Wednesday's Markets Update (January 24, 2024)

24 Jan 2024 by rate3

On Wednesday, macroeconomic data showed that January business activity increased, and the S&P 500 and Nasdaq 100 hit fresh records, driven by strong corporate results. Netflix shares soared 10% after beating revenue forecasts and increasing subscribers. Chipmakers gained, with Nvidia, Microsoft, and Meta shares reaching all-time highs (ATH). Microsoft crossed the $3 trillion valuation mark due to continuing AI excitement.

Meanwhile, European stocks hit a 5-week high on strong earnings. Oil and coffee prices continued to rise due to geopolitical tensions.

On the crypto side, BTC and ETH were slightly up on technical recovery from Tuesday's crash, as the rest of the crypto market also showed minor growth. Algorand, Solana, and Bitcoin Cash recovered up to 3%.

Details

The S&P Global US Composite PMI rose to 52.3 in January 2024, signaling the fastest growth in business activity since June 2023. Service sector activity expanded, while manufacturing output fell slightly. New business increased sharply, but new export orders declined. Job creation slowed, while input cost inflation and average prices charged eased. Business confidence was at its highest level since May 2022, due to hopes of improving demand conditions and investment in new machinery and service lines. (SP Global)

Crypto

In 2023, the crypto universe saw a decrease in stolen funds to $1.7 billion, from $3.7 billion in 2022, despite an increase in cyber incursions from 219 to 231. The decline in DeFi platform breaches, down 63.7%, suggests improved security measures. However, major heists, such as Euler Finance and Curve Finance, losing $197 million and $73.5 million respectively, highlight ongoing challenges. (source)

World Markets

Shanghai and Shenzhen stocks rose on news of Beijing's potential 2 trillion yuan rescue fund and measures to boost market confidence, with strong gains from major firms and positive sentiment from Jack Ma's Alibaba share purchase.
European stocks closed sharply higher, driven by strong earnings from major companies in the Eurozone. The Stoxx 50 and pan-European Stoxx 600 rose by 2% and 1.1%, respectively, with several companies beating forecasts and raising hopes for future growth.
The Eurozone Composite PMI slightly increased to 47.9 in January 2024, indicating a slower rate of business activity decline. Manufacturing production contraction eased, while services activity declined. New orders and exports decreased at a slower pace. Employment slightly increased, and both input costs and selling prices rose. Business optimism improved due to hopes of reduced cost of living pressures and lower interest rates. (SP Global)
South Africa's annual inflation rate fell to 5.1% in December 2023, below market predictions. Lower food and transportation costs drove the decrease, while housing, utilities, and other expenses rose. Core inflation remained steady at 4.5%. Monthly consumer prices were unchanged, compared to a 0.1% drop in November.( Statistics South Africa)
Nigerian stocks hit a record high above 100,000 points, driven by consumer goods and oil & gas sectors amid strategic pre-earnings buys to mitigate effects of rising inflation and currency woes.
Mexico's economic growth slowed to 2.3% in November, below expectations, due to the Bank of Mexico's tightening efforts and amid industrial slowdown and agricultural contraction, despite two years of expansion and quicker services sector growth; monthly activity dipped by 0.5%.
Russia's producer price inflation decreased to -3.10% in December 2023, down from -0.10% in November. The average producer price inflation from 1994 to 2023 was 1.62%, with a record high of 21.00% in January 1995 and a record low of -8.40% in November 2008. (Rosstat)

Commodities

WTI crude futures rose to $75/barrel on falling US stockpiles, China's economic stimulus, and geopolitical tensions. China's central bank reduced bank reserve requirements, and US stockpiles saw a large withdrawal of 9.2 million barrels.
Natural gas prices rose to $2.6/MMBtu after a month-low of $2.31 as production recovery was slow following the Arctic freeze. Output decreased to 102.8 bcfd in January, and exports to Mexico increased to 5.7 bcfd. Despite this, heating demand is expected to remain subdued due to above-average temperatures.
Arabica coffee futures rose towards $1.90/pound due to geopolitical tensions in the Red Sea affecting shipping costs, causing delays and increased freight rates. Despite this, the International Coffee Organization (ICO) projects a 5.8% increase in global coffee production for 2023/2024 and a 2.2% rise in consumption, resulting in a 1 million bag surplus.
Cocoa futures reached a 46-year high of $4,700/tonne due to supply constraints in West Africa, with production expected to only increase slightly in the upcoming season. Supply chain disruptions and aging tree stocks are affecting crops in top producing countries, while soaring prices may reduce demand.
Germany Electricity price surged 382.20% YoY in Jan 2024, reaching an all-time high of 699.44 in Aug 2022.

Currencies

The British pound strengthened on robust PMI data, suggesting the Bank of England may slow down on cutting rates. Private sector growth hit a seven-month peak, with potential for March tax cuts, despite poor retail sales and rising inflation.