InvestMacro

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) added 1.18%. The S&P 500 Index (US500) jumped 2.11% yesterday. The NASDAQ Technology Index (US100) closed positively at 2.96%. The S&P 500 (US500) and Dow Jones (US30) set new record highs, while the NASDAQ (US100) set a weekly high. Nvidia (NVDA) rose more than 16% to a record high on Thursday, leading a rally in the chip market after its quarterly earnings results released on Wednesday showed an explosive rise in demand for its artificial intelligence computing hardware.

Hawkish comments from policymakers failed to stop the indices from rising yesterday. Fed spokesman Christopher Waller said Thursday that the Fed should hold off on cutting rates for at least a couple more months to ensure the January inflation report was a fluke and that the Fed is still moving toward its inflation target. He added that acting too soon could squander the central bank’s gains in fighting inflation and cause significant damage to the economy. Fed Vice Chairman Jefferson agreed. He said that the Fed should be on guard against cutting interest rates too much in response to falling inflation because “excessive easing could cause progress in restoring price stability to stall or backslide. In addition, Philadelphia Fed President Harker cautioned against expecting interest rate cuts “right now and immediately” and said the biggest risk is cutting rates too quickly. Markets estimate the odds of a 25 bps rate cut at 6% for the March 19-20 FOMC meeting and 29% for the April 30-May 1 meeting.

Today, in the US, the minutes from the January FOMC meeting will be released. Investors will be looking for clues on the timing of the first-rate cut. Traders and investors have heard several Fed officials speak since the January meeting, and most preached patience with rates, warning against a premature cut, citing the strength of the US economy. If the minutes strike the same tone, given that the market is still pricing four rate cuts this year while the Fed has signaled only three, the dollar could get a boost. This would hurt stock indices and precious metals.

The latest economic data showed that US weekly jobless claims unexpectedly fell by 12,000 to a 5-week low of 201,000, indicating a strengthening labor market versus expectations of a rise to 216,000. The S&P Manufacturing PMI for February rose by 0.8 to a 17-month high of 51.5, stronger than expectations of no change at 50.7. US home sales for January rose by 3.1% to a 5-month high of 4.00 million, stronger than expectations of 3.97 million.

Canadian consumers sharply reduced their spending in January following stronger-than-expected retail purchases late last year. According to Statistics Canada’s preliminary estimate released Thursday, retail receipts fell by 0.4%, the biggest decline since March 2023. This followed a 0.9% jump in December. While this data points to strong consumer spending at the end of last year, the sharp decline in January suggests some weakness, especially amid rapid growth in Canada’s population due to immigration. The slowdown in retail consumption is expected to continue as more households renew their mortgages at higher interest rates this year.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 1.47%, France’s CAC 40 (FR40) gained 1.27% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.31% on Thursday, and the UK’s FTSE 100 (UK100) closed positive 0.29%.

Eurozone January CPI declined to 2.8% y/y from 2.9% y/y in December, matching expectations. Core CPI for January was 3.3% y/y, unchanged from December, which was in line with expectations. The report on the ECB’s January 24-25 meeting was hawkish as policymakers said the risk of cutting interest rates too early is more dangerous than cutting too late. Swaps estimate the odds of a 25 bps ECB rate cut at 3% at the next meeting on March 7 and 29% at the April 11 meeting.

Germany’s economy contracted by 0.3% in the final quarter of 2023 after two consecutive periods of stagnation. Europe’s largest economy has been hit by rising prices, higher borrowing costs, and weak external demand, especially in the manufacturing and construction sectors.

Asian markets also rose yesterday. Japan’s Nikkei 225 (JP225) gained 2.19% for the day, China’s FTSE China A50 (CHA50) added 0.50%, Hong Kong’s Hang Seng (HK50) ended Thursday up 1.45%, and Australia’s ASX 200 (AU200) ended the day positive 0.04%.

Singapore’s annual inflation rate unexpectedly fell to 2.9% in January 2024 from 3.7% in December, well below market forecasts of 3.8%. This marked the lowest inflation rate since September 2021.

Malaysia’s annual inflation rate in January 2024 stood at 1.5%, unchanged for the third consecutive month and at its lowest level since February 2021. The data was slightly below market forecasts of 1.6% amid declines in the cost of clothing (0.2% vs. unchanged in December) and communication services (2.4% vs. 3.7%). At the same time, prices continued to rise for food (2.0% vs. 2.3%), housing (2.0% vs. 1.6%), and transportation (0.7% vs. 0.3%).

