InvestMacro

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.71%. The S&P 500 Index (US500) was down by 0.32%. The NASDAQ Technology Index (US100) closed negative by 0.20%. Stocks came under pressure on Monday as bond yields rose amid hawkish comments from the Federal Reserve and stronger-than-expected economic news.

Economic news out of the US on Monday was hawkish for Fed policy and bullish for the dollar. The January ISM services index rose by 2.9 to a 4-month high of 53.4, exceeding expectations of 52.0. In addition, the January ISM services price sub-index unexpectedly rose by 7.3 to an 11-month high of 64.0, stronger than expectations of a decline to 56.7. Chicago Fed President Goolsbee said yesterday that he needs to see more data showing inflation progress before the Fed starts cutting interest rates.

Minneapolis Fed President Kashkari said the neutral rate will probably rise. That would give the FOMC time to assess upcoming economic data before it starts cutting the federal funds rate, with less risk that too tight a policy would derail the economic recovery.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) decreased by 0.08%, France’s CAC 40 (FR40) fell by 0.03%, Spain’s IBEX 35 (ES35) lost 0.20% on Monday, and the UK’s FTSE 100 (UK100) closed negative by 0.04%.

The PPI report (shows the rate of inflation between factories and plants) in the Eurozone proved to be a dovish factor for ECB policy. ECB Governing Council spokesman Vujcic said that the ECB now needs to be patient before embarking on an easing cycle to make sure that labor costs do not turn into sustained wage pressures.

The Eurozone Producer Price Index for December fell by 10.6% y/y, weaker than expectations of 10.5% y/y. The Sentix Eurozone Investor Confidence Index for February rose by 2.9 to a 10-month high of negative 12.9, stronger than expectations of negative 15.0. German trade data came in below expectations as exports for December fell by 4.6% m/m, weaker than expectations of 2.8% m/m and the biggest decline in a year. Imports for December fell by 6.7% m/m, which was weaker than expectations of 1.9% m/m and was the biggest decline of the year. Swaps estimate the odds of a 25 bps ECB rate cut at 13% at the next meeting on March 7 and 68% at the April 11 meeting.

WTI crude futures rose to around $73 a barrel on Tuesday, extending gains from the previous session amid concerns about escalating tensions in the Middle East that could disrupt oil supplies from the region. Analysts pointed to a series of US strikes against Iranian-backed militias over the weekend, although US officials emphasized that the country was not seeking a wider conflict in the region.

Asian markets traded mixed on Monday. Japan’s Nikkei 225 (JP225) decreased by 0.24% for the day, China’s FTSE China A50 (CHA50) jumped by 1.54%, Hong Kong’s Hang Seng (HK50) closed Monday at its opening price, and Australia’s ASX 200 (AU200) ended the day negative 0.85%. Hong Kong and Chinese stocks rose sharply on Tuesday opening as authorities introduced measures to maintain market stability and halt a sharp sell-off in equities.

The Australian dollar rose to around $0.65, rebounding slightly from 11-week lows after the Reserve Bank of Australia (RBA) left interest rates unchanged as expected but warned that further interest rate hikes were possible due to persistently high inflation. The RBA acknowledged that inflation fell more than expected in the fourth quarter but was undecided on when inflation would return to the 2-3% target. Policymakers added that the path of interest rates will depend on data and the evolving assessment of risks.

S&P 500 (US500) 4,942.81 −15.80 (−0.32%)

Dow Jones (US30) 38,380.12 −274.30 (−0.71%)

DAX (DE40) 16,904.06 −14.15 (−0.08%)

FTSE 100 (UK100) 7,612.86 −2.68 (−0.4%)

USD Index 104.32 −0.14 (−0.13%)

• – Australia Retail Sales (m/m) at 02:30 (GMT+2);
• – Australia RBA Interest Rate Decision at 05:30 (GMT+2);
• – Australia RBA Rate Statement at 05:30 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2);
• – US FOMC Member Mester Speaks at 19:00 (GMT+2);
• – Canada BoC Gov Macklem’s Speech at 20:00 (GMT+2);
• – New Zealand Unemployment Rate (q/q) 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

As of Thursday’s stock market close, the Dow Jones Index (US30) was up by 0.35% (+1.41% for the week). The S&P 500 Index (US500) added 1.07% yesterday (+1.34% for the week). The NASDAQ Technology Index (US100) closed positive by 1.74% (+1.02% for the week).

