The US100 reverses early euphoric gains following Nvidia's results and is currently losing ground on an intraday basis. Despite strong reports and target price increases for the company, market sentiment is becoming more cautious due to warnings about overheated valuations and the potential risk of sharp declines.
Lisa Cook of the FED warned that high valuations of equities, corporate bonds, real estate and leveraged loans increase the risk of sharp market declines, although the financial system remains resilient. Ray Dalio, for his part, confirms that markets may currently be trading at relatively high levels, but stresses that it is not necessarily necessary to sell positions immediately – in his opinion, portfolio diversification is important at all times. The September labour market report showed that the US economy added 119,000 jobs, significantly more than expected, but the unemployment rate rose to 4.4 per cent, the highest level since October 2021. Wages rose by only 0.2 per cent month-on-month and 3.8 per cent year-on-year, below forecasts. Initial jobless claims were 220,000, below expectations of 227,000. Employment growth came mainly from the healthcare and catering sectors, while transport and business services recorded losses. The data itself confirmed the market's belief in the ongoing cycle of rate cuts, but it seems that the money markets favour a pause in December. The chance of a 25bp cut at the 10 December meeting is currently 41.79%.
The US100 reverses its early substantial gains and falls below the 50-day EMA (blue curve on the chart). If the instrument closes below this barrier, it may mean that the current downward correction in the upward trend is broader than expected and may bring further pullbacks, even though recent company data may not confirm this theoretically. Source: xStation
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