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Weekly Market Update (February 18, 2024)


HIGHLIGHTS

The expectation of early rate cuts was lower, mainly driven by the higher inflation prints. The higher-than-expected CPI and PPI implied that the robust growth would fuel inflation. The rally in equities is interrupted while the USD is boosted.


China: Despite the high transportation volume during the Lunar New Year holiday, the holiday expenses are disappointing. Meituan food delivery figures jumped, indicating a downgrade in consumption.


Real Estate: The high-interest rate environment is a slow burn for real estate markets in the US. Commercial real estate is taking the hardest hit due to the structural changes in the way people work. Around USD 1.2 trillion of commercial real estate loans are going to mature in the next 2 years, which will likely be refinanced at high rates.

 
MARKETS

Nasdaq

15,775.65

-1.34%

S&P 500

5,005.57

-0.42%

Dow

38,627.99

-0.11%

10-Year

4.29%

+11bps

Brent

83.30

+1.66%

DXY

104.28

+0.19%

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

 
VIEW FROM THE STREET

Equity

Goldman Sachs: We raised our S&P500 target, mainly driven by the increasing profit estimates. We expect stronger economic growth and higher profits, especially the mega-tech companies.


Standard Chartered: Japanese equity markets are recommended, especially with the weak yen. As the latest data has reported a technical recession in the second half of 2023, the tightening policies will likely be delayed, which would be favorable to Japanese equities.

Fixed Income

UBS: Yields jumped across the curve after the hotter-than-expected inflation report. The expectation of the first cut in May declined from 51% to 33% this week. Markets are pricing fewer than 4 rate cuts this year.


Standard Chartered: US 10Y treasury yield bounced back above 4.25%. Due to the high interest rates, we expect an economic slowdown later this year., which would cap the bond yields. Investors are recommended to hedge against inflation revival by short-term inflation-protected bonds.


Economy

Standard Chartered: Consumption is worse than expected, as indicated by the latest US retail sales report. It also supports the underlying weakness in the labour market. The average hours worked continued to decline in the previous week.


UBS: Consumer spending is expected to remain healthy amid the robust job market. Despite the decline in retail sales data, we believe the strength in the job market can support household consumption.

 
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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