Weekly News 2024/02/05-2024/02/09

 U.S. stocks closed higher on Friday, the Dow closed down 54.64 points, or 0.14%, on Friday, at 38671.69 points; the Nasdaq rose 196.95 points, or 1.25%, at 15990.66 points; the S&P 500 index rose 28.70 points, or 0.57%, at 5026.61 points. The S&P 500 closing above the 5,000 mark for the first time, hitting a record high. The Nasdaq broke through the 16,000 mark during the session. As of Friday's close, the Dow Jones Industrial Average rose 0.04% this week, the S&P 500 Index rose 1.37%, and the Nasdaq Composite Index rose 2.31%. All three major U.S. stock indexes recorded gains for the fifth consecutive week. In the past 15 weeks, U.S. stocks have recorded gains in 14 weeks. The market continues to focus on U.S. stock earnings reports and the outlook for the Federal Reserves monetary policy. Several Fed officials said this week they wanted to see more evidence that inflation will continue to decline before cutting interest rates.

Solita Marcelli of UBS Global Wealth Management said in a report: “Our basic expectation remains that the U.S. economy will soft-land and the S&P 500 index will remain near current levels by the end of the year.” He said: “However, recent economic data highlight the potential for a period of continued strong economic growth, benign inflation, and accelerated monetary policy easing. In this case, we believe that the S&P 500 index has the potential to rise to around 5,300 points this year .”

In recent trading days, strong earnings reports and the continued rise of large technology stocks have provided support to the U.S. stock market. However, since the fourth quarter of 2023, the excessive concentration leading the market has been a concern for many investors.

 Nvidia (NASDAQ: NVDA) is negotiating with companies such as OpenAI on chip design. Nvidia is also in talks with Ericsson on a wireless chip. Nvidia is setting up a new unit to design chips specifically for cloud computing companies. Nvidia's new business unit will also design chips for advanced AI processors.

Google (NASDAQ: GOOG) has completed its artificial intelligence rebranding. As the first part of the rebranding, Google renamed the Bard AI chatbot launched in March last year to Gemini and launched a dedicated Gemini Android app. Gemini is the base large language model that supports the Bard chatbot. In addition, Google has also renamed the AI functions in Google Workspace applications such as Gmail and Docs. It was previously named “Duet AI” and is now renamed Gemini.

PepsiCo (NASDAQ: PEP) reported mixed fourth-quarter results as price increases led to lower demand for various products. Data show that the company's Q4 revenue fell to US$27.85 billion from US$28 billion in the same period last year, and analysts' average forecast was US$28.4 billion. PepsiCo and other retailers have raised prices several times since the outbreak to combat rising costs from supply chain disruptions, but they are now facing headwinds from those moves.

Pinterest (NYSE: PINS) first-quarter revenue guidance missed expectations. The financial report shows that the company's adjusted earnings per share in the fourth quarter were US$0.53, analysts expected US$0.48; fourth-quarter revenue was US$981.3 million, a year-on-year increase of 11.8%, and analysts expected US$990.2 million. For the first quarter of 2024, Pinterest expects revenue to be in the range of $690 million to $705 million, with the midpoint of the range at $697.5 million, compared with consensus expectations of $702.54 million, representing year-over-year growth of 15-17%.

 Bitcoin (BTC) climbed above $47,000 on Friday, with a U.S. spot Bitcoin exchange-traded fund (ETF) recording one of its largest net inflows since listing on Thursday. The largest cryptocurrency by market capitalization reached as high as $47,699, its highest level since the launch of the Bitcoin ETF, before falling to $46,700 in a swift selloff. Shortly after, the price quickly rebounded to just over $47,000.

The surge came as net Bitcoin holdings in spot ETFs increased by 9,260 BTC, according to CoinDesk calculations based on the issuers website. This represents an inflow of over $400 million, the highest figure since January 17, according to BitMex Research.

“This is the groups third-biggest day of inflows since launch,” James Seyffart, an ETF analyst at Bloomberg Intelligence said. Analysts say that while Bitcoin is up nearly 10% in a week, there is still room to rise. Bitcoin prices are poised to move higher after reclaiming the key 50-day moving average, Alex Kuptsikevich, senior market analyst said.

Standard Chartered predicts that the U.S. Securities and Exchange Commission (SEC) may approve an Ethereum ETF in May. May 23 is the last date the SEC must review VanEck and Ark 21Shares ETF applications.

Standard Chartered expects the SEC to make a decision on these applications by the final date, just as it did when it approved the 10 Bitcoin ETFs on January 10. Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said that Ethereum has key similarities with Bitcoins legal and financial status, which indicates that it will follow a similar approval model.

