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WEEKLY ROUND-UP THRU FEB 23rd 2024; “Power On – For How Long?”

Hey Folks, markets continue to power higher on the backs of strong AI Company earnings results with NVDA leading the way. How long can this last? Get my take in this week’s round-up.


US indexes generally moved higher during a week shortened by the Presidents’ Day holiday on Monday, although the small-cap Russell 2000 Index lost ground. The S&P 500 Index hit new intraday highs, as did the Nasdaq which posted its biggest daily gain in about a year on Thursday, when NVIDIA added a record USD 277 billion to its market capitalization.

Initial and continuing jobless claims both came in below consensus estimates. On a seasonally adjusted basis, 201,000 new claims were filed last week, a decline of 12,000 compared to the preceding week. The number of continuing claims slipped 27,000 to 1.862 million. S&P Global released early estimates of its purchasing managers’ indexes (PMIs) for services and manufacturing. The research group’s gauge of manufacturing activity unexpectedly rose to 51.5, its highest level in 17 months, helped in part by an increase in export orders. Business activity in the services sector cooled slightly, with this PMI pulling back to 51.3 from 52.5 in January.

Several FED Governors spoke about the need to be cautious about the timing of lowering rates due to the increase in inflation numbers in the month of January. The percentage probabilities of when the first rate cut will occur as moved further out in time to the June Fed Policy meeting date.

In the Euro Zone early PMI data for February suggested that the eurozone economy could be stabilizing, helped by a recovery in the services sector. A provisional estimate of the HCOB eurozone composite PMI for output rose to 48.9 from 47.9 in January, an eight-month high but still in contractionary territory. However, the composite PMI for Germany’s economic output declined for the eighth month in a row. And finally, in the UK, the composite PMI output index rose to 53.3 in February from 52.9 in January, accompanied by a solid improvement in customer demand.

In Japan, export data also came in strong, rising to a record high in January. Exports increased 11.9%, a second straight month of growth, allaying some fears about slowing global demand. With energy imports also lower, Japan’s trade deficit shrank to roughly half of what it was a year ago. Data from Japan’s manufacturing sector disappointed, with the latest purchasing managers’ survey indicating continuing contraction. PMI for this segment of the economy came in at 47.2, down from 48.0 in January. Equities received a boost after Bank of Japan Governor Kazuo Ueda expressed confidence that moderate inflation was likely to continue as wages grow.

Chinese equities rallied as recovery hopes rose following buoyant holiday spending during the prior week’s Lunar New Year holiday. Tourism revenue over the weeklong Lunar New Year holiday surged 47% over the 2023 holiday and surpassed pre-pandemic levels. In monetary policy news, the People’s Bank of China (PBoC) injected RMB 500 billion into the banking system. In addition, the PBoC announced that the five-year loan prime rate was lowered by a bigger-than-expected 25 basis points to 3.95%, marking the largest cut since the reference rate was introduced in 2019.

Enjoy this week’s round up;

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