Friday’s economic news from the US was better than expected and favorable for the dollar. Non-farm payrolls for January rose by 353,000, which exceeded expectations of 185,000 and was the largest increase in a year. The unemployment rate for January was unchanged at 3.7%, indicating a stronger labor market than expectations of an increase to 3.8%. In addition, average hourly earnings for January rose 0.6% m/m and 4.5% y/y, which was stronger than expectations of 0.3% m/m and 4.1% y/y. Finally, the University of Michigan Consumer Sentiment Index for January was revised upward by 0.2 to a 2-year high of 79.0, exceeding expectations of 78.9.

In an interview on the “60 Minutes” program, US Federal Reserve Chairman Jerome Powell indicated that the central bank will be cautious about cutting rates this year and will wait for more evidence that inflation is falling steadily to 2%. He added that the Fed is likely to act much more slowly than the market expects. Traders have now cut bets on a March rate cut to 20% and see total easing this year at 137 basis points, down from 150 basis points at the end of last year.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) gained by 0.35% (-0.04% for the week), France’s CAC 40 (FR40) gained 0.05% on Friday (-0.66% for the week), Spain’s IBEX 35 (ES35) jumped by 0.48% on Friday (+1.25% for the week), and UK’s FTSE 100 (UK100) closed by negative 0.09% (-0.26% for the week).

Trade data from Germany showed a sharper-than-expected decline in both exports and imports in the final month of 2023. The UK unemployment rate fell to 3.9%, the lowest since February through April 2023. A strong labor market could push back the likelihood of a rate cut by the Bank of England, which is favorable for the British currency.

WTI crude futures consolidated above $72 a barrel on Monday after falling sharply last week as investors continued to monitor developments in the Middle East. Oil prices fell more than 7% last week as progress in ceasefire talks between Israel and Hamas eased fears of supply disruptions from the region. Fading expectations of an immediate interest rate cut by the US Federal Reserve and lingering concerns about China’s economic recovery also weighed on the outlook for global demand. Meanwhile, the US said it would take further military action against Iranian-backed groups, raising tensions in the Middle East, though insisting it did not seek a wider conflict in the region.

Asian markets traded mixed last week. Japan’s Nikkei 225 (JP225) was up by 1.46% for the week, China’s FTSE China A50 (CHA50) was down by 3.23%, Hong Kong’s Hang Seng (HK50) ended the week down by 4.32%, and Australia’s ASX 200 (AU200) ended the week positive by 0.87%.

Asian equity markets mostly fell on Monday as strong US jobs data and another Powell rejection further undermined sentiment for a Fed rate cut. Hong Kong and Chinese stocks led the fall even after Chinese regulators vowed to prevent abnormal market swings. China’s overall Caixin PMI for January 2024 was 52.5, down from December’s 7-month high of 52.6, marking the 13th month of growth in private sector activity.

S&P 500 (US500) 4,958.61 +52.42 (+1.07%)

Dow Jones (US30) 38,654.42 +134.58 (+0.35%)

DAX (DE40) 16,918.21 +59.17 (+0.35%)

FTSE 100 (UK100) 7,615.54 −6.62 (−0.09%)

USD Index 103.05 +0.82 (+0.82%)

• – US Fed Chair Powell Speaks at 02:00 (GMT+2);
• – Australia Trade Balance (m/m) at 02:30 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – German Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (GMT+2);
• – US FOMC Member Bostic Speaks 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 ForexTime 

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustMarkets

As of Wednesday’s stock market close, the Dow Jones Index (US30) decreased by 0.82%. The S&P 500 Index (US500) was down by 1.61% yesterday. The NASDAQ Technology Index (US100) closed negative by 2.33%. The S&P 500 (US500) and NASDAQ (US100) indices fell to weekly lows.

