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Markets narrow but supported into March

March has negative connotations and stocks may be overdue a pullback, but fundamentals remain strong. February’ 5% surge driven by big tech led earnings surprise, with crypto’s 40% rally taking the lead again. With March likely to see a refocus on inflation and interest rates, alongside a heavy dose of politics. The rally has been supported by twin earnings growth and rate cut pillars, with a broadening rotation set to come.

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New stock market highs whilst BTC soars

Reassuring US PCE and EU inflation prints closed out a very strong tech-led February ‘leap’ month for stocks. The US government avoided a shutdown again. Whilst Bitcoins surge stole the asset class limelight. SNOW to AMC saw sharp post-results sell-offs, whilst NCL led gains. CVX big deal to buy HESS saw problem with XOM. AAPL shut self-driving efforts. See 2024 Outlook HERE and twitter @laidler_ben.

China’s ‘two-sessions’ make-or-break catalyst

A 5% GDP target at two-sessions meets, backed by fiscal support would help stabilization of China’s long-suffering and derated stocks but stop short of igniting a bull market.

Europe’s own magnificent seven

Its GRANNNOLAS’S stocks drove Stoxx 600 to similar concentrations as the US. Europe’s ‘Mag 7’ tech stocks benefit from a scarcity premium with similar valuations to US peers.

Leap days matter, a little

The four-yearly ‘Leap Day’ is a minor but real disruption for companies and markets, from earnings reporting through to calculating bond interest and paying workers.

China still in commodity drivers-seat

Commodities struggled w/ China slowdown. India starting to take up the growth baton and crucially from gold to sugar, but still nowhere near big enough to replace China demand.

New Bitcoin all-time-high coming into view

BTC rallied over $60,000, up 50% YTD, by far the best performing asset class, nearing $68,000 2021 all-time high. Driven by now $7 billion of spot ETF inflows, and outlook for ETH Dencun March upgrade and April BTC halving catalysts. Volume spike saw COIN outage. MSTR bought more BTC. See latest Weekly Crypto Roundup.

Commodities supported by dollar and China

Stable performance week, with stable US dollar and China two-sessions outlook. Depressed nickel prices helped by Indonesia quota delay and naming to Australia critical mineral list. Whilst SQM profits fell 80% on the lithium plunge. Ag saw cocoa rebound from profit taking and cotton continued a 40% surge from November.

The week ahead: China, ECB, Payrolls

  1. Triple politics dose w/ China ‘two sessions’ GDP target, UK pre-election spring budget (Tue), and US ‘Super Tuesday’ primaries.
  2. Macro focus ECB meet (Thu) w/ unchanged 4.5% rate and first cut view, and US payrolls (Fri) ease to <200k
  3. Last Q4 results from AVGO, ORCL, COST, NIO, JD. 4) International Women’s Day (Fri)

Our key views: Outlook for a different 2024

We see a stronger but very different 2024. Lower inflation and coming interest rate cuts as growth slows, and the earnings outlook idiosyncratically accelerates. Will drive an investor rotation from 2023 US and big tech winners to rate sensitive losers from Europe to real estate.

Written by a team of experienced financial analysts at eToro.

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.

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