InvestMacro

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.

By JustMarkets

As of Wednesday’s stock market close, the Dow Jones Index (US30) decreased by 0.26%, while the S&P 500 Index (US500) added 0.08%. The NASDAQ Technology Index (US100) closed positive by 0.36%. Optimism about the US economic outlook and strong corporate earnings results boosted stock prices on Wednesday.

Strong earnings from technology companies supported the broader market, as Netflix (NFLX) closed higher by more than 10% after reporting fourth-quarter streaming pay-per-view numbers well above consensus. Additionally, shares of ASML Holding NV rose more than 8% and led gains in chip stocks after reporting record Q4 orders, indicating the strength of the semiconductor industry.

S&P’s US manufacturing PMI for January unexpectedly rose by 2.4 to 50.3, beating expectations for a decline to 47.6 and showing the fastest pace of growth in 15 months.

On Wednesday, the Bank of Canada (BoC) left its key overnight rate at 5% and said that while core inflation is still a concern, the bank is focusing on when to lower borrowing costs rather than whether to raise rates again. Bank of Canada Governor Maclem said at a press conference that the Bank of Canada is not yet ready, willing, or able to go soft on interest rates but hinted that a rate cut is around the corner.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 1.58%, France’s CAC 40 (FR40) gained 0.91% yesterday, Spain’s IBEX 35 (ES35) added 1.16%, and the UK’s FTSE 100 (UK100) closed positive by 0.56%.

The Eurozone Manufacturing PMI for January rose by 2.2 to a 10-month high of 46.6, which was stronger than expectations of 44.7.

Today, the ECB will hold its first monetary policy meeting of the year on Thursday. There is no chance of a policy change at this meeting, but ECB President Lagarde’s press conference at 15:45 will play an important role in shaping expectations going forward. The ECB now depends on incoming data on inflation, production, GDP, and the labor market. And Lagarde is likely to talk about it at the press conference. The currency market is unlikely to react strongly to the ECB statement unless Lagarde specifies the timing of the rate cut. If there are clear signals about the timing of the rate cut, it could lead to a strong price imbalance.

WTI crude oil prices strengthened above $75 a barrel on Thursday, hovering near one-month highs, as a significant drawdown in US crude inventories helped boost oil prices. Official data showed US crude inventories fell by 9.233 million barrels last week, the biggest decline since August and beating market expectations for a 2.15 million barrel drop. Fresh stimulus measures in China, the largest oil importer, also contributed to the bullish sentiment, with the People’s Bank of China announcing that it will lower the reserve requirement ratio for banks next month in an attempt to support the country’s struggling economy. In addition, geopolitical tensions persisted as a coalition led by the US and UK strikes Houthi militants in Yemen, who are responsible for numerous attacks on commercial ships in the Red Sea.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.80%, China’s FTSE China A50 (CHA50) jumped by 1.28%, Hong Kong’s Hang Seng (HK50) was up by 3.56% by Wednesday’s close, and Australia’s ASX 200 (AU200) was positive by 0.06%.

On Wednesday, the People’s Bank of China (PBOC) cut the reserve requirement ratio for banks by 50 bps to 10.00%, which will boost liquidity and help revive the Chinese economy, which is favorable for global growth prospects. PBOC also noted that more measures will be taken soon to stimulate economic growth. These signals helped Chinese markets bounce off multi-year lows.

Singapore’s central bank (MAS) is expected to leave its monetary policy unchanged this month on January 29 and refrain from easing sentiment until it has more evidence that inflation is falling consistently. Inflation in Asia’s financial center remains stable. It was 3.2% in November and 3.3% in December, down from a peak of 5.5% in early 2023.

S&P 500 (US500) 4,868.55 +3.95 (+0.08%)

Dow Jones (US30) 37,806.39 −99.06 (−0.26%)

DAX (DE40) 16,889.92 +262.83 (+1.58%)

FTSE 100 (UK100) 7,527.67 +41.94 (+0.56%)

USD Index  103.31 −0.31 (−0.30%)

• – German Ifo Business Climate (m/m) at 11:00 (GMT+2);
• – Norwegian Norges Interest Rate Decision at 11:00 (GMT+2);
• – Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
• – Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
• – US GDP (q/q) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – Eurozone ECB Press Conference at 15:45 (GMT+2);
• – US New Home Sales (m/m) at 17:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 17:15 (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

At Tuesday’s stock market close, the Dow Jones Index (US30) was down by 0.25%, while the S&P 500 Index (US500) added 0.29% yesterday. The NASDAQ Technology Index (US100) closed positive by 0.43%.

