The Japanese yen continued its freefall after Japan approved a bigger-than-expected stimulus and after a report showed that inflation remained stubbornly high in October. The USD/JPY exchange rate was trading at 157.18, a few points below this week’s high of 157.73.

Japan passes a big stimulus package 

The USD/JPY exchange rate has been in a strong uptrend this year, a trend that accelerated after the recent leadership changes in the country. 

Japan’s ruling party elected Sanae Takaichi as the new prime minister, a notable thing considering that she supports Shinzo Abe’s policies.

One of her policy objectives were achieved on Friday when the cabinet approved a $135 billion stimulus package, bigger than the expected $112 billion. ¥17.7 trillion or $112 billion of the package will go to general account spending, while the rest will go towards price relief.

Some of the measures to be funded will be gas and electricity subsidies for each household in the next three months. Also, the government will provide about ¥20,000 or about $127 in handout per child and ¥2 trillion in funds to aid regions. The government will also raise the income tax-free threshold.

While a stimulus of this size may help to boost the economy, the risk is that it may help to fuel inflation in the country as we experienced in the United States, which provided handouts during the pandemic. 

Notably, the stimulus package came on the same day that Japan published strong inflation data. A report by the statistics agency showed that the headline Consumer Price Index (CPI) rose from 2.9% in September to 3.0% in October.

Similarly, core inflation, which excludes the volatile food and energy prices, rose from 2.9% to 3.0%. These numbers are significantly higher than Bank of Japan’s target of 2.0%. As such, analysts believe that the bank may decide to hike interest rates in the coming meetings.

Doubts about Fed cuts remain

The USD/JPY exchange rate remained in an uptrend as doubts about the Federal Reserve cuts remained. These doubts continued on Thursday after the Bureau of Labor Statistics (BLS) published the September jobs report. 

The report showed that the economy added over 110k jobs in September, a sign that the labor market stabilized before the government shutdown. 

Some Federal Reserve officials have warned about rate cuts. For example, Michael Barr, a governor, warned that the bank should be careful because inflation remains above 3%. He said:

“So we need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.”

In another statement, Anna Paulson of the Philadelphia Central Bank said:

“Each rate cut brings us closer to the level where policy flips from restraining activity a bit to the place where it is providing a boost. So, I am approaching the December FOMC cautiously.”

USD/JPY technical analysis 

The daily timeframe chart shows that the USD to JPY exchange rate has been in a strong bullish trend. It has jumped from a low of 139.92 in April to 157.27 today. 

The pair has formed a golden cross pattern, which is a common bullish sign. It has remained above the Ichimoku and Supertrend indicator, a sign that bulls are in control.

Top oscillators like the Relative Strength Index (RSI) and the MACD have continued rising. Therefore, the most likely scenario is where it continues rising as bulls target the key resistance at 158. A move above that level will point to more gains, potentially to the resistance at 160. 

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Ocado share price continued its painful crash this week as it plunged to its lowest level since 2013. It has plunged from the pandemic high of 2,910p to the current 187p as setbacks accelerated. So, is it safe to buy the dip in this fallen angel?

Ocado in trouble amid Kroger woes

Ocado, a top British e-commerce and technology company, suffered a big blow this week as its biggest client started to pull back. In a statement, Kroger said that its warehouse network was not achieving its goals. 

As a result, the company said that it was closing three such plants, taking a $2.6 billion charge. It will shift its strategy to using its store networks. 

This is a big blow for Ocado, a company that has historically talked about its relationship with Kroger when making pitches to other retailers. With this relationship in limbo, the company could face pressure from its existing customers.

Also, it means that the company may struggle to onboard other clients into embracing its automated warehouses. In a statement, an analyst said:

“This is pretty devastating for Ocado Group because the USA is the flagship international market for its tech. No further new outlets would have been the central scenario, but to actually say they’re going to close them is devastating for Ocado Group.”

The Kroger announcement came as Ocado comes under pressure from other its clients. For example, Sobeys, another top Canadian retailer, paused the planned launch of its Vancouver expansion. It also changed its deal with Ocado, allowing it to use other warehouse tech providers. 

Morrison’s another top Ocado client, has also said that it would reduce its use of Ocado. As such, there is a risk that more clients will do that. 

READ MORE: Ocado shares sink 11% as Kroger reviews warehouse strategy

One of the top risks for the company is that some other delivery companies like Instacart and DoorDash, have become more popular among customers and retailers. 

The most recent results showed that Ocado’s revenue rose by 13% in the half year to £674 million. It technology revenue rose by 15%, while the logistics segment rose by 12%. However, its underlying cash flow was minus £108 million. 

