US Stocks Post Best January in Four Years

  • Market Overview

Wall Street posted the best January since 2019 with all major indices gaining nearly 2% on Tuesday, as investors digested a slew of encouraging economic data and corporate earnings. “The slowing of US labour costs indicate that the Federal Reserve's (Fed) aggressive approach to tame inflation will most likely ease (going forward),” Trading Economics added. The Fed is widely expected to raise the fed funds rate by 25 basis points from 4.50% to 4.75% at the conclusion of its meeting later today. For the month, the Nasdaq gained more than 11%, while the S&P 500 and Dow were up 6.60% and 2.90%, respectively, marking the third consecutive month of gains.

European stocks extended losses for the second consecutive session on Tuesday ahead of key policy decisions from major central banks this week. The benchmark STOXX 600 lost 0.20% anchored by basic resources stocks, while Germany’s DAX remained muted after data pointed to a 5.30% decline in retail trade volumes for December 2022.

Asian markets were mixed on Tuesday following a lacklustre session on Wall Street overnight, as investors continued to assess the outlook for global economic growth and the trajectory of monetary policies. “Latest data showed that China’s manufacturing and services sectors unexpectedly returned to growth in January as the country’s abrupt exit from zero-Covid policy boosted economic activities,” Trading Economics added. The Shanghai Composite fell just over 0.40% to close at 3 256 points, while the Shenzhen Component dropped 0.80% to 12 001 points.

The FTSE/JSE All Share Index ( ALSI ) shed more than 1% at 79 477 points on Tuesday, dragged by resource-linked sectors. There’s also growing concern about SA’s economic outlook amid what appears to be a persistent energy crisis. At the conclusion of the African National Congress’s strategy meeting on Monday, President Cyril Ramaphosa said that the country’s load-shedding crisis could soon be declared a National State of Disaster, which would enable the fast-tracking of spending and the implementation of specific regulations aimed at solving the root cause of the energy crisis.

Brent crude rose toward $87 per barrel on Tuesday as risk sentiment returned to the markets thanks to US wage growth data and a weakening dollar. Bullion extended losses to below $1 900 an ounce and was on track for a monthly decline as investors await monetary policy decisions from key central banks.
PSG Wealth Daily Investment Update, 1 February 2023

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