Investors remain cautiously optimistic at the start of the week after the S&P 500 and Nasdaq 100 hit new record highs on Friday, partly because markets overall remain optimistic that inflation in the US can continue to fall even if the US economy continues to grow. Gains were again led by the big tech stocks, which have fueled the rally since January 2023. We see little trading activity as Asian traders are also mostly on Lunar New Year holidays, but we expect gains to continue, with Amazon and Nvidia pointing to further gains.
Trading activity is also subdued in the bond, currency and commodity markets. Investors are looking for further clues, with the next important data being tomorrow's US CPI data. I expect a mostly positive impact from tomorrow's US consumer price report, which should show that inflation is moving further towards the Fed's 2% target (albeit slowly), which also suggests that rate cuts are getting closer, even if swap markets only expect a total of four rate cuts (= 100 basis points) this year. Analysts expect the consumer price index (YoY) to fall from 3.1% in the previous month to 2.9%.
We will also hear more voices from Fed officials, but they have little room to change the overall outlook for rate cuts – especially not on the hawkish side – so I expect little headwind from statements from key Fed members as they too await more data.
Currencies are little changed overall. The JPY remains weak, but has managed to recover some of its recent losses. The EUR appears to be somewhat overbought as investors have scaled back their expectations of a rate cut by the ECB – given the weak economy in the Eurozone, I see rate cuts on the horizon.
A subdued trend can also be observed on the commodity markets. The oil price gave back some of last week's gains after Israel declared that the recent bombing of the Gaza Strip was “concluded”. The gold price fell slightly, but could receive some support from the pause in the rise in yields. The gold price is still hovering around $2.020 for the time being.
👁 ROB'S MARKET OVERVIEW:
February 12, 2024
🌐/🇺🇸 Global/US Markets ➡️
Cyclical Stocks ↕️
Tech/Growth Stocks ➡️/↗️ (big tech remains slightly in outperformance / overall mostly sideways movement)
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↘️/➡️
JPY ↗️/➡️ (recovering from recent overselling)
AUD, EUR, CAD ➡️
CHF, GBP ↘️/➡️
⚒ Commodity Markets ➡️
Oil prices ↘️/➡️
Natural Gas prices ↘️/➡️
Metal prices ➡️/↗️ (as risk sentiment remains overall optimistic)
Gold ➡️ (gold with some support at $2,020, benefiting from yield gains making a pause, overall in sideways movement)
⚡️Cryptos ➡️ (sideways for now but overall in a bullish trend and benefiting from improved risk sentiment)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)