Daily Digest: Tuesday 9th April
USA
US market activity throughout Tuesday was largely contingent upon tomorrow’s CPI releases, with some hesitance amongst traders as late CPI predictions fall above consensus estimates. Index performance was expectedly muted, the Nasdaq 100 ($NDX) led gains rising 0.39% to 18,169.90, followed by the S&P 500 ($SPX) which rose 0.15% to 5,209.96. Meanwhile, traders on the Dow ($INDU) experienced marginal losses as prices fell 0.02% to 38,883.94.
Shares in EV maker Tesla ($TSLA) managed to outperform the market on Tuesday, rising a further 2.25% to $176.88. The fundamental drivers of today’s activity remain the same as those discussed yesterday, with shares having now risen 7.85% during the last five days of trading.
Nvidia ($NVDA) drew attention from media and analysts alike for virtually the opposite reasons, as shares fell a further 2.04% to $853.54. During the same five day period mentioned above, Nvidia shares have now fallen 3.5%, tumbling below the $900 level. It is likely that some downward pressure stems from a rise in competition as semiconductor manufacturers increase investments into new cutting edge technologies. Furthermore, increased fiscal support from the US government has seen policymakers attempt to de-risk and diversify domestic semiconductor manufacturing output, through the provision of loans and grants to competing firms nationwide.
Europe
European indexes traded lower on Tuesday, as anticipation builds for tomorrow’s US CPI prints. The FTSE (FTSE) 100 closed marginally down, falling 0.11% to 7,934.79. Despite momentum building to the upside throughout the session, traders were met with heavy resistance around the 7,960 level, which was tested around eight times. After failing to support a meaningful breakout, prices pulled back into the close. Similarly to Monday’s session, there were no notable winners or losers, with weaker performance experienced across the index as 61 constituents closed the session lower, while only fourteen recorded >1% gains.
The Pan-European STOXX 600 (€SXXP) fell 0.62% to 505.80. Losses were partially offset by the strong performance of Norwegian hydrogen power supplier Nel ASA, whose shares rose 14.17%, while Polish mining conglomerate KGHM shares rose 8.74%, and French domiciled bioMérieux shares rose 8.59%. The STOXX is now trading just short of €10 from its all-time highs, reached at the end of March 2024 as investor backing across European equities remains strong. Positive sentiment can be attributed to a range of factors, including stronger economic outlooks across the Eurozone, a narrative supported by weakening inflation, and a move by the SNB to cut the Swiss bank rate last month. Additionally, European domiciled equities are known to trade at lower P/E ratios than their US counterparts, while markets remain accommodative to a boom in AI and tech demand, housing internationally recognised semiconductor manufacturers ASML, ARM, and NXP.
Due to their regional focusses, declines on the DAX (€GDAXI) and CAC (€FCHI) were somewhat exacerbated. The French benchmark fell 0.86% to 8,049.17, while the German DAX led declines, falling 1.32% to 18,076.69.
Rest of the World
The Nikkei 225 (¥N225) continued higher through Tuesday’s session, rising 1.08%, marking the largest single session increase in index prices since the 25th March. Trading closed at 39,773.13, at the upper end of its daily range, with investors closing in on the psychologically significant 40,000 level. As of 12:51 GMT the Yen was trading against the dollar at ¥151.826, having found some support at the ¥151.93 level during the morning session, the currency remains low, well within range of ¥152 level which is believed to be a key level of contention for policymakers and analysts alike. As noted previously a weaker yen should play well for Japanese equity performances, with overseas investors able to exploit relatively lower asset prices.
The Shanghai Stock Exchange Composite Index (¥SSE) extended losses into the session falling as low as 3,033.63 during the morning, after a brief breakout and subsequent consolidation, traders built some upward momentum driving prices to a close at 3,049.31, a 0.05% session gain. Throughout the last week index activity seems to have slowed, with traders exercising an ever cautious outlook toward Chinese listed equities, despite March’s PMI readings signalling strong output expansion across the whole Chinese economy.
The Nifty 50 (₹NSEI) traded within tight margins, closing the session 0.10% down at 22,642.75. The general trend for April remains upward, with small consolidations deemed healthy as the index trades through all-time highs. Tuesday marks only the third negative close since March 21st, reinforcing the argument that positive momentum supporting Indian equities is far from faltering.
Commodities
Crude Oil traded to the downside through Tuesday, falling 1.33% to $85.28 per barrel. Prices tested the $87 level, however, investors failed to find a foothold with prices backing off and finding pre-established support at the $85 level. This move comes despite a release from notorious US hedge fund Citadel, warning of a tightening market into the second half of 2024. Their position likely alludes to a continuation of OPEC+ crude production cuts, which have exacerbated supply side issues previously driven by geopolitical tensions and conflicts in the Middle East and Eastern Europe. Furthermore, an expansion of economic growth in both the US and China will test markets, with demand rising in line with output. This position is underscored by last weeks manufacturing PMI releases.
Gold traded slightly higher as investors rebuilt momentum following a small consolidation last Thursday. Prices rose as high as $2,384.50 per ounce before falling back to $2,367.80 per ounce as of 21:00 GMT. The direction of gold into the end of the week should be heavily influenced by tomorrow’s US CPI data releases. If CPI figures exceed expectations, it is likely that analysts will begin to revise their rate cut predictions, with analysts pushing estimates beyond June, possibly into the third quarter of 2024. Theoretically, such a scenario could lead to a downturn in gold prices, as the commodity typically benefits from lower interest rates. Lower interest rates reduce the opportunity cost investors incur when holding gold. Higher interest rates therefore have an inverse relationship, with opportunity costs increasing, as investors are able to purchase alternative ‘risk-free’ assets, benefitting from higher coupon rates.
What to watch
US CPI (YoY)
US CPI (MoM)
US Crude Oil Inventories
US Earnings:
Delta Airlines ($DAL)
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice