Morning Note: McDonald’s Q4 Outlook, Gold’s Rally, and NZD Under Pressure

McDonald’s Q4 Outlook: Strong Sales but Higher Costs?

McDonald's is on track to have year-over-year revenue growth in the fourth quarter, powered by good digital engagement, new menu additions, and continued unit expansion. Strategic pricing adjustments to menus, effective operations of restaurant complexes, and marketing efforts have probably amplified same-store sales.

However, rising commodity and wage costs likely impacted the company's fourth-quarter earnings. It was also believed that its operating margin faced headwinds in the quarter, brought about by inflationary pressures. In 2024, McDonald's expects commodity costs to rise modestly in the low single digits.

(McDonald’s Share Price Daily Chart, Source: Trading View)

From a technical analysis perspective, McDonald’s share price remains in a bearish trend, as indicated by lower highs and lower lows. However, in a shorter timeframe, the price is trending upwards and forming a lower high. It is highly possible that the price will retest the resistance zone. If it fails to go above this level, bearish momentum may retake control, pushing the price downward.

Gold Remains Bullish as a Safe-Haven Asset

Gold prices strengthened as investors rushed to safety in the light of former President Donald Trump's announcement about imposing new tariffs. While gold is often seen as a safe-haven investment during the dark financial and economic times, it tends to fall out of favour in rising interest rate environments because it bears no interest.

On Friday, Fed officials cited the strength of the U.S. job market while acknowledging the uncertainty surrounding Trump's economic growth policies and persistently high inflation. This solidified their cautious view of cutting interest rates, suggesting no sense of urgency.

(Gold Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the overall price chart for gold remains bullish, as indicated by higher highs and higher lows within the ascending channel. It has recently broken through the previous higher high level. With no bullish fair value gap in the daily timeframe, the price is most likely to surge upward, continuing to form higher highs and approaching and retesting the upper boundary of the channel.

NZD Under Pressure as Trump Tariffs Spark Trade War Fears

On Sunday, Trump announced a plan to impose 25% tariffs on all steel and aluminium imports and reciprocal duties on those countries he accuses to have unfair trade practices. The move has heightened fears of a global trade war, especially as Beijing's latest retaliatory tariffs on U.S. goods have gone into effect.

Meanwhile, the latest Chinese inflation data released over the weekend did not help boost the New Zealand dollar. Moreover, the New Zealand dollar is under continued pressure from dovish expectations ahead of the Reserve Bank of New Zealand's policy decision. Many expect the RBNZ to announce a dramatic 50 bps interest rate cut next week.

(NZD/USD Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the recent price action has broken through the downward trendline, suggesting a change in character from a bearish to a bullish trend by forming a higher high. However, this could also represent a more significant bearish correction, as bears temporarily lose momentum. The trend reversal can only be confirmed if the price successfully breaks above the rectangular resistance zone, indicating that the bulls may have regained control.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.