We are very excited to launch our TS Research Substack! TS Research is a a leading global financial markets and equity research firm. This is our weekly stock market comment were you will find the most relevant information on the previous week’s main drivers of global equity markets and our expectations for the following week.
The previous week
US equity markets continued to rally last week (Dow Jones +2.2%, S&P 500, Nasdaq Comp +1.7%), supported by Trump’s pro-business policies, strong corporate reports in the financial sector, and the US Government’s announcement that it will invest up to US$500 billion in the Stargate AI project during the next four years which confirmed AI’s favorable outlook.
The next week
The main events of the following week will be the interest rate decision by the FED and the ECB, among other Central Banks. More than 20% of S&P 500 listed companies report this week, including Microsoft, Meta, Tesla and Apple. 4Q24 profit growth will likely be the strongest in the last three years.
With respect to the interest rate decision in the US, there is a 97.3% probability that the FOMC will maintain its current interest rate unchanged at 4.25-4.50% in the next monetary policy meeting, according to CME futures, after three consecutive cuts. Jerome Powell’s will hold a press conference on Wednesday where investors will look for additional clues on the future of interest rated. For its part, ECB President Christine Laguarde has pointed out that more interest rate cuts have yet to come in the Eurozone.
The main macroeconomic indicators in the US will be: 4Q24 GDP, New Home Sales, Building Permits, S&P Case Schiller Home Price Index, Durable Goods Orders, Trade Balance, Wholesale Inventories, Pending Home Sales, Personal Income, Personal Spending, and PCE Price Index.
Our fundamental point of view is that the US economy is experiencing healthy growth with strong job creation, while corporate earnings are also performing well, in particular in technology and AI related companies. Our main concern is the potential impact of a higher 10-year bond interest rate, which we believe will depend on upcoming trade policies in the US. From a technical point of view, a short-term correction in US equity markets is likely as they are in over-bought territory. However, any short-term correction has to be viewed as a clear long-term investment opportunity taking into account the strong fundamentals of the US economy and corporate sector.