S&P 500 (US500) 4,981.80 +6.29 (+0.13%)

Dow Jones (US30) 38,612.24 +48.44 (+0.13%)

DAX (DE40)  17,118.12 +49.69 (+0.29%)

FTSE 100 (UK100) 7,662.51 −56.70 (−0.73%)

USD Index  103.87 −0.13 (−0.13%)

• – US FOMC Member Cook Speaks at 00:00 (GMT+2);
• – US FOMC Member Kashkari Speaks at 00:00 (GMT+2);
• – Singapore Consumer Price Index (m/m) at 07:00 (GMT+2);
• – German GDP (q/q) at 09:00 (GMT+2);
• – Switzerland Employment Rate (m/m) at 09:30 (GMT+2);
• – German IFO Business Climate (m/m) at 11:00 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) was up 0.13%. The S&P 500 Index (US500) added 0.13% yesterday. The NASDAQ Technology Index (US100) closed negative 0.32%. Liquidation of long positions in high-yielding artificial intelligence (AI) technology stocks weighed on the overall market on Wednesday ahead of NVIDIA Corporation’s (NVDA) earnings release. But NVDA shares jumped more than 10% in late trading after its quarterly earnings beat forecasts, and the chipmaker predicted better-than-expected revenue in the next quarter.

Minutes from the January 30-31 FOMC meeting proved hawkish, as it said most participants noted the risks of easing policy too quickly and stressed the importance of carefully evaluating incoming data to judge whether inflation is steadily easing to 2%. Fed spokeswoman Bowman said yesterday that given the current economic environment, the time for the Fed to cut interest rates is definitely not now.

FRB Richmond President Barkin also noted that recent economic data suggest that price pressures in some sectors are still too great despite an improving overall inflation picture. But despite the hawkish nature of the remarks, markets reacted calmly, suggesting that investors have postponed their rate cut expectations until later.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.29%, France’s CAC 40 (FR40) gained 0.22%, Spain’s IBEX 35 (ES35) jumped by 0.69% on Wednesday, and the UK’s FTSE 100 (UK100) closed negative 0.73%. Following their global peers, European equity markets opened higher on Thursday as an encouraging earnings report from chip giant Nvidia boosted investor confidence. Investors also overlooked the latest Federal Reserve meeting minutes, which indicated the central bank would delay interest rate cuts.

British economists at Pantheon Macroeconomics revised their forecast for the Bank of England’s first June rate cut since May. This adjustment is due to the strategic timing of allowing the Monetary Policy Committee (MPC) to consider additional economic data before making a decision. In particular, waiting until June will allow the MPC to review April labor market data, reflecting the impact of the National Living Wage (NLW) increase on wages.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.26% for the day, China’s FTSE China A50 (CHA50) added 2.19%, Hong Kong’s Hang Seng (HK50) increased by 1.57% on the day, and Australia’s ASX 200 (AU200) was negative 0.66% on the day.

Nvidia’s share gains spilled to Asian chipmaker stocks as strong results and guidance suggested increased demand for artificial intelligence developments. Japan’s Advantest Corp. and Taiwan’s TSMC (NYSE: TSM), both suppliers to Nvidia, rose by 4.7% and 1.2%, respectively. The rise in shares of leading tech companies led Japan’s Nikkei 225 Index (JP225) to jump 1.8% to a record intraday high of 39,001.50 points, breaking the 1989 peak that preceded the deflation of Japan’s huge speculative bubble in the 1990s. But it should be noted that the Bank of Japan’s ultra-soft stance has been one of the main drivers of the rally in Japanese stocks in recent months.

Broader Asian stocks are trading weaker. After seven straight sessions of gains, Chinese stocks were weak on Thursday, as much of the rebound was driven by heavy-handed government restrictions. Beijing banned institutional traders from building sell positions near the market’s open and close.

Australian economists moved their forecasts for the start of the Reserve Bank’s (RBA) easing cycle, reflecting a slight reduction in inflation estimates and bringing them in line with current money market prices. Under the new forecasts, the RBA will cut the money rate by a quarter percentage point to 4.1% in the third quarter of 2024. Judo Bank’s Australian manufacturing PMI fell to 47.7 in February 2024 from 50.1 a month earlier, flash data showed. This was due to a significant drop in new orders, which led to a downturn in production. High interest rates and difficult manufacturing conditions weakened demand, leading to the sharpest decline in output since May 2020. Employment and purchasing activity fell accordingly.

