Senior Relationship Manager
Summary: ECB starts a paradigm shift - Stocks jump on earnings, Facebook suffers the largest loss ever
Good Morning,
Next week I will be on the slopes, trade carefully and be safe in this volatile time.
Christine Lagarde was much more hawkish than I had expected, driving yields higher and giving strength to the EUR. Lagarde acknowledged that inflation was higher than desired and did not state that rate hikes in 2022 were extremely unlikely. This means that the so called most dovish central bank is looking at tightening and will mean much more interesting FX markets as interest rate differentials are likely to reappear as a driver. The Bank of England considered hiking by 50 bps rather than the 25 expected. EURUSD rose to 1.14160 and GBPUSD to 1.3580 and the USD Index falls to 95.2. EURCHF rose above 1.0550 again.
From now it is worth taking note of EU data again, the general assumption that the ECB will not take action may not hold anymore.
The Stock market also continues it`s volatility. Facebooks Meta suffered the biggest loss in market cap ever recorded, the stock price fell by 26% and eliminated 200 billion USD in market cap. While tech overall and Social Media companies in particular were dragged along Twitter -5% and Snapchat -23%, Snapchat had a spectacular rebound after the bell up more than 50%.
Amazon fell 7% during normal trading but gained 17 in the after market on good results.
Overall Futures fell Dow 1.45%, S&P 2.44%, Nasdaq 3.74%, this morning, a bit more than half of the losses have been recovered.
Today we are expecting the Nonfarm Payroll at 14:30 as the key event, with an expectation of 150k added jobs but it seems that after the low ADP number on Wednesday, a lower number is not unlikely.
Next week it thin in terms of economic data, key is likely to be the US CPI on Thursday – after the webinar with Steen.
Economic Data:
Friday: Germany Industrial Orders, EU retail sales, US Nonfarm Payroll
Earnings:
Friday:: Bristol-Myers Squibb, Sano FP
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.