Are all bets off?

Are all bets off?

Corporate Earnings News
Global market indices
Currencies
Cryptocurrencies
Fixed Income
Commodity sector news
Key data to move markets this week
Global macro updates

Corporate Earnings News

Corporate earning calendar 8 February - 15 February 2024

Thursday: ConocoPhillips, Pinterest, Illumina, Philip Morris International, Cloudflare, Take-Two Interactive Software, Expedia, Snap-On Inc., Kellog, Tyson Foods, FirstEnergy Corp., The Hershey Co., Unilever, AstraZeneca
Friday: Pepsico, Enbridge, Fortis, Magna
Monday: Arista Networks, Waste Management Inc., Cadence Design System, Principal Financial Group
Tuesday: Airbnb, Coca-Cola, Shopify, Upstart Holdings, Marriott, Ecolab, Biogen, Moody's
Wednesday: Occidental Petroleum, Twilio, Barrick Gold, CME Group, Cisco Systems, QuantumScape, Albemarle, Williams, Fair Isaac, HubSpot
Thursday: Deere & Co, Coinbase Global, Liberty Global, Applied Materials, The Kraft Heinz Company, The Trade Desk, Southern Co., Digital Realty Trust, Dropbox

US Stock Indices

Nasdaq 100 +3.60% MTD +5.52% YTD
Dow Jones Industrial Average 
+0.97% MTD +2.21% YTD
NYSE +1.78% MTD +2.13% YTD
S&P 500 
+2.01% MTD +3.63% YTD

With more than half of the S&P 500 companies having reported quarterly results, 81.2% surpassed profit expectations, according to LSEG data on Tuesday. The S&P 500 reached another record high, finishing at 4,995.06 on Wednesday. It was led by a renewed surge in tech stocks on the expectation that a still resilient US economy will continue to drive corporate profits despite some concerns around the regional banking and commercial real estate sectors following on from last week’s massive drop in share price of New York Community Bancorp. Concerns about a possible banking crisis could lead to investors piling into safe-haven government bonds, increasing their prices and driving down yields.

US stocks

Mega caps:A generally good week for the “magnificent seven” as investors continued to remain positive about AI. Apple, Alphabet, Amazon, Meta Platforms, Nvidia and Microsoft are all up over the past week. Meta Platforms market value increased by $197 bn to $1.2 trn, the biggest ever one-day gain on Wall Street, after announcing its first-ever dividend. Nvidia hit a fresh record high following a price-target raise by Goldman Sachs. However, Tesla was down this week, slipping to its weakest level on Monday since last May. Tesla’s 2024 decline began with a post-earnings drop after the company missed estimates for quarterly profit and revenue. This week’s selloff could be attributed to controversy around CEO Elon Musk’s pay package being voided by a Delaware judge, a recall on 2.2 million vehicles in the US due to problems with its brake, park and anti lock brake warning lights having a smaller font size than required by US federal safety standards.

Energy stocks had a mixed week this week. Occidental Petroleum, ConocoPhillips, Chevron, Marathon Petroleum, Baker Hughes, and Phillips 66 are all up this week. ExxonMobil and Chevron reached their second-biggest annual profits in a decade despite a slide in prices which reduced overall earnings from the records hit in 2022. BP was up this week despite annual profits halving, after it announced a share buyback of a further $3.5 bn over the first half of 2024 with adding buybacks worth at least $14 bn were planned over 2024-25. Apa Corp (US), Shell, ExxonMobil, Energy Fuels, and Halliburton are all down over this past week. 

Materials and Mining stocks had a generally poor week although recovering slightly over the past couple of days on a softening US dollar and a more upbeat sentiment in Chinese equities. Palladium hit its lowest since 2018 on a combination of concerns about European, particularly German, and Chinese demand in the auto sector Yara International, Sibanye Stillwater, CF Industries Holdings, Albemarle, Freeport-McMoRa, Newmont Mining and Mosaic are all down this week. Nucor Corporation is slightly up this week. 

European Stock Indices

Stoxx 600 -0.01% MTD +1.39% YTD
DAX 
+0.11% MTD +1.02% YTD
CAC 40 
-0.59% MTD +0.90% YTD
IBEX 35 -1.88% MTD -2.12% YTD
FTSE MIB +0.75% MTD +2.06% YTD
FTSE 100 -0.02% MTD -1.35% YTD

Other Global Stock Indices 

MSCI World Index +1.35% MTD +1.88% YTD
Hang Seng +3.85% MTD -5.66% YTD

Chinese stocks had their best week in more than a year in response to a change of leadership at the market regulator and other government support measures.

Currencies

The US dollar, despite falling slightly on Tuesday and Wednesday as yields fell due to strong 3-year and 10-Year Treasury sales, remains strong, benefitting from US economic resilience and pushback from Federal Reserve officials on market expectations on the number and speed of interest rate cuts. The GBP is -0.46% MTD against the USD and -0.80% YTD as the BoE considers the timing of when, not if, to cut rates. The EUR is -0.43% MTD against the USD and -2.41% YTD. The ECB appears to be divided over beginning rate cuts in April or June as it struggles with a weak economy, a strong labour market with wage growth pressures, and risks from the Fed’s and the BoE’s decisions on their rate cut timing.

Cryptocurrencies

Bitcoin +4.08% MTD +5.42% YTD
Ethereum +6.69% MTD +6.31% YTD

Bitcoin and Ethereum have both recovered ground this past week as the US dollar softened slightly. The growing interest in cryptocurrencies, particularly following the SEC spot Bitcoin ETF approval, has, as noted by blockchain analytics firm Chainalysis, led to an increasing number of new players due to the potential for high profits and lower barriers to entry. It says payments from crypto-related ransom attacks nearly doubled to a record $1 billion in 2023. However, it also said that losses stemming from other crypto-related crimes such as scamming and hacking fell in 2023. However, as noted by Reuters, Chainalysis' figures undervalue crypto's role in all crime as it only tracks cryptocurrency sent to wallet addresses identified as illicit. It does not include payments for non-crypto-related crime such as crypto used in drug trafficking deals.

