Market overview: China finally introduces new stimulus measuresMarket overview: China finally introduces new stimulus measures. New rises expected for oil?
Welcome to our weekly market overview.
My column focuses on analyzing the most promising stocks and futures contracts in today's financial markets. Let's discover together the most attractive investment opportunities and how to make the most of them.
We will also analyze the general macroeconomic situation and I will provide information on my open positions to share my views and investment strategies.
Macroeconomics
Despite some disappointments in quarterly results, there is a positive mood for stock markets. Wall Street continued to reach new highs, buoyed by the stability of the U.S. economy and the prospect of an upcoming interest rate cut.
Europe is enjoying the benefits of decelerating inflation and good performance by large companies, while Asia is catching up after the announcement of new support measures in China.
The ECB held a meeting but was completely eclipsed by data on U.S. economic activity. Although the central bank kept rates and its rhetoric unchanged, U.S. GDP rose 3.3 percent in the fourth quarter, exceeding forecasts of 2 percent.
This suggests that the economy may have a soft landing, as also indicated by the U.S. manufacturing and services PMIs that have returned to the expansion zone.
In addition, the risk of recession is easing further. The Future S&P 500 Mar 2024 reached new all-time highs and the yield on the 10-year U.S. bond reached a low from 4.23/25 percent.
Stocks
Highlighted this week are Netflix Inc and Tesla Inc.
Netflix overcame market doubts about its growth. The streaming giant reported a 12.5 percent increase in revenues for the quarter thanks to growth in the number of subscribers to 260 million (+12.8 percent). The company reported operating income of $1.49 billion, nearly tripling that of the previous year, and net income exploded from $55 million to $938 million.
However, Netflix's stock price is currently very high, so I do not recommend buying at these levels. Tesla is facing several obstacles at the moment. The group reported lower-than-expected fourth quarter results, with lower-than-expected sales growth and an annual decline in non-GAAP earnings.
The recall of 200,000 vehicles in the United States due to a software problem with rearview mirrors is just the latest blow to the company after a major recall just two months ago.
In addition, management's comments about profitability in 2024 and forecasts of a further decline in profitability have made the situation worse. In the near future, we may see a price decrease of up to 20 percent.
Futures
Futures in the energy and fossil fuel sector are performing well. Future Crude Oil WTI - Mar 2024 prices have been supported by encouraging economic data and ongoing Red Sea issues. Brent passed the $80 per barrel mark, while the U.S. economy grew faster than expected in the fourth quarter.
This was also confirmed by January PMIs, which exceeded economists' expectations.
In addition, U.S. weekly inventories fell significantly from consensus (-9.2 million instead of -1.2 million), providing further support for rising prices. Due to recent tensions in the Red Sea, the price of crude oil, could exceed $80.
The Natural Gas Future - U.S. Mar 2024 are trading around $2.09/MMBtu with a weekly increase of 4.4 percent, indicating a slight recovery from the previous 24 percent slump.
According to the most recent government data, U.S. utilities withdrew 326 billion cubic feet of natural gas from storage facilities last week, exceeding market expectations of 322 bcf. This was the highest weekly withdrawal since February 2021 due to strong gas demand caused by extreme cold weather.
Although storage levels are decreasing, they still remain above the seasonal average of 5.2 percent. Heating demand is expected to be low in the coming weeks due to higher-than-average temperatures until at least Feb. 7.
This situation makes optimistic forecasts for natural gas in the near future difficult. We may also see new lows in prices during this quarter, possibly falling as low as $1.60.
The value of Future Gold - Apr 2024 is stable at 2020 USD, pending the Fed's rate cut. Personally, I do not expect the Fed to cut its interest rate in the short term, so I maintain a bearish position on gold with a target at 1980 USD in the short term.
There is a technical rebound going on in the cryptocurrency market.
Last week was negative, the CME Bitcoin Future - Feb 2024 declined, dropping to around $41,000 and down more than 1 percent since Monday. The ether, on the other hand, suffered a more significant drop, falling more than 8 percent over the same period and now hovers around $2,250.
Among the reasons for the decrease in the ether's valuation is the postponement of the SEC's decision on Grayscale and BlackRock's Ethereum Spot ETFs. On the other hand, the approval of the eleven Bitcoin Spot ETFs had an effect opposite to investors' expectations.
Since the ETFs were approved on January 11, the value of Bitcoin has fallen by 15 percent, leading to an overall loss of nearly $200 billion in the cryptocurrency market. This was all predicted in my recent articles on cryptocurrency price movements.
Currently, the Bitcoin market is highly promising and I may consider buying to benefit from the possible increase in value in the second quarter.
Here are my current positions:
I have confirmed my purchase on the Hang Seng Future Feb 2024.
The arrival of effective stimulus measures in China has reinforced my bullish strategy. I am currently investing in Chinese stocks through a certificate offering an 18.5 percent annual return on two electric car manufacturers.
I have also confirmed my bearish position on gold, which is currently generating excellent profits, and a short position on the Future Nikkei 225 Mar 2024.
Given the high prices and the Japanese central bank's intention to abandon ultra accommodative policy this year, I expect a technical correction in the near future.