S&P 500 (US500) 4,981.80 +6.29 (+0.13%)

Dow Jones (US30) 38,612.24 +48.44 (+0.13%)

DAX (DE40)  17,118.12 +49.69 (+0.29%)

FTSE 100 (UK100) 7,662.51 −56.70 (−0.73%)

USD Index  103.87 −0.13 (−0.13%)

• – Australia Manufacturing PMI (m/m) at 00:00 (GMT+2);
• – Australia Services PMI (m/m) at 00:00 (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – German Services PMI (m/m) at 10:30 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone ECB Monetary Policy Meeting Minutes at 14:30 (GMT+2);
• – Canada Retail Sales (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US Services PMI (m/m) at 16:45 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (GMT+2);
• – US Natural Gas Reserves (w/w) at 17:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+2);
• – New Zealand Retail Sales (m/m) at 23:45 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

The Dow Jones Index (US30) was down 0.17% at the close of the stock market yesterday. The S&P 500 Index (US500) lost 0.60%. The NASDAQ Technology Index (US100) closed negative 0.92%. The broad market was under pressure yesterday as weakness in chip maker stocks led to a decrease in the technology sector. Shares of Nvidia (NVDA) fell more than 5%, leading to a decline in technology sector stocks ahead of Wednesday’s fourth-quarter earnings results.

Tesla (TSLA) shares fell more than 3% after Phillip Securities downgraded the stock to “neutral.” Airbnb (ABNB) is down more than 3% after Phillip Securities downgraded the stock to “neutral” from “buy”. Caterpillar (CAT) is down 1% after Evercore ISI downgraded the stock to “neutral” from “buy”. Walmart (WMT) is up over 4%, leading the Dow Jones Industrials, after the company reported Q4 comparable sales rose by 3.9%, which was stronger than the consensus forecast of 3.2%.

Today, in the US, the minutes from the January FOMC meeting will be released. Investors will be looking for clues on the timing of the first-rate cut. Traders and investors have heard several Fed officials speak since the January meeting, and most preached patience with rates, warning against a premature cut, citing the strength of the US economy. If the minutes strike the same tone, given that the market is still pricing four rate cuts this year while the Fed has signaled only three, the dollar could get a boost. This would hurt stock indices and precious metals.

Canada’s annual inflation rate for January 2024 fell to 2.9%, the lowest since June, from 3.4% the previous month and well below market expectations of 3.3%. The result marked a sharp reversal from the significant reading in December, renewing hopes for disinflation in the Canadian economy and strengthening the case for more easing measures from the Bank of Canada (BoC) on rising growth concerns.

Equity markets in Europe traded yesterday without a single dynamic. Germany’s DAX (DE40) was down 0.14%, France’s CAC 40 (FR40) was up 0.34%, Spain’s IBEX 35 (ES35) jumped 0.94% on Tuesday, and the UK’s FTSE 100 (UK100) closed negative 0.12%.

The latest ECB report showed that Eurozone wage growth slowed to 4.5% in the final quarter of last year from a record 4.7% in the previous period. This confirmed market expectations that while wage growth has peaked, it is still well above the level consistent with 2% inflation. ECB President Christine Lagarde recently said she prefers to wait for the outcome of the first quarter wage agreement before considering a rate cut. Other policymakers have supported the cautious sentiment for monetary easing, suggesting that rate cuts are possible this year but refraining from giving a specific timeline for such moves.

The Swiss National Bank (SNB) may start cutting its benchmark discount rate in the year’s first half, including possibly a March cut. The SNB also increased its foreign exchange reserves for the second consecutive month in January, indicating a recovery from a prolonged decline over the past two years that has seen reserve levels hit seven-year lows.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.28% for the day, China’s FTSE China A50 (CHA50) added 0.03%, Hong Kong’s Hang Seng (HK50) increased by 0.57% on Tuesday, and Australia’s ASX 200 (AU200) was negative 0.08% on the day. Hong Kong stocks (HK50) soared to a seven-week high of 16,615 in Wednesday morning trading, rising for a second straight session, amid rising bets that China’s central bank may go for more policy easing this year after a record cut in the main 5-year lending rate on Tuesday, as policymakers seek to support economic growth. Economists say China’s increased stimulus could boost its growth and positively impact the global economy.

