Global bond markets have calmed down after the biggest two-day sell-off in months, triggered by the very strong NFP data and after the Fed sees the possibility of a rate cut in March as very unlikely. Global equity markets remain mixed and are looking for further clues.
The stock market rally is currently pausing as investors reassess rate cut expectations. We see markets little changed in Europe but buoyed by strong gains in BP (+7%) after the oil and gas giant announced it would buy back $3.5 billion worth of shares in the first half of the year. UBS Group fell after its earnings disappointed analysts, while German chipmaker Infineon suffered losses after citing falling demand from industrial buyers. Palantir Technologies rose more than 20% in pre-market trading after the big data company gave a higher than expected earnings outlook due to demand for artificial intelligence products.
Markets are still looking for more clarity on upcoming rate cuts. A number of Fed officials are due to speak this week and are likely to reiterate that the Fed is under no pressure to cut rates and that a wait-and-see approach is being adopted; they may also comment on the risks of inflation remaining at high levels.
Markets in Asia are moving a little more (mostly positive) after Beijing took further strong measures to end the stock market crisis. However, much of the gains are due to government purchases. Even though Beijing is showing clear signs that it is determined to support the Chinese economy and the very weak stock market – I expect only temporary tailwinds as foreign investors continue to shun the Chinese stock market.
However, Beijing's measures led to strong gains in Chinese markets, such as the Hang Seng China Enterprises Index, which rose by almost 5%. Other emerging market equities also recorded solid gains.
The S&P 500 and Nasdaq 100 also rose, with tech stocks leading the gains. However, market depth remains poor – most stocks lost value this week.
As we see continued sideways movement, the risk of a correction is increasing. The rebound in China is likely to be short-lived, but has also helped oil prices to find a bottom. The main focus will be on yields. After two days of very strong gains, we see that they are currently stabilizing at a high level – which continues to put pressure on equities and gold.
👁 ROB'S MARKET OVERVIEW:
February 06, 2024
🌐/🇺🇸 Global/US Markets ↕️
Cyclical Stocks ↗️/↕️
Tech/Growth Stocks ↗️/↕️/↘️ (early gains likely followed by slight profit taking; Big tech (- Tesla) still in outperformance)
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ➡️/↘️
Materials Stocks ➡️/↘️
GBP, AUD ↗️/➡️ (slight recovery after recent losses)
USD ➡️/↗️ (mostly sideways but remains in demand)
EUR, CHF ➡️/↘️
⚒ Commodity Markets ↕️
Oil prices ↗️/➡️ (slight rebound after recent sharp losses; remains in sideways)
Natural Gas prices ↘️/↕️
Metal prices ➡️
Gold ↗️/➡️/↘️ (early slight rebound gains; gold remains under pressure due to high yields)
⚡️Cryptos ↘️/➡️ (mostly sideways – range $42.0K – $43.5K / stuck)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)