Fixed Income

US 10-year yield to 4.12%.
German 10-year yield to 2.32%.
UK 10-year yield to 3.99%.

Bonds rallied towards the latter part of this week on increased US supply. Yields fell on Tuesday after a successful $54-bln auction of three-year notes, while on Wednesday a record $42 billion of 10-year notes were sold.

Note: As of 5 pm EST 7 February 2024

Key data to move markets this week

EUROPE

Thursday: ECB Economic Bulletin and speeches by ECB Exec board member Elderson and Chief Economist Philip Lane.
Friday:
German Harmonised Index of Consumer Prices.
Tuesday: Eurozone ZEW Economic Sentiment and German ZEW Current Situation and Economic Sentiment.
Wednesday:
Eurozone GDP, Industrial Production, and Employment Change.
Thursday: Spanish Harmonised Index of Consumer Prices.

UK

Thursday: A speech by BoE Monetary Policy Committee member Catherine Mann.
Tuesday: 
Claimant Count, Average Earnings, Claimant Count Rate, Employment Change and ILO Unemployment Rate.
Wednesday: 
CPI, PPI, and RPI.
Thursday: 
GDP, Industrial Production and Manufacturing Production.

US

Thursday: Initial Jobless Claims and Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing on the Financial Stability Oversight Council annual report.
Friday: 
Fed Monetary Policy Report.
Tuesday: 
CPI.
Thursday: 
Initial Jobless Claims, NY Empire State Manufacturing Index, Retail Sales, Philadelphia Fed Manufacturing Survey, and Industrial Production.

CHINA

Thursday: CPI and PPI.
Friday: 
Chinese Lunar New Year.

GLOBAL

Tuesday: OPEC Monthly Report.

Global Macro Updates

The US economy keeps on keeping on. Last Friday the Nonfarm payroll (NFP) jumped to 353,000 for December, more than double market expectations. November and October NFP data was also revised upwards. On Sunday night, an interview with Fed Chair Jerome Powell was shown on CBS’ 60 Minutes TV show where he reiterated that the Fed was not going to cut rates any time soon. He insisted that a resilient US economy and comments from Fed policymakers have caused investors to reassess their bets on how quickly the Fed will cut rates this year and the number of cuts markets should expect. Minneapolis Fed President Neel Kashkari said in an interview with CNBC that he expects two to three rate cuts this year based on existing data, while Fed Governor Adriana Kugler said more assurance is needed before lowering rates. Richmond Fed President Thomas Barkin told an audience during an event held by The Economic Club of Washington there was still "a reasonable amount of uncertainty in what we're seeing," citing the need for disinflation to move beyond goods to the services and rental sectors, where he said inflation has stayed more elevated. Boston Federal President Susan Collins said US demand will need to slow this year. She noted that the recent rise in workers in the US labour market and the easing of supply chain pressures had helped ease price pressures, but that a durable return to the 2% inflation target will likely require demand growing at a more moderate pace this year.

US deficit growing.According to the independent, non-partisan Congressional Budget Office (CBO), the US budget deficit is set to soar by almost two-thirds over the next 10 years, from $1.6tn to $2.6tn as higher interest rates weigh on the government’s finances. On Wednesday the CBO said government repayments to holders of US government debt would account for about three-quarters of the rise in the deficit between now and 2034. It also warned that the deficit’s share as a proportion of GDP would increase from 5.6%in 2024 to 6.1% over the next decade because of repayment costs remaining well above the average of 3.7% over the past 50 years.

ECB holding pattern. The question of when to cut rates is still uncertain with hawks like executive board member Isabel Schnabel saying that sticky services inflation, a resilient labour market, a notable loosening of financial conditions and tensions in the Red Sea, cautions against adjusting the policy stance soon. The question of timing is difficult for the ECB as the Eurozone economy appears to be barely improving with the HCOB Eurozone Composite PMI for January rising to only 47.9 in January. Although this is a rise from December’s 47.6 figure and the highest reading since July, it is still in contractionary territory. The output prices index rose to an eight-month high of 54.2 from 53.8. Business confidence rose again, with optimism at its highest level in nine months. The periphery countries of Spain and Italy are growing with the January HCOB Composite PMI showing their strongest growth in these countries for six and eight months, respectively. By contrast, contractions in Germany and France worsened, with the Composite Output Index falling. Germany is also showing signs of further weakness with factory output falling for the seventh consecutive month, surpassing the 2008 financial crisis for the longest-ever downturn. Industrial production fell 1.6% month on month in December. German factory output has been falling since May, dragging it down 1.5% over the whole of last year and 10% since before the Covid-19 pandemic hit.

China’s stimulus push.The Chinese regulators continued efforts to steady markets and end the rout of the country’s $8 trillion stock market by placing further curbs on short selling and state investors said they were expanding their stock buying plans. The head of China's securities regulator, Yi Huiman, was replaced on Wednesday by Wu Qing, as chairman and party chief of the China Securities Regulatory Commission, according to the official Xinhua News Agency. The collapse in Chinese markets comes as consumer prices fell at the fastest rate in 15 years in January, falling 0.8% year on year according to official statistics released on Thursday. This was the fourth straight month of declines and the biggest contraction since 2009. Producer prices also improved, dropping 2.5% year on year in January from December’s 2.7%. China’s economy slipped into deflation in July. A prolonged period of deflation could undermine business and consumer confidence, weakening investor sentiment and also weighing on further growth.

While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.

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