Japan’s trade deficit narrowed sharply to JPY1,758.311 billion in January 2024 from JPY3,506.43 billion in the same period of the previous year. Exports rose by 11.9% Y/Y to JPY7,332.65 bln, the highest in 14 months, helped by strong demand from the US and China. Meanwhile, imports fell 9.6% YoY to JPY9,090.97 bln, marking the tenth consecutive month of decline driven by lower energy prices. The Tankan sentiment index for manufacturers in Japan fell sharply to negative 1 in February 2024 from plus 6 in January, adding to fears of a further economic slowdown.

Australian wages rose by 4.2% year-on-year in the fourth quarter, beating forecasts for a 4.2% increase and the highest since the first quarter of 2009. Wage growth tends to be accompanied by rising inflation figures. This could eventually lead to the Reserve Bank of Australia (RBA) holding rates for longer than forecast.

S&P 500 (US500) 4,975.51 −30.06 (−0.60%)

Dow Jones (US30) 38,563.80 −64.19 (−0.17%)

DAX (DE40)  17,068.43 −23.83 (−0.14%)

FTSE 100 (UK100) 7,719.21 −9.29 (−0.12%)

USD Index  104.00 −0.08 (−0.07%)

• – Japan Trade Balance (m/m) at 01:50 (GMT+2);
• – Australia Wage Price Index (m/m) at 02:30 (GMT+2);
• – US FOMC Member Bostic Speaks at 15:00 (GMT+2);
• – US FOMC Member Bowman Speaks at 20:00 (GMT+2);
• – US FOMC Meeting Minutes at 21:00 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

Due to a bank holiday, the US stock market was not trading on Monday.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) lost 0.15%, France’s CAC 40 (FR40) gained 0.01% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.59% on Monday, and the UK’s FTSE 100 (UK100) closed positive 0.22%. The FTSE 100 Index gained momentum and closed at 7730 on Monday, its highest level all year. Investors are gearing up for the week ahead as key data such as the flash Eurozone PMI and final inflation data will be released. The market also looks forward to the Fed and ECB meeting minutes and semiconductor giant Nvidia Corp’s (NVDA) earnings report.

Silver (XAGUSD) prices are trading around $23 an ounce, moving away from the seven-week high of $23.4 an ounce reached on February 16, as traders continue adjusting their bets on a Fed rate cut. Upcoming FOMC meeting minutes and statements from Fed officials will provide more clues as to when the first rate cut may occur. Originally expected to be cut in March, there is now a 53% chance of a 25 bps rate cut in June. Silver prices are expected to rise this year thanks to a weaker dollar and lower Treasury bond yields as the Fed moves to looser monetary policy.

On Tuesday, Brent crude oil prices held near three-week highs above $83 a barrel as heightened geopolitical tensions in the Middle East continue to raise supply concerns. The Houthi rebel group in Yemen launched fresh strikes on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more ships hit by drone strikes or missiles since Friday. Investors were also cheered by strong travel data from China, a significant importer of crude oil.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.04% for the day, China’s FTSE China A50 (CHA50) was up 0.82% after the holidays, Hong Kong’s Hang Seng (HK50) lost 1.13% on Monday, and Australia’s ASX 200 (AU200) was positive 0.09% on the day.

The offshore yuan (CNY) is holding near 7.20 per dollar as investors reacted to the central bank’s latest decision. The People’s Bank of China (PBoC) cut its main five-year lending rate by 25 basis points to 3/95%, beating forecasts for a 15 bps cut. It was the most aggressive cut since this rate was introduced in 2019 as China continues to struggle with a sluggish economic recovery. Meanwhile, the PBoC left the one-year lending rate unchanged at 3.45%. Earlier this week, investors were cheered by strong travel data from China during the Lunar New Year celebrations, which exceeded pre-New Year’s Eve levels this year.

The Australian dollar fell to $0.652, pulling back from two-week highs, as investors digested the latest central bank meeting minutes. The Reserve Bank of Australia’s (RBA) February meeting discussed the possibility of further interest rate hikes but ultimately decided to maintain current monetary settings given signs of moderate inflation. The RBA also indicated it needed more time to see if inflation was returning to target before ruling out the possibility of further rate hikes. Markets expect the central bank to cut interest rates by a total of about 40 basis points this year, with the first move coming in August.

