Asset Market Trends and Key Issues - 240123

Asset Market Trends:

The New York stock market started mixed with little movement, focusing on the fourth-quarter results of companies after the S&P 500 hit a record high the previous day (23rd, local time). (Dow -0.09%, S&P 500 +0.10%, Nasdaq +0.11%)

Bond yields rose as expectations for the Fed’s rate cut faded. The 10-year Treasury yield rose to 4.13%. The 2-year Treasury yield rose to 4.41%. The dollar was strong against the dovish policy of the Bank of Japan.

International oil prices reversed their rise after the attacks by the Houthi rebels in the U.S. and Britain and fell. Crude oil fell 0.8% to $74 per barrel. Brent oil rose 0.03% to $79 per barrel. Gold was strong despite the dollar’s strength, as the preference for safe assets worked. Copper rose 0.6% on expectations of China’s economic stimulus.

 

Key Issues:

1. Earnings Season: According to LSEG (formerly Refinitiv), the earnings growth rate of S&P 500 companies in the fourth quarter is expected to be 4.4%. According to FactSet, which has reported about 10%, the earnings growth rate is sluggish at -1.7% year-over-year. Netflix (NFLX), Texas Instruments (TXN), Johnson & Johnson (JNJ) and others are in focus.

2. China’s Stimulus: The Chinese government is preparing a stock stabilization measure of about 2 trillion yuan ($278 billion) in response to the slump of the Chinese benchmark index CSI 300, which fell to its lowest level in five years, according to Bloomberg.

3. Bank of Japan: The Bank of Japan (BOJ) announced that it will maintain its yield curve control policy, which allows the short-term interest rate to remain at minus 0.1% and the 10-year yield to fluctuate in the range of minus 1~1%.

Today’s Featured Stocks and Focus Companies

United Airlines (UAL): Earnings per share (EPS) of $2.00, beating estimates of $1.68 by about 18%. Revenue was $13.6 billion, in line with expectations. UAL projected a bigger loss this quarter due to the impact of the 737 Max aircraft grounding, but its full-year guidance was above Wall Street consensus, with earnings per share of $9.00~$11.00 based on strong demand.

Asset Market Trends and Key Issues - 240119

Asset Market Trends:

The New York Stock Exchange started with all three indices rising, as expectations for a soft landing of the economy strengthened amid the positive outlook from TSMC, which boosted the semiconductor industry. (Dow +0.51%, S&P500 +0.45%, Nasdaq +0.66%)

Bond yields remained on the rise as the market's expectations for a rate cut eased. The 10-year Treasury yield was strong at 4.14%. The 2-year Treasury yield rose to 4.38%. The dollar showed little movement and remained stable in a weak range.

International oil prices remained strong, supported by OPEC's positive outlook and increased demand from the U.S. Brent crude rose 1.16% to $79 per barrel. Gold rose 0.8% on the dollar's weakness. Copper rose slightly as concerns about the global economy eased.

Key Issues:

1. Semiconductor Strength: The semiconductor sector led the Nasdaq's rise, boosted by the strong fourth-quarter results and positive outlook from TSMC(TSM), the world's largest semiconductor manufacturer, due to artificial intelligence.

2. Temporary Budget Passed: The U.S. Congress failed to agree on the main budget for fiscal year 2024, but avoided a government shutdown by passing a two-month temporary budget. The House passed the budget bill following the Senate on the previous day (18th, local time).

3. Housing Market: Existing home sales announced, which can show the soundness of the U.S. housing market. Mortgage rates have fallen from their highest level in October, but concerns about demand persist, putting pressure on home prices.

Today's Featured Stocks and Focus Companies:

TSMC(TSM): TSMC forecasted that the semiconductor industry will overcome last year's inventory problems and macroeconomic difficulties, and that strong demand for 3nm and 5nm, as well as the artificial intelligence boom, will make 2024 a 'year of healthy growth'.

Asset Market Trends and Key Issues - 240118

Asset Market Trends:

The New York Stock Exchange started mixed as expectations for the Fed's rate cut clashed with stronger-than-expected data and expectations for a soft landing of the economy grew. (Dow -0.13%, S&P500 +0.38%, Nasdaq +0.91%)

Bond yields rose as the Fed's rate cut expectations faded on strong U.S. economic data, with the 10-year Treasury yield rising to 4.11%. The dollar strengthened on the euro's weakness and easing rate cut outlook.

International oil prices turned bullish on OPEC's robust demand outlook, geopolitical concerns, and supply disruptions due to the U.S. winter storm. Crude oil rose 0.73% to $73 per barrel. Brent oil rose 0.4% to $78 per barrel. Gold rose on safe-haven sentiment despite the dollar's strength.