As expected, the FOMC maintained the target range for the federal funds rate at 5.25%-5.50% and stated that the risks to employment and inflation targets are becoming more balanced. The FOMC removed mention of possible additional policy tightening but declined to immediately ease monetary policy, saying it did not believe it was appropriate to lower the target range until there was greater confidence that inflation was moving steadily toward 2%. During the press conference, Powell said a rate cut in March was not a base scenario and reiterated a commitment to keep rates at current levels. Markets are discounting the odds of a 25 bps rate cut at the March 19-20 FOMC meeting at 37% and fully discounting (100%) the probability of the same 25 bps rate cut at the April 30-May 1 meeting. Investors now await the weekly jobless claims and PMI reports from ISM on Thursday and the much-anticipated monthly employment report on Friday.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) fell by 0.40%, France’s CAC 40 (FR40) lost 0.27%, Spain’s IBEX 35 (ES35) rose by 0.38% on Wednesday, and the UK’s FTSE 100 (UK100) closed negative by 0.47%.

German Consumer Price Index for January (EU harmonized) declined to 3.1% y/y from 3.8% y/y in December, better than expectations of 3.2% y/y. Germany’s January unemployment change unexpectedly fell by 2,000, indicating a stronger labor market than expectations of an 11,000 increase. The unemployment rate for January was unchanged at 5.8%, indicating a stronger labor market than expectations of 5.9%. German retail sales for December unexpectedly fell by 1.6% m/m, weaker than expectations for a 0.6% m/m increase.

ECB Vice President Gindos said that inflation has been delivering mostly positive surprises lately and will be slightly lower than the ECB’s forecast. Swaps estimate the odds of a 25 bps ECB rate cut at the next meeting on March 7 at 23% and fully discount (103%) the same rate cut at the next meeting on April 11.

Silver prices came under pressure on Wednesday amid weaker-than-expected reports on Chicago’s PMI and China’s manufacturing PMI for January, a negative for industrial metals demand.

WTI crude futures rose above $76 a barrel on Thursday, recovering some of the previous session’s losses amid an improved demand outlook. The IEA executive director recently said that global oil demand is likely to grow by 2 million barrels per day in 2024, well above the previous forecast of 1.24 million barrels per day. Prospects for lower interest rates in major economies and a series of stimulus measures in China, a major oil importer, have also boosted the demand outlook. OPEC+ representatives will meet online today. No changes in production are expected, but we should always be ready for surprises.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) gained 0.74%, China’s FTSE China A50 (CHA50) added 0.52%, Hong Kong’s Hang Seng (HK50) was down by 1.39% on the day, and Australia’s ASX 200 (AU200) was positive by 0.12%.

China’s Caixin manufacturing PMI unexpectedly jumped to 50.8 in January 2024, matching December’s reading but exceeding market forecasts of 50.6. It was the third consecutive month of rising factory activity, contrasting with official data that indicated prolonged weakness.

Japan’s Consumer Confidence Index for January rose by 0.8 to a 2-year high of 38.0, exceeding expectations of 37.5. Japanese industrial production for December rose by 1.8% m/m, weaker than expectations of 2.5% m/m. Retail Sales in Japan for December unexpectedly fell by 2.9% mom, weaker than expectations of 0.2% mom and the biggest decline in 3 years. A summary of the BoJ’s January 22-23 policy meeting said policymakers are getting closer to raising interest rates for the first time since 2007. A BoJ official indicated that conditions for a policy review, including an end to the negative interest rate policy, are being met. Swaps estimate the odds of a 10 bps rate hike from the BOJ at 24% at the next meeting on March 19 and 80% at the April 26 meeting.

Indonesia’s annual inflation rate eased to 2.57% in January 2024 from 2.61% in December, compared with expectations of 2.55%, approaching the midpoint of the central bank’s target of 1.5 to 3.5% for 2024.

