Morning Note: Palantir's Plunge, US Jobless Claims, Swiss GDP Outlook

Palantir Stock: Reversal or Just a Market Correction?

Palantir’s stock is down 20% in the last 5 days after reports of an 8% annual cut in the US defence budget over the next 5 years. In 2024, Palantir generated $2.9 billion in revenue, with government clients making up 55% of that. US government clients alone made up $1.2 billion. Given Palantir’s heavy reliance on government business, it is exposed to the risks of changes in federal spending priorities, budget delays, and political shifts.

To mitigate the impact of government contract volatility, Palantir is expanding its commercial business. As the federal budget process progresses and defence spending priorities become more defined, the company’s diversification strategy could serve as a buffer against the risks outlined in its regulatory filings.

(Palantir Stock Daily Chart, Source: Trading View)

From a technical analysis perspective, Palantir's stock price has been moving in a bullish trend, as indicated by higher highs and higher lows. Recently, the bullish momentum exhausted, bearish forces regained control and pushed the price downwards. The stock is expected to retest the first support zone at 80.5 - 83.50. If it fails to find support at this level, it may drop further to retest the second support zone below at 62.8 - 65.9.

U.S. Unemployment Claims is Expected to Increase

Last week’s US initial jobless claims were 219K, and this week’s forecast is 225K, which is expected to be released at 13:30 GMT today. The rise in jobless claims could be a sign of a more cautious labour market, possibly due to seasonal changes, economic uncertainty, or a slowdown in hiring. Moreover, rising inflation and slowing growth may also prompt employers to be more conservative in hiring, leading to more layoffs.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of the U.S. dollar index has been bullish since the end of September, as indicated by the higher highs and higher lows. However, the index started to decline in early February, marked by a significant double-top candlestick pattern. Currently, the price is retesting the previously broken swap zone. If it fails to close above or within this swap zone at 106.50 - 106.80, it is highly likely that the bearish momentum will continue pushing the price downward.

Switzerland's GDP is Expected to Decline

Switzerland’s Q4 YoY GDP was 2%, while this quarter’s forecast is 1.7% and is expected to be released at 08:00 GMT today. Certain sectors like manufacturing or services might be slowing down. A slowdown in main trading partners, especially in the Eurozone, could also impact Swiss exports and lead to a lower GDP reading.

(USD/CHF Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/CHF currency pair has been moving in a bullish trend since the beginning of October, as indicated by higher highs and higher lows within the ascending channel. However, it broke below the channel with significant bearish momentum in mid-February and started forming lower highs and lower lows. Currently, the price is retesting the swap zone at 0.8970 - 0.8995. If the price fails to close within or above the swap zone in the near term, the bearish momentum might push the price further downwards.

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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.