Can markets keep climbing by leaps and bounds?

Can markets keep climbing by leaps and bounds?

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

Corporate Earnings News

Corporate earning calendar 15 February - 22 February 2024

Thursday: Deere & Co, Coinbase Global, Liberty Global, Applied Materials, The Kraft Heinz Company, The Trade Desk, Southern Co., Digital Realty Trust, Dropbox
Friday: Vulcan Materials,PPL Corp.
Tuesday: Home Depot, Medtronic, Walmart, Palo Alto Networks, Teladoc Health
Wednesday: Nvidia, Etsy, Jackson Financial, Lucid Group, Rivian Automotive
Thursday: Keurig Dr Pepper, Moderna, Newmont

According to LSEG I/B/E/S data, as of 13 February the 23Q4 Y/Y blended earnings growth estimate is 9.2%. If the energy sector is excluded, the growth rate for the index is 12.7%. Of the 350 companies in the S&P 500 that reported earnings to date for 23Q4 by 13 February, 79.7% reported above analyst expectations. This compares to a long-term average of 66%. The 23Q4 Y/Y blended revenue growth estimate is 3.4%. If the energy sector is excluded, the growth rate for the index is 4.8%.

US Stock Indices

Nasdaq 100 +3.88% MTD +5.81% YTD
Dow Jones Industrial Average 
+0.32% MTD +1.55% YTD
NYSE +1.95% MTD +2.30% YTD
S&P 500 +3.64% MTD +5.28% YTD

The S&P 500 whipsawed around the 5,000 mark this week, hitting a record high on Monday before being hit by higher than expected inflation data. However, there was a recovery on Wednesday as stocks once again managed to surpass that psychologically important 5,000 barrier. It appears that markets may now be more comfortable with the Fed holding back on rate cuts until the June meeting as the economy seems to continue to be resilient, disinflation looks set to continue, and corporate earnings are still looking overwhelmingly positive despite some concerns about overvaluation and concentration risk.

US stocks

Mega caps: A mixed week for the “magnificent seven” as investors continued to remain positive about AI with Nvidia leading the pack. It is up for the week after surpassing Google-parent Alphabet as the third most valuable US company, just after overtaking Amazon. Apple, and Microsoft are down this week following the higher than expected US CPI data, while Alphabet and Amazon have been relatively flat. Meta Platforms is up this week after announcing on Wednesday that Hock E. Tan, CEO of the chipmaker Broadcom and John Arnold, a former energy trading executive at Enron now involved in high-voltage transmission line electricity projects, have been elected to the company’s board of directors, effective immediately. Tesla is down this week. CEO Elon Musk has said he will seek shareholder approval to move Tesla's state of incorporation to Texas, where it has its headquarters. He is also reportedly trying to get Chinese suppliers to Mexico to replicate the local supply chain at Tesla’s Shanghai plant.

Energy stocks had a difficult week this week as the energy sector was down on concerns over sowing demand growth after data showed a rise in US crude inventories. The increased likelihood of the Fed keeping rates higher for longer due to inflation and fears of inflationary pressures coming from a strong labour market, with markets now pricing in a June cut, has also acted as a tailwind. This drop comes despite OPEC+ production cuts and continuing tensions in the Middle East. Occidental Petroleum is down this week even though it beat estimates for fourth-quarter profit, delivering its best quarterly output in three years and trimming spending. ConocoPhillips, Chevron, Baker Hughes, Phillips 66, ExxonMobil, Energy Fuels, and Halliburton are all down over this past week. Marathon Petroleum and Apa Corp (US) are relatively flat this week. Shell said on Wednesday that it expects global LNG demand to double by 2040 as industrial demand in China and economic development in South and South-East Asia continues to grow. Its shares are up this week.

Materials and Mining stocks had a mixed week. Sibanye StillwaterFreeport-McMoRan, Newmont Mining, Mosaic, and Nucor Corporation are all down this week. Yara International is up this week after reporting on 9 February that fourth-quarter EBITDA was $586 million, compared with $1,067 million a year earlier. Net income was $246 million (96 cents per share) compared with $766 million ($3.02 per share) in the fourth quarter 2022. CF Industries is also up from a week ago despite it reporting on Wednesday that fourth-quarter profit slumped 68%, as lower prices of its products weighed on earnings. The company said its net earnings fell to $274 million, or $1.44 per share, in the quarter ended December 31, from $860 million, or $4.35 per share, a year earlier. Albemarle, the world's largest lithium producer, is down this week despite posting a better-than-expected adjusted quarterly profit on Wednesday due to its aggressive cost cuts.