S&P 500 (US500) 5,005.57 0 (0%)

Dow Jones (US30) 38,627.99 0 (0%)

DAX (DE40)  17,092.26 −25.18 (−0.15%)

FTSE 100 (UK100) 7,728.50 +16.79  (+0.22%)

USD Index  104.24 −0.05 (−0.05%)

• – Australia RBA Monetary Policy Meeting Minutes at 02:30 (GMT+2);
• – China PBoC Prime Rate (m/m) at 03:15 (GMT+2);
• – Switzerland Trade Balance (m/m) at 09:00 (GMT+2);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

At Wednesday’s close of the stock exchange, the Dow Jones Index (US30) rose by 0.40%. The S&P 500 Index (US500) was up 0.96%. The NASDAQ Technology Index (US100) closed positively at 1.30%.

Chicago Fed Chairman Goolsbee stated yesterday that even if inflation is slightly higher for a few months, it would still be consistent with a path back to target. He added that the Fed’s current policy is pretty restrictive and said that he doesn’t support the idea of waiting until inflation hits 2% in 12 months to start cutting interest rates. That raised the odds that the Fed could begin cutting rates this spring. Markets estimate the odds of a 25 bps rate cut at 14% for the March 19-20 FOMC meeting and 46% for the April 30-May 1 meeting.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 0.38%, France’s CAC 40 (FR40) gained 0.68% yesterday, Spain’s IBEX 35 (ES35) declined 0.09%, and the UK’s FTSE 100 (UK100) closed positive 0.75%.

Eurozone industrial production for December unexpectedly rose by 2.6% m/m, beating expectations of 0.2% m/m and the most significant increase in 16 months.

ECB Vice President Guindos said yesterday that it would take some time before the ECB has the necessary information to confirm that inflation is steadily returning to our 2% target. His colleague, ECB Governing Council representative Makhlouf, added that the short-term outlook for the Eurozone economy points to stagnation amid tightening financing conditions, weak business and consumer confidence, and weak foreign demand. Swaps put the odds of an ECB rate cut at 25 bps at 8% at the March 7 meeting and 55% at the April 11 meeting.

Silver gained support on Wednesday after Eurozone industrial production unexpectedly rose rapidly in 16 months, a positive for industrial metals demand. Gold also gained support as an inflation hedge after the US 10-year breakeven inflation rate rose to a 3-week high on Wednesday.

WTI crude futures fell as low as $76 a barrel on Thursday, extending losses from the previous session as official data showed that US oil inventories rose by about 12 million barrels last week, the highest in three months. The latest figure also exceeded market expectations for a 2.56 million barrel rise in inventories and raised demand concerns in the world’s largest oil consumer. Meanwhile, OPEC’s latest report forecasts global oil demand growth in 2024 and 2025, contrasting with more conservative estimates from other sources.

Asian markets traded mixed on Wednesday. Japan’s Nikkei 225 (JP225) was down 0.69% for the day, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) was up 0.84%, and Australia’s ASX 200 (AU200) ended the day negative 0.74%.

Japan’s economy unexpectedly contracted 0.4% year-on-year in the fourth quarter of 2023, falling short of market forecasts that expected 1.4% growth. It was the first decline in five years amid high inflation and an uncertain global economic outlook.

Traders are looking to add new positions on Chinese indices after Chinese authorities said the country’s holiday season could witness a record 9 billion domestic passenger trips this week. Meanwhile, Beijing has taken a dozen steps since January to cushion the rout in China’s stock market while supporting weak demand in the real estate market amid the lingering real estate crisis.

The Australian dollar held below $0.65 in a weak market reaction as weak employment data reinforced a dovish view of the country’s monetary policy. Australia’s unemployment rate rose to a two-year high of 4.1% in January, and employment increased by just 500, while analysts had expected 30,000 new jobs. The Reserve Bank of Australia is expected to cut interest rates by a total of about 40 basis points this year, with the first move coming in August. Earlier this week, RBA Governor Michele Bullock said inflation didn’t need to slow to 2.5% before the central bank would consider cutting the money rate. However, she emphasized that the central bank remains open to the possibility of a further rate hike in the face of persistent inflation. Expectations for Australian consumer inflation in February 2024 stood at 4.5%, unchanged for the third consecutive month and at its lowest level since January 2022.

