Stock markets in the US tested new highs last week and are expected to remain bullish in the coming months, as positive investor sentiment builds on hopes of a Federal Reserve interest rate cut in June.
Amid a healthy US earnings season, stocks have not really responded to last week's sell-off in Treasury markets, hotter-than-expected consumer price index data or producer price index readings.
CPI, a key measure of US inflationary conditions, came in higher than expected at 3.1 per cent year-on-year, above the expected 2.9 per cent.
Year-on-year core CPI, the same metric but excluding food and energy, also ticked higher to 3.9 per cent, just above the expected 3.7 per cent.
The PPI metric – which measures the change in prices of goods sold by manufacturers – also increased across the board.
While equities corrected in the immediate short term on these figures – the S&P 500 dropped more than 1.3 per cent on February 13 – their performance in the days after was encouraging.
Investors absorbed the news better than expected and this means that risk factors have not moved much in overall sentiment.
Even the S&P's lower closing of 0.5 per cent on Friday seems like a minor correction, all things considered.
A quick check of the CME’s FedWatch tool shows that while the Federal Open Market Committee's meeting in March will undoubtedly yield a hold in rates, the possibility of a cut at its June meeting has increased to 51.6 per cent – up from 41.9 per cent from a week ago (before the CPI and PPI prints were released).
Markets are taking on more momentum for a cut in June – and one could argue the recent rally in US equities backs this up.
This would mean the bullish moves in US equities will continue, albeit we could see some uneven pricing action and minor corrections on a daily basis, similar to that of last week.
Overall, US earnings are positive and this should continue to lend support to markets and risk-on sentiments.
However, on the flip side, it is important to note that geopolitical risks – from the ongoing Middle East turmoil and Red Sea volatility – could weigh on sentiment.
More companies have been addressing these geopolitical issues during earnings calls with analysts and investors in the first quarter.
Through to the end of February and the early parts of March, I will be keeping an eye out for any minute details and changes in wording from the FOMC meeting minutes that are due on February 21 at 11pm UAE time.
Any comments perceived to be hawkish would see weakness in risk modes, which would eventually lead to more US dollar buyers and higher Treasury yields.
Weekly jobless claims are due on February 22, at 5.30pm UAE time, and are expected to show slight increases.
On February 28, we have US gross domestic product data (due at 5.30pm UAE time). This will precede the all-important personal consumption expenditure print at 5.30pm on February 29.
The PCE is the Fed’s preferred measure of inflation. Year-on-year PCE in December came in at 2.6 per cent, while core PCE, which excludes food and energy, came in at 2.9 per cent.
Any slight increase in these prints and currencies will fall against the greenback, while gold should also come under pressure.
Again, equities would also feel the pressure short term, but longer term it should not hinder the bullish upwards bias.
Considering this, longer-term traders would need to wait before accumulating positions, while shorter-term traders may find some opportunity amid the coming data points.
Gold looks to hold above $1,974 through to the end of the first quarter, while I see upsides capped at $2,060.
If we turn to currency markets, EUR/USD looks to be under pressure technically in the short term.
I expect to see a conclusive test of 1.06 levels before the end of the first quarter, while upsides will be capped at 1.08.
Fundamentally, there is nothing supporting euro forecasts in the interim.
Expect to see new highs in US equities through to the end of February.
While it could get a little bumpy, I expect the S&P 500 index to make a run towards 5,300 before the end of March.
Gaurav Kashyap is a risk manager at Equiti Securities Currencies Brokers. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti Securities Currencies Brokers
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
- Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
- Biodiversity: Support species like sea turtles, dugongs, and seabirds
- Coastal protection: Reduce erosion and improve water quality
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
The specs: 2018 Chevrolet Trailblazer
Price, base / as tested Dh99,000 / Dh132,000
Engine 3.6L V6
Transmission: Six-speed automatic
Power 275hp @ 6,000rpm
Torque 350Nm @ 3,700rpm
Fuel economy combined 12.2L / 100km
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
More about Middle East geopolitics
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
Match info:
Wolves 1
Boly (57')
Manchester City 1
Laporte (69')
Day 1, Abu Dhabi Test: At a glance
Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.
Stat of the day – 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.
The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227-4 at the close.
Killing of Qassem Suleimani
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
FIXTURES
All times UAE ( 4 GMT)
Saturday
Fiorentina v Torino (8pm)
Hellas Verona v Roma (10.45pm)
Sunday
Parma v Napoli (2.30pm)
Genoa v Crotone (5pm)
Sassuolo v Cagliari (8pm)
Juventus v Sampdoria (10.45pm)
Monday
AC Milan v Bologna (10.45om)
Playing September 30
Benevento v Inter Milan (8pm)
Udinese v Spezia (8pm)
Lazio v Atalanta (10.45pm)
The%20specs
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Fixtures
Tuesday - 5.15pm: Team Lebanon v Alger Corsaires; 8.30pm: Abu Dhabi Storms v Pharaohs
Wednesday - 5.15pm: Pharaohs v Carthage Eagles; 8.30pm: Alger Corsaires v Abu Dhabi Storms
Thursday - 4.30pm: Team Lebanon v Pharaohs; 7.30pm: Abu Dhabi Storms v Carthage Eagles
Friday - 4.30pm: Pharaohs v Alger Corsaires; 7.30pm: Carthage Eagles v Team Lebanon
Saturday - 4.30pm: Carthage Eagles v Alger Corsaires; 7.30pm: Abu Dhabi Storms v Team Lebanon
CREW
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ERajesh%20A%20Krishnan%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ETabu%2C%20Kareena%20Kapoor%20Khan%2C%20Kriti%20Sanon%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5%2F5%3C%2Fp%3E%0A
La Mer lowdown
La Mer beach is open from 10am until midnight, daily, and is located in Jumeirah 1, well after Kite Beach. Some restaurants, like Cupagahwa, are open from 8am for breakfast; most others start at noon. At the time of writing, we noticed that signs for Vicolo, an Italian eatery, and Kaftan, a Turkish restaurant, indicated that these two restaurants will be open soon, most likely this month. Parking is available, as well as a Dh100 all-day valet option or a Dh50 valet service if you’re just stopping by for a few hours.
Springsteen: Deliver Me from Nowhere
Director: Scott Cooper
Starring: Jeremy Allen White, Odessa Young, Jeremy Strong
Rating: 4/5
Sun jukebox
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
The bio
Job: Coder, website designer and chief executive, Trinet solutions
School: Year 8 pupil at Elite English School in Abu Hail, Deira
Role Models: Mark Zuckerberg and Elon Musk
Dream City: San Francisco
Hometown: Dubai
City of birth: Thiruvilla, Kerala
