The S&P 500 broad market index futures
surged by 1.7% to 5067 points, marking a new all-time high. This record was
driven by the exceptional Q4 2023 earnings report from NVidia. The chipmaker
reported a 265% YoY increase in EPS compared to Q4 2022, and its optimistic
forward guidance, particularly in the AI segment, led to a substantial rise in
NVidia stocks, pushing the entire market up. NVidia's massive market cap of
$1.91 trillion had a significant impact, causing the tech-heavy Nasdaq 100 to
jump by more than 2.5%.
Prior to NVidia's corporate release, S&P
500 index futures were down by 1.0% to 4947 points as investors were disappointed
by hawkish FOMC minutes, where policymakers called for a delay in further
interest rate actions. The February PMI readings came in mixed, with Service
PMI falling to 51.3 points (below the expected 52.4 points), while
Manufacturing PMI rose to 51.5 points (above the expected 50.5 points).
According to the CME FedWatch Tool, bets on
interest rate cuts in March fell to 4.5%, to 24.4% in May after the
publication, and June expectations were moderate at 52.8%. The 10-year
Treasuries yields remained steady at 4.31-4.33%. It appears that the rise in
the stock market was primarily propelled by the NVidia report, as stocks might
have been seeking a safe landing otherwise. The duration of this corporate
effect is uncertain, but next week could bring more reasons for monetary
tightening, with the second U.S. Q4 GDP estimate and the release of the Fed’s
preferred inflation gauge, the Personal Expenditure Index (PCE), for January.
The S&P 500 has
surpassed the final upside target zone at 4850-4950 points, and missed
potential correction opportunities. Nevertheless, betting on a rally before
that could be risky. Reversal patterns are anticipated, with the first already
emerging, signaling a standard correction of 5-7% within the next five weeks.
The starting point of this correction is yet to be defined. But before a next
all-time high record is possible.
Oil prices are making
another attempt to finally push through the resistance at $81.00-83.00 per
barrel for Brent crude benchmark. The ongoing war in the Middle East increases
the likelihood of further upside moves in oil prices above $83.00 per barrel in
February and March. The next resistance is located at $87.00-92.00 per barrel.
Gold prices, having
reached mid-term upside targets at $2000-2100 per troy ounce, are currently retesting
the resistance at $2010-2030 per ounce from the downside. If the resistance
survives prices could slip to $1920 and further down.
Volatility in the currency
market is very high, with expectations of another wave of the upcoming downside
correction for the Dollar seen materializing. The Greenback losing around 1.0%
on Thursday However, the U.S. Dollar again failed to strengthen further curbed
by strong macroeconomic data. This is a sign of weakness. The latest Composite PMI
in the United States are weaker than in the Eurozone. However, it remains risky
to bet on both the rising and declining EURUSD. A return to the 1.11500-1.12500
area for the pair is likely, but a drop to 1.05000 should not be excluded.