ECT - Stocks investing Wall Street - Adobe

Nasdaq Markets Outlook

Better Economic Prospects Helping Market Sentiment

A mostly graphical daily curated roundup of the markets and the economy from Nasdaq's IR team.

| Stock buybacks are rising this earnings season -YahooF

| rate cut odds getting pared back | "With stronger-than-expected jobs and growth data this year and inflation still mild, investors have had to reassess their outlook for policy rates." -JP Morgan Asset Management

"the amount of cuts priced in by the Fed’s December meeting is now the lowest since mid-November, at 79bps, around half the amount expected at the start of the year." -Jim Reid, Deutsche Bank

us implied

* source: JP Morgan Asset Management

exhibit 1

better economic prospects helping market sentiment + keeping yields elevated + less urgency for rate cuts

exhibit 2

US economy resilient | the AI revolution...

exhibit 1

* source: Goldman Sachs Global Investment Research

| Fed Funds have been FLAT at slightly above 5% while financial conditions have eased providing support for the equity markets

figure 8

* source: JP Morgan

| "the S&P 500 has now been up for 15 out of the last 17 weeks. This is the first time since 1989 that’s happened, and before that you’d need to go back to 1972 for such a run. If we get yet another advance this week, it would be 16 out of 18 for the first time since 1971, the joint record in an 18-week run."

-Deutsche Bank, Jim Reid

figure 1

* source: Deutsche Bank, Jim Reid

| as per the most recent JPM survey, sentiment is slightly positive & only 39% of investors planning to increase exposure...

figure 1

| concentration risk + commercial real estate are concerns...

figure 4

* source: JP Morgan

| earnings - "4Q earnings season is winding down and all eyes are on ’24 expectations. The outlook for larger caps has remained steady while expectations for small caps in 2024 have dipped below 2022 levels." -Piper Sandler

large cap
cy 2022
small cap

* source: Piper Sandler

earnings growth last quarter mostly

from tech, communications, and consumer discretionary

figure 1

* source: JP Morgan

| still some work left, low/mild inflation expected as per 10YR breakevens

figure 10

* source: JP Morgan

| recent chatter around funds trimming their exposure to the Magnificent 7 | Positioning: "Hedge funds rotated into cyclicals and Momentum while mutual funds added to defensives and anti-Momentum"

Despite a surge in tech shares, global hedge funds sold tech stocks at the highest pace in nearly eight months -RTRS

exhibit 3

interestingly hedge funds + large caps were not overweight tech in Q4...healthcare / industrials / materials overweight

exhibit 4

* source: Goldman Sachs Global Investment Research

1) KEY TAKEAWAYS

1) Equities MIXED / Dollar + Oil + Gold HIGHER / TYields LOWER

-large drop in headline January durable-goods order

-hawkish Fed chatter

Inflation data in focus on Thursday (PCE) | ISM Manufacturing on Friday

DJ -0.3% S&P500 -0.0% Nasdaq +0.1% R2K +1.0% Cdn TSX -0.0%

Stoxx Europe 600 +0.0% APAC stocks MIXED, 10YR TYield = 4.295%

Dollar HIGHER, Gold $2,035, WTI +1%, $78; Brent +1%, $83, Bitcoin $57,007

2) Food for thought...

Mortgage rates are now around 7%

us 30-year

* source: Oxford Economics

3) Commercial real estate a concern... - the next crisis?

exhibit 1

* source: Goldman Sachs Global Investment Research

4) Exhibit 3: While the Office Market Has a Surplus of Supply, the Residential Market Faces a Supply Shortage

homeowner
gs housing

* source: Goldman Sachs Global Investment Research

5) THIS WEEK:

"focus will be on the US PCE inflation release, with other inflation reports also due in Europe and Japan. Otherwise, several economic activity indicators will be released for key economies, including PMI gauges in China.

Corporate earnings feature Berkshire Hathaway, Salesforce and Dell."

