Macroeconomic/ geopolitical developments
- US stock averages extended to record highs as the economy exceeded expectations with a 2.5% full-year growth rate, driven by strong consumer spending. The focus now flips to the tech giants upcoming quarterly results, giving insights into the sustainability of their high valuations.
- Earnings Recap: Netflix beat expectations, adding 13.1 million subscribers and experienced a surge in its stock value of nearly 11%. IBM also surpassed expectations, seeing its stock surge over 9% after reporting a 4% increase in fourth-quarter revenue, driven by strong demand for AI products. Tesla disappointed, revealing revenue of $25.1 billion and earnings of $0.71 per share, with its stock falling 12%.
- US Data: GDP surprised positively, coming in at 3.3% for the October to December period, compared to 2% expectations. Core PCE came in slightly below expectations at 2.9% in December, compared to the anticipated 3% and marking a decrease from the 3.2% recorded in the preceding month.
- Potential March Fed rate cut expectations are fading, as the prevailing sentiment among economists expects interest rate cuts in the second quarter, with June being deemed more likely than May.
- The ECB gave no hint on rate cuts, maintaining its record-high interest rates and reiterated its commitment to combating inflation. This dispelled speculation about an imminent policy easing.
- The PBoC announced significant measures to stimulate the country’s economy, as a response to the continued plunge of the stock market. This sparked a positive market response, leading to a rebound in stock prices, but investors remain cautious about the sustainability of the recovery.
Global financial market developments
- Global equity index futures advanced, with US averages again achieving new all-time highs.
- US and European yields prodded still higher, probing to new multi-week yield highs.
- The US Dollar Index consolidated recent solid gains.
- Gold futures consolidated at the lower end of the intermediate-term range.
- Oil futures extended to still higher prices, with still heightened tensions in the Middle East.
Key this week
Central Bank Watch: A significant week for central banks with monetary policy decisions on Wednesday from the Fed and on Thursday from the Bank of England (BoE).
Macro Data Watch: Standouts this week are EU GDP (YoY, QoQ) on Tuesday, Japan Retail Trade and Sales and US ADP Employment on Wednesday, EU CPI (MoM, YoY) and US ISM Manufacturing PMI Thursday, US Employment and Michigan Consumer Sentiment Friday.
Earnings Watch: A huge week for earnings, with notable standouts being Microsoft, Alphabet, Boeing, Apple, Amazon, and Exxon Mobil
| Date | Major Macro Data |
| 01/29/2024 | Nothing of note |
| 01/30/2024 | Japan Unemployment Rate; German and EU GDP (YoY, QoQ); US JOLTS Job Openings and Consumer Confidence |
| 01/31/2024 | China PMI; German Retail Sales, Unemployment and CPI; US ADP Employment; Fed Monetary Policy Statement, Decision and Press Conference |
| 02/01/2024 | EU CPI (MoM, YoY); EU Unemployment Rate; BoE Monetary Policy Decision, Report and Minutes; global Manufacturing PMI from S&P Global and US ISM Manufacturing PMI |
| 02/02/2024 | US Employment report; Michigan Consumer Sentiment |
| Date | Major Earnings Data |
| 01/29/2024 | Nothing of note |
| 01/30/2024 | Microsoft, Alphabet, Pfizer, Starbucks |
| 01/31/2024 | Mastercard, Qualcomm, Boeing |
| 02/01/2024 | Apple, Amazon, Merck & Co, Honeywell |
| 02/02/2024 | Exxon Mobil, AbbVie, Chevron |
