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Weekly Market Update (February 04, 2024)


HIGHLIGHTS

Feb pushed back against the expectation of a March rate cut. Mega tech earnings were in focus this week, while the results were mixed. S&P500 and Nasdaq went up, mainly driven by the after-hour moves on Thursday. 10Y treasury yield was hovering around 4%.


Job Report: Nonfarm payroll data came in almost 2 times higher than expected (353k actual vs 185k expected). Unemployment rate remains unchanged. With the favorable inflation and growth data, Fed’s Chair even commented that this is a good economy. The International Monetary Fund (IMF) also revised up its global growth forecast for 2024 due to the resilient US economy.


Tech Earnings: Five of the Magnificent Seven stocks reported earnings this week. Microsoft and Google reported modest results on Tuesday, leading the mega-tech basket of stocks down 2.65%. The basket rebounded on Thursday after the other three mega-tech companies (i.e. Amazon, Apple, Meta) reported earnings, eventually finishing the week up 5.1%.

 
MARKETS

Nasdaq

15,628.95

+1.12%

S&P 500

4,958.61

+1.38%

Dow

38,654.42

+1.43%

10-Year

4.03%

-13bps

Brent

77.48

-7.57%

DXY

103.96

+0.47%

*Data as of market close. 5-day change ending on Friday.

 
VIEW FROM THE STREET

Equity

Goldman Sachs: Markets are speculating on the subsidies of new factories of semiconductors from the Biden Administration. Billions of dollars were involved and semi-conductors were the focus this week.


Bank of America: Although semiconductors are cyclical stocks, the potential returns of semiconductors are the best compared to other Technology, Media & Telecom (TMT) companies overall in the long term.

Fixed Income

UBS: The markets are still too optimistic about the pace and timing of rate cuts. We believe the economic data still needs to cool down more to keep the Fed on track for 100bps cuts, while 140bps is priced in currently.


Standard Chartered: We are adding more allocation to bonds, especially government bonds in developed markets as they continue to offer attractive yields. In the short term, we recommend adding short-duration inflation-protected bonds, hedging against the risks of increasing escalation in the Red Sea or other geopolitical tensions.


Economy

Morgan Stanley: In the previous years, COVID stimulus has injected significant liquidity into the market, boosting bank reserves double relative to GDP. However, bank reserves have dropped recently, implying that they will not be fuelling the equity valuation multiples anymore.


UBS: The GDP figure in Q4 2023 was better than expected. We expect higher volatility ahead given the potential disappointment on Fed policy. Any sign of hawkishness could pull back the market expectation of rate cuts.

 
KNOWLEDGE TRANSFER

ARM IPO

Here's all you need to know about the initial public offering of Arm Holdings.


 
DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.



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