Photo - Andreas Zanin
Andreas Zanin
Analysis, Market Analysis | January 24, 2024

JASPER’S MARKET SQUAWK 24-01-2024

Netflix Soars, Dollar Rises, Chinese Stocks Falter

Market Movers

  • Chinese stocks waver amid scepticism over a proposed $278 billion rescue package, with key indexes like the CSI 300 and Shanghai Composite remaining near multi-year lows.
  • The US dollar reaches a six-week high, bolstered by expectations that the Federal Reserve may not rush to cut interest rates.
  • Netflix’s shares surge following a stronger-than-expected subscriber growth in the fourth quarter.
  • European bourses are set for a higher open, with investors focusing on manufacturing PMI data ahead of the European Central Bank meeting.
  • The S&P 500 hits a third consecutive record high, driven by mixed early quarterly results and expectations around upcoming reports from major companies.

What’s Happening

Chinese Stock Market Volatility

Despite early gains, Chinese stocks failed to maintain momentum as investor enthusiasm over a potential $278 billion rescue package faded. This left the blue-chip CSI 300 index and the Shanghai Composite near their lowest points in five years, underscoring the challenges faced by Chinese authorities in stabilising the market.

Dollar Strengthens Amid Rate Cut Speculations

The US dollar index reached a six-week high, signifying a resurgence in investor confidence. This upswing in the dollar’s value is largely driven by market expectations that the Federal Reserve may delay any potential interest rate cuts. Such a move would be indicative of the Fed’s assessment of the US economy’s stability and strength.

Netflix Boosts Tech Stocks

Netflix’s stock leaped following the announcement of its fourth-quarter results, which exceeded expectations in terms of subscriber growth. This achievement is attributed to the company’s compelling content offerings that resonated with a wide audience base. The positive performance of Netflix has had a ripple effect on the broader tech sector, boosting investor sentiment and driving optimism about the potential for continued growth and innovation in the streaming and technology industries.

European Markets Eye Manufacturing Data

European stocks are poised for a positive opening, with traders keenly awaiting the release of manufacturing PMI data from key regions such as the euro zone, UK, France, and Germany.

S&P 500 Reaches New Heights

The S&P 500 index achieved a new milestone, recording its third consecutive record high. The rally is being fuelled by a combination of factors, including the anticipation of upcoming earnings reports from major corporations and the evaluation of early quarterly results, which have shown a mix of performances.

Econ Calendar

  • Manufacturing PMI data releases for France, Germany, the euro zone, and the UK.
  • The European Central Bank’s policy meeting, with expectations of maintaining current interest rates.
  • The Bank of Canada’s policy meeting, anticipated to hold rates steady.
  • Key earnings reports from companies like ASML and Tesla.
  • Advance fourth-quarter GDP data and the Federal Reserve’s PCE index release.

Chart of the Day

The longer you remain liquid (i.e. not invested), the more your chances of beating the stock market and therefore generating excess returns are reduced. Over the course of a year, there are only 31% chances. Over a 10-year period, the odds drop to 15%. On a 20 year old, they drop to 1%.

Source: Matteo Marchetti, KTM Market Analyst

For all the latest market developments follow Matteo @MMTradingKTM and Key to Markets @keytomarkets on Telegram

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