After a bumpy start to 2024, the markets took a breather on Thursday. US equity futures are trading slightly higher and European equities are also up – but only due to likely short-term gains in defensive and energy stocks. We also see yields continue to rise, showing that markets are uncertain whether the optimistic rate cut hopes are justified.
Apple continues to lose value and Piper Sandler is also concerned about Apple's slowing growth and stretched valuation. Oil prices rose slightly due to temporary supply bottlenecks in Libya and conflicts in the Middle East. However, concerns about weak economic growth will weigh on commodity prices.
European inflation data will be closely monitored, as there are signs that the recent rapid disinflation slowed in December – which is not unusual due to the Christmas shopping season. The main focus will be on the US labor market reports – especially after ADP employment change has already been reported higher than expected. Tomorrow's NFP data will be crucial.
The Fed's meeting minutes, which initially brought nothing new, contributed to market sentiment but once again showed that the Fed will not cut interest rates as much in 2024 as the markets are pricing in.
The USD corrected after recent strong gains – but I see the USD remaining in demand as I expect mostly robust US labor market data. The JPY remains weak as expectations rise that the Bank of Japan will keep negative interest rates for longer and non-Japanese bond yields rise.
I expect mixed markets to move sideways today, but investors will remain cautious ahead of tomorrow's labor market data, which will reinforce expectations that the Fed is in no hurry to cut rates. There could be some light buying, but I do not expect a significant rally and instead expect losses – especially towards the end of the day.
👁 ROB'S MARKET OVERVIEW:
January 04, 2024
🌐/🇺🇸 Global/US Markets ↗️/➡️/↘️ (some dip buying, but markets turning cautious again towards end of US session)
Cyclical Stocks ↗️/➡️
Tech/Growth Stocks ↕️/↘️
Financial Stocks ➡️/↘️
Defensive Stocks ➡️/↗️
Energy Stocks ↗️/↘️ (Oil price shock temporary)
Materials Stocks ↘️/➡️
💱 Forex
CAD ↗️/➡️
USD ↘️/↗️ (USD sell-off short-lived as US Treasury yields likely to rise further)
AUD ↗️/↘️
GBP, EUR ↗️/↘️ (early strong gains with profit taking especially as USD rises)
CHF ➡️/↘️ (remain under pressure from rising yields of non-Swiss bonds)
JPY ↘️ (remain under pressure from rising yields of non-Japanese bonds; rising expectations of no change by BoJ)
⚒ Commodity Markets ↕️
Oil prices ↗️/↕️/↘️
Natural Gas prices ↗️/↕️
Metal prices ↘️
Gold ➡️/↘️ (falling again if yields rise again)
⚡️Cryptos ↕️ (volatility due to concerns of no approval for Bitcoin ETF / higher yields)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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