Economic news from the US on Tuesday was weaker than expected. The Richmond Fed’s January index of current conditions in the manufacturing sector unexpectedly fell by 4 to a 3-year low of negative 15, weaker than expectations of a rise to negative 8.

Markets are discounting the odds of a 25 bps rate cut at 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. As recently as a week ago, the probability of a rate cut in March was 60%.

Verizon Communications (VZ) shares are up more than 6% after its 2024 adjusted EPS forecast beat consensus. The Dow Jones Industrials Index spent the day in negative territory as shares of 3M Co. (MMM) closed down more than 11% after its 2024 adjusted earnings forecast came in below consensus.

The Bank of Canada (BoC) will hold its first monetary policy meeting of the year today. Like other G10 central banks, the Bank of Canada is not yet ready to cut rates. The BoC is expected to keep rates at 5%. Policymakers continue to talk about their willingness to “raise rates further if necessary,” and inflation continues to rise faster than desired. But for the March meeting, the probability of keeping the rate on hold has fallen from 100% to 66% over the past week, so investors’ main focus will be on the monetary policy report, where the BoC’s new projections will be unveiled, and on Bank Governor Macklem’s remarks at the post-meeting press conference. The focus should be on the GDP and inflation forecasts. If the GDP forecast turns out to be positive and the inflation forecast is down, it could put pressure on the Canadian dollar, as it will increase the probability of a rate cut at the March meeting. But we should not forget that the Canadian dollar is a commodity currency and is highly correlated with oil prices. Taking into account the aggravation of the geopolitical situation in the Middle East, the growth of oil prices may further stimulate the growth of the Canadian dollar or keep the CAD from excessive decline.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) fell by 0.03%, France’s CAC 40 (FR40) lost 0.34% yesterday, Spain’s IBEX 35 (ES35) decreased by 1.09%, and the UK’s FTSE 100 (UK100) closed negative by 0.03%.

The Eurozone Consumer Confidence Index for January unexpectedly fell by 1.0 to negative 16.1, which was weaker than expectations of a rise to negative 14.3. Today, manufacturing PMI and service PMI statistics for many European countries will be released. These data will show how business activity, which was in contractionary territory in most countries at the beginning of the year, is progressing. A slight improvement in the business activity indicators is forecast.

On Wednesday, Germany’s Ifo Institute downgraded its economic growth forecast for 2024 again, citing uncertainty caused by changes to the federal budget triggered by a constitutional court ruling. The institute now expects Europe’s largest economy to grow by 0.7% this year instead of 0.9%.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.08%, China’s FTSE China A50 (CHA50) was down by 0.78%, Hong Kong’s Hang Seng (HK50) jumped by 2.63% by Tuesday’s close, and Australia’s ASX 200 (AU200) was positive by 0.51%.

Alibaba Group (BABA) led the Hang Seng gains, rising by 5% following reports that co-founders Jack Ma and Joe Tsai purchased shares of the largest e-commerce company totaling $200 million in the fourth quarter.

Japan’s exports rose at the fastest pace in a year last month, raising the likelihood that the economy will resume growth in October-December. Exports rose by 9.8% in December from a year earlier, the biggest jump in a year and reversing a 0.2% drop in the previous month. Imports fell by 6.8% compared to economists’ forecast of a 5.4% decline. The data suggests that external demand will have less of an impact on the economy in the fourth quarter, contributing to the recovery.

Consumer inflation in New Zealand in the fourth quarter was in line with expectations. Annual inflation was 4.7% in the fourth quarter, slower than the 5.6% in the third quarter. Inflation is now at its lowest level since mid-2021. However, some closely watched indicators of underlying inflationary pressures were stronger than the Reserve Bank of New Zealand (RBNZ) had forecast. Non-traded inflation was 5.9% rather than 5.7%, and the core reading, which excludes the most significant ups and downs, was around 5%. Therefore, despite the obvious weakness in the New Zealand economy, most analysts expect the Reserve Bank to maintain its hawkish stance.

S&P 500 (US500) 4,864.60 +14.17 (+0.29%)

Dow Jones (US30) 37,905.45 −96.36 (−0.25%)

DAX (DE40) 16,627.09 −56.27 (−0.34%)

FTSE 100 (UK100) 7,485.73 −1.98 (−0.03%)

USD Index  103.53 +0.16 (+0.20%)

• – Australia Manufacturing PMI (m/m) at 00:00 (GMT+2);
• – Australia Services PMI (m/m) at 00:00 (GMT+2);
• – Japan Trade Balance (m/m) at 01:50 (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – Germany Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – Germany 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);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US Services PMI (m/m) at 16:45 (GMT+2);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+2);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – Canada BoC Press Conference at 18:00 (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 Monday’s stock market close, the Dow Jones Index (US30) increased by 0.36%, while the S&P 500 Index (US500) gained 0.22% yesterday. The NASDAQ Technology Index (US100) closed positive by 0.32%. All three indices once again set new record highs. Stocks rose on Monday amid optimism about the US economic outlook and expectations of strong quarterly corporate earnings results. In addition, a decline in government bond yields on Monday supported stocks. Companies such as Netflix (NFLX), Tesla (TSLA), and Intel (INTC) will also report this week.

