5 February 2024 | Weekly Snapshot

Did you know?

The S&P 500 was up nearly 20% in the three months from November-January putting it in the 99th percentile for rolling 3 month returns in market history according to Goldman Sachs.

Market Movements

Australian Share Market (ASX 200) – up 1.91% for the 2nd week in a row, hitting an all time high on strong offshore leads and as inflation fell by more than expected. The REIT sector up 5.9% led the gains last week, rallying sharply on the prospects for lower interest rates. Energy up 3.8% was another strong contributor with ongoing Middle East tensions and Saudi Arabia winding back some production expansion plans keeping the oil price elevated. Info Tech up 2.97% was also notably stronger on positive offshore leads as several of the big US tech stocks generally reported better than expected Q4 results. It was a strong week on the ASX with no sectors trading lower. It was also a very busy week in terms of macro developments both domestic and internationally and was a huge week of US earnings with around 40% of the S&P 500 by market capitalization reporting Q4 results that were largely better than expected. With 46% of S&P 500 companies having now reported, the annual blended earnings growth rate is currently 1.6%, in line with the 1.6% expected at the beginning of the reporting season but improving from the -1.3% annual earnings growth rate this time last week. It was a significant week for domestic interest rate expectations. Our retail sales fell 2.7% for the month in December, larger than the 1.7% decline expected and was the largest monthly decline in 12 months. A larger pull forward from the increasingly popular Black Friday/Cyber Monday November sales when retail sales surged was the main culprit although weakness was broad based. The ASX 200 surged to an all-time high on Wednesday, buoyed by a larger than expected fall in the Q4 inflation report. Headline inflation slowed to 4.1% over the year, down from the 5.4% increase in Q3, and well below expectations for 4.3%. Interest rate futures pricing moved to a 70% chance of RBA rate cut in June (vs 50% prior to the report), and 100% chance of cut by August (was November prior to report).


U.S. Share Market (S&P 500) – up 1.38%, with the Dow (+1.43%), and Nasdaq (+1.12%) also higher for the 4th week in a row with the S&P 500 extending further into all-time high territory. Although with the S&P 500 up nearly 20% in the three months from November-January (the 99th percentile for 3 month moves in market history according to Goldman Sachs), some valuation and positioning concerns had resurfaced, despite the better-than-expected Q4 earnings last week as above. Along with earnings, it was a big week for employment data and was the Federal Reserve’s first meeting for the year where they left interest rates on hold in the 5.25%-5.5% range as expected, and dropped their tightening bias adding to views that rates have peaked. But pushed back somewhat on imminent easing expectations with those expecting a March rate cut likely disappointed and shares falling post the meeting. Although better than expected big tech earnings later in the week saw the major indices closing on their highs for the week. The January ISM manufacturing report was stronger than expected, contrasting with very week recent regional manufacturing indicators with the index at 49.1 and still in contraction (below 50), but well above consensus of 47.2. New orders were stronger with the report highlighting a stable start to 2024 with soft but improving demand. The December JOLTS job openings were ahead of estimates, unexpectedly rising to 9.02 million and the first reading above 9 million since September. The weekly Initial jobless claims at 224K were higher than expected, the highest since early November but remain low historically. The January Nonfarm payrolls on Friday night posted an impressive 353K jobs gain, smashing expectations for +177K and the biggest monthly gain since January 2023. Bond yields had fallen post the FOMC meeting, but the 10 yr. shot back up above 4% on the strong employment report with 2024 rate cut expectations falling to 115 basis points worth of cuts for the year following the report, down from around 150 basis points worth of cuts expected a few weeks ago, with the employment report vindicating Powell’s pushback on more imminent rate cuts.

Portfolio Movements

Amazon (AMZN) beats Q4 estimates on strong Christmas spending. Amazon reported Q4 results that easily beat estimates with Q4 EPS of $1.00 vs the $0.80 consensus. Q4 revenue of $169.96B also topped the $165.96B estimate. Amazon Web Services revenue of $24.2 billion was in line, up 13% from a year ago. “This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon,” CEO Andy Jassy said in a statement. “As we enter 2024, our teams are delivering at a rapid clip, and we have a lot in front of us to be excited about.”. Efforts to rein in costs also look like they are paying off with the company laying off 27,000 employees last year after expending too quickly during covid.


Microsoft (MSFT) beats Q2 estimates. Microsoft, now the world’s largest company by market cap after over taking Apple the other week, has beaten estimates with Q2 EPS of $2.93 ex-items ahead of the $2.77 expected. Q2 revenue of $62.02B is also ahead of the $61.14B expected. The company’s Intelligent Cloud segment (Azzure) a standout again with $25.88 billion in revenue and still growing at around 30% a year. Microsoft’s overall revenue increased 17.6% year on year, while Q2 net income of $21.9B increased by 33% year on year. Q2 highlights included the acquisition of video game publisher Activision Blizzard, its largest deal ever. They announced the custom cloud chips and started selling a $30 monthly Copilot artificial intelligence add-on to Microsoft 365 productivity software bundles.


Novo Nordisk (NOVO) beats Q4 estimates -Provides strong 2024 outlook. Diabetes and obesity treatment company Novo Nordisk posted another strong set of Q4 results last week with the shares hitting an all-time high and becoming only the 2nd European company in history to surpass a US$500 billion market cap. Q4 EPS of DKK4.91 was ahead of the DKK4.65 estimate. Q4 revenue of DKK65.86B also beat the DKK63.35B estimate. The board also approved a new share repurchase programme of up to DKK 20B (US$3B) to be executed during the coming 12 months. FY24 guidance was solid with sales growth in the 18% to 26% range on calendar year 2023 at a constant exchange rate and operating profit growth in the 21% to 29% range.

The Week Ahead

Domestic economic data releases this week include ANZ Job Ads and New Vehicle Sales today. The RBA’s first meeting on Interest Rates is tomorrow where another hold decision is widely expected with the new RBA Governor Bullock set to appear before the House of Representatives on Friday.

International economic data releases include China Caixin Services PMI today with Eurozone Sentix Economic Index and US ISM Services PMI tonight. Japan Household Income is tomorrow with German Manufacturing and Eurozone Retail Sales tomorrow night. German Industrial Production is Wednesday night along with US Consumer Credit. Thursday is China Loan Growth, CPI and PPI.

Portfolio company reporting this week includes Linde Plc Q4 Tuesday. Amcor Q2 is Wednesday along with Nippon Steel Q3 and CVS Health Q4. Transurban fi4rst half is Thursday along with SSE Plc Q3.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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