European Stock Indices

Stoxx 600 -0.09% MTD +1.30% YTD
DAX 
+0.25% MTD +1.16% YTD
CAC 40 
+0.27% MTD +1.78% YTD
IBEX 35 -1.60% MTD -1.84% YTD
FTSE MIB +1.90% MTD +3.22% YTD
FTSE 100 
-1.55% MTD -2.13% YTD

Europe’s Stoxx 600 index climbed to the highest in more than a month earlier today. As noted by LSEG I/B/E/S data, as of 13 February fourth quarter earnings were expected to decrease 5.5% from Q4 2022. Excluding the Energy sector, earnings are expected to increase 0.2%. Fourth quarter revenue was expected to decrease 0.2% from Q4 2022. Excluding the Energy sector, revenues are expected to increase 3.8%. Of the 143 companies in the STOXX 600 that had reported earnings by 13 February for Q4 2023, 53.1% reported results exceeding analyst estimates. In a typical quarter 54% beat analyst EPS estimates. However, there are concerns that a slowdown in demand is stifling profits. According to Bloomberg news, industrials and energy companies are having a much harder time of it than the technology and pharma sectors.

Other Global Stock Indices 

MSCI World Index +1.20% MTD +1.73% YTD
Hang Seng +2.55% MTD -6.85% YTD

Currencies

The US dollar slid from a three-month high on Wednesday. The inflation data for January pushed back bets on a first Fed rate cut to the middle of the year, with funds futures pricing in a nearly 80% chance of easing at the June meeting.The GBP is -0.99% MTD against the USD and -1.33% YTD. Sterling continues to weaken as the economy officially slipped into recession last year. The EUR is -0.82% MTD against the USD and -2.8% YTD. 

Cryptocurrencies

Bitcoin +21.94% MTD +23.50% YTD
Ethereum +22.24% MTD +21.80% YTD

The total value invested in Bitcoin surpassed $1 trillion on Wednesday for the first time since November 2021 as inflows to US spot Bitcoin ETFs continued to support cryptocurrency prices.

Fixed Income

US 10-year yield to 4.27%.
German 10-year yield to 2.24%.
UK 10-year yield to 4.04%.

Yields jumped this week before slightly coming down as the timing of possible interest rate cuts worried investors. Yields surged on Tuesday following the hot inflation reading as market expectations for the first rate cut was pushed solidly back to June. However, yields eased on comments by Fed officials suggesting that despite an uptick, the 2% target was still on track. 

Note: As of 4 pm EST 14 February 2024

Commodities

Gold futures to $2,004.30 per ounce.
Silver futures to $22.39 per ounce.
West Texas Intermediate crude to $76.46 a barrel.
Brent crude to $81.50 a barrel.

Gold declined this past week to near a two-month low as the dollar strengthened on higher than expected US inflation data, which reduced hopes for early and deeper interest rate cuts this year.

Oil consolidated gains this week despite US crude inventories jumping by 12 million barrels to 439.5 million barrels last week according to the Energy Information Administration. This was the largest jump since November 2023. This consolidation may be due to the need to replenish depleted oil stocks in China and Europe. It also appears that the US is gradually topping up its Strategic Petroleum Reserves. On Wednesday the International Energy Agency (IEA) said global inventories had slipped by 8.4 million barrels last November. However, earlier today the IEA said that it expects global oil demand to slow. It trimmed its 2024 growth forecast to 1.22 million barrels per day (bpd) this year - about half of the growth in 2023 - owing in part to a sharp slowdown in Chinese consumption. It had previously forecast 2024 demand growth of 1.24 million bpd. As noted by Reuters, the Brent crude oil benchmark has risen about 6% since the start of the year as attacks on shipping in the Red Sea have raised supply fears, with January outages in major non-OPEC oil producing countries such as the United States adding to concerns.

