Ben Laidler, global markets strategist at trading and investment platform eToro. The expert analyzes how the first month of the year has been in the markets and advances forecasts for February, a month that “will be driven by the great pending technological benefits, a possible inflation of less than 3% in the US and a busy political calendar.” .
On the other hand, Bret Kenwell, US analyst at eToro, analyzes yesterday's Fed meeting. “Due to the strength of the economy, the Federal Reserve may feel it has some leeway in when to cut rates, and it doesn't want to do so too soon. At the same time, the longer rates remain in restrictive territory, the greater the risk will be for the labor market and the economy in general,” he points out.
Lower and more distributed returns. Ben Laidler, Global Markets Strategist at eToro
OUTLOOK: January started the year strongly, maintaining the leadership of technology and the US and China falling behind. The S&P 500 capped its rebound with a new all-time high for the first time in two years, returning 1.6% in January above the long-term average of 1.3%, with an annualization of more than 20%. The two pillars of the bull market are in place, with lower inflation and upcoming rate cuts, and a soft landing of the economy and reacceleration of earnings. New highs often beget new highs. The month of February will be driven by large pending technology benefits, possible inflation below 3% in the US and a busy political calendar. We see a positive year, but with lower and more distributed returns.
JANUARY: Leadership fell in line with what was seen in 2023, with the strength of Japan and the US and the weakness of China, along with the boost in communications and IT and the delay in the real estate sector. Sentiment improved, but not across the board. The VIX is near lows, but outflows have continued and retail sentiment is only moderate. 10-year bond yields rose slightly as central banks balked at aggressive rate cut expectations. This benefited the US dollar, while the yen and Swedish krona led the weakness. Oil rose on rising tensions in the Red Sea and stimulus measures taken by China at the end of the month. Bitcoin turned around following the approval of the spot ETF, digesting big gains in 2023.
FEBRUARY: Profits, inflation and politics are the main monthly drivers (see chart). It is usually the third best month of the year, with an average return of 1.3%. The market rebound led by technology companies will be tested by the earnings season, led by Apple and Nvidia, with a concentration of the 'magnificent 7' at all-time highs. The markets' most important figure, US inflation, could fall below 3% for the first time and reinforce upcoming interest rate cuts. The year 2024, full of political events, begins with the Democratic primaries in the United States and the elections in Indonesia. China's long New Year holiday kicks off the Year of the Dragon, as authorities prepare a bigger and broader stimulus.
Source: Territorioblockchain.com
