We see Wall Street struggling to find its direction as central banks continue to try to reduce rate cut optimism. Markets in Asia closed weaker at the start of the week and Europe is also struggling to hold on to recent strong gains.
The dollar remained broadly stable, although US government bond yields continued to fall after last week's sharp decline. Meanwhile, central bankers from the ECB, such as Governing Council member Bostjan Vasle, or the Fed, such as New York Fed President John Williams, are pushing for rate cuts. ECB President Lagarde even says that interest rate cuts are not yet on the table.
I believe that investors continue to believe that rate cuts are imminent and more likely as early as H1/2024, even if the exact timing is still uncertain. The Bank of Japan is the next central bank to announce its interest rate decision (tomorrow). It is unlikely that the BoJ will make any significant changes as the Japanese central bank is currently under less pressure than it has been in recent weeks.
Overall, we see less volatility and a decline in trading volumes. However, gold was able to gain (further) today. The oil price also gained as the major shipping routes through the Red Sea were closed following the escalating attacks on merchant ships. Despite an improving macroeconomic environment (for cryptocurrencies), Bitcoin saw further profit-taking (it is now trading at $41,000).
I expect the optimism to remain and continue until early 2024. However, volatility and trading volumes will decrease from here on. On the data front, inflation data will take center stage this week.
👁 ROB'S MARKET OVERVIEW:
December 18, 2023
🌐/🇺🇸 Global/US Markets ↕️/↗️
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↕️/↗️
Financial Stocks ➡️
Defensive Stocks ➡️/↗️
Energy Stocks ↗️/➡️
Materials Stocks ➡️
💱 Forex
CHF ↗️
EUR, AUD, CAD ↗️/➡️
USD ↘️/➡️
GBP, JPY ↘️ (with JPY seeing some headwinds before BoJ rate decision)
⚒ Commodity Markets ↕️
Oil prices ↗️/↕️ (Profits due to supply disruptions in the Red Sea)
Natural Gas prices ↕️/↗️ (still oversold)
Metal prices ↕️
Gold ➡️/↗️ (remains bullish as yields / rate cut hopes remain)
⚡️Cryptos ↘️/↕️ (hope for rapid gains decreased)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
