Aviso Weekly Market Monitor: January 29th – February 2nd

Feb 5, 2024

Market developments

Equities:
The stock market extended gains, reaching all-time highs with the S&P 500 above 4,950 and the Nasdaq up 1.5%. Positive outlooks from Meta Platforms Inc. and Amazon.com Inc. contributed to the rally. Economic optimism overshadowed concerns about the Federal Reserve delaying their first rate cut to the second quarter. The rush into technology stocks is being compared to the dot-com era, with investors assuming strong economic performance despite tighter monetary policy. Bank of America Corp.’s Michael Hartnett notes that 75% of investors expect a “soft landing”, while 20% anticipate a “no-landing” scenario.

Fixed income:
The strong economic data suggests the Federal Reserve may defer rate cuts until at least the second quarter. Market participants have adjusted expectations, reducing the odds of a March rate cut. The Fed’s cautious approach aligns with Chair Powell’s recent comments, emphasizing the need for sustained confidence in inflation moving toward 2%. The strong economic data, along with central bank comments drove whipsawed yields this week, but yields ultimately ended the week lower, lifting bond indices higher.

Commodities:
Oil prices settled at their lowest level in three weeks on Friday, contributing to their largest weekly decline since October. Demand concerns and uncertainty around a potential ceasefire in the middle east has led to the continued uncertainty.

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