S&P 500 (US500) 4,845.65  −79.32 (−1.61%)

Dow Jones (US30) 38,150.30 −317.01 (−0.82%)

DAX (DE40)  16,903.76 −68.58 (−0.40%)

FTSE 100 (UK100) 7,630.57 −35.74 (−0.47%)

USD Index  103.57 +0.29 (+0.28%)

• – Japan Retail Sales (m/m) at  01:50  (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – OPEC+ meeting (m/m) at 12:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
• – UK BoE Interest Rate Decision at 14:00 (GMT+2);
• – UK BoE Monetary Policy Statement at 14:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 14:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 15:45 (GMT+2);
• – Canada Manufacturing PMI (m/m) at 16:30 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2);
• – US Natural Gas Storage (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

The Dow Jones Index (US30) was up by 0.36% as of Tuesday’s stock market close. The S&P 500 Index (US500) decreased by 0.06% yesterday. The NASDAQ Technology Index (US100) closed negative by 0.76%.

The US economic reports released on Tuesday showed a growing US economy, bolstering optimism that the Federal Reserve will be able to provide a soft landing. The January Conference Board US Consumer Confidence Index rose by 6.8 points to a 2-year high of 114.8, matching expectations. In addition, the December JOLTS Job Openings Index unexpectedly rose by 101,000 to 9.026 million, indicating a stronger labor market than expectations of a decline to 8.750 million.

The US Federal Reserve will hold its monetary policy meeting in the US today. The Central Bank intends to keep interest rates unchanged, but the focus will be on any hints about the timing and speed of rate cuts this year. Markets will react to any change in the tone of the FOMC statement. A more dovish tone of the statement will put pressure on government bonds and the US dollar, giving confidence to indices and gold. On the other hand, a cautious tone due to persistent service inflation and data dependence may provoke investors to be overly cautious in the form of a sell-off in equities, especially as indices are at all-time highs.

The US Federal Reserve will hold its monetary policy meeting in the US today. The Central Bank intends to keep interest rates unchanged, but the focus will be on any hints about the timing and speed of rate cuts this year. Markets will react to any change in the tone of the FOMC statement. A more dovish tone of the statement will put pressure on government bonds and the US dollar, giving confidence to indices and gold. On the other hand, a cautious tone due to persistent service inflation and data dependence may provoke investors to be overly cautious in the form of a sell-off in equities, especially as indices are at all-time highs.

General Motors shares rose by 7.8% after the company beat earnings and revenue forecasts and provided a better-than-expected earnings outlook for 2023. Meanwhile, Nvidia shares hit an all-time high of 627.74. Alphabet (GOOG) shares fell by 6% on the report. Alphabet disappointed Wall Street as holiday ad sales came in below expectations, but the company said its spending on servers to power artificial intelligence will increase this year. Microsoft (MSFT) reported second-quarter results Tuesday that beat analysts’ forecasts, as rising demand for artificial intelligence boosted the tech giant’s cloud computing business. But the company’s shares fell by nearly 2% on the report.

The IMF raised its global economic growth forecast for 2024 to 3.1% from 2.9% in October and left its 2025 forecast unchanged at 3.2% amid better-than-expected resilience in the US and several large emerging market and developing economies, as well as fiscal support in China. Growth forecasts for 2024 were revised upward for the US (2.1% vs. 1.5%), China (4.6% vs. 4.2%) and India (6.5% vs. 6.3%), but the institution expects lower growth in the Eurozone (0.9% vs. 1.2%) and Japan (0.9% vs. 1%).

Equity markets in Europe were mostly rising yesterday. Germany’s DAX (DE40) rose by 0.18%, France’s CAC 40 (FR 40) gained 0.48%, Spain’s IBEX 35 (ES35) jumped by 1.51% on Tuesday, and the UK’s FTSE 100 (UK100) closed positive by 0.44%.

Frankfurt’s DAX (DE40) index rose above the 17,000-point mark for the first time but then eased back to close at 16,980 points. Investors were analyzing the latest GDP data and its potential impact on the European Central Bank’s monetary policy outlook. The German economy contracted by 0.3% in the fourth quarter after two consecutive periods of stagnation, driven by persistent inflation, rising energy prices, and weaker external demand. On an annualized basis, the German economy contracted by 0.2% in the fourth quarter, entering a technical recession for the first time since 2020-21.