Therefore, the scaling down of its relationship with Kroger will likely have a negative impact on its revenue in the long term. In its recent report, the company said that Morrisons paid an exit fee of ~£17 million, while Kroger will pay it £250 million, a notable amount for a company now valued at £1.5 billion. 

Ocado share price technical analysis 

OCDO stock price chart | Source: TradingView

The weekly chart shows that the OCDO stock price has been in a strong downtrend in the past few months. It has remained below all moving averages and the Supertrend indicator.

A closer look shows that the stock has formed a descending triangle pattern. This pattern is made up of a horizontal support, which in this case, is at 222p and a diagonal line. This diagonal line connects the highest swings since February 2022. 

Therefore, the stock will likely continue falling as sellers target the next key support at 150p. This outlook is based on its weak technicals and the fact that its technology business is struggling. 

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The global stock market is going down today, Nov. 21, mirroring the performance of American shares on Thursday. 

In Europe, the German DAX, French CAC 40, and the British FTSE 100 fell by over 0.60%. The closely-watched Stoxx 50 Index dropped by over 1%, with most of its constituent companies being in the red.

The same crash happened in Asia, where the Nikkei 225, Shanghai Composite, China A50, and the Hang Seng indices plunged by over 2%. 

A closer look shows that just Russia’s MOEX Index was up as it jumped by 2% after a report showed that Donald Trump was pushing Ukraine to reach an agreement with Russia. Such a deal would see Ukraine cede land and agree to reducing the size of its military. The US would also remove Russian sanctions.

US stock market futures were also up a bit. Dow Jones Index futures rose by 162 points, while those tied to the S&P 500 and the Nasdaq 100 were up marginally.

Stock market down amid AI bubble jitters

The global stock market is crashing as jitters on the artificial intelligence industry continued. A good example of this is Nvidia whose stock surged in the premarket session on Thursday and then fell despite publishing strong financial results a day earlier.

Nvidia’s results showed that its revenue jumped to $57 billion in the last quarter, higher than the median estimate of $55 billion. It expects that its fourth quarter revenue will surge to $65 billion, with the management predicting that its annual revenue will get to $500 billion in the near term.

Still, there are concerns that the AI industry is in a bubble as many companies have not demonstrated properly how they will monetize the technology. This explains why the top laggards in the ongoing stock market crash are companies in the tech industry.

Micron stock price crashed by 10% on Thursday, making it the top laggard in the Nasdaq 100 Index. Datadog stock fell by 9.50%, while companies like AMD, Palo Alto Networks, Sandisk, Lam Research, Palantir, Marvell, and ASML were among the top laggards.

On the other hand, companies in traditional industries like Walmart, Regeneron Pharmaceuticals, GE Healthcare, Solventum, Brown Forman, and Erie Indemnity were the top gainers in the S&P 500 Index.

Some top global stock indices have a limited exposure to the technology and AI industries. As such, the ongoing crash is because of the correlation that happens among global indices.

Concerns about the Federal Reserve remains 

The stock market crash is also happening because of a report released by the Bureau of Labor Statistics (BLS) on Thursday. This report showed that the American economy added over 110k jobs in September this year, a sign the labor market was stabilizing ahead of the US government shutdown.

The report came as divisions at the Federal Reserve continued. Some Fed members have warned that inflation remains stubbornly high and urged against cutting in December. In a statement on Thursday, Michael Barr said:

“I am concerned that we’re seeing inflation still at around 3% and our target is 2%, and we’re committed to getting to that 2% target. So we need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.”

Some other official like Jeff Schmid and Beth Hammack have urged for caution, warning that cuts will prolong inflation over time. Hammack said:

“Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets.”

The ongoing stock market crash is also because of profit taking since most of the top indices are hovering at their all-time highs, with some analysts warning that the stock market was highly overvalued.

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PayPoint share price suffered a big reversal after forming a triple-top pattern on the weekly chart and after publishing relatively weak financial results. PAY plunged by over 20% in its worst day in years. It moved to a low of 512p, its lowest point since June last year.

PayPoint share price crashed after forming a triple top pattern 

The weekly chart shows that the PayPoint stock price formed a triple-top pattern at 767p and a neckline at 520p. This pattern is characterized by three peaks and a neckline, and is one of the most common bearish reversal patterns in technical analysis.

The stock has now moved below the neckline at 520p, confirming this pattern. Also, it has moved below the 50% Fibonacci Retracement level at 542p. It has also moved below the 50-week and 100-week Exponential Moving Averages (EMA).

Other technicals points to more downside. For example, the Awesome Oscillator has fallen and is nearing the zero line. Also, the stock has moved below the Ichimoku cloud and the Supertrend indicators.

READ MORE: As the Adidas share price crashes, is it safe to buy the dip?