Kendrick expects the price of ether to rise to $4,000 before the expected May 23 approval date, assuming that ether follows a similar trading pattern to Bitcoin during the ETF approval process.

 Data release on Friday showed U.S. inflation at the end of last year was about the same level. Data from the U.S. Bureau of Labor Statistics shows that the U.S. core CPI annual rate in the fourth quarter of 2023 was 3.3%, which was the same as the previous data. The revisions to the overall data are also small. The lackluster revision will come as a relief to Fed officials who are looking for more evidence that price pressures are continuing to subside before starting to cut interest rates. Inflation slowed rapidly in the second half of last year, and policymakers expressed doubts that the rapid slowdown could be sustained.

The price of gold once rose 15 points in the short term to an intraday high of 2037, but has fallen back to $2029.44 per ounce, down 0.23%. Gold prices fell briefly on Friday, driven by a stronger U.S. dollar and rising Treasury yields. Investors are focused on next week's U.S. inflation data for clues on when the Federal Reserve may start cutting interest rates.

The U.S. dollar index was on track for a weekly gain, making gold more expensive for holders of other currencies. At the same time, the U.S. 10-year Treasury bond yield also rose slightly. Jigar Trivedi, senior analyst at Reliance Securities, said that recent remarks by Federal Reserve Chairman Powell have reduced the possibility of an interest rate cut in March, thus restricting the trend of gold prices.

This week, several Fed policymakers said they would wait for greater confidence that inflation would fall to 2% before cutting interest rates. As a result, market focus turns to the U.S. Consumer Price Index report released on Tuesday. Lower interest rates reduce the opportunity cost of holding non-yielding gold. Strategists believe spot gold could surge above $2,300 sometime in the next six months.

 On Friday, the price of Brent crude oil futures was US$81.67 per barrel, an increase of 0.05%, and the price of WTI crude oil futures was US$76.38 per barrel, a decrease of 0.10%.

The Israeli army continued air strikes on some targets in the southern border city of Rafah in the Gaza Strip from the evening of the 7th to the early morning of the 8th, killing at least 13 people. WTI crude and Brent crude were both up about 3% on Thursday.

Warren Patterson, head of commodities research at ING, said: Thursday move seemed a bit unexpected, at least from a fundamental perspective, market's move seemed a bit excessive.

The U.S. Energy Information Administration (EIA) reports that energy storage in Cushing, Oklahoma, is declining again, but the latest decline is smaller. Still, it will be difficult to push oil prices higher as it extends its five consecutive production cuts. The decline means demand for oil remains strong and, in some cases, may be increasing. This is generally positive for oil prices.

In addition, the recent rebound in China's stock market has boosted the oil market. Tensions have kept oil prices higher, with both Brent and WTI oil prices expected to rise more than 5% this week. While conflicts in the Middle East have pushed up oil prices, they had no impact on oil production.

Tony Sycamore, an analyst, said that the risk of deflation in China, the world's largest crude oil importer, has also put pressure on global oil prices. He added: “I believe the main reason for lower crude oil prices during the Asian session is the early weakness in Chinese stocks, as well as the impact of China's shocking CPI data yesterday, which further dampened confidence ahead of the Lunar New Year celebrations.”

 The U.S. dollar index was flat and slightly lower on Friday, ending a week of gains but giving up most of its gains. The Canadian dollar retreated slightly after a brief boost from a better-than-expected unemployment rate in Canada. The Canadian dollar retreated after testing higher on Friday. After the USD/CAD pulled back from the 11-week high of 1.3544, it entered the 1.3450-1.3500 range and traded sideways. USD/CAD is currently at 1.34627, an increase of 0.03%.

The U.S. CPI revision did not change much, which relieved markets worried about the data being revised upwards. U.S. inflation at the end of last year was about the same level as initially reported after accounting for annual revisions. Data from the U.S. Bureau of Labor Statistics shows that the U.S. core CPI annual rate in the fourth quarter of 2023 was 3.3%, which was the same as the previous data.

After the monthly CPI rate in the United States was revised downwards in December, U.S. Treasury bonds recovered their losses. The 2-year U.S. Treasury bond yield rose to 4.484%, the highest level since December 13 last year. The U.S. 5-year Treasury bond yield rose to 4.137%, the highest since December 13 last year.

Steven Ricchiuto, chief U.S. economist at Mizuho Securities, said these CPI revisions will not prompt the Fed to cut interest rates. The key now is that the Fed is in no rush.

Looking ahead, U.S. inflation will be released on February 13, while retail sales, industrial production, business inventories, the NAHB Housing Market Index and long-term TIC net flows are expected to be released on February 15. In addition, producer prices, new housing starts, building permits and preliminary Michigan consumer confidence will all be released on February 16.

OnePro Special Analyst

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