Market Update – February 1 – US100 Posts Best January Since 2001

Stocks and bonds corrected higher on Tuesday as the deceleration in ECI energized short covering and boosted risk appetite. Global Stock market finished solid. Earnings were mixed, but a lot of bad news has been digested, opening the door for bargain hunting. Treasury yields declined, led by the front end as the market senses rate hikes are coming to an end. Month-end buying also contributed. Along with ECI, the calendar included further declines in home prices, a drop in consumer confidence, and a slide in the Chicago PMI.

UK: UK house prices inflation slowing down, shop prices continuing to rise & the mortgage rate surge through October will add to the arguments of the hawks at the MPC, as they add to signs that against the background of rising interest rates and falling disposable income the housing market is slowing fast. The question is how fast and how long the correction will be as the risk that thousands are stuck in a situation with negative equity where loans exceed house values could exacerbate an already very difficult situation for the UK economy.
China: China Caixin manufacturing PMI signals ongoing contraction. Unlike the official PMI report,  the Caixin General Manufacturing PMI remained below the 50 point no change mark and nudged only slightly higher – to 49.2 from 49.0 in December last year.
The USD Index – slumped to 101.991 as the market saw fading prospects of an aggressive stance from the FOMC, even though many expect Chair Powell to push back against the rallies in bonds and stocks.
EUR – advances slightly to 1.0879 from 1.0800.
JPY – steady for 6 days in a row at 130.00 – 130.40. BOJ buys record $182 billion worth of bonds in January.
GBP – drifted to 1.2300 bottom.
Stocks – US100 +1.67% at 12118, for a 10.68% surge on the month, US500 1.46% higher and up 6.18% for January, the best monthly gain since October. And it is the first January increase since 2019. The US30 rose 1.09% on the day for a 2.83% monthly gain. Exxon smashes Western oil majors’ profits with $56 billion in 2022. AMD revenue beats targets, Wall St relieved after Intel’s grim outlook. GM shoves aside recession fears with robust 2023 forecast. Pfizer sees steep 2023 fall in COVID sales, aims to bolster pipeline.

USOil – rebounded from 76.50 to 79.40 yesterday. The IMF has also lifted its global growth forecast and that should likely keep demand expectations and prices underpinned.
Gold – closed at 1928.
BTC – held above 23000 into the new month.

Today – EU prelim. HICP, US ADP employment change, US ISM Manufacturing and FED meeting and Press Conference. Earnings: Meta, Novo, Thermo Fisher, Novartis, Sony etc.

Biggest FX Mover @ (07:30 GMT) Coffee (+6.66%). Bounced to 182 from 169.40. MAs aligning higher, MACD histogram & signal line extends higher. RSI 86 but lower , H1 ATR 1.77, Daily ATR 5.48.

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Andria Pichidi

Market Analyst

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