The euro area economy unexpectedly stalled in the last three months of 2023 after contracting by 0.1% in the previous period. The common bloc avoided recession at the end of 2023 thanks to better-than-expected growth in Spain (+0.6%) and Italy (+0.2%), while the French economy stalled and the largest Germany contracted by 0.3%. Other small economies, including Portugal (+0.8%), Belgium (+0.4%), Latvia (+0.4%), and Austria (+0.2%), also contributed positively to GDP. On the other hand, declines were seen in Ireland (-0.7%) and Lithuania (-0.3%). The Eurozone’s outlook for 2024 remains challenging amid high borrowing costs and prices, weaker domestic and external demand, and a weakening manufacturing sector, especially in Germany.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) was up by 0.11%, China’s FTSE China A50 (CHA50) was down by 1.74%, Hong Kong’s Hang Seng (HK50) lost 2.32% on the day, and Australia’s ASX 200 (AU200) was positive by 0.29% on Tuesday.

Australian inflation fell to 4.1% y/y in Q4 2023 from 5.4% in Q3, indicating the lowest level since Q4 2021, compared to market expectations of 4.3%. The Australian dollar depreciated to $0.657, hitting its lowest level in a week, as weak inflation data spurred bets the country will cut interest rates soon. The Reserve Bank of Australia (RBA) is expected to leave rates unchanged at next week’s meeting, while there is about a two-thirds chance of a rate cut in June, and a rate cut in August is already fully priced in.

China’s official manufacturing PMI came in at 49.2 in January 2024, matching forecasts and up from December’s 6-month low of 49.0. China’s composite PMI rose to 50.9 in January 2024 from 50.9 in the previous month. This is the highest reading since September last year, with the services sector rising the most in four months, while the decline in factory activity continued for the fourth consecutive month. The latest data suggests that the momentum of the Chinese economy remains weak amid numerous piecemeal support measures targeting specific sectors. Meanwhile, the central bank has taken a raft of measures in recent months, including large cash injections and an unexpected reduction in the reserve requirement ratio for commercial banks, which will take effect in early February.

S&P 500 (US500) 4,924.97 −2.96 (−0.06%)

Dow Jones (US30) 38,467.31 +133.86 (+0.35%)

DAX (DE40)  16,972.34 +30.63 (+0.18%)

FTSE 100 (UK100) 7,666.31 +33.57 (+0.44%)

USD Index  103.39 −0.22 (−0.21%)

• – Japan Retail Sales (m/m) at  01:50  (GMT+2);
• – Australia Consumer Price Index (m/m) at 02:30 (GMT+2);
• – China Manufacturing PMI (m/m) at 03:30 (GMT+2);
• – China Non-Manufacturing PMI (m/m) at 03:30 (GMT+2);
• – German Retail Sales at 09:00 (GMT+2);
• – German Unemployment Rate (m/m) at 10:55 (GMT+2);
• – German Consumer Price Index (m/m) at 15:00 (GMT+2);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
• – Canada GDP (m/m) at 15:30 (GMT+2);
• – US Chicago PMI (m/m) at 16:45 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Statement at 21:00 (GMT+2);
• – US Fed Interest Rate Decision at 21:00 (GMT+2);
• – US FOMC Press Conference at 21:30 (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 Friday’s close, the Dow Jones Index (US30) was up by 0.16% (+0.50% for the week) and had risen to a new record high. The S&P 500 Index (US500) decreased by 0.07% on Friday (-0.07% for the week). The NASDAQ Technology Index (US100) closed Friday negative by 0.36% (+0.40% for the week). Friday’s economic reports on personal spending for December and home sales for December were better than expected, and price pressures eased after the core PCE deflator for December — the Fed’s preferred measure of inflation — showed the slowest pace in 2 years.

The US core PCE deflator for December eased to 2.9% y/y from 3.2% y/y in November, better than expectations of 3.0% y/y. US home sales for December rose by 8.3% m/m, beating expectations of 2.0% m/m and the largest increase in 3 years. Currently, markets are discounting the odds of a 25 bps rate cut of 3% at the next FOMC meeting on January 30-31 and 48% for the same 25 bps rate cut at the March 19-20 meeting.

