The current rally, led by US big tech companies, remains intact. In particular, the Magnificent Seven continue to outperform strongly as investors expect strong earnings growth from the world's largest technology companies.
Markets in Europe are also trading higher, while Asia looks back on a mixed session as China continues to disappoint.
After a bumpy start for stocks and bonds, equities returned to 2023 mode with all major US indices hitting new all-time highs.
European and US bond yields fell on an overall quiet day for economic data and earnings reports, but ahead of a busy week. Earnings season continues with companies such as Netflix, Tesla, Visa, ASML and Intel releasing their results later in the week.
Investors also pushed aside recent fears that the rate cuts might come a little later than expected and remain optimistic that the US economy will have a soft landing. However, the rally is not really broad-based as big tech companies dominate earnings.
Central banks also remain in focus: the Bank of Japan is unlikely to change its policy tomorrow and the ECB will make its interest rate decision on Thursday (probably also with no change).
Oil prices fell slightly again as there was no major news from the Middle East (the situation remains volatile). Libya has resumed production in its largest oil field, which has provided an additional headwind for oil prices. Gold is currently trading near $2,025 but should benefit from a slight recovery in bonds (= lower US government bond yields). The major investment banks Morgan Stanley and JPMorgan are advising investors to buy bonds now, which will give bonds a further tailwind.
👁 ROB'S MARKET OVERVIEW:
January 22, 2024
🌐/🇺🇸 Global/US Markets ↗️/➡️ (slight additional gains)
Cyclical Stocks ↗️/➡️ (slight additional gains)
Tech/Growth Stocks ↗️ (big tech remains in outperformance also pushing up other tech stocks)
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↘️/➡️
JPY ↗️/➡️ (slight rebound – but will face headwinds as BoJ likely keeps policy unchanged)
USD ↘️/➡️ (we see sliding yields / improve risk sentiment weighing on USD)
GBP, EUR, CAD ↘️/➡️
⚡️Cryptos ↕️/↘️ (no driver for short-term gains; potentially testing $40K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)