A longer and bumpier road for the Fed?

A longer and bumpier road for the Fed?

Global market indices
Fixed Income
Commodity sector news
Key data to move markets this week
Global macro updates

US Stock Indices Price Performance

Nasdaq 100 +0.14% MTD +7.39% YTD
Dow Jones Industrial Average +0.02% MTD +3.49% YTD
NYSE +2.34% MTD +6.92% YTD
S&P 500 +1.55% MTD +8.50% YTD

Earnings for the S&P 500 grew 7.4% in the fourth quarter from the same time a year ago. Excluding the Magnificent Seven group of technology giants, profits in the index posted a 1.7% contraction. The S&P 500 remains in its longest stretch since 2018 without a decline of at least 2%, according to data compiled by Bloomberg.

US stocks

Mega caps: A positive week for the “magnificent seven” although higher than expected CPI barely made a dent in market enthusiasm for most of the stocks. Apple, Microsoft, Alphabet, Amazon and Nvidia are all up on the week, while Meta Platforms is slightly down. On Tuesday a US Appeals Court in Washington, DC ruled that Meta Platforms could not stop the US Federal Trade Commission from reopening a probe into its Facebook unit's privacy practices, despite Meta's objections that it already paid a $5 billion fine and agreed to a range of safeguards.

Tesla is down this week. It fell further on Wednesday following a report by Colin Lagan, an analyst at Wells Fargo, which suggested that there will be zero growth in sales volumes this year and that volumes will drop in 2025 due to the waning impact of price cuts on the demand for electric vehicles. He also slashed Tesla's price target to $120 from $200, and implied a 32% downside to stock's last closing price.

Energy stocks had a generally good week. The oil market continues to be affected by the ongoing war between Russia and Ukraine and concerns around global demand forecasts. However, rising crude oil futures underpinned gains. Occidental Petroleum, Chevron, ConocoPhillips, BP, Apa Corp (US), Shell, Baker Hughes, ExxonMobil, Phillips 66, Halliburton, Schlumberger, and Marathon Petroleum are all up this week. However, Energy Fuels is down this week. 

BP and UAE owned Adnaco shelved talks to buy a 50% stake in Israel’s leading natural gas producer, considering the $2 billion deal too risky at the moment given the ongoing events in Gaza.

Shell is up this week after it said it was cutting some of its climate targets to accommodate its plans to keep growing its giant gas business. The company said earlier today that it is now targeting a 15-20% drop in its net carbon intensity by 2030 and would abandon the interim 2035 target as it seeks to get to net zero by 2050. It also introduced an ambition to cut the absolute emissions from its oil products by 15 to 20 per cent from 2021 levels by 2030. Shell said that would represent a 40 per cent fall compared with 2016.

Materials and Mining stocks had a good week as gold prices remained supported by a weakening dollar and continuing geopolitical conflicts. Copper hit an 11-month high on reports that Chinese smelters planned to cut production at some of their loss making plants. Copper is used in the construction and manufacturing industries, and is vital for green energy and electric vehicle (EV) production because of its ability to conduct electricity. CF Industries, Albemarle, Yara International, Newmont Mining, and Sibanye Stillwater are all up this week. Nucor and Mosaic are down this week.

Freeport-McMoRan, operator of the mine with the world's largest known gold reserve, was up this week as gold prices continue to remain strong on a weakening dollar and as a safe haven asset.

On Wednesday, Albemarle, the world's largest producer of lithium for EV batteries, said that it will hold auctions to sell lithium supplies as part of a push to boost market transparency.

European Stock Indices Price Performance

Stoxx 600 +2.57% MTD +5.92% YTD
DAX +1.60% MTD +7.22% YTD
CAC 40 +2.65% MTD +7.88% YTD
IBEX 35 +5.59% MTD +4.54% YTD
FTSE MIB +4.00% MTD +11.64% YTD
FTSE 100 +1.86% MTD +0.50% YTD

According to LSEG I/B/E/S data, as of 12 March, fourth quarter earnings were expected to decrease 6.1% from Q4 2022. Excluding the Energy sector, earnings were expected to decrease 0.7%. Fourth quarter revenues were expected to decrease 0.8% from Q4 2022. Excluding the Energy sector, revenues were expected to increase 3.5%. Of the 261 companies in the STOXX 600 that had reported earnings by 12 March for Q4 2023, 48.7% reported results exceeding analyst estimates. In a typical quarter 54% beat analyst EPS estimates. 305 companies in the STOXX 600 have reported revenue for Q4 2023. Of these, 50.5% reported revenue exceeding analyst estimates. In a typical quarter 58% beat analyst revenue estimates.

