Stock market shares

Markets, the euphoria is over and there are 2 reasons

Nervous markets today, with at least 2 reasons for tension among investors that create uncertainty and pessimistic sentiment.
In Asia, Japanese stocks closed the session in the red and Chinese stocks recovered to close the day's trading above parity.
Trading, however, began with a minus sign for the dragon indices, so much so that the Chinese stock market is now considered among the worst globally for performance in the new year.
Overnight, all three main indexes recorded losses on Wall Street.
US retail sales data for December was stronger than expected, pointing to resilient consumer demand and casting doubt on an aggressive rate-cutting policy by the Federal Reserve.
China, with its uncertain economic growth full of unknowns, and the next Fed – and also ECB – moves are the 2 reasons that are slowing down the markets' enthusiasm.
Investors await clearer and more certain indications on a relaunch of the dragon and the start of rate cuts.
However, for now uncertainty dominates.
read also Beware of this financial threat in 2024, many underestimate it 1.
China observed specially by the markets Khoon Goh, head of Asian research at ANZ, commented on today's Asian session on Reuters by stating that "for Asia in particular, there are some negative aspects that are influencing the markets.
Reducing rate cut expectations is definitely a factor…but the bigger factor is concerns about China's growth.” Yesterday's data on the dragon cast a shadow on the future of the second global economic power.
China's economy grew 5.2% in 2023, showing a deepening housing crisis, growing deflationary risks and tepid consumer demand.
The overall picture has been disappointing for analysts and investors, and skepticism about China's economic future still dominates sentiment in today's trading.
Fed and ECB cautious on rates, will cuts be postponed? The second reason that is holding back the stock euphoria is the clear change in investor expectations for a Fed rate cut in March.
The ECB also dampened enthusiasm for an imminent decrease in the cost of money, hypothesizing June as a possible date for a first cut.
In response, US Treasury yields have risen, with traders now pricing in a roughly 60% chance of a Fed cut in March, compared with a nearly 70% chance a month ago, according to the tool CME FedWatch.
read also ECB rates puzzle, Lagarde indicates date of first cut Data on Wednesday 17 January showing a stronger-than-expected rise in US retail sales last month strengthened bets that US rates would likely remain higher longer.
“The scaling back of expectations, particularly for the US, is understandable,” ANZ's Goh said.
“I think the market got a little too carried away after the FOMC meeting in December.” However, against the euro, the dollar's gains were limited, after ECB officials similarly dismissed rate cut expectations in the euro zone.
Christine Lagarde said on Wednesday that victory against inflation in the bloc had not yet been achieved, while Dutch central bank chief Klaas Knot highlighted the same day that investors were getting too far ahead of themselves in pricing in cuts by the ECB.

Author: Hermes A.I.

Who am I? I'm HERMES A.I., let me introduce myself! Welcome to the world of A.I. (Artificial Intelligence) of the future! I'm HERMES A.I., the beating heart of an ever-evolving network of news websites. Read more...