Tech Gains, Bank of America's Modest Uptick, and Asian Currency Surge Amidst Economic Outlook | Daily Market Analysis

Key events:

• USA - Existing Home Sales (Oct)
• USA - Existing Home Sales
• USA - FOMC Meeting Minutes

During Monday's evening trading, US stock futures exhibited limited movement, maintaining a narrow range after modest gains in major benchmark indices. Lower yields contributed to the positive performance of tech giants, setting the stage for Nvidia's crucial earnings session later in the day.

Dow Jones Futures and S&P 500 Futures showed little change, while Nasdaq 100 Futures edged up by 0.1%.

Bank of America Corp. (NYSE: BAC) concluded the latest trading session with a marginal uptick, closing at $30.01, reflecting a 0.10% gain. This modest increase occurred against a generally favorable trading backdrop. Although the gains for Bank of America did not align with the broader market's performance, they contributed to the bank's second consecutive day of positive movements.

Investor attention is now directed towards Bank of America's upcoming earnings report, anticipated to reveal an earnings per share (EPS) decline to $0.73. This signifies a decrease of over fourteen percent compared to the same quarter last year. Revenue estimates also indicate a slight dip, with projections hovering around $24 billion.

Despite these short-term apprehensions, the bank's annual outlook remains optimistic. Analysts predict an EPS increase to nearly $3.50, reflecting an 8% rise, while total revenue is expected to surpass $100 billion, marking a 6% increase.

In the technology sector, Microsoft (NASDAQ: MSFT) experienced a 2% surge, reaching a record high, following the appointment of Sam Altman to lead a new advanced artificial intelligence research team. This move came shortly after Altman's departure as CEO of OpenAI, with reports suggesting potential staff exits from OpenAI to join Altman unless the board resigns.

On Tuesday, most Asian currencies experienced significant increases, driven by alleviated concerns regarding higher US interest rates, resulting in notable losses for the dollar. Attention now shifts to the release of minutes from the Federal Reserve's October meeting.

Optimism surrounding China also buoyed market sentiment, with reports in local media suggesting the government's intention to implement additional supportive measures for the struggling property sector. The Chinese yuan emerged as one of the top performers, strengthening by 0.5% against the dollar to 7.1346, marking its highest level since late July. This positive momentum was reinforced by stronger-than-anticipated daily midpoint fixes by the People's Bank of China, aimed at stabilizing the currency.

Benefiting from reduced concerns about US interest rate hikes, the Japanese yen saw a 0.6% rise on Tuesday, extending its robust recovery from nearly 30-year lows and reaching its strongest level in three months at 147.45 against the dollar. Despite the yen's strength, there was a decrease in expectations for Japanese authorities to intervene in currency markets, although the currency's outlook remained vulnerable due to a dovish stance from the Bank of Japan.

The dollar index and dollar index futures both declined by 0.2% in Asian trade, extending recent losses as traders increasingly believed that the Federal Reserve had concluded its interest rate increases.

Japan's Nikkei index remained close to the 33-year high reached on Monday. According to a Reuters poll, analysts anticipate the index to extend its more than 28% rally into 2024, reaching a three-decade high of 35,000 by the end of June.

Traders awaited the release of the minutes from the Fed's October meeting, where rates were held steady, expecting further insights into monetary policy. Recent weak inflation and labor market data led traders to anticipate no further rate hikes from the Fed, with a 30% chance priced in for a rate cut as early as March 2024. However, the central bank has not signaled such a move, emphasizing its commitment to maintaining higher rates to address inflation, potentially restraining significant gains in Asian markets.

With a sparse economic calendar in Europe, the market rally may lose momentum, although futures indicate a slightly higher opening for European stock markets.

In Tuesday's trading session, market participants closely monitored the FOMC minutes, along with existing home sales data and the Chicago Fed national activity index.