Despite forceful warnings from analysts and muted trading as markets wait for more US data, we see the recent rally to return as we have expected. Stocks in Europe are slightly positive – the DAX continues to outperform and reach a new ATH.
Concerns about slowing earnings and too high valuations continue to weigh on market sentiment. The recently strong USD has also weighed on Wall Street but we see the USD given back further recent gains against its peers with also US Treasury yields slightly lower for the day.
Durable goods orders came above expectations – showing again that most analysts continue to underestimate the resilience of the US economy and more over the US consumer. However, I agree that the markets need yet another strong earnings season to push stocks another leg higher from here. On the other hand, the outlook for rate cuts by the Fed and other central banks continue to provide a tailwind as it means financial conditions will improve later this year.
However, we can continue to see equities outside the US catching up with the strong gains we have seen on Wall Street in particular. This could accelerate as interest rate cuts in Europe are probably closer than in the US. Equities in Asia are also undervalued.
Overall, we will continue to see very subdued trading activity, but I expect investors to return to equities (including in the US). We see markets rising across the board in the US, with growth/tech stocks outperforming and leading the S&P 500 higher.
The generally improved risk sentiment is also reflected in commodity prices: Oil and industrial metals prices have risen recently. I expect this trend to continue – although a temporarily stronger USD will then give it a pause – but the outlook for commodity prices remains bullish. We continue to expect the energy sector to outperform and materials to trade at a discount. The recent outperformance of cryptocurrencies – although triggered by the opening of a marketplace for Bitcoin and Ether ETNs by the LSE – also shows an overall positive risk sentiment.
Oil prices remain on an upward trend – supported by rising expectations of a supply deficit, signs of higher global demand and ongoing global tensions. Global tensions, increasing uncertainty about how much further equity prices can rise and the prospect of interest rate cuts are keeping gold on the upswing.
👁 ROB'S MARKET OVERVIEW:
March 26, 2024
🌐/🇺🇸 Global Markets ↗️/➡️
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️/➡️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ↗️
Materials Stocks ➡️
💱 Forex
AUD, CAD ↗️
EUR ↗️/➡️ (recovering from over-selling)
USD ➡️ (little changed – but will likely see some gains towards THU)
GBP ➡️ (remains rather bearish, but benefits from rebound gains after recent weakness)
JPY ➡️/↘️
CHF ↘️
⚒ Commodity Markets ↗️/↕️
Oil prices ↗️ (oil remains bullish)
Natural Gas prices ↗️/↕️ (short-term recovery gains after recent sharp selling)
Metal prices ↘️/↕️ (slight selling after recent gains; commodities remains slightly bullish)
Gold ↗️/↕️ (gold to remain bullish – may see slight headwinds if USD strength returns)
⚡️Cryptos ↕️ (volatile – risk of (sudden) profit taking increases)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
