On Wall Street, the signs are pointing to further gains after a strong rally in tech and chip stocks on Thursday. We see the Nasdaq 100 hitting a new record high as chip stocks continue to be the biggest gainers in pre-market trading.
We see little change in yields after they had continued to rise in previous sessions as the market reassessed the interest rate outlook earlier in the week, driven in particular by hawkish statements from the Federal Reserve, but also by robust US economic data. Comments from Fed officials will continue to be closely watched, but the market has been able to decouple from yields as the strong AI/chip rally we saw in 2023 has returned.
Equities in Europe are only slightly up, with the Stoxx Europe 600 Index trading around 0.2% higher. Asia ended the week on a positive note – thanks in part to gains in chip stocks, particularly TSMC, which rose by more than 6% in Taiwan.
Despite falling rate cut expectations, with swap markets now only expecting around 50% for a rate cut in March, investors are pushing back into mega-cap tech stocks (including the Magnificent Seven) and other chip/AI stocks in particular. Only Tesla disappointed. These same stocks helped the markets perform so strongly in 2023, leading, for example, to the 54% rally in the tech-heavy Nasdaq 100, which is more dominated than ever by mega-cap tech stocks.
Despite the recent rise in yields, gold managed to move slightly higher in its first decoupling from yields this year. I expect this to remain a rather short-lived phenomenon – although gold may benefit if yields fall again. Despite the initial gains in the gold price today, gold is trading lower overall for the week. Oil prices have fallen slightly after rising yesterday due to escalating tensions in the Middle East.
👁 ROB'S MARKET OVERVIEW:
January 19, 2024
🌐/🇺🇸 Global/US Markets ↗️/↕️/↘️ (very volatile; Strong gains of big tech will for now lead to further gain; Likely some profit taking in second half of US trading)
Cyclical Stocks ↗️/↕️/↘️
Tech/Growth Stocks ↗️/↕️
Financial Stocks ↗️/➡️
Defensive Stocks ↗️/➡️
Energy Stocks ➡️/↘️
Materials Stocks ➡️
💱 Forex
AUD, USD ➡️/↗️
EUR, CAD ↗️/➡️
GBP, JPY ➡️/↘️
CHF ↘️
⚒ Commodity Markets ↕️
Oil prices ↕️/↘️/↗️ (potentially slight gains in final hours of Friday trading)
Natural Gas prices ↘️
Metal prices ↗️
Gold ↗️/↕️/↘️
⚡️Cryptos ↘️/➡️ (little drivers that could trigger a bitcoin rally – especially with stocks outperforming)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