S&P 500 (US500) 5,000.62 +47.45 (+0.96%)

Dow Jones (US30) 38,424.27 +151.52 (+0.40%)

DAX (DE40) 16,945.48 +64.65 (+0.38%)

FTSE 100 (UK100) 7,568.40 +56.12 +0.75%)

USD Index 104.71 -0.25 (-0.23%)

• – Japan GDP (q/q) at 01:50 (GMT+2);
• – Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• – Japan Industrial Production (m/m) at 06:30 (GMT+2);
• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Trade Balance (m/m) at 09:00 (GMT+2);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 10:00 (GMT+2);
• – Eurozone Trade Balance at 12:00 (GMT+2);
• – US Retail Sales (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Industrial Production (m/m) at 16:15 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – New Zealand RBNZ Gov Orr Speaks at 20:40 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

US stocks fell sharply on Tuesday after releasing a sharper-than-expected inflation report. At Tuesday’s stock market close, the Dow Jones Index (US30) was down 1.35%. The S&P 500 index (US500) was down 1.37%. The NASDAQ Technology Index (US100) closed negative at 1.80%. In the United States, the annual inflation rate eased to 3.1%, beating expectations of 2.9%, while core inflation came in at 3.9% compared to the forecast of 3.7%. Consumer prices rose by 0.3% from the previous month, and core inflation rose by 0.4%, exceeding expectations. The strong inflation report forced investors to revise their expectations for rate cuts by the Federal Reserve in March and May. All key sectors were down, with real estate and technology leading the way as shares of major technology companies such as Microsoft (2.1%), Amazon (2.1%), and Alphabet (1.6%) fell.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) fell by 0.92%, France’s CAC 40 (FR40) decreased by 0.84% yesterday, Spain’s IBEX 35 (ES35) lost 0.59% on Tuesday, and the UK’s FTSE 100 (UK100) closed negative 0.81%.

The ZEW Economic Sentiment Indicator for Germany rose for the seventh consecutive month to 19.9 in February 2024, reaching its highest level in a year and beating market expectations of 17.5 amid hopes that major central banks will start cutting interest rates this year. In addition, German investor morale improved to a one-year high in February, while the assessment of current economic conditions fell to its lowest level since mid-2020. More than two-thirds of respondents expect the ECB to cut interest rates in the next six months due to lower inflation, while nearly three-quarters of respondents predict the US central bank will cut interest rates soon. Swaps put the odds of a 25 bps ECB rate cut at 7% at the next meeting on March 7 and 52% at the April 11 meeting.

The UK unemployment rate for the fourth quarter of 2023 fell to 3.8% from 4.0%. The UK wages rose more than expected in the year’s final quarter, leading investors to cut bets on a rate cut by the Bank of England this year.

The Swiss franc fell to 0.88 per US dollar in February, its lowest in two months, after lower-than-expected inflation data strengthened the case for doves at the Swiss National Bank (SNB). Swiss consumer prices rose 1.3% year-on-year in January, well below market expectations of 1.7% and the lowest in two years, remaining below the SNB’s upper 2% target for the seventh consecutive month. Inflation fell despite repeated calls for stubbornly higher rates as the country scraped electricity subsidies and revised the value-added tax. In turn, this result has raised bets that the SNB may start to cut its benchmark discount rate in the first half of the year, including the possibility of a March cut. The franc was also pressured because the SNB increased its foreign exchange reserves for the second month in a row.

WTI crude oil prices rose to 78 dollars per barrel on Tuesday, hitting a two-week high, as tensions in the Middle East continued to support oil prices. Meanwhile, OPEC maintained its forecasts for sustained growth in global oil demand in 2024 and 2025 and raised its economic growth forecasts for those years, pointing to additional growth potential. In addition, the report noted a 350,000 bpd reduction in OPEC oil production in January following the implementation of a new round of voluntary production cuts by the OPEC+ alliance in the first quarter.

The US natural gas prices fell more than 5.5% to below $1.7/MMBtu, hitting their lowest since July 2020 due to rising production and weak demand. Gas wells pushed production to near-record levels after a sharp cold snap in mid-January.

Asian markets were mostly up on Tuesday. Japan’s Nikkei 225 (JP225) was up 2.89% for the day, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) was also not trading yesterday, and Australia’s ASX 200 (AU200) ended the day negative 0.15% on the day.

The sharp fall in the Japanese yen yesterday prompted Japan’s Finance Minister Shun’ichi Suzuki to warn that authorities were closely monitoring the market without confirming whether they would intervene again. Deputy Finance Minister for International Affairs Masato Kanda also said that Japan would take appropriate action in the foreign exchange market if necessary, as the sharp fall of the yen is not suitable for the economy. The country intervened in the foreign exchange market three times in 2022 when the yen fell to a 32-year low of 152 per dollar but has taken no further action since then.

