Mar Rosso

Markets, the focus is on these 3 themes. What happens today?

The markets are about to end the week with 3 crucial themes in focus.
The gains in the semiconductor sector, which has brought back enthusiasm among investors and relaunched the tech sector as a protagonist also in 2024, are a significant driving factor for the performance of the stock markets today.
Other key points for global financial exchanges include rumors about the moves of central banks with the dilemma of the timing of rate cuts still to be clarified and the prices of raw materials in the chaos of the Red Sea, which is increasingly complex and alarming.
The week of the markets is about to be archived in the name of uncertainties on geopolitical tensions, expectations on the Fed and ECB and cautious optimism on the technological revival.
read also Euro dollar exchange rate, rise or collapse coming? It all depends on the Fed and the ECB 1.
Tech euphoria, chip shares soar Semiconductor stocks, from Tokyo Electron to Nvidia, gained over $160 billion in market value after Taiwan Semiconductor Manufacturing's outlook for capital expenditure and revenue raised hopes of a broad tech recovery in 2024.
TSMC's better-than-expected numbers underlined expectations of a rebound in demand for smartphones, chips and computers, after more than a year of post-Covid pain.
Gains in chip stocks pushed MSCI's Asia Pacific gauge to rise for a second straight day and contracts for the tech-heavy Nasdaq 100 to advance.
read also TSMC sends chip stocks soaring.
New highs also for NVIDIA “TSMC's better-than-expected results could be positive signs of demand recovery,” An Hyungjin, CEO and fund manager at Billionfold Asset Management Inc., said on Bloomberg.
“With strong demand for artificial intelligence , not only big US tech companies but also those around the world need to invest in AI and this could be good news for stock markets,” he added.
2.
New messages from the Fed and ECB Overnight data showed weekly U.S.
jobless claims unexpectedly fell, adding to signs of resilience in the economy.
Hopes of an interest rate cut in March by the Federal Reserve are weakening more every day.
Futures still favor a first decrease in the cost of money in March by the Fed, but with less conviction, with a probability of 55%, down from 70% last week.
Meanwhile, total easing this year is seen at 140 basis points.
Atlanta Fed President Raphael Bostic said he would be open to cutting interest rates sooner than expected if inflation fell faster than expected.
However, he also urged policymakers to proceed with caution given the potential impact of unpredictable events, from elections to global conflicts and a surge in demand if rates fall too soon.
The ECB warned in the minutes of its latest meeting that it was too early to discuss easing monetary policy, highlighting concerns about very weak eurozone growth and saying the 2% inflation target could be reached by 2025 read also ECB minutes: no mention of rate cuts, but growth is worrying Raw materials and the Red Sea: is it an alarm? The escalation of war in the Middle East and chaos in the Red Sea now seems realistic: the United States launched new attacks against Houthi anti-ship missiles aimed at the sea, while Pakistan conducted attacks inside Iran, two days later Iranian ones inside Pakistani territory.
The current picture is alarming and pushes investors to observe the commodity sector very carefully.
Signs of price pressure are emerging again in the commodities sector, threatening aggressive bets on interest rate cuts this year.
Cameron Crise on Bloomberg warned about rising shipping costs resulting from the Red Sea conflict and their potential to fuel inflation.
We are already seeing the impact with diversions of commodity transporters, from oil to gas and even livestock.
Recent history shows that this is likely to eventually be reflected in overall inflation, with delivery delays ranging from four to nine months.
Then there are signs of rising food inflation, from coffee – which is taking a direct hit from the Red Sea trade disruption – to cocoa, where production has slowed to Covid-era levels amid a shortage of cocoa which pushed futures higher.
It's the kind of inflationary pressure once thought to be transitory, given its supply-driven nature.
However, it is also the type of inflation that affects consumers and has great potential to solidify future price expectations, according to the Bloomberg analyst.

Author: A.W.M.

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