H.G Markets :

On Friday, US stock futures experienced a decline following disappointing results from Intel, which led to a more than 10% plunge in extended trading. Intel’s weaker-than-expected first-quarter guidance had a ripple effect on industry peers such as NVidia (-1.7%), AMD (-3.4%), and Broadcom (-1.3%). In the previous regular trading session on Thursday, the Dow increased by 0.64%, the S&P 500 gained 0.53%, and the Nasdaq Composite added 0.18%. The positive market movements were attributed to higher-than-expected US economic growth in the fourth quarter, raising optimism about the avoidance of a severe recession and indicating favorable prospects for corporate America. Despite a significant 12.1% drop in Tesla shares due to the electric vehicle company reporting lower-than-expected earnings and revenue in the fourth quarter, the major indexes managed to overcome this setback. Tesla also issued a warning about reduced volume growth prospects for the current year. Looking ahead, investors are anticipating the release of the Fed-preferred PCE inflation data on Friday, along with a keen interest in upcoming corporate earnings reports.

Asian shares faced a decline as optimism surrounding China’s rescue measures waned, coupled with disappointing results from Intel Corp. Both mainland China and Hong Kong witnessed a drop following a three-day rally. Morgan Stanley reduced its targets for major Chinese stock indexes, citing challenges such as debt, demographics, and deflation as obstacles to further equity gains. Notable Hong Kong stocks, including Alibaba Group Holding Ltd. and Wuxi Biologics (Cayman) Inc., experienced losses. Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho, highlighted China’s economic, financial, and currency risks. MSCI’s Asia-Pacific index fell by 0.8%, with Japanese indexes also joining the downturn. US equity futures retreated after Intel’s disappointing forecast. In Tokyo, inflation dropped below 2% for the first time in over a year and a half, influencing Bank of Japan’s considerations on interest rates.

The latest US gross domestic product data surpassed recession forecasts, supporting Corporate America’s outlook. Wall Street reached another all-time high, fueled by falling inflation and expectations of a Fed rate cut in 2024. The S&P 500 closed near 4,900, and US 10-year yields slid. Investors are now assessing the sustainability of the equity rally that began last year, considering historical data that suggests robust returns following new market highs. The outlook remains influenced by inflation trends and the potential for further central bank rate cuts in 2024. The dollar index stabilized at approximately 103.5 on Friday, with investors exercising caution in making significant moves in anticipation of a pivotal inflation report that carries potential insights into the trajectory of US interest rates.

Notably, the dollar exhibited some strength on Thursday following data indicating the resilience of the US economy despite elevated borrowing costs, registering a growth of 3.3% year-on-year in the fourth quarter, surpassing expectations set at 2%. While the Federal Reserve is anticipated to maintain interest rates during its upcoming meeting, attention will be focused on remarks from Fed Chair Jerome Powell for potential indications regarding the commencement of an easing cycle. Concurrently, the euro experienced a depreciation subsequent to the European Central Bank’s expected decision to keep rates unchanged. However, traders actively engaged in speculation, positioning bets on the possibility of rate cuts commencing in April.