Intel (INTC) shares fell by more than 11%, topping the S&P 500 (US500), Dow Jones Industrials (US30), and Nasdaq 100 (US100) list of losers after the company projected adjusted first-quarter revenue of $12.2-13.2 billion well below the consensus forecast of $14.25 billion. American Express (AXP) is up more than 7%, leading the S&P 500 (US500) and Dow Jones Industrials (US30), after the company projected 2024 EPS of $12.65-$13.15, which was stronger than the consensus forecast of $12.40.

Equity markets in Europe were mostly up on Friday. The German DAX (DE40) rose by 0.32% (+1.66% for the week), the French CAC 40 (FR40) gained 2.28% (+2.66% for the week) on Friday, the Spanish IBEX 35 (ES35) added 0.20% (+0.22% for the week) on Friday, and the British FTSE 100 (UK100) closed positive by 1.40% (+2.32% for the week).

The German February GfK Consumer Confidence Index unexpectedly fell by 4.3 to an 11-month low of negative 29.7, weaker than expectations of a rise to negative 24.6. Eurozone M3 Money Supply for December unexpectedly rose by 0.1% y/y, stronger than expectations of negative 0.7% y/y and the first increase in six months.

ECB Governing Council spokesman Kazaks said on Friday that while interest rates should start to fall, in the absence of any major shocks, the ECB’s biggest mistake could be premature easing, which would allow inflation to bounce back. Swaps put the odds of a 25 bps ECB rate cut at the next meeting on March 7 at 18% and at the April 11 meeting at 87%.

WTI crude futures jumped to $79 a barrel on Monday, hitting their highest level in two months, as a Houthi attack on a Trafigura fuel tanker in the Red Sea heightened fears of further supply disruptions. The oil tanker was hit by a missile off the coast of Yemen on Friday, prompting commodities trader Trafigura to reassess the security risk of further Red Sea voyages. OPEC and its allies will meet online on February 1, and the group is not expected to adopt changes to its production plan.

Asian markets traded mixed last week. Japan’s Nikkei 225 (JP225) fell by 1.50% for the week, China’s FTSE China A50 (CHA50) jumped 2.16% over 5 trading days, Hong Kong’s Hang Seng (HK50) ended the week up by 3.93%, and Australia’s ASX 200 (AU200) ended the week positive by 2.84%.

The December Bank of Japan (BoJ) meeting minutes showed that policymakers actively discussed the terms of the gradual withdrawal of stimulus and agreed to deepen the discussion on the appropriate pace of future interest rate hikes. The minutes were released after the BoJ said on Tuesday it was increasingly confident that conditions for phasing out its huge stimulus measures were becoming more favorable, suggesting it would soon take short-term interest rates out of negative territory. The Bank of Japan may retain control over bond yields as a loose basis even after it takes short-term rates out of negative territory, according to the December minutes.

New Zealand’s trade deficit narrowed to USD 0.323 billion in December 2023 from USD 0.651 billion in the corresponding month of the previous year. Exports declined by 8.7% y/y to US$5.9 billion. Among major trading partners, exports declined to China (-16%), Australia (-0.8%), the US (-4.6%), the EU (-20%) and Japan (-17%). At the same time, imports fell by 13% to $6.3 billion. Imports from China (-12%), EU (-14%), Australia (-9.8%), US (-40%) and South Korea (-113%) declined. On the other hand, purchases of oil and petroleum products increased by 115%.

S&P 500 (US500) 4,890.97 −3.19 (−0.07%)

Dow Jones (US30) 38,109.43 +60.30 (+0.16%)

DAX (DE40) 6,961.39 +54.47 (+0.32%)

FTSE 100 (UK100) 7,635.09 +105.36 (+1.40%)

USD Index  103.47 +0.04 (+0.04%)

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 Thursday’s stock market close, the Dow Jones Index (US30) was up by 0.64%, while the S&P 500 Index (US500) added 0.53% yesterday. The NASDAQ Technology Index (US100) closed positive by 0.18%. Stock indices are moderately rising as signs of resilience in the US economy ease recession fears and strengthen prospects for a soft landing. Q4 GDP rose by 3.3% (annualized), beating expectations of 2.0%. New home sales for December rose by 8.0% m/m to 664,000, stronger than expectations of 649,000. On the downside, Initial Jobless Claims for the week rose 25,000 to 214,000, indicating a weak labor market versus expectations of 200,000.

