News and analysis

When the pre-Christmas week was just beginning, the global investment sentiment had been fuelled by record-breaking earnings of a great chipmaker for gadgets and data centers Broadcom. The bullish appetites were sparked as that was the last big tech company to report before the year-end, and it luckily projected a better trend for chip demand from flagship customers like Apple, Samsung, Huawei and Cisco.

The value of Broadcom added more than 35% within a couple of trading days to hit $1 trillion or over $250 per share. This was around an annual target area for the firm according to estimates of many reputable investing houses. The tech-heavy Nasdaq Composite index exceeded a psychological mark of 20,000 points.

The two achievements in sync prompted a natural wave of massive profit taking by a happy but still wary crowd, due to much weaker prospects provided by some other AI era leaders like Adobe and Oracle, especially ahead of the last Federal Reserve’s policy decision in 2024. Thus, the widespread stock rally was stopped and faced an even deeper 3% retracement from fresh peaks in terms of the S&P 500 broad market barometer. The S&P 500 had to retrace from above 6,050 to below 5,850 points on Wednesday night of December 18, as a response to the U.S. central bank’s relentless remarks. Its chair Jerome Powell clarified that policymakers shifted their road map from previously supposed three or four interest rate cut moves to only two small 0.25% steps to lower borrowing costs in a very narrow and careful way. Too high levels of normalised rates restrict access to cheap credit resources, being negative for stocks, yet this impact is limited in time and scale due to a solid labour market, hopes for soft landing, running away from inflation to assets and lower rates in other countries. A rate differential factor is also boosting yields of the U.S. public debt, which led the Greenback index to fresh 24-month highs above 108 points, suppressing gold prices.

Cosmos (ATOM) is up 1.78% this week, trading at $6.540, closely tracking the broader market, where Bitcoin has gained 1.30% to $96,034. Despite the recent uptick, ATOM is struggling to hold onto its gains, having lost 27.0% since December 17, pulling prices down to a recent low of $5.810.

This temporary stabilization may precede a retest of the $7.500 resistance, potentially followed by a deeper decline toward the stronger support at $5.000. This critical level could serve as a solid foundation for a recovery, should market sentiment improve and broader cryptocurrency trends turn positive.

Nem (NEM) has plunged 28.0% this week to $0.0225, significantly underperforming the broader cryptocurrency market, where Bitcoin (BTC) is down 8.2% to $94,500. The sharp decline in altcoins has caught many off guard, with the broader market weakness taking hold following the Federal Reserve's hawkish decisions on Wednesday. Cryptocurrencies, like other risky assets, are under heavy selling pressure, and no clear bottom has been established.

Bitcoin faces a critical support level at $90,000, representing a potential additional decline of 5.0%. Should this level be tested, NEM prices could drop a further 11.0% to $0.0200. A deeper decline toward $0.0160, coinciding with trend support, is also possible if selling pressure intensifies. Any meaningful recovery in NEM prices would likely depend on broader Bitcoin movements, as NEM itself lacks positive catalysts or supportive news to drive independent gains.

The parcel delivery operator missed quarterly consensus estimates but its market value was soaring by nearly 8.75% to $300 per share in extending trading during the Thursday night, thanks to announcing plans to spin off its freight trucking division through the capital markets with an intention to create a new publicly traded company. The stock is knocking the $300 door for the fourth time in six months, but each time bullish attacks went awry leading to a larger or smaller retracement. What will be the developments now it's hard to say based on current fundamentals, but it would be useful to look more carefully at the investing crowd's moves in the vicinity of this psychologically important band, $300 plus or minus $10 to $15 per share.

FedEx reported both revenue and profit lines for the previous quarter mostly in-line with average expert estimates. This was a small step forward compared to the numbers three months ago as the indications at the end of September sharply missed consensus bets ($3.6 for equity per share instead of $4.86 in Wall Street projections and $21.6 billion instead of nearly $22 billion in expert poll bets for the firm's sales). Now both the bottom and the top lines improved to $4.05 for equity per share on revenue of $22 billion. However, there is almost flat growth on an annual basis, with the last quarter still lagging well behind some much more successful quarterly results in 2021-2023. What is a good sign that FedEx also provided a higher forward guidance for fiscal 2025, with earnings ranging between $19 and $20 per share, which is an equivalent for $4.75 to $5.00 per average quarter. The Wall Street pool assumptions were limited to $19.75.

Markets hope for aggressive cost cutting during a complex restructuring. The permanent cost reductions from FedEx transformation program already released $2.2 billion. The process may become more effective when FedEx will divide itself into two independent businesses seeking for two different growth strategies, even if the two businesses may attempt to preserve commercial and operational synergies. The separation is reportedly to be done within the next 18 months and "in a tax-efficient manner for FedEx stockholders" and executed. By separation, FedEx would "respond to the unique dynamics of the LTL market,” said CEO Raj Subramaniam. The term LTL, in contrast with global parcelling, means "less than truckload" to refer to shipping services for relatively small loads of freight, typically below 15,000 pounds, which may lead to smarter cost efficiency. As a part of the single corporation, FedEx Freight subdivision was increasing its operating profit averagely by 25% a year over the previous 5 years. FedEx Freight will be the largest LTL carrier having the widest global network for transportation and the fastest delivery time within this segment.

Unlike the Biblical kingdom, which is divided within itself and will be destroyed, this business kingdom wants to be divided but still trying to remain a cart moving better. With still a shared brand of FedEx and their common base of customers, commercial agreements will be made between the two entities. Capital allocation optionality including advanced flexibility to invest in profitable growth and then returning capital to stockholders, distinct and compelling investment profiles with two separate public stock listings and distinct stockholder bases were remarked among the basic advantages. We will see sooner or later if this decision will actually allow the two companies to organize a more customized operational execution as well as more tailored capital allocations when unlocking a separate value (some sources say it could be up to $20 billion) for a freight branch of FedEx business., as it was declared, will it release more efficiency for FedEx Express and FedEx Ground businesses. And, finally, investors will see if it was true or not that FedEx Freight assets were probably not fully appreciated within FedEx.