Global markets started the week on a cautious note. We are seeing a slow start ahead of a busy week of earnings reports, important data and interest rate changes from major central banks, including the Fed.
Stocks in Europe and the US are little changed, with the German DAX underperforming. Overall, however, we see an optimistic market after the S&P 500 closed a third week of gains and ended Friday near its record high. The European Stoxx 600 index also remains near its highest level since January 2022, while energy stocks outperformed in early US premarket trading after rising tensions in the Middle East briefly pushed oil prices to their highest level since November before falling again.
It is sure to be an important week, especially with key earnings reports from some of the companies leading the 2023 rally (Apple, Amazon, Meta Platforms). Central banks will also provide a further update on upcoming rate cuts. The recent robust US economic data, especially in combination with an improving inflation outlook, has led to rising expectations that the US economy can avoid a recession.
I still expect earnings to weaken further in the coming quarters, but for Wall Street, as in 2023, the key will be whether tech mega-cap stocks can continue to rise. The latest data points to continued strong earnings growth for tech companies, especially those benefiting from the AI hype.
China continues to be supported by Beijing's stimulus measures. On the downside, the Chinese real estate sector remains in trouble after a Hong Kong court ordered the liquidation of real estate giant China Evergrande Group.
I expect a mostly sideways movement with low volatility today. Investors are likely to remain optimistic ahead of earnings reports from some of Wall Street's biggest companies. I see gold in an improving environment as rate cut optimism remains intact for now, which is also partly reflected in falling yields – which will also benefit other yield-sensitive assets such as growth stocks.
👁 ROB'S MARKET OVERVIEW:
January 29, 2024
🌐/🇺🇸 Global/US Markets ↘️/➡️/↗️ (mostly sideways movement; Optimism remains)
Cyclical Stocks ➡️/↗️
Tech/Growth Stocks ➡️/↗️
Financial Stocks ↘️/➡️
Defensive Stocks ➡️
Energy Stocks ↗️/➡️/↘️
Materials Stocks ➡️
CHF, JPY ➡️/↗️ (benefiting from rate cut hopes for Fed, ECB, BoE etc.)
AUD, GBP, CAD ↗️/➡️
⚒ Commodity Markets ↕️
Oil prices ↗️/↕️ (support from geopolitical tensions remains shaky)
Natural Gas prices ↕️/↘️
Metal prices ↗️/➡️ (Still benefiting from China boost)
Gold ↗️ (benefiting from lower yields)
⚡️Cryptos ➡️/↗️ (Bitcoin slowly recovering)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)