The main global stock markets closed the month of February in a high zone, thanks mainly to large technology and artificial intelligence stocks, boosting the S&P 500 by 5.2% and exceeding 5,100 points. Lower inflation rates in the US and Europe provided relief to stocks and bonds, along with the US government avoiding an administrative shutdown.
March will begin with the focus on meetings on inflation and interest rates, with an earnings season over and the political agenda still heavy. In that sense, the market is pricing in a positive 2024 supported by average earnings above 10% or more and global interest rate cuts in the second half of the year to boost broader returns.
On the other hand, in recent weeks investors have witnessed a significant (and unexpected) rise in short-term Treasury bond yields, a phenomenon that deserves a closer look given its potential impact on the investment outlook. This rally can be read as a reflection of a broader pulse in the economy, particularly with respect to manufacturing activity and consumer perceptions.
Manufacturing activity in the United States, traditionally a barometer of economic health, has shown signs of weakening. This decline in one of the pillars of US economic activity could be a precursor to a more widespread slowdown, a possibility that investors should monitor.
Simultaneously, there has been a significant correction in economic expectations, as reflected by recent consumer confidence metrics. Consumer sentiment, a critical driver in a consumer-driven economy, has suffered a notable deterioration in the past month. This decline in sentiment points to a possible contraction in spending and, therefore, future economic growth. However, consumers still maintain a view of controlled inflation, which could indicate relative stability in purchasing power and, possibly, spending patterns.
It is important to note that these changes in perception align with the signals issued by the ISM, which traditionally offers insight into the health of the manufacturing economy. Furthermore, recent comments from influential figures, such as Chris Waller, suggest a possible tactical shift in Treasury holdings, favoring short-term securities. Such a strategy could reflect an adaptation to current uncertainty and a search for flexibility in the face of possible turbulence.
For investors, the interpretation of these events varies considerably depending on their approach. Those with a long-term view might view these signals as opportunities to adjust their strategies, while more short-term market participants may not feel the need to react with the same intensity.
What is clear is that both manufacturing activity and consumer sentiment are key elements that can offer valuable clues about the future direction of the economy and, therefore, the market. Investors would do well to monitor these developments closely, preparing to adjust their positions and strategies in line with the changing winds of the global economy.
Early next week:
- Events dominated by the China two-session meetings, the UK spring budget and the US “Super Tuesday” presidential primaries.
- Macroeconomic focus in the ECB's Thursday press conference, which will be the first to present interest rate cut prospects, and in the more moderate US employment report on Friday.
- End of the earnings season in the USA and Europe stronger than expected, with companies from AVGO, ORCL, TGT, AHT.L to the Chinese NIO, JD.US.
This being the case, these are not times to get carried away by FOMO in the zone of maximums, and it is time to analyze the portfolio, the positions taken, the exit levels and the strategy of each one with its specific objectives. After all, it is in moments of glory that one can best plan for the future.
Key technical levels
THEY ARE NOT INVESTMENT RECOMMENDATIONS. Only comments from a technical informative point of view.
1.- S&P
From a technical point of view, the index continues to set historical highs – there are already 15 sessions in 2024 where an ATH has been set – breaking upwards the control zone that we established at 5100 points. This is now the first of the supports to watch in the short term. Below, we have to look for references in the 5030, 5000 and 4925 points for references of some importance. Caution in an environment of very positive sentiment, insider sales and a VIX that is beginning to show signs of gentle increases.
Source: investing.com
IBEX-35
From a technical point of view we continue within the large range 9800-10250 marked by this indicator. At the moment back and forth with inability to exceed 10,200 and losing 10,000 points. Control references in the 10050 first, the 10000 as the second zone and from there, to the base of the commented range. Above, 10200 and 10250 points. Until that resistance is overcome, we will not see an increase in volume.
Source: investing.com
3.- BITCOIN (BTC)
From a technical point of view, breakout of the 53,000USD area and momentum to the 63,000USD reference. The surpassing of 59,000USD has been devastating and shows the current state of euphoria. After that impulse, prices have gone into a consolidation movement, generating brutal movements in the rest of Altcoins. It is these moments of FOMO and delayed arrival of investors that should keep us alert and take extreme risk management. Losing 60,500USD will open the door for us to go looking for 59,000USD which, if lost, opens the way to a possible decline to 53,000USD. Above, exceeding 63,000USD will mark the path to all-time highs. Overbought, excess optimism and beginning of inflows as negative catalysts.
Source: investing.com
This content is for informational and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. CFDs are leveraged products and carry a high risk to your capital
Source: Territorioblockchain.com
