19.01.2024 – A strong statement from Wall Street: the Nasdaq 100 has reached a new high. A whole bunch of smaller news items boosted share prices. Above all, the hope of a Goldilocks situation created a buying mood: lower interest rates with a strong economy.
The new year begins with a new peak – the Nasdaq 100 has produced a nice rally. Here is the daily chart.
Source: Bernstein Bank GmbH
Let’s take a look at the background. Firstly, there was positive news for the two Nasdaq heavyweights Nvidia and Apple. The most important supplier Taiwan Semiconductor announced a return to solid growth.
Soft landing
In addition, the lockdown in the US was averted for the time being – and, as always, at the last minute. There had been a dispute in the US Congress since September. Now the two chambers of parliament are once again voting in favour of a temporary budget solution.
Hopes of a soft landing for the US economy also increased – fears of a recession receded. The number of new weekly applications for unemployment benefits fell to a 16-month low. Unemployment claims slipped by 16,000 to 187,000; most forecasts had put the figure at 205,000.
In addition, new housing starts in December were stronger than expected. Specifically, they fell by 4.3 per cent month-on-month to 1.46 million – the forecast had only been 1.425 million. The property market is therefore proving to be relatively robust, although the decline does not indicate overheating. The home ownership situation and demand for mortgages in particular has been a permanent factor in higher interest rates under the central bank’s hawks.
Interest rate cut ahead
The head of the Atlanta Fed, Raphael Bostic, meanwhile, explained that he expects the Federal Reserve to cut interest rates from the third quarter onwards. According to Barchart.com, the market only believes that the key interest rate will remain unchanged for the time being: only 3 per cent of players see a rate cut of 25 basis points at the end of January. However, 56 per cent already expect this for the following meeting in March.
As the Federal Reserve has already signalled an end to tightening anyway, the chances of a win-win scenario for the bulls have increased: Lower interest rates and an economy running at full speed – falling borrowing costs for high-tech companies, many of which are still living on credit, and the prospect of rising profits. A Goldilocks scenario. We are excited to see what happens next – Bernstein Bank wishes you successful trades and investments!
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