Tuesday's Markets Update (January 16, 2024)

16 Jan 2024 by rate3

On Tuesday, major stock indexes are mostly lower, with the S&P 500 and Dow Jones down, while Nasdaq remains flat. Comments from Fed's Waller about a gradual decrease in inflation suggest no rush for rate cuts, leading to a rise in the dollar and Treasuries. Hawkish remarks from ECB policymakers also emerged. Apple's stock falls after the company offered iPhone discounts in China, and financials are down due to a warning of lower margins. In the crypto sector, Bitcoin's price fell below $43,000 after ETF approval, yet institutions like BlackRock capitalized on the opportunity, purchasing 11.5k BTC amid the dip. Ethereum maintains a bullish pattern, holding steady at $2.5K.

Details

The NY Empire State Manufacturing Index hit a record low of -43.7 in Jan '24, signaling a steep decline in manufacturing activity (source) New orders and shipments also plunged. Employment and workweek decreased modestly. Unfilled orders and delivery times shrank significantly. Price increases picked up slightly. Optimism rose slightly, with firms expecting improvement in the next six months. Capital spending increased, indicating improved investment plans.

Crypto

Bitcoin's price fell after ETF approval, but institutional investors like BlackRock (bought 11.5k BTC) (source) saw this as an opportunity to accumulate. Will this stockpiling have a positive impact on Bitcoin's price?

World Markets

European stocks dipped after ECB officials at Davos suggested it's too early for rate cuts, citing persistent inflation and regional conflicts. Ocado Group saw Q4 revenue growth, while Hugo Boss missed Q4 EBIT forecasts.
In January, Germany's ZEW Economic Sentiment rose to +15.2, (source) higher than expected, indicating increased optimism and anticipation of ECB rate cuts. US rate cut expectations are even stronger, while the current German economic assessment is stable but low.

Commodities

Platinum below 950 USD/t.oz, near weakest in a month, due to US dollar strength and rate cut bets. However, supply deficit projected, with market anticipated to have a shortfall of 0.54 million ounces in 2024, as demand to outpace supply. Risks include electricity shortages in South Africa and sanctions on Russia.
Palladium nears 5.5-year low, pressured by stronger dollar and potential market surplus of 300,000 ounces in 2024 due to faltering automotive demand. The demand for catalytic converters declining as EVs share grows and manufacturers use cheaper materials.

Currencies

The dollar index hit a nearly monthly high of 103.3 on Tuesday, as investors scaled back bets on interest rate cuts. Fed's Waller sees no reason to move quickly on rate cuts. The euro and pound fell due to hawkish ECB remarks and weak data, increasing likelihood of interest rate cuts.