Daily Digest: Monday 11th March
USA
US market activity was weak as the tech sell-off continues and traders await Tuesday’s CPI data print, a release which should trigger a more volatile market response. The Nasdaq 100 ($NDX) fell 0.37% to 17,951.69, while the S&P 500 ($SPX) dropped 0.11% to 5,117.94 with price decreases resting on continued sell side pressure across tech shares. On the other hand, the Dow ($INDU) managed to close the session in the black, rising 0.12% to 38,769.66.
Nvidia ($NVDA), which has almost become the benchmark of the AI and microchip space experienced a second consecutive session of losses, falling 2% to $857.74. Meanwhile competitor AMD ($AMD) shares fell 4.34% as traders continued to sell-off shares across tech, extending Friday’s sentiment.
Oracle ($ORCL) provided some after-hours relief as they posted Q3 earnings, with shares rising some 9% by 20:45(GMT) with the firms cloud services generating a combined $5.1bn USD, a 25% rise from the previous period. This should provide some support for tech shares going into an important Tuesday session.
Europe
European trading was slow, as tech shares continued a sustained sell-off into the US open, as Friday’s US employment prints remain in focus. The FTSE 100 (FTSE) rose 0.12% to 7,669.23 with banks leading transaction volume for the second session running, shares in Lloyds (LLOY.L), Barclays (BARC.L), NatWest (NWG.L), and HSBC (HSBA.L) had a collective volume of 356 million shares throughout the session. Once again traders seem to be increasing their bets on financial institutions, which may be the result of expected interest rate cuts edging closer. Despite eroding current interest earnings, a rate decrease will increase the price of bonds the institutions own to balance risk in their long-term portfolios. Furthermore, banks will stand to benefit from a rise in borrowing, specifically in the residential mortgage sector as interest rates fall. The four banks mentioned above are also trading at relative discounts from their all-time highs.
In mainland Europe the German DAX (€GDAXI) led losses, falling 0.38% to 17,746.27, the STOXX 600 (€SXXP) followed closely behind falling 0.35% to 501.49, while the French CAC (€FCHI) fell 0.1% to 8,019.73.
Rest of the World
The Nikkei 225 (¥N225) continued to struggle on Monday, as investor concerns were exacerbated by Sunday’s quarter on quarter (QoQ) GDP print. Despite rising 0.1% during the fourth quarter of 2023, GDP growth was some 0.2 percentage points lower than analyst expectations. An underwhelming Q4 GDP print slowed the Yen’s gains, with the currency falling against the dollar to ¥146.67, as of 10:45am GMT. The weakening of the Yen will likely be short lived as traders continue to price in a BOJ interest rate pivot, which is now expected as early as the monetary policy committees next meet. The Nikkei suffered its largest single session decline of the last two weeks, falling 2.19% to ¥38,820.49, closing below the ¥40,000 level for the second consecutive session.
In China Year on Year (YoY) CPI figures for February were released on Saturday, with inflation rising 0.7%, 0.4 percentage points ahead of analyst expectations. The Shanghai Stock Exchange composite Index performed well through the session as fears of deflation within the Chinese economy dwindle. The SSE (¥SSE) rose 0.74% to ¥3,068.46, its highest close since November 2023.
Cryptocurrencies
After a slow weekend, Bitcoin managed to break the 70,000 level for the second time in seven days, however, unlike Friday’s breach, prices didn’t trigger a sell-off. Bitcoin rose as high as $71,000 on Monday morning before continuing to rise, breaking new all-time highs of $72,800. By 9pm GMT Bitcoin was trading up 4.05% at $72,115. Ethereum also continued to rise on Monday, making new 52-week highs at $4086 before a small pullback as traders eye all time highs which are just under $5,000.
'Crypto stocks' have once again managed to trade against the direction of the market, with Michael Saylor’s MicroStrategy ($MSTR) rising 4.11% to $1,484 following the announcement of the purchase of an additional 12,000 Bitcoin at an average purchase price of $68,447. This now takes the firms total holdings to 205,000 Bitcoin at a total cost of $6.91bn. As of the time of writing these holdings are valued around $14.7bn. MicroStrategy is one of only a handful of publicly listed firms that hold Bitcoin on their balance sheet, acting as a case study in cryptocurrency effectiveness as a corporate asset, if successful over the long-term the firm may be able to act as a framework for others who wish to expand investment holdings in the defi sector. Additionally, MSTR share price performance has shown that traditional investors are not deterred by the implied volatility of cryptocurrency markets.
Commodities
The same concerns around Crude have followed traders into a new week, as demand eases in China and geopolitical tensions threaten supply across the Middle East. Markets remain rightfully cautious. Crude prices were up 0.14% by 9pm, trading at $78.12 per barrel. This increase follows yesterday’s announcement from the state owned Saudi Aramco, that despite a decrease in net profits caused by downward price volatility, they would be increasing dividend distributions. This suggests the firm remains confident in their current operating model, despite profitability falling it was still the corporations second highest profit figure of all time.
Gold prices have remained defiant, despite trading into small headwinds, specifically on the subject of the UK as the Global Research arm of UBS have downgraded their BOE rate cut expectations for this year. Analysts now forecast 75bps of cuts between August and December. If correct this would mean a slight extension of the higher for longer approach, which in the UK market would increase the opportunity cost of gold, lowering demand for the safe-haven asset while bond coupons remain high. Despite there being no specific upside catalysts on Monday, Gold has continued to rally, rising 0.16% to break a new record close at $2,189.10.
What to watch
US CPI Month-on-Month
US CPI Year-on-Year
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://twitter.com/saylor/status/1767158870294605904
https://investor.oracle.com/investor-news/news-details/2024/Oracle-Announces-Fiscal-2024-Third-Quarter-Financial-Results/default.aspx