After the markets in Europe, the US and Japan reached new record highs in the wake of Nvidia's record rally, we see a sideways movement near the record highs.
Many investors have sharply reduced their holdings in Nvidia and other tech stocks only to be caught on the wrong foot by another blockbuster earnings report from Nvidia. The $277bn rise in Nvidia's market capitalization in a single day was by far the largest ever recorded in a single trading day, dwarfing Meta Platforms' recent $197bn rise.
Markets are now more cautious again, wondering if the mega tech/AI rally can continue, especially as the Fed has scaled back its rate cut plans. The US economy has performed very well in recent quarters despite the highest Fed interest rates since 1981.
Shares in Europe have continued to rise. After some initial profit-taking, we also see US futures slightly up, with Nvidia again leading the gains in New York (currently up almost 2%) and approaching a market value of $2 trillion.
I expect the non-tech sectors, which are generally not expensively valued, to catch up in the coming weeks and there will be no major correction for the time being. Although the “Magnificent 7” stocks are expensively valued, most of them have delivered or even exceeded already lofty expectations in their earnings reports. We are likely to see only minor additional gains today and some profit taking before the close, but the tech rally still has more room to run in my view.
Treasury yields are close to the 2024 peak but remain stable. The USD has barely changed but should see additional buying in the coming sessions as no rate cuts are expected in the next 3-4 months and the US economy is very robust and does not need rate cuts at the moment.
The AI rally is well advanced but is likely to remain the main driver for the further uptrend in equities. Further gains in New York will continue to support European equities. European mega-cap stocks such as ASML, SAP, LVMH and Novo Nordisk continue to outperform and help European equities to new record highs.
Global equities and especially European equities (as they are more sensitive to China) are also benefiting from the fact that Chinese markets remain in recovery mode. The CSI 300 index extended its gains for the ninth time in a row, while Hong Kong equities held steady. Australian, Taiwanese and South Korean stocks also rose in an overall positive session in Asia. Japanese markets were closed for a public holiday.
In commodities, we see oil prices hitting resistance in the $77.00 – $78.50 range due to ongoing demand concerns – I foresee more headwinds ahead – especially on signs that geopolitical tensions may ease somewhat. Base metal prices also continue to disappoint – a clear sign that commodity traders are not convinced of an upturn in the Chinese economy. The recent upward trend in gold is experiencing headwinds in view of yields at the record level of 2024.
👁 ROB'S MARKET OVERVIEW:
February 23, 2024
🌐/🇺🇸 Global Markets ↗️/➡️ (good start into Friday with likely some profit taking in second half of US trading)
Cyclical Stocks ↗️/➡️
Tech/Growth Stocks ↗️/➡️
Financial Stocks ➡️/↗️
Defensive Stocks ➡️
Energy Stocks ↘️/➡️
Materials Stocks ↗️/➡️
💱 Forex
AUD, GBP ↗️/➡️ (benefiting from positive risk sentiment)
USD ➡️/↗️ (slight gains towards end of US trading)
CHF, JPY ➡️
EUR ➡️/↘️ (still slightly overbought)
CAD ↘️/➡️
⚒ Commodity Markets ↕️
Oil prices ↘️/↕️
Natural Gas prices ↘️
Metal prices ↘️/➡️
Gold ↕️ (headwinds from high yields / likely slight recovery before NYSE closing)
⚡️Cryptos ➡️ (hovering near $51K; overall still bullish towards Bitcoin halving in April)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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