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The week in the markets –
January 5, 2024
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Tech stocks led market sell-off amid new year malaise
- The stock market began 2024 on a different note compared to the end of 2023, experiencing a sell-off across most regions.
- Big tech stocks (particularly Apple) were at the forefront of the market downturn, driven largely by overstretched valuations and uncertainty regarding Federal Reserve rate cuts.
- Economic data presented a varied picture, contributing to a cautious market outlook.
Stocks experienced a widespread sell-off, with notable losses in big tech companies, with the NASDAQ leading the way. This decline in stocks didn't stem from a single cause: it was more of a mix of fundamental and technical reasons, including shifts in market dynamics. Major tech firms have started the year on a weaker note. Their falling stock values (Apple, for example, being down by over 5% this week), reflected stretched valuations and uncertainty surrounding the U.S. Federal Reserve's timeline for rate cuts. This led investors to question whether the market's recent optimism was justified. Apple's shares dropped following a downgrade by Piper Sandler (a leading investment bank), coming on the heels of similar action by Barclays.
This downturn stands in stark contrast to the market’s strong performance at the close of 2023, when the S&P 500 Index finished with its best weekly winning streak since 2004. The new year, however, has started with a softer market, influenced not just by economic factors but also by ongoing geopolitical tensions. This week saw a number of interesting economic data releases.
The December Federal Open Market Committee Minutes provided little clarity on the timing of rate cuts, which contributed to a cautious market sentiment. This caution was reflected in the DXY index, which edged above 102.50, although its gains were limited by the subdued Jobs Opening and Labour Turnover Survey. Its November data indicated a slowing labour market. However, considering the previous overheated conditions, the labour market remains tight overall.
A new month means a new ISM Manufacturing data release, one of our favourite indicators. The Manufacturing PMI for December rose to 47.4, exceeding expectations but remaining in contraction for the fourteenth consecutive month. If we dig into the numbers for further insights, the prices paid index (an important inflation indicator) dropped to 45.2, below both forecasts and previous figures, signalling a positive trend. The employment aspect of the report showed significant improvement, but new orders continued their downward trend. Despite this, production has moved back into expansion, presenting a mixed economic outlook as the year begins.
Listen to this week’s podcast for further insights.
This week's market closing value - week ending January 5, 2024
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 20,923.40 | -36.02 | -0.17% | -0.17% | 7.26% | 7.72% |
| S&P 500 | 4,692.24 | -79.74 | -0.83% | -0.83% | 21.37% | 13.12% |
| DJIA | 37,466.11 | -223.43 | 0.25% | 0.25% | 12.07% | 9.83% |
| FTSE 100 | 7,689.61 | -43.63 | 0.07% | 0.07% | 5.93% | 2.36% |
| CAC 40 | 7,420.69 | -122.49 | -1.69% | -1.69% | 12.38% | 8.49% |
| DAX | 16,594.21 | -157.43 | -1.00% | -1.00% | 17.71% | 8.13% |
| Nikkei | 33,377.42 | -86.75 | -1.99% | -1.99% | 17.37% | 5.03% |
| Hang Seng | 16,535.33 | -512.06 | -2.22% | -2.22% | -22.60% | -8.35% |
| CURRENCY RETURNS | CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3367 | 0.0113 | 0.85% | 0.85% | -1.50% | -0.01% |
| Euro | 1.4621 | -0.0009 | -0.06% | -0.06% | 2.40% | -0.83% |
| Yen | 0.0092 | -0.0002 | -1.73% | -1.73% | -9.20% | -5.61% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 5.02 | 0.10 | Oil | $73.85 | $2.46 |
| 5-year | 3.36 | 0.19 | Gold | $2,044.61 | -$18.44 |
| 10-year | 3.26 | 0.15 | Natural Gas | $2.88 | $0.38 |
| CANADIAN PRIME RATE |
|---|
| 7.20% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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