on inflation

Reserve Bank of Australia Governor Bullock

Reserve Bank of Australia Governor Bullock

bond markets pretty well behaved globally
bond markets reflecting increasing government debt
think we are restrictive enough, will stay there until confident on inflation
recent inflation had both supply- and deand-sdie components
aim is to lower inflation
prices not going back to pre-covid level, that would be deflation and not going to have that

New Zealand data – FPI -0.9% in October (prior +0.5%)

New Zealand food price index – an inflation indicator

ICYMI – Japan planning US$87 billion extra budget to fund stimulus package

Support for low income households and families

Noting this, report comes from Japan media (Sankei) via Reuters:

Japanese government to compile a supplementary budget of about 13.5 trillion yen ($87 billion)
to fund a stimulus package to help low-income households and offset rising prices
government would provide 30,000 yen to low-income households that are exempt from residential taxes and 20,000 yen per child for households with families

Cryptocurrency News

Bitcoin Approaches 90K: Consolidation or Waning Momentum?

Market Overview
Bitcoin surged to a new all-time high of $93.5K but is struggling to sustain levels above the psychological 90K mark, hinting at potential fatigue. The daily chart reveals long upper shadows on candles from today and Wednesday, suggesting early signs of a bull trap as Bitcoin repeatedly fails to close above 90K.

Technical Analysis
Overbought signals are prevalent, with the 14-day momentum and stochastic indicators beginning to ease from the overbought zone, underscoring a need for more downside movement to validate a reversal. However, strong support remains for Bitcoin, with a 5-day moving average (5DMA) at 86,790 acting as immediate support, followed by Tuesday’s low of 85,132. The upper 20-day Bollinger band at 83,839 and the 10DMA at 80,810 provide additional support levels.

Support Levels

86,790 (5DMA)
85,132 (Tuesday’s spike low)
83,839 (Upper 20-day Bollinger band)
80,810 (10DMA and psychological 80K level)

Resistance Levels

90,000 (psychological barrier)
91,856 (minor resistance)
93,539 (recent peak)
95,029 (Fibonacci extension level)
100,000 (psychological milestone)

Market Sentiment and Drivers
Strong “Trump trades” continue to drive Bitcoin’s bullish momentum, suggesting possible consolidation in the 90K zone before a potential continuation higher. For traders, it may be prudent to wait for a breakout above 93.5K or a decline below 86.8K to confirm the next directional move. As Bitcoin oscillates near record highs, its technical configuration suggests consolidation as bulls and bears vie for control around this significant threshold.

Can DOGE Go Deflationary After a 100% Surge?

Market Overview
Dogecoin (DOGE) traded at $0.3960 on Thursday, dipping by 4% amid discussions on its inflationary design and potential for a deflationary shift. The meme coin has surged over 100% recently, bolstered by key endorsements and bullish sentiment, but a debate is emerging around its supply model. Dogecoin co-founder Billy Markus has proposed changes to make DOGE deflationary, sparking interest across the crypto community.

Elon Musk’s Take on Dogecoin’s Inflationary Model
Tesla CEO Elon Musk weighed in, suggesting that Dogecoin’s flat inflation — where a fixed number of tokens is issued over time — could actually be beneficial. Musk argues this feature is more predictable than traditional fiat, as Dogecoin’s inflation rate gradually decreases as a percentage, becoming more stable over time. Markus supported Musk’s view, stating that predictable, steady inflation is ideal for a currency and would keep DOGE viable over the long term, unlike the constantly fluctuating US Dollar.

Potential for Deflationary Shift
Markus hinted at a possible code change to reduce inflation by modifying Dogecoin’s unlimited supply, but he noted that consensus from miners and the community would be essential to implement such a change. The conversation on DOGE’s deflationary potential follows its rapid price movement, with trader Peter Brandt suggesting that if Dogecoin replicates Bitcoin’s past trends, it could potentially rise another 100% in the future.

Market Sentiment and Key Drivers
The ongoing debate on Dogecoin’s supply structure and its comparison to Bitcoin’s deflationary nature are fueling interest in DOGE as both a currency and investment. President-elect Donald Trump’s recent announcement of the Department of Government Efficiency (DOGE) and Musk’s appointment to co-lead the initiative further strengthened investor sentiment, driving optimism around DOGE’s long-term role as a currency.

Dogecoin’s future hinges on whether the community embraces Musk and Markus’s views on inflation, or if a pivot to a deflationary model garners enough support. For now, Musk’s backing of a stable inflation model could continue to underpin DOGE’s role as a digital currency for everyday transactions, while the potential for future price gains remains in the spotlight.

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Round up of today’s market news

ByBilals Tech