ADDX Go Morning Wrap - 2024 Oct 1

Market Key Focus

Equities: SMCI will begin trading post 10-for-1 stock split tonight

Crypto: Bitcoin is closing out one of its biggest September rallies on a down note, dropping back below $65,000

US Treasury Bonds: 30-year yield falls for five straight months

FX: US dollar rose as Fed Chair Powell pushed back on rate cut expectations

Gold: ⚡️ Goldman Sachs predicts gold prices will increase to $2,900 by early 2025, up from $2,700.

Economic data: US JOLTS job opening, US ISM manufacturing PMI, Euro-area inflation

Smart Money Tracking

ARKK Investment Holdings Update

1. Reduced its holdings of Roku Inc by 53,904 shares, a decrease of 0.65% from the previous period, and currently accounts for 10.53% of the total holdings.
2. Reduced its holdings of Roblox Corporation by 55,248 shares, a decrease of 0.65% from the previous period, and currently accounts for 6.57% of the total holdings.

Stocks to Focus

1. OpenAI, Google, Meta benefits from California vetoes, US cancels SB-1047
2. Google will invest $1 billion in Thailand to accelerate the development of artificial intelligence in Asia.
3. Germany's antitrust regulator, the Federal Cartel Office (FCO), announced on Monday, September 30, that it has identified Microsoft as a "company that is essential for cross-market competition."

Market events

US September ISM Manufacturing PIM

- Previous: 47.2

- Forecast: 47.5

US September Markit Manufacturing PIM

Macros

1. Fed Chairman Powell’s prepared remarks largely reiterated his remarks from the September FOMC Press Conference. However, the speech tilted hawkish as he stated that the Fed is not in a rush to cut rates quickly and that if the economy evolves as expected, that would mean two more cuts this year, for a total of 50bps - implying a 25bp rate cut in September and December, leaning back against expectations for another 50bp rate cut. Meanwhile, Atlanta Fed President Bostic said that he is open to another 50bp rate cut if the labour market shows an unexpected weakness, suggesting this week’s NFP data on Friday could be the key to watch.
2. China’s PMI numbers offered a snapshot of the economy just as it went on the Golden Week holiday. Manufacturing PMI remained in contraction at 49.8 but better than August’s 49.1. Non-manufacturing PMI fell to the lowest in 21 months, but Beijing’s current stimulus measures supported sentiment despite the dismal readings. Caixin PMIs were also mixed but September macro readings matter less for now and focus is on how the stimulus measures can turn around the economy.
3. Germany inflation fell in September for a second straight month, supporting the case for an October rate cut. Headline inflation was -0.1% MoM or 1.8% YoY vs. -0.2% MoM and 2.0% YoY in August. Euro-area inflation print is due today and is likely to confirm the disinflation trends seen in France, Italy and Germany.

Earnings

1. Before Open: PAYCHEX(PAYX), MKC, AcuityB rands (AYI), UNFI
2. After Close: Nike

US Equities

US stocks ended Monday on a positive note as investors processed comments from Fed Chair Powell. The S&P 500 reached a record high, gaining 0.4%, while the Nasdaq also rose by 0.4%. The Dow Jones saw a slight increase.

Speaking at the National Association for Business Economics, Powell highlighted that the Fed does not adhere to a fixed policy path but indicated that two quarter-point rate cuts could still occur this year if economic conditions align with expectations.

Investors are also preparing for significant economic data releases this week, including the jobs report, JOLTS, and ISM manufacturing and services PMIs. The probability of a 50bps rate cut in November is currently 35%, down from over 50% the previous week.

Materials and consumer discretionary sectors led the declines. Among megacaps, Apple (2.2%), Microsoft (0.5%), and Alphabet (1.2%) saw gains, while Nvidia (-0.1%) and Amazon (-0.9%) experienced losses. SMCI will begin trading post 10-for-1 stock split tonight.