Forex Analysis: 11 June 2024 Forex and Stock Updates

by | Jun 11, 2024 | Forex Analysis

Forex Market Analysis 11 June 2024

CURRENCIES:

Key Highlights:

  • Fed and BoJ Rate Decisions:
    • Both the Federal Reserve (Fed) and the Bank of Japan (BoJ) are expected to keep interest rates unchanged.
    • Market focus will be on their commentary and economic projections.
  • Nasdaq:
    • The index remains at record high levels despite diminishing rate expectations.
    • Nvidia, the AI chip giant, now surpasses Apple in market cap and approaches Microsoft.
  • Gold:
    • Gold is sinking into support levels, currently trading around $2,310/oz.
    • It needs to hold support at $2,280/oz to attract buyers again.
  • Bitcoin:
    • Bitcoin is pressing against resistance at $72k.
    • A break above the May 21 high could lead to a new all-time high.

Economic Data and Events:

  • US Dollar:
    • The USD is under pressure, nearing a two-month low.
    • The USD index is testing the 200-day simple moving average.
    • A confirmed break lower could see the USD trade below 104.00.
  • Impact on Gold:
    • Early Friday saw a $20/oz drop in gold due to reports of China halting gold purchases.
    • The US Jobs Report caused further declines as US Treasury yields spiked.
  • Nasdaq 100:
    • Driven by Nvidia, the Nasdaq 100 posts fresh record highs.
    • The ‘Magnificent Seven’ tech companies dominate the market movement, posing concentration risks.
  • Bitcoin Trends:
    • Struggling to break above the $72k level.
    • Breaking the May 21 high could result in a new all-time high.

STOCK MARKET:

Nvidia Stock Split: What’s Next for the Stock and Other AI Plays

  • Nvidia Stock Split:
    • Nvidia (NVDA) is set for a 10-for-1 stock split, trading begins Monday.
    • Shares have surged 212% in the past year, propelling Nvidia into the $3 trillion club alongside Apple (AAPL) and Microsoft (MSFT).
    • The split is seen as a vote of confidence from management, with expectations of maintained value.
  • Market Reactions and Volatility:
    • The stock split is expected to increase retail investor interest but could also trigger volatility.
    • Adam Coons from Winthrop Capital cautions that retail traders’ quick decisions could heighten volatility by diluting institutional buyers.
    • Evercore ISI’s Julian Emanuel views increased volatility as a buying opportunity for patient investors.
  • Historical Performance of Stock Splits:
    • Historically, stock splits are bullish, with average returns of 25% one year post-split, compared to 12% for the broad market (Bank of America analysis).
  • Nvidia’s Impact on the Market:
    • Nvidia’s gains have significantly driven the broader market to record highs.
    • The rally contributed about a third of the S&P 500’s return this year and over a quarter in May alone.
  • Wall Street Sentiment:
    • Post-earnings report on May 22, Wall Street has grown more bullish.
    • Bank of America’s Vivek Arya raised his price target to a Street high of $1,500.
    • Arya anticipates a decade-long conversion to accelerated computing, predicting annual spending of $250 to $500 billion, with Nvidia leading the charge.
  • Broader AI Industry Growth:
    • Nvidia’s stock split signals optimism about AI industry growth.
    • According to Lam Research CFO Doug Bettinger, AI investment is still in its early stages.
    • The next growth phase will involve companies integrating AI into planning and enterprise spending.
  • AI Investment Insights:
    • Nutanix CEO Rajiv Ramaswami notes increasing adoption of hybrid-cloud architectures and enterprise AI.
    • Vivek Arya recommends investing in Broadcom (AVGO), Marvell Technology (MRVL), Micron (MU), and Arm (ARM) as they are poised to benefit from AI’s growth.
    • Arya sees increasing computing, networking, and memory requirements as multi-year growth drivers.

Summary:

  • Nvidia’s stock split highlights its impressive growth and market confidence.
  • While volatility is expected, historical data suggests positive returns post-split.
  • The broader AI industry is set for significant expansion, with Nvidia and other key players positioned to lead the charge.

CRYPTOCURRENCIES:

  • Bitcoin was little changed at $70,987.
  • Ether increased 1.71% to $3,764.

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