We see traders becoming a little more cautious at the end of what looks set to be the strongest weekly rise for Wall Street and global equities this year. After a series of central bank meetings, markets remain convinced that rate cuts are coming soon – or in the case of the SNB, have already begun.
The S&P 500 rose by 2.4% this week – that would be the strongest weekly performance this year. The broad-based European Stoxx 600 has risen for nine weeks in a row, the longest streak in more than a decade. The Nikkei reached a new ATH in March – for the first time since 1989 – and continued to rise to a new ATH in Asian trading today.
The USD recovered quickly and rose again despite falling yields as other central banks also prepared to loosen monetary policy, reigniting positive risk sentiment. Fears that the Fed might loosen its monetary policy have not materialized, but the market is divided on whether the massive stock market rally has gone too far – well into bubble territory. I don't think so, because even the massive AI hype is underpinned by fundamentals such as corporate revenue growth.
Above all, the SNB's surprise rate cut has helped the USD. Some investors believe that other central banks (especially in Europe) could follow suit – I don't think this will happen as inflation in Switzerland is very different from the situation in the Eurozone or the UK.
Economic data from Asia and also from Europe (for the most part) started to improve, which means that the rally has more room to run – even if at least half of the analysts think the markets are heavily overvalued. I disagree and still think equities are attractive and in a good place – especially given the clear signs of easing financial conditions later this year.
I expect a solid/positive run in equity markets today with some profit taking towards the end of regular US trading. The Nasdaq only appears weaker at first glance with Tesla trading sharply lower on news that the EV pioneer is cutting car production in China.
The resurgent USD also weighed on commodity prices, but I see the headwinds becoming increasingly limited. The USD's upside potential is also limited, as the US Federal Reserve gave a clearly dovish outlook and expects not only three rate cuts in 2024, but also a reduction in QT. Gold remains bullish and offers a good entry opportunity, especially for medium/long-term investors.
👁 ROB'S MARKET OVERVIEW:
March 22, 2024
🌐/🇺🇸 Global Markets ↘️/↗️/➡️
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↘️/↗️/➡️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ➡️/↗️
Materials Stocks ↗️/➡️
💱 Forex
JPY ↗️/➡️
USD ↗️/↘️/➡️
CHF ➡️/↘️
AUD, NZD, CAD ↘️/↗️/➡️
GBP, EUR ↘️/➡️
⚒ Commodity Markets ↕️/↗️
Oil prices ➡️/↗️ (oil to see gains during regular US trading)
Natural Gas prices ↘️/↕️
Metal prices ↗️/➡️
Gold ↘️/↕️/↗️ (gold to remain bullish – further gains towards end of regualar US trading)
⚡️Cryptos ↕️/↘️ (volatile – gains continue to hit profit taking – shows signs of sliding further)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
