- The Great British Pound retraces upwards breaking the Dollar’s seven-day winning streak.
- Meta stocks continue to fall after the European Commission imposes a fine of 797 million Euros due to unfair conditions.
- Susan Collins, the chairperson of the Federal Reserve of Boston, said that a 0.25% rate cut could be considered in December, but it depends on forthcoming economic data.
- The Federal Reserve indicates a rate cut would depend fully on November’s NFP and inflation rate.
GBPUSD – Lack of Confidence In The Great British Pound!
The GBPUSD ended the day 0.45% higher, mainly gaining momentum within the US trading session. According to technical analysts, the decline was largely due to a break in the US Dollar’s trend but also investors temporarily purchasing the significant dip in the exchange rate. However, in order for the bullish price movement to maintain its upward momentum it is important for the GBP to obtain support from a further price driver.
When looking at technical analysis, even with the upward price movement which rose to yesterday’s mentioned targets, the price continues to move in line with bearish trend theories. In order to break out of the pattern, the GBPUSD will need to push higher than the 1.27210 level. However, this would require Dollar weakness as well as investor confidence in the GBP returning. Investors’ confidence in the GBP has taken a dip since the UK Autumn Budget and fear of possible Trump US-UK tariffs. Technical indicators pointing towards a potential further rise are likely to arise if the GBPUSD increases above 1.26791.
Investors are scrutinizing recent US Federal Reserve comments, adding uncertainty to future actions. Before the election, experts expected continued rate cuts, but Donald Trump’s victory and plans for tax cuts and higher import duties have reduced this likelihood. According to analysts, a reduction in the Fed’s Fund Rate will primarily depend on November’s employment and inflation data. The Fed will particularly wish to see inflation fall in order to cut a further 0.25%. Yesterday, the CME Fed-Watch tool illustrated a 65% chance of a cut. Today the possibility of a cut has fallen to 58%.
Fed Chair Jerome Powell stated there’s no urgency to lower rates, while Boston Fed Chair Susan Collins suggested a possible December cut of 25 basis points, depending on data. In contrast, Chicago Fed President Austan Goolsbee hinted at further reductions, totaling 125 basis points by 2025.
USA500 – Investors Expect Walmart to Beat Earnings Expectations!
The US stock market on Monday was a day of two halves and did not point towards a clear trend. Nonetheless, the downward price movement clearly lost momentum. The reason for the downward trend was primarily due to the higher inflation rate and lower possibility of another interest rate cut in December. However, certain news from individual companies also pressured the index.
Alphabet continues to come under pressure from the DOJ to sell Chrome in its search to crack down on Google’s monopoly. In addition to this, Meta came under pressure as the EU imposes another fine of 797M Euros.
However, investors are hoping the sentiment towards US companies and stocks will change with the release of Walmart’s quarterly earnings report this morning and NVIDIA’s tomorrow evening. Of the SNP’s 500 components, Walmart is the 21st most influential stock, while NVIDIA is the most influential holding a weight of 7.03%. If both reports are better than expectations, the SNP500 may outperform both the NASDAQ and Dow Jones.
Walmart has beat their earnings expectations over the past 3 quarters. Investors are expecting a slightly lower revenue and earnings per share this quarter. However, if higher than expected, the stock is likely to rise further. Investors are anticipating the earnings to beat expectations, hence why the stock is trading 1.61% higher during this morning’s pre-trading hours. So far this year, the stock has risen 59%.
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Michalis Efthymiou
Market Analyst
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