-Deutsche Bank

key events

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

EU Parliament passes nature law despite political backlash Reuters

-The nature law is one of the EU's biggest pieces of environmental legislation, requiring countries to introduce measures restoring nature on a fifth of their land and sea by 2030.

-The nature law has faced fierce political backlash since the European Commission proposed it in 2022. Centre-right lawmakers had attempted to scrap it completely, and eventually won changes to weaken parts including a goal to introduce more trees, ponds and other biodiverse features to farmland.
 

EU’s Toughest ESG Proposal Revived as Italy Considers Backing It BNN

-Ambassadors will seek to approve a plan that would require firms to screen value chains for environmental and human rights abuses.

-Germany, which blocked the deal earlier this month, has given no indication that it has changed its stance. But Italy, another holdout, may now support the deal, people familiar with the matter said.

3) MARKETS, MACRO, CORPORATE NEWS

  • Fed’s Schmid urges patience on cuts as inflation fight continues-BBG
  • HEDGE FLOW Hedge funds call time on tech rally, banks say-RTRS
  • Stock buybacks are rising this earnings season-YAHOO
  • Dollar rides wave of US exceptionalism to reign supreme-BBG
  • European private credit rebounds to levels last seen in mid-2022-Deloitte-RTRS
  • China props up renminbi ahead of leadership summit in March-FT
  • Housing costs are running hot, but is the data missing a cooling trend?-NYT
  • Fed hikes are hurting consumer mood more than economists think-BBG
  • Yellen says global economy remains resilient, lauds US as growth driver-RTRS
  • German consumer sentiment stabilizes at low level in March, finds GfK-RTRS
  • British grocery price inflation slows to 5.3%, Kantar says-RTRS
  • Japan's inflation beats forecasts, end of negative rates in sight-RTRS
  • McConnell: We’re not going to let government shut down-HILL
  • Bitcoin scorches past $57,000 as big buyers flock in-RTRS
  • Israel signals willingness free high-profile Palestinian prisoners-NYT
  • After U.S. strikes, Iran’s proxies scale back attacks on American bases-NYT
  • FirstFT: Oil and gas profits triple under Joe Biden-FT
  • China wine tariffs expected to be gone by end of March-ABC
  • Broadcom to pause $1 billion sale of Carbon Black unit-BBG
  • GIP, KKR among firms eyeing stake in Cellnex’s polish unit-BBG
  • United Steelworkers union signs NDA with Nippon Steel to advance talks-BBG
  • UniCredit weighs acquisition of Warburg-backed Vodeno-BBG
  • Perfume retailer Douglas plans to launch IPO in coming days, sources say-RTRS
  • Macquarie exits BP’s $55 billion WA green energy project-SNH
  • Shein considers London IPO after US resistance to listing-BBG
  • Samsonite considers options after takeover interest incl. going private-BBG
  • LNG demand will surge 50% in next decade, Woodside CEO says-BBG
  • Exxon considers pre-emption rights to Hess’ Guyana Oil stake-BBG
  • Expedia to cut about 1,500 jobs globally amid moderating travel demand-RTRS
  • Shein considers London IPO after US resistance to listing-BBG
  • Debt-addicted companies look to equity as interest costs skyrocket-BBG

Oil/Energy Headlines: 1) Russia’s crude exports shrug off halt to key Pacific grade-BBG 2) Trans mountain pipeline seen driving Canadian oil to three-year high-BBG3) Russia to ban gasoline exports for six months from March 1-PLATTS 4) Chevron warns of threat to $53bn Hess deal from ExxonMobil-FT 5) US announces latest solicitation of 3 million crude barrels to further refill SPR-PLATTS 6) Looming Venezuelan sanctions give a bump to Colombian oil prices-BBG

Subscribe to Nasdaq+ for full access.

Exclusive content, detailed data sets, and best-in-class trade insights to rewrite your portfolio for tomorrow.

Try Now ->
Massud Ghaussy, CFA

About the author

Massud Ghaussy, CFA, is part of Nasdaq's IR Insights team and delivers daily insights that empowers readers to get a sense of the important issues impacting the day's trading.

Text