Note: As of 5 pm EST 7 February 2024

Key data to move markets this week

EUROPE

Thursday: Spanish Harmonised Index of Consumer Prices and speeches by ECB President Christine Lagarde, ECB Chief Economist Philip Lane, and German Bundesbank President Joachim Nagel.
Friday: 
A speech by ECB Executive Board Member Isabel Schnabel.
Monday: 
German Bundesbank Monthly Report.
Wednesday: 
Eurozone Consumer Confidence.
Thursday: 
German HCOB Composite, Manufacturing and Services PMIs, Italian CPI, Eurozone HCOB Composite, Manufacturing and Services PMIs, Eurozone Harmonised Index of Consumer Prices, and ECB Monetary Policy Meeting Accounts.

UK

Thursday: GDP, Industrial Production, Manufacturing Production, and a speech by BoE MPC members Megan Greene and Catherine Mann.
Friday: 
Retail Sales and a speech by BoE Chief Economist Huw Pill.
Thursday: 
S&P Global/CIPS Composite, Manufacturing and Services PMIs.

US

Thursday: Speeches by Atlanta Fed President Raphael Bostic and Fed Board of Governors Member Christopher Waller, Initial Jobless Claims, NY Empire State Manufacturing Index, Retail Sales, Philadelphia Fed Manufacturing Survey, and Industrial Production.
Friday: 
Building Permits, Housing Starts, PPI, Michigan Consumer Sentiment Index, UoM 5-year Consumer Inflation Expectation, and speeches by Vice Chair for Supervision of the Fed Board of Governors Michael Barr and San Francisco Fed President Mary Daly. 
Wednesday: 
FOMC Minutes.
Thursday: 
Initial Jobless Claims, S&P Global Composite, Manufacturing and Services PMIs, and Existing Home Sales Change.

Global Macro Updates

Still on track? The Federal Reserve's path back to its 2% inflation target rate would still be on track even if price increases run a bit hotter-than-expected over the next few months, and the central bank should be wary of waiting too long before it cuts interest rates, Chicago Fed President Austan Goolsbee said on Wednesday, "Even if inflation comes in a bit higher for a few months it would still be consistent with our path back to target." 

A light at the end of the tunnel for Europe? Eurozone industrial production in December rose for the first time since February last year, according to data from Eurostat. Industrial production was up 1.2% on an annual basis in December. In Germany, output fell for the second consecutive month as a manufacturing slump continued. Annual output for both Germany and Italy were down from December 2022, falling 3.8% and 2.1%, respectively. However, despite concerns about the state of the wider eurozone economy, the ECB will still likely hold rates until June over concerns about the tightness of the labour market and the potential for wages to field a resurgence in price pressures. “Wage pressures remain high and we do not yet have sufficient data to confirm they are starting to ease,” vice-president Luis de Guindos said in a speech in Split, Croatia, on Wednesday. Earlier today ECB President Christine Lagarde told a European Parliament hearing that "The latest data confirms the ongoing disinflation process and is expected to bring us gradually further down over 2024.” The ECB’s need for caution is reflected in its growth prospects with the European Commission cutting its eurozone GDP growth forecast to just 0.8% from 1.2%, which is only a marginal improvement on last year's 0.5% rise.

Is the UK in a worse state than the US or Europe?The Office for National Statistics (ONS) said that GDP contracted by 0.3% in the three months to December after having shrunk by 0.1% between July and September. The fall in GDP in the fourth quarter was the biggest since the first quarter of 2021. Economic output fell by 0.1% month on month in December after 0.2% growth in November. All the main sectors fell in the quarter, with manufacturing, construction and wholesale falling the most, partially offset by increases in hotels and rentals of vehicles and machinery. There was a fall in the volume of net trade, household spending and government consumption in the final quarter, only partially offset by an increase in investment. Economic output stands only 1% higher than pre-COVID level. As noted by the Financial Times, in 2023, the economy largely stagnated as it grew only 0.1%. This was well below the 2.5% expansion in the US, and weaker than the eurozone’s 0.5 % growth. The stagnation of the British economy will put increasing pressure on the Bank of England to act. Inflation held steady at 4% in January. However, wage growth remains strong, up 6.2% in January, which may still add inflationary pressure. Nevertheless, swap markets are pricing in three quarter point cuts this year and investors are increasingly counting on the BoE to cut interest rates in June, with markets pricing in a 75% chance of the first cut at that meeting. 

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.

Next article
Created by professionals. For professionals.
privacy protect
Version 1.3.1