15.11.2023 – 06:47

Colivar Weekly Market Pulse

Here you will read the Colivar Weekly Market Pulse,courtesy of our guest author Mahnoosh Mirghaemi.

Please meet Mahnoosh here https://www.colivar.ai/about-creator

Read Every women's key to a second income here https://www.colivar.ai/

Enjoy our weekly insights about markets, macro-economics, geopolitics and investing.

Holiday Cheer or Drear: Insight into Consumer Headwinds and Market Dynamics

As 2023 nears its end, the U.S. economy has demonstrated remarkable resilience, particularly with notable GDP growth of 4.9% in the third quarter. This growth is primarily driven by consumer spending, a critical component of the U.S. economy, which accounts for about 70% of the GDP.

Market Overview

Tech Sector’s Strength: The technology sector has been a cornerstone of the S&P 500’s performance, with significant contributions from major players like Apple and Microsoft. This sector’s dominance in the S&P 500 has risen to over 29%, the highest since the end of 2021, indicating its growing influence in the broader market.

Bond Market Challenges: The bond market experienced volatility, most notably highlighted by the underperformance in the “Great Fall Bond Rally of 2023” and the disappointing long-term bond auction. This volatility briefly disrupted the stock market rally but did not completely derail it.

S&P 500’s Resilience: Despite some challenges, the S&P 500 is on an upward trend and is aiming to reach its annual high. However, we believe upcoming CPI data and other economic indicators could pose new hurdles.

Swiss Market Index Woes: Contrasting the broader market trends, Switzerland’s SMI is poised for its weakest annual performance against its Eurozone counterparts since 1999, impacted by underwhelming earnings from its heavyweight constituents. Many Swiss firms have been hampered by the Swiss franc’s appreciation, which has presented challenges for companies with significant international revenues.

Consumer financial health

Savings Downtrend: The reduction in household savings hints at the possibility of decreased consumer spending ahead, which is pivotal since consumer spending fuels the bulk of the U.S. economy.

Debt and Delinquencies: Increased credit card debt and late payments suggest financial strains that could alter consumer spending patterns.

External Influences: The Broader Impact

Political Climate: The threat of a U.S. government shutdown and geopolitical unrest could sway investor sentiment and market confidence worldwide.

Global Economic Indicators: Forthcoming economic reports, including Chinese economic activity and the U.K. consumer price index, will shape market expectations in the short term.

Future Market Outlook

Tech vs. Small Caps: The tech sector continues to outperform small-cap stocks, reflecting its resilience amidst economic uncertainties.

Interest Rate Observations: The Federal Reserve’s approach to interest rates remains a focal point for markets. Any shift in their policy could significantly impact both the stock and bond markets.

Corporate Buybacks: The conclusion of earnings blackout periods may lead to increased corporate buyback activities, potentially boosting stock prices.

Investor Perspective

Investors are navigating a complex landscape marked by tech sector growth, bond market volatility, and macroeconomic uncertainties. Diversification and a long-term perspective are key to successful investing in this environment. Despite current challenges, the market has shown resilience, and there are opportunities, especially with the anticipated year-end rally and the tech sector’s continued growth.

Source: Data and insights derived from diverse financial sources, including Bloomberg Intelligence and market observations.

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Karen Wendt

President of SwissFinTechLadies