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Nasdaq Markets Outlook

With Market Breadth Improving, Will Small Caps Stage a Comeback?

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

#marketseverywhere | equity + bond markets closed tomorrow = Good Friday

| Weakness with JPY + Malaysian Ringgit, and strength with Indian Ruppees | "The Fed and other developed-economy central banks officially don’t target exchange rates, but their policies have big consequences for currencies. Don’t discount the risk that exchange-rate swings could break something somewhere."

-The Editorial Board, WSJ, All Aboard the Foreign-Exchange Seesaw

| ACHTUNG! | "central banks tolerant of higher inflation" -BofA's Michael Hartnett

| S&P 500 Is Poised for Best Start to Year Since 2019 | Resilient corporate profits, enthusiasm around AI, and hopes that the Fed will cut rates have given investors plenty of reasons to keep on buying.

-WSJ

s&p 500
nasdaq

* source: Yardeni Research

gold

* source: CNBC

chart 7

* source: BofA's Michael Hartnett, The Flow Show

| market breadth improving, will small caps stage a comeback = catch up rally in laggards? | as of 3/25, 79% of S&P 500 members are above their 200-day moving average.

s&p 500

* source: Grindstone Intelligence

iwc

* source: CNBC

| “Soft Landing” + Rate Cuts = Risk-on Markets

us financial conditions

* source: Tom Joyce, MUFG

| Yen hitting 34-year lows of 151.97 overnight | dovish remarks by the BoJ board member Naoki Tamura: central bank must proceed slowly and steadily towards normalising its ultra-loose policy

dovish

* source: CNBC

| market indicators - HF + LO positioning is interestingly neutral while equity flows are bullish

table 4

* source: BofA, Michael Hartnett, The Flow Show

| "Q1 factor performance was mainly driven by Momentum, which posted its strongest quarterly returns post-Covid.

With AI/Tech/Nvidia leading the way, Growth and Quality also outperformed.

Value lagged in Q1 although it picked up momentum in March as performance started to broaden out. Size remained an underperformer as rate cuts were pushed out further while an improving growth backdrop made Low Vol unattractive."

-Barclays' Emmanuel Cau

factor performance

* source: Barclays' Emmanuel Cau

| bifurcation in markets...as per Piper Sandler

large sales
large cap

* source: Piper Sandler

| JPM poll: in this bifurcated market, will markets sell off or laggards catch up for a reversal to materialize?

markets pricing in mild inflation

figure 11

* source: JP Morgan

1) KEY TAKEAWAYS

1) Equities + Gold + Dollar + TYields + Oil HIGHER

DJ +0.0% S&P500 +0.1% Nasdaq +0.1% R2K +0.4%

Stoxx Europe 600 +0.2% APAC stocks MIXED, 10YR TYield = 4.206%

Dollar HIGHER, Gold $2,208, WTI +1%, $82; Brent +1%, $87, Bitcoin $70,842

2) THIS WEEK:

light macro calendar

key events

* source: Barclays' Emmanuel Cau

2) MARKETS, MACRO, CORPORATE NEWS

  • Fed’s Waller says no rush to cut interest rates-BBG
  • BOJ policymakers saw need to go slow in future rate hikes-RTRS
  • ECB's Panetta repeats conditions emerging for monetary easing-RTRS
  • BoE rate-setter warns against rushing to cut interest rates-FT
  • NZ central bank Orr: conditions to allow cut becoming more apparent-RTRS
  • Bank of Korea warns of economic hit if property slump lasts-BBG
  • JPMorgan says stocks are so crowded they may crack at any time-BBG
  • Traders bet US election will unsettle market calm-FT
  • Japan repeats verbal warning to yen bears, BOJ keeps dovish tone-RTRS
  • Japan’s bonds saw most outflow in 14 months in historic BOJ week-BBG
  • China’s bond frenzy fades amid worries best returns are over-BBG
  • Biden administration warns of lengthy disruption at Baltimore port-FT
  • UK economy went into recession last year, data confirms-RTRS
  • German unemployment rises less than expected, supporting rebound-BBG
  • Australia retail sales rise modestly in Feb thanks to Taylor Swift concerts-RTRS
  • China property crisis is rippling through its biggest banks-BBG
  • Janet Yellen warns China against clean energy dumping-FT
  • US is asking allies to tighten servicing of chip gear in China-BBG
  • Israel asks US to reschedule scrapped meeting on Rafah military plans-RTRS
  • Xi Jinping to China’s central bank: Restart treasury-bond trade, after 2-decade hiatus-SCMP
  • Keysight sparks £1.1bn bidding war for London-listed Spirent-SKY
  • Japan’s Mitsui, Rohto said near deal for Chinese medicine firm-BBG
  • Exclusive: SIX Group CEO rules out Allfunds bid amid M&A hunt-RTRS
  • Nissan will invest in Renault's Ampere in pursuit of global EV roadmap-RTRS
  • French builder, Spanish airport manager in race for £3bn Edinburgh Airport-BBG
  • Carnival will not sail through Red Sea for rest of 2024, early next year-RTRS
  • Baltimore Bridge May trigger historic marine loss, says Lloyd's of London-BBG
  • Ozempic, Novo’s $1,000 diabetes shot, can be made for under $5 a month-BBG

Oil/Energy Headlines: 1) Asia crude imports surge as China, India snap up Russian oil-RTRS 2) More than 20% of global oil refining capacity at risk, analysis finds-RTRS 3) Exclusive: Russia's Kuibyshev oil refinery at a standstill after drone attack last week-RTRS 4) US to buy oil for SPR oil at above $79 target price in latest round-RTRS 5) Russian Navy Enters warship-crowded Red Sea amid Houthi attacks-BBG

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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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.