Global Markets

Overnight saw US equities maintain their upside momentum with “Big Tech” again leading the charge, the NASDAQ touched its all-time high during the session and looks destined to test the psychological 17,000 area in the coming weeks, now only +1.5% away. Stocks, in general, extended their recent gains even after the Fed tried to temper investors’ hopes of rate cuts by March with a deluge of M&A activity mirroring our session yesterday, although in their case, it was more than $US40bn worth of deals. It was an impressive session after seven weeks of gains, with investors’ comfort at current levels illustrated by the VIX (Fear Gauge) continuing to hover around multi-year lows.

• This week we see the market’s tendency to rally in the second half of December face-off against potential exhaustion from an already electric move higher.
• We are still targeting further upside by US equities into the New Year, with the tech-based NASDAQ now only 10pts below its 2021 all-time high.

Not a great deal needs to be added to the commentary around the “Magnificent Seven”, which the financial press has discussed at length over recent months, except their testament to trends extending further than many people expected. We believe they are now extended on the upside and likely to underperform in 2024, but on several occasions in 2023, elastic bands have stretched much further than we & the market expected before snapping back, e.g. the recently out of favour Lithium Sector.

• We are looking for further upside by the Tech Sector into 2024 but the advance is maturing into New Year.