Senior Relationship Manager
Summary: Traders are looking for a hawkish ECB, Google strong on results.
Good Morning
Quite a mixed session on US exchanges yesterday, that ended in the green for the indexes, Dow 0.78%, S&P 0.69%, Nasdaq 0.75%. Exon rose 6.5% on strong results and stock of the day was Google, closing up almost 2% and adding another 6% after the results and market close. For Swiss, UBS was rather amazing with an 8% rise
Sony surprises with a 30% rise in operating profit this morning. The GER40 is near the key resistance at 15725.
Fed Speakers Patrick Harker and Raphael Bostic were on the wires yesterday, saying 4 hikes could be appropriate and that the fed needed to act soon. Harker said he was not convinced a 50 point hike in March was necessary.
The Expectation for a hawkish ECB is in the rise, yields are rising to their highest since 2019 and interest futures imply a 9 basis point hike by July. British Yields also rise. Both central banks will announce their policy rates tomorrow. It will be an interesting day.
EURUSD rises to 1.1270 and GBPUSD 1.3520, the USD Index trades at 96.29. Gold and Silver tested higher yesterday but Gold failed to breach the 1810 and fell back to 1797 and Silver trades 10 cents higher than yesterday after hitting a high of 23.10 yesterday.
Russian President Vladimir Putin accused the West of trying to push Russia into a war..
China, Hong Kong, Singapore, Malaysia continue to be closed for the Chinese New Year celebration.
Our Ole Hansen published a great article on commodity returns, that is key for a all looking to start trading the sector:
Commodity investors need to understand total return
Commodities continued to build on strong gains in 2021, a year where the sector recorded its best year since 2000. In our recently published Quarterly Outlook we see the prospect of even higher prices in 2022 with another year of tight supply and inflationary pressures supporting commodity returns. The decarbonization of the world will increasingly create so-called greenflation where rising demand and prices of commodities needed to support the process will be met by inelastic supply, partly driven by regulations, such as ESG, prohibiting some investors and banks from supporting mining and drilling activities.
Economic Data:
Wednesday: EZ HICP, ADP Employment
Thursday: International PMIs, EU PPI , UK rate decision, EU Rate decision, US Employment data and factory orders
Friday: Germany Industrial Orders, EU retail sales, US Nonfarm Payroll
Earnings:
Wednesday :Alibaba Novo Nordisk Alphabet Sony Mitsubishi T-Mobile Meta QUALCOMM AbbVie Thermo Fisher Novartis AG
Thursday: Roche Ford Amazon.com Eli Lilly Shell ConocoPhillips , Estee Lauder Cos Inc
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.