During the week of 18 March, eight companies are expected to report quarterly earnings.

Other Global Stock Indices Price Performance

MSCI World Index +1.80% MTD +7.20% YTD
Hang Seng +3.46% MTD +0.20% YTD


The US dollar had a volatile week after rising on Tuesday’s hotter than expected CPI before falling on Wednesday as investors appeared to be consolidating their positions before next week’s Fed meeting. The GBP is +1.37% MTD against the USD and +0.54% YTD. Sterling declined this week, but steadied on Wednesday after January’s GDP came in at a +0.2%, giving hope that the UK will emerge this quarter from the technical recession it fell into at the end of last quarter. The pound has been the only major currency to rise against the dollar in 2024 due to bets that the Bank of England will keep interest rates higher for longer than its peers. The EUR is +1.33% MTD against the USD and -0.81% YTD. The euro is still faring well despite expectations of the first rate cut taking place in June. Dutch Central bank head, Klaas Knot, said he currently anticipated three cuts in 2024, fewer than the four currently pencilled in by markets.


Bitcoin +18.99% MTD +74.38% YTD
Ethereum +19.07% MTD +74.54% YTD

Bitcoin hit a record high this week surpassing the $72,000 mark. The rise is attributed to expectations of looser monetary policy and massive inflows into new Spot Bitcoin ETFs. As issuers buy up large amounts of Bitcoin to support their ETFs, the actual physical supply has begun to fall.

Fixed Income

US 10-year yield to 4.19%.
German 10-year yield to 2.37%.
UK 10-year yield to 4.02%.

US yields rose this week with traders increasingly focused on the possibility of a “no-landing” or bumpier landing scenario. Bond auctions this week were mixed with a weak $39 bn 10-year note auction on Tuesday followed by a better performance on Wednesday of $22 billion in 30-year bonds which drew a bid-to-cover ratio of 2.47, slightly higher than the February average of 2.40.

Traders are still betting on interest rate cuts in June, pricing in about a 65% chance compared to 72% before the CPI data, according to the CME Group's FedWatch Tool. Markets still appear to be pricing in 3 cuts for this year despite at least one Fed official, Federal Reserve Bank of Minneapolis President Neel Kashkari, suggesting that there may only be two or even one cut this year.

Eurozone yields fell this week, currently pricing in about 93 basis points of moves. However, ECB officials continue to stress that the central bank will be cautious but, according to French central bank head Francois de Galhau, the "victory" against inflation is in sight. Markets have widely priced in the ECB’s first cut for the June meeting.


Spot Gold to $2,179.21 per ounce.
Spot Silver to $24.96 per ounce.
West Texas Intermediate crude to $79.72 a barrel.
Brent crude to $84.03 a barrel.

Gold continued to rally this week on signs of US dollar weakening despite Tuesday’s hotter than expected CPI. It was also supported by escalating geopolitical tensions.

Oil reached a four-month high this week, despite the somewhat contradictory views of OPEC and the International Energy Agency (IEA) on future energy demand. The IEA expects demand to peak by 2040 and OPEC not seeing any peak in demand in its forecasts as far out as 2045. The IEA has also revised its estimate for growth in global demand in 2024 slightly higher to 1.3 mn barrels a day, but downgraded its forecast of growth in supply to 800,000 b/d, including a “downward adjustment” to expected OPEC+ output. Concerns around demand this week have been weighed down by supply side issues. After six straight weeks of builds, US crude oil stockpiles unexpectedly fell by 1.5 million barrels in the week ended 8 March as refineries ramped up processing, according to the US Energy Information Administration (EIA).

Note: As of 4:30 pm EDT 13 March 2024

Key data to move markets this week


Thursday: Spanish Harmonised Index of Consumer Prices and speeches by ECB Executive Board members Frank Elderson and Isabel Schnabel and Vice President Luis de Guindos.
Spanish and French CPI, a speech by German Bundesbank President Joachim Nagel, and a speech by ECB Chief Economist Philip Lane.
Eurozone Harmonised Index of Consumer Prices. 
Eurozone ZEW Economic Sentiment, German ZEW Current Situation and Economic Sentiment surveys.
German PPI and Eurozone Consumer Confidence.


Friday: Consumer Inflation Expectations.
CPI, PPI, and RPI.


