Daily Digest:
w/c 4 March 2024: US stock averages higher again to end the week, prodding at record levels; upcoming week's focus on the Fed's Powell testimony before Congress and the US Employment report

Dovish Central Bank Perception Trumps Mega cap Disappointment, Risk On Extends

Beginner

Macroeconomic/ geopolitical developments

  • The MASSIVE week for market data and events resulted in an extension of the 2023 “risk on” theme from January into February.
  • Wednesday’s FOMC decision to hike rates 0.25% as expected was met with a perception of a slightly more dovish tone from Fed Chair Powell.
  • In addition, both the Bank of England (BoE) and European Central Bank (ECB) hiked rates 0.50% on Thursday, but again markets perceived comments as more dovish than expected.
  • Mega cap stocks in the US were overall disappointing in their results and guidance, despite a positive tone from Meta, as Apple, Amazon and Alphabet all disappointed.
meta
  • The US Employment report surprised significantly to the upside on Friday, with the NFP data massively beating expectations, posting at 517K, as the Unemployment rate fell to 3.4%, its lowest since 1969.
NFP
  • The Institute for Supply Management (ISM) non-manufacturing PMI jumped to 55.2 from 49.2 in December, way above consensus, whilst S&P Global Services and Composite data from European economies also broadly beat estimates.

Global financial market developments

  • The major US, European and Asian stock averages were all positive territory again for the week, moving to multi-month highs.
  • Growth stocks were again the leaders with the Nasdaq posting a fifth successive week of gains.
  • The UK benchmark index, the FTSE 100 hit a new record high, buoyed by a weaker Pound.
Weekly FTSE 100 chart
  • US and European Bond yields were erratic, but broadly sideways.
  • The US Dollar Index hit a new multi-month low but posted a strong rebound into the end of the week.
  • Gold nudged higher to initially build on the 2023 surge, to then plunge from another new multi-month high.
  • The January Oil rally has been reversed, with the market back close to multi-month lows.
  • Copper sold off from near multi-month highs, for a more negative tone.

Key this week

  • Central Bank Watch: Focus this week will be on Tuesday with the Reserve Bank of Australia (RBA) interest rate decision and the Fed’s Powell speaks at the Economic Club of Washington, D.C.
  • Macroeconomic data: A light week for data, German CPI, UK GDP and US Michigan Consumer Sentiment are the standouts.
DateKey Macroeconomic Events
06/02/23EU Retail Sales
07/02/23RBA interest rate decision; Fed’s Powell speaks
08/02/23Nothing of note
09/02/23German CPI 
10/02/23China CPI, UK GDP, Manufacturing and Industrial Production; Canada Employment report; US Michigan Consumer Sentiment

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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