The Week Ahead
Macro Factors - Inflation Data and Bank Earnings on focus
After a tough start of the year, the week highlight of the release of crucial inflation data, followed by the unofficial kickoff of earnings season on Friday.
The December consumer price index (CPI) that’s set for release Thursday is expected to confirm the recent trend of easing inflation. Economists polled by FactSet expect headline CPI increase 3.2% year over year, and a 0.1% more than in November. But core inflation, which excludes volatile food and energy prices, is expected to rise 3.8%, compared with a 4% gain previously.
The CES technology event kicks off in Las Vegas, Nev. The trade show runs through Friday.
One of the most highly anticipated in cryptocurrency history: the week the U.S. could finally green light a spot bitcoin exchange traded fund. Bitcoin registered a 60% higher over the past three months. The SEC is widely expected to approve several spot bitcoin ETF applications at the same time, if it approves any at all, to even the competitive playing field.
Banks Earnings
Big bank earnings will kick off the start of the latest corporate earnings season in the week, with $Bank of America(BAC)$ , $Citigroup(C)$ , $JPMorgan Chase(JPM)$ and $Wells Fargo(WFC)$ all reporting on Friday. Last week, JPM hit record highs after $Goldman Sachs(GS)$ called it a top 2024 banking pick.
Last Week's Recap
The US Market - The major averages notched negative returns in the first week
The three major averages notched negative returns in the first trading week of 2024, to snap a nine-week winning streak.
The tech-heavy Nasdaq suffered the biggest decline at 3.25% — its worst weekly performance since September. The $S&P 500(.SPX)$ and $DJIA(.DJI)$ dropped 1.52% and 0.59%, respectively.
Fed officials agreed during their last policy meeting of 2023 that interest rates were likely at their peak and almost all of them predicted lower rates by the end of 2024, according to minutes from that meeting released by the central bank. However, a number of participants suggested that rates could stay at this peak for "longer than they currently anticipated".
The U.S. economy added many more jobs than anticipated in December, with nonfarm payrolls growing by 216,000. Economists polled by Dow Jones expected a gain of 170,000 for last month. The unemployment rate held steady at 3.7% in another sign of continued labor strength.
The nonfarm payrolls result sent Treasury yields spiking higher, with the benchmark 10-year rate touching a high of 4.103%, but pared gains.
Market participants predicted that the Fed might potentially delay the first of its rate cuts. Odds of a quarter-point cut in the fed funds rate to 5.00-5.25% from the current 5.25-5.50% dropped to 53.6%, down from 62.3% Thursday and 73.4% one week ago, according to the CME FedWatch tool.
The US Sectors & Stocks -AAPL slumped 6.4%
Only 3 of S&P 500 sectors rose for the first trading week of 2024, that were healthcare、utilities and energy sectors.
The technology sector slumped 4.78% as $Apple(AAPL)$ has been downgraded by two research firms, which concerned about sluggish iPhone sales and macroeconomic worries that could impact consumer spending. Barclays cut its AAPL rating to underweight. Piper Sandler lowered its rating to neutral from overweight. The iPhone maker tumbled 6% this week.
$Tesla Motors(TSLA)$ deliveries jumped to 484,507 in Q4, that slightly topped views of 480,000. For the year, deliveries grew 38% to 1.81 million, just exceeding the company's 1.8 million target. However, BYD (BYDDF) sold a record 341,043 EVs in December, pushing its 2023 sales to 3,012,906, that bested Tesla for the first time.
$Rivian Automotive, Inc.(RIVN)$ reported Q4 deliveries of 13,972 and full-year deliveries hit 50,122. Both were slightly below views. RIVN stock plunged.
$Eli Lilly(LLY)$ and $Novo-Nordisk A/S(NVO)$ unveiled key initiatives in their battle for dominance in the weight-loss drugs arena, Both of their stocks outperformed. Meanwhile, Novo signed a pair of deals to investigate another means of treating obesity with $Omega Therapeutics(OMGA)$ and a treatment for a form of steatohepatitis related to obesity. OMGA skyrocketed 45% for the week.
$Mobileye Global Inc.(MBLY)$ stock plunged nearly 30% as it warned that 2024 sales would be below estimates because of excess inventory at its automotive customers. The news dragged down auto-exposed semiconductor stocks, including $Analog Devices(ADI)$ , $NXP Semiconductors NV(NXPI)$ , $ON Semiconductor(ON)$ , $Texas Instruments(TXN)$ .
$Peloton Interactive, Inc.(PTON)$ shares jumped 10% as Peloton announced that it is partnering with TikTok to bring short-form fitness videos to the social media platform.
U.S. spot bitcoin ETFs could win approval next week after last-minute application updates, sources familiar with the matter said.
Hong Kong Market - $HSI(HSI)$ lost 3% to start the year
Hong Kong stocks had the worst start to the year since 2005, after it just finished a fourth year of losses.
The Hang Seng Index capped a 3% decline in the four-day trading week, while the Tech Index lost 4.57%.
$LI AUTO-W(02015)$ deliveries topped 50,000 for the first time in December. $XPENG-W(09868)$ edged up to a fresh monthly peak of 20,155. $NIO-SW(09866)$ deliveries rose to 18,012 in December, exceeding its Q4 target. But shares of three China EV makers fell.
“Hong Kong stocks are still under pressure fundamentally,” said Vincent Ji, an analyst at ICBC International in Hong Kong. “Global markets, particularly US stocks, have fully priced in expectations about the rate cuts, so the rallies will take a breather from here. All eyes will be on China’s property market to see if there are any signs of a recovery after all the loosening measures.”
Singapore Market - $Straits Times Index(STI.SI)$ lost 1.7% in the first trading week
Singapore stocks logged a 1.7% loss in the first trading week of 2024, snapping a four-week winning streak.
Singapore GDP grew by 2.8% year on year in the fourth quarter of 2023 , nearly triple the 1% recorded in the third quarter of 2023. For 2023, Singapore’s GDP grew by 1.2%, within the range of 0.5% to 1.5% forecasted by the Monetary Authority of Singapore (MAS).
Prime Minister Lee Hsien Loong delivered a New Year’s Day message on 31 December 2023 where he mentioned that MTI expects Singapore’s GDP to grow between 1% to 3% for 2024.
Australian Market - $S&P/ASX 200(XJO.AU)$ lost 1.34% to mark its worst first-week since 2007
Australian shares lose out its first week of 2024, with the benchmark was down 1.34%, that marked the benchmark’s worst first-week performance of any year since 2007.
The S&P/ASX 200 rallied more than 7% last month on hopes that central banks would begin cutting interest rates sooner than expected.
IML senior portfolio managers Hugh Giddy and Simon Conn said they expected the Australian sharemarket to remain volatile, despite the hopes surrounding falling inflation. “It’s important to note that while goods price rises have moderated significantly, services inflation is more persistent. Unless the economy weakens abruptly, interest rates may remain at elevated levels in Australia for some time.”
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