- Technology stock investors ignore signals of a restrictive monetary policy in 2024 and continue buying tech stocks.
- The USA100 climbs to its all-time highs after rising 1.56% on Thursday. Applied Materials (+4.54%), Qualcomm (+4.22%) and Apple (+3.25%) are amongst the best performers.
- US Unemployment Claims decline to their lowest level since February 2023. Weekly US Employment Claims decline from 203,000 to 187,000.
- UK Retail Sales decline 3.2% largely due to bad weather. The decline in Retail Sales is the largest witnessed since January 2022.
USA100 Reaches All Time Highs As Tech Earnings Approach
All US Indices rose on Thursday but the USA100 witnessed the strongest increase and rose to a new all-time high. Investors again ignored the negative factors from the past week such as supply disruptions, higher inflation, and less rate cuts. Instead, investors continue to believe in a soft landing and rate cuts throughout the year. Lastly, investors are also using this week to expose themselves to the stock market ahead of next week’s earnings data.
Next week will be the first week where the market will see major quarterly earnings reports for technology-based companies. Judging by the upbeat price action of the past 48 hours, investors seem to believe earnings will be higher than expectations. Next week’s earnings reports are listed below:
Netflix – 23rd January – After Market Closes – Earnings Expectations $2.24 Per Share. (-1.51% over the past 5 days).
Tesla – 24th January – After Market Closes – Earnings Expectations $0.74 Per Share. (-8.04% over the past 5 days).
Intel – 25th January – After Market Closes – Earnings Expectations $0.45 Per Share. (-1.54% over the past 5 days).
T-Mobile – 25th January – After Market Closes – Earnings Expectations $1.96 Per Share. (+1.17% over the past 5 days).
The USA100 was able to increase in value regardless of the more expensive Dollar and higher bond yields which shows investor momentum. Most global indices are also trading higher this morning including the Nikkei225, DAX and the French CAC. This can also be used as an indication of global risk sentiment and risk appetite. However, investors should note that the performance of the USA100 will largely depend on the performance of next week’s earnings data.
This afternoon’s Prelim UoM Consumer Sentiment will also influence the price of the USA100. In addition to this, the Existing Home Sales and Prelim Inflation expectations will also create volatility but to a lesser extent. Ideally, investors will want to see higher consumer sentiment but lower inflation expectations. Lastly, technical analysis indicates potential bullish price movement. The USA100 is trading above the 75-bar EMA and above the neutral on the RSI (2-Hour Chart). Additionally, the price is trading above the day’s VWAP, and order flow shows higher buy orders compared to sell orders.
GBPUSD – UK Retail Sales Decline At Fastest Pace Since January 2022!
The GBPUSD is witnessing considerable price action in favor of the US Dollar. The Dollar rose 0.24% against the Pound in the 90 minutes after the UK’s Retail Sales release. In addition to this, the currency pair also formed a bearish price gap after the announcement which signals lack of demand after the data was made available.
The economic release, which shows that UK Retail Sales declined 3.2% largely due to bad weather, also triggered bearish movement. The decline is the largest witnessed since January 2022. At the moment, the Pound is decreasing in value against all currencies and the US Dollar Index is trading 0.14% higher. Investors are favoring the Dollar due to the strength of the US economy, US economic data and stability.
The main concern for investors is that the Bank of England will need to abandon its restrictive policy or will not be able to bring inflation down without causing a recession. The price of the GBPUSD is still forming higher highs and higher lows. However, the price has now fallen from a “buy” signal to a “sell”. If the price declines below 1.26628, the Fibonacci will also signal a sell opportunity.
Michalis Efthymiou
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
In the world of finance and stock markets, there are certain events that make headlines and leave investors and analysts in awe. One such event in recent times is the incredible performance of the USA100 index. This popular index, which tracks the top 100 companies in the US, has been on a record-breaking streak, shattering resistance levels and reaching unprecedented highs. In this article, we dive deep into this monumental achievement, decoding the reasons behind it and what it means for the investors and the market as a whole.
What is the USA100 Index?
First, let’s understand what the USA100 index is and how it works. The USA100, commonly known as the Nasdaq 100, is a market capitalization-weighted index that tracks the performance of the top 100 non-financial companies listed on the Nasdaq stock exchange. These 100 companies represent various sectors of the economy, such as technology, healthcare, consumer goods, and more. This index is widely followed and has become a preferred benchmark for many investors and fund managers.
USA100 Shatters Resistance Levels
In the first few months of 2021, the USA100 index has been on a relentless upward trajectory, surpassing its previous resistance levels and reaching all-time highs. In March 2021, the index crossed the 13,000 mark for the first time, further solidifying its upward trend. This remarkable performance has not gone unnoticed, and analysts and investors are keen to understand what’s driving this index’s unstoppable rise.
Factors Contributing to the USA100’s Record Highs
One of the key contributors to the USA100’s remarkable performance is the shift towards digitalization and technology-driven solutions in the wake of the COVID-19 pandemic. With the majority of the world’s population staying at home and relying on digital platforms for work, education, and entertainment, tech companies have seen an unprecedented surge in demand, translating into soaring stock prices and higher market capitalization.
Companies like Apple, Microsoft, Amazon, and Google, which are among the top holdings of the USA100 index, have benefited significantly from this trend. Moreover, the US government’s stimulus packages and low-interest rates have also boosted the economy, leading to higher consumer spending and business investment, again benefiting the companies listed on the USA100 index.
Investor Optimism and Strong Earnings
Along with external factors, investor sentiment and faith in the market have also played a crucial role in the USA100’s tremendous run. The stock market has defied expectations and maintained its upward trend, even in the face of uncertainties and challenges posed by the pandemic. This has increased investor optimism and led to more investments in the market, further fueling the USA100’s rise.
Apart from that, the earnings reports of many companies listed on the index have also been stellar, surpassing analyst expectations and boosting market confidence. This has translated into higher stock prices and pushed the USA100 index to new highs.
What Does this Mean for Investors?
The remarkable performance of the USA100 index has been a boon for investors, particularly those with significant exposure to tech stocks. It has also opened up new opportunities for portfolio diversification, as the USA100 index’s constituents represent a diverse range of sectors.
Investors need to be cautious, though, as market experts predict that the USA100 may not maintain this pace in the long term. A market correction or a shift in consumer behavior could impact the index’s performance. Therefore, it is crucial to have a well-diversified and balanced portfolio to mitigate risks.
Practical Tips for Investors
For investors looking to capitalize on the USA100’s record highs, the key is to research and opt for a sound investment strategy. Dollar-cost averaging, where investors invest smaller amounts at regular intervals, can be a prudent approach. This helps mitigate the risk of buying at the peak and ensures that investors have a diversified portfolio.
Additionally, investors must keep a close eye on market developments and macroeconomic factors that can impact the USA100 index. Fundamental analysis and technical analysis can also be useful tools for investment decisions.
Conclusion
In conclusion, the USA100 index’s performance has been nothing short of spectacular, breaking all barriers and reaching unprecedented highs. The shift towards digitalization, strong earnings, and investor confidence have all contributed to this phenomenal performance. However, investors must exercise caution and do their due diligence before making investment decisions. With the right strategy and approach, investors can capitalize on the USA100’s record-breaking performance and secure their financial future.
