We see stocks taking a breather after moving to new all-time highs in the previous week and with a busy week ahead, including the release of the Federal Reserve's preferred inflation measure (PCE) on Thursday.
Stocks in Europe are mixed, with mining companies such as Rio Tinto, Anglo American, Glencore etc. weighing on the markets due to the fall in commodity prices and recurring concerns about the outlook for Chinese demand. The German DAX, on the other hand, rose to a new all-time high, supported by further gains in SAP and the German defense giant Rheinmetall.
There was little change on Wall Street, but there are signs of further gains after Nvidia's landmark earnings report pushed US futures and European markets to new all-time highs. Some profit-taking in tech stocks on Friday and in pre-market trading today appears to have come to an end. Berkshire Hathaway benefited from a (widely expected) strong earnings report over the weekend that put Warren Buffet's group on course to reach a market value of nearly $1 trillion.
There was also little change in the bond market as yields stabilized. There has also been muted movement on the currency markets. The main focus this week will be on inflation data and further comments from central bank officials. Another positive US inflation reading (on Thursday) could lead to a further reduction in interest rate expectations and trigger another wave of profit taking (on risk assets).
Overall, I expect the positive market sentiment to continue and other (non-tech) sectors to catch up slightly – which would be a good sign as the rally is still mainly driven by mega-cap tech stocks. The strong earnings season, especially the continued optimism around AI revenue growth, will likely keep the positive momentum going for a bit longer, although we see cautious trading ahead of Thursday's PCE data in particular.
Bond investors are also preparing for record sales of two- and five-year US Treasuries later today and sales of seven-year bonds on Tuesday. Normally, the auctions take place over three days, starting on a Tuesday. Since they must be completed on February 29 with only one day's notice, the auctions will be compressed and begin earlier.
In commodities, oil prices posted further losses after a weekly decline as traders awaited fresh clues on global demand and balance in March and beyond. Concerns over Chinese demand continue to weigh on oil prices, as do worries that interest rates could remain high for longer. Other commodity prices also remain under pressure, such as iron ore, which is trading at its lowest level since October.
👁 ROB'S MARKET OVERVIEW:
February 26, 2024
🌐/🇺🇸 Global Markets ➡️/↗️ (positive momentum in US remaining supporting global stocks)
Cyclical Stocks ➡️/↗️
Tech/Growth Stocks ↕️/↗️ (more mixed but overall more gains as long as Nvidia / big tech can edge higher)
Financial Stocks ➡️/↗️
Defensive Stocks ➡️/↗️ (defensive stocks with catch-up potential)
Energy Stocks ↘️/➡️ (Energy stocks with catch-up potential, but remain weak for the time being)
Materials Stocks ↘️
💱 Forex
EUR ↘️/↗️/➡️ (remains slightly overbought)
CHF, GBP ↗️/➡️
USD, JPY, CAD ➡️ (mostly sideways for today more action later this week (USD))
AUD ↘️/➡️/↗️ (stabilizing during US trading)
⚒ Commodity Markets ↕️
Oil prices ➡️/↘️
Natural Gas prices ↕️
Metal prices ↘️
Gold ➡️ ($2,030 – $2,035 remains key-range for most of today)
⚡️Cryptos ➡️/ (hovering near $51K; overall still bullish towards Bitcoin halving in April)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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