Weekly Market Update

U.S. Jobs Report Sparks Market Shift

February 5, 2024

Amid a mixed bag of US corporate earnings and a strong jobs report fueling rate hike expectations, global markets face contrasting fortunes, highlighting the complexity of forecasting economic trends in a time of technological growth and geopolitical uncertainty.

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What happened in the markets last week

At the beginning of the week, Australian inflation data fell slightly below expectations but indicated a positive trajectory, boosting the local market. Subsequently, the U.S. earnings season took centre stage, revealing a mixed performance in corporate America. While strong tech earnings drove stock prices higher, overall earnings seemed to decline when adjusted for inflation.

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U.S. jobs report and market performance

The most significant news came with Friday's release of the U.S. jobs report, showcasing robust growth with the addition of 350,000 jobs and upward revisions for prior months. This led to a 20 basis points increase in the 10-year Treasury yield, tempering earlier optimism about inflation and declining rates. Expectations for rates in the coming years have risen, impacting the Australian yield curve, especially in crucial three-year terms that may affect mortgage rates.

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Despite flat or negative earnings growth in certain sectors during the U.S. earnings season, tech and AI-related companies, the 'magnificent seven,' drove stock prices higher. Sectors like healthcare, materials, and energy lagged, reporting declines in earnings, suggesting varied economic experiences within the U.S. Questions arise about whether this indicates a soft landing and when the Fed might consider rate cuts. The blind market anticipates a recession and lower rates later in the year, while the market follows economic data, which currently does not indicate a recession.

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Global market overview

In 2024, Japan has seen an 8% increase, and the Nasdaq is up by 5%, benefiting from a corporate renaissance. In contrast, the UK and emerging markets are slightly down. Differing perspectives on China's economy and innovation pace warrant further research.

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Performance of Passive Funds in January

Passive funds outperformed in January, benefiting from increased duration and higher allocations to the US. Overall, Growth portfolios saw gains of around 1-1.5%, while defensive portfolios returned approximately 0.5%.

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U.S. Jobs Report Sparks Market Shift

Highest inflation print in Australia since 2000

Daily Volatility as high as mid-march 2020 levels

Global markets have become extremely US centric

Value and growth in emerging markets with Trinetra - the best of both worlds?

Recession fears build, yet equity markets end the week higher

There was nowhere to hide last financial year

Another week, another odd rally

March confounded many market watchers

Markets start to believe central banks are genuine about tightening

Quantitative Tightening (QT) with Hunt Economics

A quiet week with some swelling volatility

Rising rates and slowing growth, can't have one without the other

Markets slid again last week, with a concentrated sell off in US tech

Recession fears build, yet equity markets end the week higher

Inflation - Flash Update

Interest rate sensitivity persists into the new year

Strong start to the year continues despite recession concerns

Equities turbulent but resilient as interest rates rise

Helping your clients assess the climate impact of their Portfolio

Carbon credits and investing – is it the outcome we expect?

Better World makes a difference with investment in renewables

Bad news equals good news

‘Buy the dip’ opportunism start surfacing

US momentarily dips into official bear market territory

How Mark Lewin saved 13 hours a week with Managed Accounts

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