Investors are waiting for the earnings of the first big tech stocks that fueled the record rally on the stock markets. Europe is trading little changed, while Wall Street is down slightly but still near its all-time highs (for the S&P 500 and Nasdaq 100).
General Motors jumped 7.5% after beating earnings expectations. United Parcel Service slipped as it missed revenue forecasts. Europe's Stoxx 600 index climbed to a new two-year high as banking and media stocks led gains but now saw light selling.
After a rather quiet Monday, investors remain on the sidelines but see a very busy week ahead. Microsoft, Alphabet and AMD will provide the first evidence later (after the close) as to whether the bullish sentiment around the so-called Magnificent Seven and the strong gains in the chip sector and AI-related stocks are sustainable.
In particular, the strong performance of the tech sector has driven the strong gains in New York since January 2023, as well as ongoing expectations that Fed rate cuts are coming soon and will further boost earnings growth. This busy week also sees the Fed's interest rate decision, where the Fed will not change rates but may give an outlook on policy.
The next three days will be absolutely crucial in determining whether the current rally continues or pauses for now.
Rarely have a few stocks played such an important role for Wall Street (major indices) – certainly reminiscent of the mega valuations during the dot-com bubble. However, the share price gains are not only based on optimistic sales forecasts, but also on strong indications that the US tech giants can accelerate or at least maintain the current impressive sales growth rates
Treasury bond yields fell further on Tuesday, partly because the US Treasury lowered its estimate for quarterly new borrowing to ease concerns about the flood of debt being issued to cover the federal deficit. The dollar was little changed overall. The EUR benefited from slightly better than expected (but still weak) GDP growth data in the Eurozone and higher than expected Spanish inflation data.
In commodities, oil bulls are looking at another poor session as the decline in oil prices is set to continue despite ongoing geopolitical tensions. Gold continued to rise, supported by the ongoing decline in yields and safe-haven buying ahead of key earnings reports and due to the ongoing property market crisis in China.
We expect a mostly sideways movement with some profit taking. However, optimism will remain overall. I also believe that the first set of big tech earnings numbers are highly unlikely to disappoint.
👁 ROB'S MARKET OVERVIEW:
January 30, 2024
🌐/🇺🇸 Global/US Markets ↘️/➡️/↗️ (mostly sideways movement; investors rather optimistic about first big tech earnings)
Cyclical Stocks ↘️/↕️
Tech/Growth Stocks ↘️/➡️/↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ↘️
Materials Stocks ➡️
JPY ➡️/↗️ (benefiting from rate cut hopes for Fed, ECB, BoE etc.)
EUR ↗️/➡️ (EUR losing some of early gains; EUR remains weak)
USD, CHF ➡️
GBP, AUD ↘️
⚡️Cryptos ➡️/↗️ (Bitcoin slowly recovering, likely more headwinds in $44K – $45K range)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)