Friday's Markets Update (January 19, 2024)

19 Jan 2024 by rate3

On Friday, the Michigan consumer sentiment index reached 2021 highs, and inflation expectations fell. Stocks rallied on strong earnings and economic data, with the technology sector leading the gains. Nvidia, Advanced Micro Devices, and Texas Instruments surged. The S&P 500 reached an all-time high, while the Nasdaq and Dow also gained.

EU stocks were down on ECB remarks. Asian stock markets continued to be dragged down by the Chinese economy, with the exception of Japanese stocks propelled by the independently efficient BoJ's policy. In Africa, markets are in the red, while in South America, it's in equilibrium.

In commodities, uranium and oil continue to rally on geopolitics, while natural gas is in deep red due to oversupply.

In currencies, the Russian ruble and the Pakistani Rupee continue to depreciate against USD.

On the crypto side, BTC and ETH are slightly in the green but continue to fluctuate close to their critical support levels. Most of the crypto market trades in the red, with MATIC, Avalanche, and Polkadot down by more than 3 percent. Meanwhile, Chainlink and Litecoin both surged by more than 5%.

Details

According to the University of Michigan, consumer sentiment (78.8) soared to highest level since July 2021 in January 2024, driven by optimism about inflation and income. Inflation expectations fell to lowest level since December 2020. All five index components rose, pointing to a strong start to the year. (University of Michigan)
Existing-home sales fell 1.0% in December 2023 to lowest level since August 2010, missing expectations. Sales down in Midwest and South, but up in the West. Annual decline of 6.2%. NAR Chief Economist sees potential upturn due to lower mortgage rates and expected inventory increase. (NAR)

Crypto

The Bitcoin network's achieved a hash rate of 500 exahashes per second, processing 5 billion computations per second for every star in the Milky Way galaxy. It would take approximately 2000 years for the entire global population to match the network's current hash rate. (source)
99% of crypto is legal. According to Chainalysis' crypto crime report, the total value of cryptocurrency sent to illicit addresses dropped in 2023 to $24.2 billion from $39.6 billion in 2022. The 2022 figure was inflated by $8.7 billion in FTX creditor claims. In 2023, illicit cryptocurrency transactions accounted for just 0.34% of all cryptocurrency volume, down from 0.42% in 2022 and a significant decrease from 1.3% in 2019. (source)
Spot Bitcoin ETFs led by Fidelity and BlackRock saw nearly $1.2 billion influx within the first five days of trading, but a net outflow of $131.6 million due to Grayscale's converted fund. Bitcoin's price has been affected, with potential further pressure from profit-taking by GBTC investors.(source)

World Markets

Foreign direct investment in China decreased 8% to CNY 1.13 trillion or $157.1 billion in 2023. It fell in manufacturing and services but rose in high-tech industries, construction, and R&D. Investment increased from several countries, including France, the UK, and the Netherlands. (China's Ministry of Commerce)
EU stock markets are mostly in red, led by Greece market (down by almost 2%). EU Central Bank published its "Account of the ECB meeting held on 13-14 Dec 2023" (ECB). It shows that ECB maintained high interest rates and signaled an end to bond purchases to combat inflation. Inflation projected to remain elevated in coming years. No rate cuts discussed, future decisions data-dependent. The ECB's projected inflation: 5.4% (2023), 2.7% (2024), 2.1% (2025), 1.9% (2026). The core rate: 5.0% (2023), 2.7% (2024), 2.3% (2025) and 2.1% (2026).
South American markets are in an equilibrium with Argentinian Merval surging almost 4% but Brazil's Ibovespa falling 0.3% to a one-month low below 126,900 due to uncertainty over payroll tax exemption and rising interest rates. Fiscal challenges and an impasse on tax reform plans intensified the decline, impacting consumer discretionary stocks like Casas Bahia and Magazine Luiza. Vale and Petrobras also retreated despite recovering commodity prices, leading to a weekly decline of over 3.4%.
Asian markets are mostly down led by China related stocks (f.e. HK50 is 3% in red) with exception of Japanese stocks, with the Nikkei 225 up 1.4% at 35,963 and Topix gaining 0.72% at 2,510. Easing inflation in Japan reinforced a dovish outlook on monetary policy. Strong corporate earnings in the US boosted technology stocks, driving gains in Tokyo Electron, Advantest, Disco Corp, Renesas Electronics, and SoftBank Group. The Nikkei and Topix finished the week 1.08% and 0.63% higher, respectively.
In Africa markets are in a negative territory mostly except the Zimbabwe Stock Index (ZSI Industrials) which rose by 56.97%, gaining 386,194 points since the start of 2024, propelled by high inflationary expectations.

Commodities

Uranium prices continue to rally, adding another 14% and hitting $106 per pound, the highest since 2007, driven by supply issues in Kazakhstan, setbacks in key mines, and geopolitical tensions affecting Russian imports.
Urals Oil rose 5.59% to $3.34 per barrel since the start of 2024, tracked through a contract for difference (CFD).
US natural gas futures hit a two-week low at $2.5/MMBtu, with over 20% weekly losses, driven by smaller storage draw, reduced demand, increased output, and low LNG export flows.

Currencies

The Russian ruble weakened to around 89 per USD, influenced by profit-taking after a recent rally on positive oil dynamics. The finance ministry's forex sales aim to prevent further depreciation.
Among other daily records is the Pakistan Rupee, which continues to depreciate against USD with a historical high of 307.75 in September 2023.

Busy Week 4 ahead: US GDP, PCE, income/spending data, durable goods, PMIs, home sales, and earnings. Rate decisions in Euro Area, Japan, Canada, and others. Manufacturing and Services PMIs in several countries. Germany Ifo and GFK indices, Australia NAB Business Confidence.