Market in Review 25/1/2024

MARKET REPORT

Review:
– Crude up 3% ($77.25) on stronger US GDP (higher expected demand on economic growth) combined with decline in crude stocks
– S&P notches 5th straight record day
– Tesla down 12%, worst day since 2020
– US GDP +3.3% vs 2% Forecast (Hawish)
– PCE (Q4) 2% in line (Dovish)
– Jobless 214K, slightly higher.
– ECB leave rates UNCH (as Exp) 4.5%
– Lagarde dovishly perceived
– Treasuries, Dollar & Crude up.

DOLLAR:
– AUD UNCH (again!): 65.82 UNCH (66.10 – 65.72) close off lows
– EUR up: 92.23                       +0.4% (91.73 – 92.36) Close off highs
– GPB down smalls: 127.05   -0.15% (127.40 – 126.82) close off lows
– JPY up smalls: 147.72          0.2% (14147.10 – 147.88) close off highs

GOLD up smalls: $2019       +0.18% ($2012 – $2025) close mid rge
DOW/ES/ND:                          38170 +0.6%, 4920 +0.5%, 17610 UNCH
CRYPTO: BTC/ETH:                +150/+0.35% 39790, +15/+0.6% 2220
CRUDE: $77.25                       $+2.15/+2.9%

Upcoming:

ALL EYES: US: Core PCE MoM
US: Pending Homes
JAP: CPI & BoJ Minutes
CH: Industrial Profits

Speakers:

Earnings:   Volvo, Remy Cointreau, Lonza, American Express

MAJORS:

DX:
Dollar flat vs AUD, up vs EURO, flat vs Pound and YEN.
Much stronger US GDP (Exp +2% Act +3.3%) kicked the dollar upwards trading 1030 the handle to 103.48, we closed 103.31. ALL EYES ON PCE TOM!

Dollar has a firm base Im a fan of future dollar strength (PCE dependent obv)

No call pre PCE

1

AUD:
“ANYTHING above 66 is A SELL!”
Yest Mkt Report.
COUGH
And the day before.
We traded up to 66.10 overnight before US GDP pushed the AUD back below the 66 handle where we stayed and closed.
All eyes PCE but I favour a firmer dollar and hence a look at the 65 handle at some stage, data dependent.

No call pre US PCE

9

EUR:
EUR was lower on Thursday in the wake of the ECB and following President’s Lagarde’s press conference. Recapping, ECB left rates unchanged, as expected, and the statement added little new while Lagarde was deemed more dovish than anticipated as she did not explicitly push back on market pricing and provided welcome wage-related remarks. In the wake of the ECB, Reuters sources said ECB policymakers are open to start discussing future rate cuts in March if data points to inflation hitting 2% this year and a March pivot would pave the way for a rate cut most likely in June. Elsewhere for the single-currency, German Ifo Expectations was soft accompanied by ‘down’ commentary.

No call. Like anything with a 91 handle but PCE on cards.

9

POUND:
GBP and Yen both saw slight losses with currency-specific news-flow light this session ahead of Japanese CPI closing out the APAC week.

No call.

1

YEN:
See above.

No call

1

GOLD & SILVER:
A muted session for Gold with the metal capped on Dollar/ Treasury strength. With the Dollar firming its hard to see upside for the yellow stuff.

Sell bounces. Go with down turn.

No call pre PCE

EQUITIES:
US:
– SPX +0.53% 4,894
– NDX +0.10% 17,516
– DJIA +0.64% 38,049
– RUT +0.71% 1,975

EUR:
– DAX +0.10% 16,906.92
– FTSE 100 +0.03% 7,529.73
– CAC 40 +0.11% 7,464.20
– Euro Stoxx 50 +0.37% 4,580.95

SECTORS (S to W): Energy +2.23%, Communication Services +1.83%, Utilities +1.79%, Real Estate +1.31%, Materials +1.09%, Industrials +0.98%, Consumer Staples +0.92%, Financials +0.54%, Technology +0.38%, Health -0.23%, Consumer Discretionary -1.05%

Tesla  -12.1%: EPS, revenue, and gross margin missed alongside noting 2024 vehicle volume growth may be notably lower than 2023 levels as it focuses on its new gen vehicle.
IBM  +11.5%: EPS and revenue beat alongside noting client demand for AI was accelerating.
American Airlines  +8%: Strong Q4 metrics with FY profit view topping consensus.
Southwest Airlines  +1.5%: Earnings beat.
Northrop Grumman  -6%: Swung to a surprise loss in the quarter due to a charge on the B21 bomber program


OIL
:
WTI (H4) SETTLED USD 2.27 HIGHER AT 77.36/BBL; BRENT (H4) SETTLED USD 2.39 HIGHER AT 82.43/BBL

The crude complex was firmer on Thursday amid ever-heightening Middle East tensions, continued Chinese stimulus tailwinds, and US economic data showing faster-than-expected growth in Q4. On the former, and continuing to illustrate the vulnerability of the Red Sea attacks, BHP (BHP AT) has been forced to divert shipping from Asia to Europe, adding around nine days to transit time, according to the WSJ. Reuters also reported that Qatar also informed Spain’s Endesa of a 10-12 day delay to an LNG cargo while Edison Group in Italy is also experiencing a slowdown in deliveries of Qatar LNG due to Red Sea conflict. On the day, WTI and Brent ground higher throughout the US session to settle at highs, and while oil-specific newsflow was light it seemingly saw support from tier 1 US data (Advanced Q4 GDP), ahead of the pivotal US PCE data and the weekly Baker Hughes rig count data on Friday. Oil report courtesy of newsquark

BOND YIELDS:

US 1-MO 5.375 +0.004 US 6-MO 5.209 -0.033 US 1-YR 4.77 -0.055 US 5-YR 4. -0.074US 10-YR 4.12 -0.058 US 30-YR 4.374 -0.038
2YR/10YR -0.18

CRYPTO
BTC trading around 40k still.
39k appears to be holding. Id be looking for a break back into the 40 handle.

Yest Mkt Report
“ETH 2200 is pretty solid support in ETH dating back to mid Dec. Id be looking for a move up.”
2200 held and I think will continue to do so.
Id be looking for a breakout upwards

Best of luck out there. Let the market come to you

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