/market_analysis/forex-market-analysis-us-equities-surge-to-new-heights-22-jan-2024/

    Forex Market Analysis: US Equities Surge to New Heights 22 Jan 2024

    January 22, 2024

    Forex Markets Update: 22 Jan 2024

    CURRENCIES:

    Equities Forecast:

    • US equities, including the S&P 500 and Dow Jones, reach fresh all-time highs, propelled by a robust performance in big tech stocks.
    • The ongoing Q4 earnings season, especially results from the ‘Magnificent Seven’ companies, is anticipated to further boost US indices.
    • Notably, Microsoft alone holds a significant 7.29% weighting in the S&P 500 index.

    US Dollar Performance:

    • The US dollar initiates the year with strength, attributed to Federal Reserve Members countering overly optimistic interest rate cut expectations.
    • US Treasury yields support the USD against various currencies.
    • Precious metals, particularly gold, face pressure as they test the $2,000/oz. level.

    Upcoming Events and Releases:

    • A multitude of Q4 US earnings releases is scheduled for the upcoming week.
    • Key economic events include the closely monitored Bank of Japan Quarterly Outlook Report, significant given elevated USD/JPY levels.
    • Thursday brings the European Central Bank (ECB) policy decision, while Friday features the US core PCE release, positioning them as the week’s main attractions.

    Monday

    • Economic data: Leading Index, December (-0.3%, expected, -0.5% prior)
    • Earnings: United Airlines, Logitech, Zions Bancorporation Top of Form

    STOCK MARKET:

    Market Highlights:

    • US equities achieve new record highs with S&P 500, Dow Jones, and Nasdaq Composite in positive territory for January.
    • Consumer sentiment data from the University of Michigan boosts positive vibes as consumers express confidence in the economy.

    Corporate Earnings:

    • Tech results take center stage with Netflix (NFLX) earnings on Tuesday and Tesla (TSLA) on Wednesday.
    • Other notable reports include Johnson and Johnson (JNJ), United Airlines (UAL), Verizon (VZ), and AT&T (ATT).
    • Overall, one of the busiest weeks for quarterly reports on Wall Street.

    Economic Data:

    • First reading of Q4 economic growth expected on Thursday.
    • Release of the Personal Consumer Expenditures (PCE) Index, the Fed’s preferred inflation gauge, scheduled for Friday.

    Economic Growth Outlook:

    • Resilient data indicates a potential 2% annualized growth in the US economy for Q4.
    • Oxford Economics expresses confidence in the ongoing economic expansion, citing a strong labor market, deceleration in inflation, and looser financial conditions.

    Inflation and Rate Cut Speculations:

    • Key debate centers on when the Federal Reserve will cut interest rates.
    • Investors shift from an 81% chance of a March rate cut to 49%.
    • Goldman Sachs chief economist anticipates a March rate cut, driven by a decline in inflation to the target of 2%.

    Upcoming Events:

    • Federal Reserve in blackout period, focusing attention on earnings as a key driver of stock market sentiment.
    • Technology earnings, particularly from large-cap companies, may influence short-term market direction.
    • Focus on Netflix demand for new advertising tier and Tesla’s margins, with CEO Elon Musk’s comments under scrutiny.
    • Fourth quarter earnings show a weak start, but the narrative is expected to shift to Technology and Communication Services, where growth is anticipated.

    Start Your Forex Journey with VT Markets, visit here for more information.