FOMC officials have traditionally kept quiet this week ahead of next week’s Fed meeting. Markets are discounting the odds of a 25 bps rate cut at 3% for the January 30-31 FOMC meeting and 42% for the same 25 bps rate cut at the March 19-20 meeting.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.77%, France’s CAC 40 (FR40) gained 0.56% yesterday, Spain’s IBEX 35 (ES35) added 1.11%, and the UK’s FTSE 100 (UK100) closed positive by 0.35%.

European equity markets opened higher on Tuesday, likely extending gains from the previous session amid improving risk sentiment. However, investors remained cautious ahead of the European Central Bank’s decision later this week. The ECB is expected to keep interest rates unchanged, but policymakers have disagreed with predictions of an imminent rate cut.

WTI crude oil prices held just below $75 a barrel on Tuesday, near their highest levels in four weeks, as fresh strikes by US and British troops on Houthi targets in Yemen heightened fears of a wider conflict in the region that could disrupt supplies. Meanwhile, the resumption of production from Libya’s largest field and signs of rising output, especially from non-OPEC countries, continued to weigh on the oil market. On the demand side, the IEA revised its forecast for oil demand growth in 2024 to 1.24 million bpd, up 180,000 bpd, citing improved economic growth and lower oil prices in Q4. OPEC also maintained its forecast for oil demand growth of 2.25 million bpd in 2024, with 1.85 million bpd growth expected in 2025.

Asian markets traded mixed on Monday. Japan’s Nikkei 225 (JP225) gained 0.72% yesterday, China’s FTSE China A50 (CHA50) was down by 0.72%, Hong Kong’s Hang Seng (HK50) fell by 2.25% on Monday, and Australia’s ASX 200 (AU200) was positive by 0.51%.

The Bank of Japan (BoJ) unanimously kept its key short-term interest rate unchanged at negative 0.1% and the 10-year bond yield at around 0% at its January meeting, as expected. The Central Bank also kept the upper limit on long-term government bond yields unchanged at 1.0%. Meanwhile, in its quarterly outlook report, the BoJ lowered its CPI target for fiscal 2024 to 2.4% from October’s forecast of 2.8%, reflecting the recent decline in oil prices. For 2025, the BoJ said it expects core inflation at 1.8%, up slightly from previous estimates of 1.7%. On economic growth, policymakers lowered their GDP growth forecast for 2023 to 1.8% from 2.0% in previous projections. For FY 2024, the bank revised its GDP forecast upward to 1.2% from 1.0%, helped by pent-up demand. BoJ Governor Kazuo Ueda recently stated that he sees no need for an immediate change in the BoJ’s dovish stance.

Singapore’s annual inflation rate unexpectedly rose to 3.7% in December 2023 from November’s 25-month low of 3.6%, exceeding market forecasts of 3.5%. Annual core inflation (excluding food and energy prices) rose to 3.3% in December from 3.2% in November, beating forecasts for a  3.1% rise.

The offshore yuan rose to 7.18 per dollar, hitting its highest level in nearly two weeks after China’s cabinet pledged again to stabilize capital markets. China’s premier of the State Council held a cabinet meeting on Monday, where officials said they intend to take stronger and more effective measures to stabilize market confidence. Policymakers are reportedly seeking to channel about 2 trillion yuan, mostly from the offshore accounts of Chinese state-owned enterprises, into a fund to buy mainland stocks.

S&P 500 (US500) 4,850.43 +10.62 (+0.22%)

Dow Jones (US30) 38,001.81 +138.01 (+0.36%)

DAX (DE40) 16,683.36 +128.23 (+0.77%)

FTSE 100 (UK100) 7,487.71 +25.78 (+0.35%)

USD Index  103.17 −0.16 (−0.15%)

• – Japan BoJ Interest Rate Decision at 04:30 (GMT+2);
• – Japan BoJ Monetary Policy Statement at 04:30 (GMT+2);
• – Singapore Consumer Price Index (m/m) at 07:00 (GMT+2);
• – Japan BoJ Press Conference at 08:30 (GMT+2);
• – US Richmond Manufacturing Index (m/m) at 17:00 (GMT+2);
• – New Zealand Consumer Price Index (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.