The price target in a triple-top pattern is estimated by first measuring the distance from the upper side and the neckline and the same distance from the neckline. In this case, the target for the stock is 245p. For that to happen, the stock will need to move below the key support at 295p, the lowest level in May 2023.

However, this PayPoint stock price is based on the weekly chart, meaning that it may take a long time before it crashes to the target price. On the flip side, a move above the resistance level at 600p, the 38.2% Fibonacci Retracement level, will invalidate the bearish outlook and point to more upside.

PAY stock price crashed after earnings 

The main catalyst for the PayPoint stock price crash was its financial results, which came out on Thursday.

These numbers showed that the underlying EBITDA dropped to £37.3 million in the first half of the year from £37.5 million in the same period last year.

The underlying profit before tax dropped by 4.5% to £25.7 million. On the positive side, the company’s revenue jumped by 6.7% to £144.1 million. 

PayPoint stock also dropped after the management warned that its goal of delivering an EBITDA of £100 million will take longer to do so, pointing to the distribution of its parcel business and the slowdown of the monetization of obsconnect. The CEO said:

“While obconnect continues to build its new business pipeline and range of opportunities, the pace of growth and monetising of these opportunities in year is slower than we had planned.”

On the positive side, the company announced shareholder returns of about £90 million in the form of buybacks and dividends. It also reduced its net debt to £84 million from £86 million last year. 

The management also hopes to keep growing its revenue by between 5% and 8% annually in the next few years. It also hopes to reduce its costs over time and continue to slash its outstanding shares.

READ MORE: CoreWeave stock analysis: is this data center company a buy or sell?

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Nvidia stock price has pulled back in the past two weeks, moving from the year-to-date high of $212 to $180. This retreat will either accelerate or reverse once the company publishes its financial results later today. 

Nvidia will likely publish strong results

Wall Street analysts are highly optimistic about the upcoming Nvidia earnings. Data compiled by Yahoo Finance shows that the average estimate among analysts is that the company’s revenue rose by 56% in the third quarter to over $55 billion.

There are signs that the sales will be much higher than these estimates as key metrics point to more demand, with some of this demand being circular in nature. 

The first sign is that TSMC, the company’s biggest supplier, published strong financial results in September and boosted its forward guidance. Just recently, Jensen Huang, Nvidia’s CEO, pressed the company to accelerate the pace of manufacturing.

The other notable sign is that hyperscalers like Microsoft, Google, Meta Platforms, and Amazon have all maintained their upbeat spending plans this year. They all expect that the AI build up in the United States with continue over time.

READ MORE: Nvidia stock slips ahead of earnings: what happens if the AI darling misses

Other smaller buyers of Nvidia chips are also accelerating, with companies like CoreWeave, IREN, Bitfarms, and Hive Digital have all committed to boosting their investments in the AI space. More demand could come from Anthropic, a company it invested in this week.

Therefore, there is a likelihood that the company’s revenue will beat estimates as it has done in the past.

Analysts are optimistic that the company’s earnings-per-share (EPS) jumped to $1.25 from the 81 cents it made a year ago. The company has a long track record of publishing earnings that are better than estimates.

Nvidia is still a bargain 

Another potential catalyst for the NVDA stock price is that it is a bargain based on multiple valuation metrics.

Data compiled by SeekingAlpha shows that the company has a forward price-to-earnings (PE) ratio of 42, higher than the sector median of 29, but much lower than the five-year average of 58.

On a non-GAAP basis, the company’s forward PE ratio is 42, also higher than the sector median of 29, but lower than the five-year average of 80.

Other valuation multiples also showing that the company is not as expensive as investors think. For example, the forward PEG ratio is 1.15, lower than the sector median of 1.66. This is an important number that includes the concept of growth in its calculation.

Meanwhile, the company has one of the best rule-of-40 multiples in Wall Street. Its growth rate is 55%, while the profit margin is 52%, giving it a multiple of over 100%. Still, this valuation approach is commonly used among SaaS companies.

Nvidia is also a bargain compared to other AI stocks. For example, Broadcom has a forward PE ratio of 80, while Palantir has a multiple of 295. Oracle stock has a forward PE multiple of nearly 50.

Nvidia stock price technical analysis

The daily timeframe chart shows that the NVIDIA stock price has been in a strong uptrend in the past few years. It recently crossed the important resistance level at $200, bringing its market capitalization to over $5 trillion.

Nvidia stock has now pulled back and is hovering near the support at $180. It remains above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that the downtrend bullish momentum is continuing.

Therefore, the most likely scenario is where the stock resumes the uptrend and retests the year-to-date high of $213. 

READ MORE: Why Nvidia’s earnings could spark a $320B move: here’s what options data reveals

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