In the past week, major financial markets have suffered a setback as central bankers tried to dampen investors' hopes about possible rate cuts.
However, the NASDAQ saw an uptick thanks to the semiconductor sector, which set a new all-time high while awaiting earnings reports from the exchange's major companies.
Volatility is always around the corner with each new set of data or corporate results.
Each week in our column, we will analyze the most promising stocks and futures contracts in the financial markets at the moment.
We will also look at the overall macroeconomic situation to help you make informed decisions about your investment choices.
The week began with very good news for the semiconductor sector, thanks to the increase in earnings and revenue estimates by Super Micro Computer (NASDAQ:SMCI).
This good performance is also supported by better-than-expected quarterly results from Taiwanese giant Taiwan Semiconductor Manufacturing (NYSE:TSM). In our Technical Analysis video, we will examine whether this positive trend will continue in the coming days.
One of the worst stocks of the weekend was Plug Power (NASDAQ:PLUG) Inc. The U.S.-based hydrogen fuel cell company fell sharply after announcing a $1 billion stock sale, which will be used to support the group's working capital and capital expenditures.
With recent problems in liquid hydrogen supply in North America, the company had already raised doubts about its ability to continue its operations last November. Is it possible for the company to go bankrupt?
Rates in the US
After a week of slowdown in the United States due to the Martin Luther King Jr. Day celebrations, macroeconomic activity showed some stability. With the exception of the Empire State manufacturing index, which fell to -43.7 instead of the expected -5. Meanwhile, world financial leaders gathered at the World Economic Forum in Davos and delivered stiff speeches to counter investors' expectations of a future rate cut.
However, the concept of "higher rates for longer" is relatively simple to understand. Even as equity markets remain unstable, yields have been secretly rising, as evidenced by the yield on the U.S. 10-year Treasury note, which has exceeded 4.07 percent.
The S&P 500 and other stock markets may see a slowdown in their upward momentum as the monetary easing that began in October comes to an end.
Oil
WTI Crude Oil Future prices rose slightly this week, but remain below $80 per barrel. Tensions in the Red Sea continue with the United States carrying out new attacks against the Houthis in Yemen.
According to the recent International Energy Agency report, the situation in the energy market looks rather pessimistic as strong supply is expected this year, especially if OPEC+ continues to limit production.
On the other hand, the IEA recently raised its forecast for global demand growth, which is expected to increase by 1.24 million barrels per day (mbpd) in 2024, but slowing down from 2023 (+2.25 mbpd).
When it comes to oil prices, Brent is currently trading at around $78.50 while WTI is at around $73. In the natural gas market, the European benchmark continues to decline and stands at 28 euros/MWh for the Rotterdam TTF, while in the United States new lows are being reached for Future Natural Gas prices in the $2 area as predicted in our previous articles.
Crypto
At the time of writing, the price of Bitcoin is around $41,000, disappointing traders' expectations. However, Ether is registering a 1 percent increase to $2,500. Despite the approval of as many as 11 Bitcoin Spot ETFs last week in the United States and transaction volumes exceeding $10 billion, bitcoin is marking time.
It is important to note that the demand for these ETFs had already pushed up the price of BTC in 2023, especially when BlackRock (NYSE:BLK) joined the game last June. In the end, the strategy - buy when an asset-related event is announced (buy the rumor) and sell when the event occurs (sell the news) - as outlined in previous articles, worked.
Metals and China
In the metals sector, things do not look good as the downward trend continues. In London, a ton of copper fell to nearly $8,200, while aluminum lost ground at $2,130 and zinc continued its descent to $2,440.
It is true that China's recent economic performance is mixed: although GDP grew at an annual rate of 5.2 percent in 2023, economists were expecting a better outcome. Even Future Gold is losing ground, affected by rising bond yields. Currently, one ounce of gold is trading at about $2025.
China is still struggling with a difficult economic situation, with GDP forecast for 2023 below expectations and troubling news from the real estate sector.
Despite this, Beijing is avoiding stimulus measures to support the economy. This is reflected in the Hong Kong and Shanghai stock markets, which remain under negative pressure.