S&P 500 (US500) 4,953.17 −68.67 (−1.37%)

Dow Jones (US30) 38,272.75 −524.63 (−1.35%)

DAX (DE40) 16,880.83 −156.52 (−0.92%)

FTSE 100 (UK100) 7,512.28 −61.41 (−0.81%)

USD Index 104.85 +0.68 (+0.65%)

• – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK Producer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 17:00 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets 

At Monday’s stock market close, the Dow Jones (US30) index was up 0.33% and set a new all-time high. The S&P 500 index (US500) was down 0.10%. The NASDAQ Technology Index (US100) closed negative 0.30%. Ahead of the monthly US consumer price report, equities were pressured by long-position liquidation.

Fed Chair Bowman’s hawkish comments on Tuesday also weighed on stocks when she stated that current interest rates are in a good place to maintain downward pressure on inflation and that she does not believe a Fed rate cut is appropriate in the near term.

Today, the US will release its consumer inflation (CPI) report. On an annualized basis, overall inflation is expected to fall from 3.4% to 3.1%. Core inflation (which excludes food and energy prices) is forecast to fall from 3.9% to 3.7% y/y. If progress with inflation continues, this will put pressure on the dollar index but will also have a favorable impact on stock indices and the precious metals market (gold and silver). Suppose progress in the fight against inflation stalls or develops less favorably than expected. In that case, the US Treasury yields will likely jump as traders abandon bets on the sharp rate cuts scheduled for this year and push back the expected start date of the Fed’s easing cycle. Such an outcome would have to be favorable for the US dollar soon and hurt risk assets (euro, British pound, stock indices, and gold).

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose 0.65%, France’s CAC 40 (FR 40) gained 0.55% yesterday, Spain’s IBEX 35 (ES35) jumped 0.89% on Monday, and the UK’s FTSE 100 (UK100) closed positive 0.02%.

The European Central Bank does not need to weaken the eurozone economy further to bring inflation under control as demand is still weak, ECB board spokesman Piero Cipollone said on Monday. These comments contrast with other more hawkish remarks from ECB officials. Currently, swaps are priced at a 25 bps chance of an ECB rate cut of 11% at the next meeting on March 7 and 60% at the April 11 meeting.

WTI crude futures hit around $77 a barrel on Tuesday, near their highest levels in two weeks, as heightened geopolitical tensions in the Middle East continue to support oil prices. On Monday, Israel launched airstrikes on the southern Gaza city of Rafah after Israeli Prime Minister Benjamin Netanyahu rejected a ceasefire offer from Hamas. However, diplomatic talks in Beirut indicate possible progress in reducing tensions between Israel and Hamas. Meanwhile, uncertainty on the demand side could limit oil price gains as inflation risks could delay interest rate cuts by the Federal Reserve.

Most markets in the Asia-Pacific region, including China, Hong Kong, Japan, South Korea, and Singapore, were closed for holidays. Australia’s ASX 200 (AU200) ended the day positively, 0.06%.

Inflation expectations in New Zealand reached the lowest level in 2 years at 2.5% in the first quarter of 2024. But overall sentiment remained unfavorable after RBNZ Governor Adrian Orr told a parliamentary committee on Monday that the current inflation rate of 4.7% is still too high and money rates should stay at restrictive levels. The statement came amid the central bank’s preparations for its first policy meeting of the year in late February.

The NAB Australia Business Confidence Index rose to 1 in January 2024 from an upwardly revised zero in the previous month but remained below its long-term average. The improvement in the index was mainly in manufacturing and construction, while sentiment in wholesale and retail trade declined. The Westpac-Melbourne Institute of Australia’s consumer sentiment index jumped 6.2% to 86 in February 2024 from 81 in January, the highest in 20 months, amid lower inflation and optimism that the Reserve Bank of Australia has ended its tightening campaign.

S&P 500 (US500) 5,021.84 −4.77 (−0.10%)

Dow Jones (US30) 38,797.38 +125.69 (+0.33%)

DAX (DE40)  17,037.35 +110.85 (+0.65%)

FTSE 100 (UK100) 7,573.69 +1.11 (+0.02%)

USD Index  104.13 +0.05 (+0.05%)

• – Japan Producer Price Index (m/m) at 01:50 (GMT+2);
• – New Zealand Inflation Expectations (m/m) at 04:00 (GMT+2);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets 

As of Friday’s stock market close, the Dow Jones Index (US30) was down 0.14% (0.32% for the week). The S&P 500 Index (US500) decreased by 0.57% (1.40% weekly). The NASDAQ Technology Index (US100) closed positively at 1.25% (2.41% for the week). Economic optimism rallied shares of chip, cybersecurity, and software makers, leading higher technology stocks. According to Bloomberg Intelligence, about 80% of S&P 500 companies reporting results this cycle beat forecasts well above the 10-year average of 74%.