 Key Issues:

1. Rate Cut Outlook: Following stronger-than-expected December retail sales data, the Fed's Beige Book, a report on the U.S. economic situation, said "strong consumer spending has boosted the economy in recent weeks." Betting on a March rate cut fell to the 50% range.

2. Economic Indicators: As the Fed's rate cut bets eased on strong economic data, key leading indicators such as building permits and housing starts, new unemployment claims, and the Philly Fed's manufacturing index were announced.

3. OPEC Outlook: The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that oil demand will remain robust for the next two years. The U.S. saw a sharp drop in oil supply due to a winter storm in North Dakota. Supply concerns intensified due to the conflict between Pakistan and Iran.

Today's Featured Stocks and Focus Companies:

Apple (AAPL): Apple, which had fallen due to price cuts in response to China's weak demand, gained strength as BofA presented a target price with more than 20% upside potential, along with an analysis that Apple will benefit from the increase in artificial intelligence demand in the future.

Asset Market Trends and Key Issues - 240117

Asset Market Trends:

1. The New York stock market opened lower amid concerns over the global economic recovery due to the slump in Asian markets and mixed expectations for the Fed's rate cut. (Dow -0.39%, S&P500 -0.46%, Nasdaq -0.69%)

2. Treasury yields rose on Waller's hawkish remarks. The 10-year Treasury yield rose to 4.10%. The 2-year Treasury yield rose to 4.33%. The dollar index hit a one-month high.

3. International oil prices plummeted on concerns over global demand due to China's weak data. Crude oil fell 2.3% to $70 per barrel. Brent oil fell 1.2% to $77 per barrel. Gold fell on the dollar's strength. Copper fell 0.4% on concerns over the global economic recovery.

Key Issues:

1. China's growth slowdown: China's GDP growth rate in 2023 slowed to 5.2%, lower than the market estimate of 5.3%. New home sales prices and retail sales data also fell short of market expectations. Hong Kong Hang Seng Index plunged 3.7%, Shanghai Index dropped 2%.

2. Christopher Waller: The Fed's Waller said that "inflation is gradually moving toward the 2% target", but poured cold water on the market's expectations for a rate cut, saying that "there is no reason to lower the rate as fast as before".

3. Regional banks and the Fed: US Bancorp (UBNC) and Citizens Financial (CFG) kicked off the earnings season for regional banks. Following Waller, Fed Vice Chair Michael Bower is scheduled to speak. US retail sales data for December will be released.

Today's Featured Stocks and Focus Companies

Tesla (TSLA): Tesla lost its position as the No. 1 electric car maker in 2023 to Volkswagen, just a week after lowering the prices of Model 3 and Model Y in China. It also cut the price of Model Y in Germany. The stock fell 1.3% before the opening.

Asset Market Trends and Key Issues - 240116

Asset Market Trends:

1. The New York stock market started weakly, waiting for the statement of Christopher Waller, the Fed director, who is perceived as a hawkish figure, despite the positive performance of Goldman Sachs and Morgan Stanley. (Dow -0.16%, S&P500 -0.29%, Nasdaq -0.35%)

2. The bond yield turned upward, waiting for the statement of Christopher Waller, the Fed director. The 10-year Treasury yield rose to 4.01%. The 2-year Treasury yield rose to 4.21%. The 5-year inflation expectation rate rose to 2.22%, the highest in two months. The dollar rose to the highest level in a month.

3. The international oil price rose, reflecting the geopolitical risk. Crude oil rose 0.8% to $73 per barrel. Brent oil rose 2.09% to $79 per barrel. Gold fell 0.4% due to the dollar's strength. Copper rose 0.8% in a slight recovery.

Key Issues:

1. Christopher Waller, Fed Director: He is expected to make a statement as a hawkish figure among the majority of Fed officials who are wary of the market's expectations that are too ahead of the curve.

2. Donald Trump: In the first primary of the Republican Party in Iowa, which is scheduled for November, former President Donald Trump won by a landslide with 51% of the vote, overwhelming second-place Ron DeSantis, governor of Florida, within 30 minutes of the start of the count.

3. Geopolitical Risk: As the Yemeni Houthi rebels' attack on a ship in the Red Sea escalates into a bigger geopolitical risk with the intervention of the U.S. and Britain, Reuters reported that the U.S. military's bombing did not have a significant impact on the Middle East's oil supply.

Today's Featured Stocks and Focus Companies

1. Tesla (TSLA): Elon Musk, CEO, said that it would be uncomfortable to grow Tesla into a leader in artificial intelligence and humanoid robot engineering without having 25% voting rights of Tesla's shares, and fell more than 1% after the remark.

2. Apple (AAPL): Apple launched an 'unprecedented discount' event for the iPhone, citing weak demand and intensified competition in China, raising concerns among investors. Apple announced a discount event for its flagship products, such as the latest model iPhone 15 series, MacBook, and iPad, from the 18th to the 21st.