Market sentiment has continued to improve following mostly positive signals from the cyclical sector in Europe, showing that European equities can rebound after recent positive momentum showed signs of fatigue – led by heavy profit-taking in New York as concerns over a prolonged Fed rate hike increased. Ongoing geopolitical tensions have also weighed on market sentiment in recent weeks.
Israel is still considering a response to the first attack on the Jewish state from Iranian soil. Saudi Arabia and the United Arab Emirates, in a rare, outspoken joint statement, called for maximum “self-restraint” to save the region “from the dangers of war and its dire consequences”.
Futures on Wall Street are pointing to a slightly positive opening, indicating a possible recovery after the recent sharp profit-taking. Signs that US Treasury yields may have reached a temporary peak are also contributing to the improvement in sentiment. The USD has also stabilized.
Now that the US Federal Reserve has shown more hawkishness in its latest statements – although this did not come as a surprise – further surprises in the form of further delayed interest rate cuts are becoming less likely. Hopes of monetary easing in the near future have been dashed. After up to six rate cuts were expected at the beginning of the year, traders are now betting on fewer than two rate cuts.
The focus is now on corporate earnings. We have had a mostly solid start with good results in the first quarter, but some cautious forecasts so far. I believe we will see another strong earnings season which will help global equities recover some of the recent losses.
European natural gas has risen for the fifth day in a row (although the price of natural gas has fallen by almost 10% this week – a European phenomenon). Oil prices continue to show weakness, giving back much of the recent upside that had been priced in due to concerns over the threat of war in the Middle East. Energy stocks are still oversold, but will probably bottom out soon. Gold remains close to record highs but encountered resistance yesterday at $2,395. Gold remains attractive.
👁 ROB'S MARKET OVERVIEW:
April 17, 2024
🌐/🇺🇸 Global Markets ↗️/➡️
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️
Financial Stocks ↗️/➡️
Defensive Stocks ↗️/➡️
Energy Stocks ↘️/➡️ (remains oversold but will edge higher once WTI can move back to / above $85/barrel)
Materials Stocks ↗️
💱 Forex
AUD ↗️ (supported by improving risk sentiment)
GBP ↗️/➡️ (inflation path to 2% may be bit bumpy; benefiting from improving risk sentiment)
EUR, USD, CAD, CHF ➡️
USD ↘️/➡️ (slight temporary correction; USD will remain in demand as yields will likely rise further in upcoming days)
JPY ↘️/➡️ (JPY would be even weaker if not for expectations for upcoming BoJ measures to support the yen)
⚒ Commodity Markets ↗️
Oil prices ↘️/➡️
Natural Gas prices ↘️/↕️
Metal prices ↗️
Gold ➡️/↗️ (gold remains bullish and on path to $2,400+)
⚡️Cryptos ↕️/↗️ (remain volatile – point towards near-term rebound to $65K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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