The US Bureau of Labor Statistics left the core US Consumer Price Index for Q4 unchanged at an annualized rate of 3.3%. Fed comments on Friday were a bit hawkish and supported the dollar at the end of the trading day. Dallas Fed President Logan said she sees no need for additional interest rate adjustments at this time and is confident that the progress being made in inflation will be sustainable over the medium term. Atlanta FRB President Bostic also said that the Fed must “stay the course” to ensure inflation returns to the 2% target. Markets rate the odds of a 25 bps rate cut at 19% for the March 19-20 FOMC meeting and 73% for the next meeting on April 30-May 1.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 0.22% (0.00% change for the week), France’s CAC 40 (FR 40) fell by 0.24% on Friday (down 0.73% week-on-week), Spain’s IBEX 35 (ES35) lost 0.09% on Friday (down 1.50% week-on-week), and the UK’s FTSE 100 (UK100) closed negative 0.30% (down 0.56% week-on-week).

On Friday, ECB Governing Council spokesman Kazaks said that there are now expectations that the ECB may cut interest rates in the spring at its March or April meetings, but that one should not be overly optimistic. Croatian central bank governor Boris Vujcic said there was no rush to cut record-high borrowing costs and that it was better to wait and see if inflation was decisively beaten. Many more ECB chiefs will be in front of the microphone in the coming days. The euro can probably count on additional support if they repeat this statement. Swaps currently estimate the odds of a 25 bps ECB rate cut at 9% at the next meeting on March 7 and 53% at the next meeting on April 11.

Oil prices will remain volatile in the coming days after rising on Friday, up 6% for the week. Bullish for oil prices were comments by Israeli Prime Minister Netanyahu on Thursday when he said Israel could achieve total victory over Hamas within months and rejected any ceasefire talks. A continuation of the war threatens to escalate and widen the conflict across the Middle East, a region that accounts for about a third of global oil production. In addition, Friday’s rally in the S&P 500 Index to a record high showed confidence in the economic outlook, which positively impacted energy demand and crude oil prices.

Asian markets traded mostly higher last week. Japan’s Nikkei 225 (JP225) gained 1.31% for the week, China’s FTSE China A50 (CHA50) jumped by 4.47%, Hong Kong’s Hang Seng (HK50) ended the week up 2.67%, and Australia’s ASX 200 (AU200) ended the week negative 0.71%.

Financial conditions in Japan will remain easy for now even after the Bank of Japan ends its negative rate regime, Bank Governor Kazuo Ueda said late last week. Ueda’s comments were the latest statement from Bank officials, who assured market participants that any end to negative rates would not herald a change in the Bank’s core policy. The International Monetary Fund has supported the BoJ’s cautious approach, recommending gradual rate hikes once inflation becomes sustainable. These dovish statements suggest that the BoJ’s exit from its ultra-low stance is unlikely to result in multiple rate hikes, as has been seen recently in other key economies, but rather limited to a few scattered increases. In theory, this could limit the yen’s recovery potential in the coming months, making it less attractive in yield differentials than its major peers.

The New Zealand dollar continues to rise as currency markets assess further interest rate hikes by the Reserve Bank of New Zealand following last week’s strong labor market data. According to money market pricing, investors now believe there is a 90% chance of a further 25 basis point interest rate hike by May. Markets have postponed the first RBNZ rate cut until November. The RBNZ will, therefore, be one of the last major central banks to cut rates, which will support the New Zealand dollar.

S&P 500 (US500) 5,026.61 +28.70 (+0.57%)

Dow Jones (US30) 38,671.69 −54.64 (-0.14%)

DAX (DE40)  16,926.50 −37.33 (-0.22%)

FTSE 100 (UK100) 7,572.58 −22.90 (-0.30%)

USD Index  104.08 −0.09 (-0.08%)

• – New Zealand RBNZ Gov Orr Speaks at 02:30 (GMT+2);
• – Indian Consumer Price Index (m/m) at 14:00 (GMT+2);
• – US FOMC Member Bowman Speaks at 16:20 (GMT+2);
• – US FOMC Member Kashkari Speaks at 20:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 20:00 (GMT+2).

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.