Thursday: Initial Jobless Claims, PPI and Retail Sales.
NY State Empire Manufacturing Index, Industrial Production, Michigan Consumer Sentiment Index, and UoM 5-year Consumer Inflation Expectation.
Housing Starts and Building Permits. 
Fed Monetary Policy Statement, FOMC Economic Projections, Fed Interest Rate Decision and Press Conference. 


Friday: House Price Index.
Retail Sales and Industrial Production.
PBoC Interest Rate Decision.


Tuesday: BoJ Interest Rate Decision and Monetary Policy Statement.

Global Macro Updates

Sticky inflation means the Fed will be even more cautious. Higher-than-expected core inflation for a second straight month has markets slightly worried that the road to rate cuts may be bumpier than expected. Headline CPI increased 0.4% for the month and 3.2% from a year ago. The monthly measure was in line with expectations while the 12-month reading was slightly higher. The core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast. Earlier this month Fed Chair Jerome Powell said rate cuts will "likely be appropriate" later this year, "if the economy evolves broadly as expected" and once officials gain more confidence in inflation's steady decline. The disappointing core CPI figure on Tuesday meant that markets were looking very closely to today’s PPI figure. Wholesale prices accelerated at a faster than expected pace in February with PPI jumping 0.6% on the month. This comes after a 0.3% increase in January. Core PPI accelerated by 0.3%, compared to market estimates for a 0.2% increase. Both figures components will feed into the PCE number, the Fed’s favoured inflation gauge. As a result, next week’s Fed meeting may yet again signal that the Fed is still on guard, potentially reducing the likelihood of a rate cut in June.

Finally, some good news for Britain? On Wednesday, the Office for National Statistics (ONS) reported that GDP grew 0.2% in January, after falling 0.1% in December. The economy shrank in Q3 and Q4 2023 so the UK had entered a technical recession. GDP growth in January was boosted by retail sales and house-building. January’s GDP growth raised hopes that the UK economy will expand in Q1. However, all was not rosy as output was down 0.3% compared with January 2023, reflecting the impact of continuing high interest rates. In the three months to January, output was down 0.1% compared with the previous three months. The Office for Budget Responsibility this month forecast economic growth of 0.8% in 2024.

Will the ECB drive down the euro? Last week the ECB kept rates on hold at 4%, with ECB President Christine Lagarde stating that, “We are making good progress towards our inflation target and we are more confident as a result, but we are not sufficiently confident. We clearly need more evidence and more data. We will know a little more in April, but we will know a lot more in June.” It is clear that although there are concerns around the role of wages continuing to add inflationary pressure, given the tightness in the wider labour market, the overall expectation is of wage growth slowing throughout the year. The ECB acknowledged last week that "Inflation (projections have) been revised down, in particular for 2024 which mainly reflects a lower contribution from energy prices,” and so the ECB lowered its inflation projections for the second consecutive quarter, putting price growth at 2.3% this year and at its 2% target next year. What this means is that, overall, the disinflation process in the euro area may be further ahead of the US. The ECB has pretty much stated it will begin cuts in June, leaving the bigger question of how fast will they cut from that point. Another point that seems clear is that, given that the eurozone economy is much weaker than the US economy, the level of excess demand in the eurozone countries is falling relative to what we see in the US, and this will have an effect on the euro, even as we expect to see dollar softening later this year in line with slower US growth.

Is it time up for Chinese tech in the West?On Wednesday the US House of Representatives passed a bill that would give TikTok's Chinese owner, ByteDance, about six months (165 days) to sell the short video app, which has over 170 million users, to an American company or face a ban. However, it is not clear if it will pass in the Senate, which appears to have a different approach to regulating foreign-owned apps and other technologies, including AI chips. According to CNN, Wang Wenbin, a spokesperson for the ministry, accused the US of “resorting to acts of bullying” when it could not succeed in fair competition, saying such practice would disrupt market operations, undermine investor confidence and sabotage the global economic order. President Joe Biden has said he will sign the legislation if it passes. Former president and (assumed) GOP nominee Donald Trump said he opposes the idea. The potential ban is important due to the wider impact it may have on advertising revenue on social media giants Meta Platforms (owner of Facebook, Snapchat and Pinterest), Google’s parent company, Alphabet and on Amazon. If a ban does go into effect, it may result in tit-for-tat measures with China, meaning that Apple and Tesla, both of whom rely upon China for production, may also be affected.

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.

This article is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here.

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