Equity markets are struggling to maintain yesterday's positive momentum after Wall Street posted another record close, rising more than 1% after inflation data was not seen as worrying enough to change the markets' conviction that the Fed will cut rates this year.
Bonds felt the brunt of the potentially negative impact of US inflation being too high again, with yields rising for the first time after falling sharply recently. We see US yields rising a little further today, while yields in Europe are mostly lower as expectations for an ECB rate cut in June remain high following dovish comments from ECB officials.
However, swap markets in the US also remain optimistic that the Fed will cut rates in June (currently with a 70% probability). Hopes of a Fed rate cut are becoming increasingly overly optimistic – especially given the sideways trend in inflation. However, the ongoing price pressure is also due to the strong US consumer and the continued strong growth in US GDP. Investors will therefore be looking closely at tomorrow's US retail sales data.
Although the rally is nearing the end of the bull cycle, I believe it is intact. I believe that the rally can extend in the coming weeks, which means that other sectors such as financials, energy, but also more defensive stocks can make gains. Stocks in Europe extended their recent gains, led by retailers and utilities. Germany's Zalando (+13%) and Spain's Inditex (owner of Zara; +7%) posted strong sales, pointing to an improved consumer spending mood in the Eurozone.
I expect mixed markets and some rotation from technology into other sectors. Investors are waiting for more data, especially tomorrow's US retail sales data.
Signs of an improvement in market sentiment can also be seen in commodity prices. Oil prices continue to find solid support below $78/barrel (WTI) and are supported by signs of falling US crude oil inventories, indicating a possible oil supply deficit. Base metals also saw a good Asian session. Gold has risen despite higher yields and is now trading near $2,165. Bitcoin has broken through another ATH and is trading above/near $73K.
👁 ROB'S MARKET OVERVIEW:
March 13, 2024
🌐/🇺🇸 Global Markets ↕️ (mixed markets, a bit of a rotation from tech to other sectors; overall sideways movement)
Cyclical / Luxury Stocks ↕️/➡️
Tech/Growth Stocks ↘️/➡️ (first some profit taking, then stocks stabilizing)
Financial Stocks ➡️
Defensive Stocks ➡️/↗️ (benefiting from broadening of rally)
Energy Stocks ↗️ (benefiting from broadening of rally)
Materials Stocks ➡️
💱 Forex
AUD ➡️/↗️
EUR, GBP ↗️/➡️ (slight gains before turning slightly bearish again)
JPY ↘️/↗️ (recovering from post US CPI headwinds)
CAD, CHF ➡️
USD ↘️/➡️
⚒ Commodity Markets ↕️/↗️
Oil prices ↗️
Natural Gas prices ↘️/↕️
Metal prices ↗️/➡️
Gold ↗️/➡️ (rebounding from yesterday's losses, overall benefiting from sideways movement of stocks today)
⚡️Cryptos ↕️/↗️ (Remains volatile; overall bullish momentum is strong, buying dips remains right strategy)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
