Global stocks are trading lower at the start of the week with overall limited trading volume. Also Wall Street points to a subdued opening after data showed a sharp drop in industrial profits in China, adding to investor concerns about the country's sluggish economy. Nasdaq futures slipped as much as 0.5% before recouping the loss and trying to move back to/above 16000. Europe's broad Stoxx 600 index trades similarly – slightly down at the start of the week.
Yields are also little changed after bonds briefly hit their highest level in more than a week. Gold climbed to a six-month high, while the dollar fell 0.1%. The general trend of a weakening USD and falling yields (resulting in an improving environment for gold) results.
Chinese industrial company profits rose at a much slower pace in October, pointing to continued weakness in the world's second largest economy. Economic data from Europe in the previous week also showed strong signs of more and prolonged weakness. New economic data from the US and Europe will be released this week. Given that investors are so LONG in the markets, which also triggered the current bull market, it's hard to imagine what investors would like to see to push the rally further up. It's likely that signs of economic and consumer demand slowdown rises.
The current optimism is build by the belief that further interest rate hikes by the Federal Reserve and the European Central Bank are unlikely and that rate cuts will come early next year – a very optimistic view. We see very little volatility with the VIX index, known as Wall Street's fear gauge, at the lowest level since January 2020 last week. It shows that the current rally is exhausting.
Signs of a soft landing, however, could help to push Wall Street a bit higher but the list of risks increase, including more signs that China's brief recovery signs are fading already. China's weak economy limits gains in the region and will also weigh on markets in Europe.
Gold closed above $2,000/oz on Friday, marking a second weekly rise and boosting confidence that higher prices are warranted. We expect gold to remain bullish as yields continue to slide and economic data weakens. Oil prices point to another day of losses as traders looked ahead to this week's postponed OPEC+ meeting and signs of an ongoing supply surplus as well as a slow oil demand increase.
We will see markets mostly in sideways movement today – we expect slight profit taking but no strong movements.
👁 ROB'S MARKET OVERVIEW:
November 27, 2023
🌐/🇺🇸 Global/US Markets ➡️/↘️ (mild profit taking)
Cyclical Stocks ↕️
Tech/Growth Stocks ➡️/↘️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ➡️/↘️
Materials Stocks ↘️
GBP ➡️/↗️ (slighty bullish due to still high UK inflation)
USD, EUR ➡️
⚒ Commodity Markets ↕️/↘️ (headwinds on China weakness)
Oil prices ↘️ (remains bearish, will see occasional recovery attempts)
Natural Gas prices ↘️
Metal prices ➡️/↘️
Gold ➡️/↗️ (remains bullish after breaking $2,000)
⚡️Cryptos ↘️/➡️ (remains mostly in sideways for now but bitcoin overall remains bullish)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)