Tesla (TSLA) is down by more than 10% after reporting weaker-than-expected adjusted earnings per share for Q4 and stating that vehicle volume growth in 2024 could be markedly lower than in 2023. Health insurer stocks are also down, led by a 13% drop in Humana (HUM) shares after it projected 2024 adjusted earnings well below consensus and withdrew its 2025 earnings target. Boeing (BA) fell more than 6% yesterday, topping the Dow Jones (US30) losers list after the US Federal Aviation Administration (FAA) halted a planned increase in production of the Boeing 737 Max airliner.

Today, the US will release data on the PCE index, which is considered the favorite inflation indicator for the US Federal Reserve. The PCE index differs from the CPI in that it measures only goods and services intended for and consumed by individuals. Prices are weighted according to total expenditures for each item, which provides an important insight into consumer behavior. Following the CPI and PPI reports, economists expect the core PCE deflator to fall below 3% y/y for the first time since March 2021. Therefore, a decline in the PCE index is likely to harm the dollar index, lending confidence to risk assets and indices. On the contrary, if the PCE data points to growth, the US dollar will get additional support, which will hurt indices and gold.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 0.10%, France’s CAC 40 (FR40) gained 0.11% yesterday, Spain’s IBEX 35 (ES35) declined by 0.58%, and the UK’s FTSE 100 (UK100) closed positive by 0.03%.

Germany’s IFO Business Climate Index for January unexpectedly fell by 1.1 to a 3-year low of 85.2, weaker than expectations of a rise to 86.6. The European Central Bank, as expected, left its main refinancing rate unchanged at 4.50% and said that this level should be maintained for a long enough time to ensure that inflation returns to the 2% level in time. ECB President Lagarde stated that the Eurozone economy will likely stagnate in the last quarter of 2023. Ms. Lagarde also added that borrowing costs could be lowered in the summer.

WTI crude futures rose sharply on Thursday as China “hinted” to the Houthis that it would worsen business relations with Beijing if they did not stop attacking ships in the Red Sea. That helped ease market fears of supply disruptions. The US crude stockpiles fell by 9.2 million barrels last week, beating market expectations and marking the biggest decline since August. The drop in inventories is also helping to boost oil prices.

Natural gas prices initially rose on Thursday after the EIA reported that natural gas inventories fell by 326 billion cubic feet last week, beating expectations of 318 billion cubic feet. However, prices gave up gains and declined after NatGasWeather reported that temperatures in the US would remain “exceptionally warm” from February 1 to February 8, reducing demand for gas for heating.

Asian markets rallied strongly yesterday. Japan’s Nikkei 225 (JP225) for yesterday rose by 0.03%, China’s FTSE China A50 (CHA50) jumped by 1.75%, Hong Kong’s Hang Seng (HK50) ended Thursday up by 1.96% and Australia’s ASX 200 (AU200) was positive by 0.48%.

The core consumer price index in Tokyo, Japan, came in at an annualized 1.6% in January 2024, slowing from 2.1% in December and below market expectations of 1.9%. January’s reading was also the lowest since March 2022 and below the central bank’s 2% target for the first time since May 2022, breaking 19 months of above-target readings. The easing of inflationary pressures is mainly due to lower energy prices. This increases the likelihood that the BOJ will keep monetary policy accommodating. Nevertheless, BoJ Governor Kazuo Ueda recently said that the probability of sustainably achieving the 2% inflation target through wage growth is gradually increasing and that the central bank will review its massive stimulus program if this trend continues.

S&P 500 (US500) 4,894.16 +25.61 (+0.53%)

Dow Jones (US30) 38,049.13 +242.74 (+0.64%)

DAX (DE40) 16,906.92 +17.00 (+0.10%)

FTSE 100 (UK100) 7,529.73 +2.06 (+0.03%)

USD Index  103.48 +0.25 (+0.24%)

• – Japan Tokyo Core CPI (m/m) at 01:30 (GMT+2);
• – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
• – US PCE price index (m/m) at 15:30 (GMT+2);
• – US Pending Home Sales (m/m) at 17:00 (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.