Stocks in Europe, Japan and the S&P 500 hit new record highs, driven by gains in the technology sector after Nvidia delivered another mega earnings report and raised its guidance further. Nvidia's strong numbers came as a surprise (not to us at all) as the markets were in panic mode for 2-3 days worrying about Nvidia's latest update. Now we see optimism about economic growth and the AI rally continuing.
The Stoxx Europe 600 also surpassed its previous all-time high from January 2022, with tech stocks and especially chip stocks (such as ASML), where Nvidia was up 13% in pre-market trading, leading the gains. However, Danish pharmaceutical manufacturer Novo Nordisk, German software giant SAP and French luxury goods manufacturer LVMH also recorded double-digit gains in 2024, helping European equities (= with the exception of the tech-less UK FTSE 100) to new highs.
Beyond the individual sectors, signs of a robust global economy are creating a positive mood among investors, partly because there is still hope that interest rate cuts will soon follow.
Returning confidence in luxury stocks is supporting European / French markets and is another sign that investors are becoming more optimistic that the Chinese consumer will remain resilient. However, stimulus measures from Beijing have not yet brought back confidence that the larger problems in the Chinese economy can be overcome in the coming months – I fully agree and see very serious core problems in the Chinese economy, including a terribly inflated real estate market (which is already bursting) that is putting immense pressure on Chinese banks.
After analysts warned about Nvidia's earnings report and advised cuts, the same analysts are now saying the rally can continue. Nvidia's strong earnings and even more optimistic outlook show once again that the current mega rally in Big Tech also has fundamental backing – at least for Nvidia, which is enabling the AI revolution.
Despite further rising US Treasury yields, we have seen a slight headwind for the USD. I see the current slight weakness in the USD as temporary and expect more strength in the short and medium term.
The overall improvement in risk sentiment has also supported other risk-sensitive assets, but commodities continue to show weakness. We also see gold remaining near $2,030 and expect to see further profit taking in the equity market.
We are already seeing very strong pre-market gains (which we traded very successfully post-market yesterday with our Nasdaq 100) and want to wait and see if the market doesn't take profits first after being so concerned earlier in the week.
👁 ROB'S MARKET OVERVIEW:
February 22, 2024
🌐/🇺🇸 Global Markets ↗️/↕️ (weak start, then mixed markets, cautious trading ahead of Nvidia report)
Cyclical Stocks ↗️/➡️
Tech/Growth Stocks ↗️↗️/↕️ (we see extreme pre-market gains; We may first see additional buying followed by some profit taking; overall optimism returned)
Financial Stocks ➡️
Defensive Stocks ↘️/➡️ (rotation back into growth)
Energy Stocks ↘️/➡️/↗️ (temporary rotation back into growth)
Materials Stocks ↘️/➡️
💱 Forex
AUD ↗️/➡️
EUR ↗️/➡️ (seems overbought)
USD ➡️/↗️ (USD to remain in demand)
CHF ➡️
GBP ➡️/↘️
CAD, JPY ↘️/➡️
⚒ Commodity Markets ↕️
Oil prices ↘️/↕️/↗️
Natural Gas prices ↘️/↕️
Metal prices ↗️/➡️ (benefiting from improved risk sentiment / iron ore weak)
Gold ➡️/↘️ (finding some resistance near $2,030 – facing headwinds from high yields)
⚡️Cryptos ↗️/➡️ (in sideways movement – likely hovering near $51K – $52K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
