US equities started the year on a weak note, with the S&P 500 closing 0.6% lower, marking its lowest level in nearly two weeks. The technology sector, led by Apple’s 3.6% decline, faced headwinds, while defensive sectors like consumer staples and health care outperformed. Profit-taking and a shift into underperforming sectors, such as energy, characterised the market, influenced by a downgrade of Apple and concerns in the semiconductor industry. The Nasdaq Composite fell 1.6%, and semiconductor shares dropped amid export bans on chipmaking equipment to China. In the Euro Area, the Stoxx 50 index closed 0.3% lower on the first trading day of the year, slipping from its 23-year high, with rising bond yields. Notably, technology shares, including ASML declined after the Dutch government partially revoked an export license for the shipment of some of its machines to China. 

Summary for 02.01.2024 

  • Most Asian stocks declined amid concerns over early US interest rate cuts and China’s slowing growth. The tech sector faced significant losses, with South Korea’s KOSPI down 1.7% and Hong Kong’s Hang Seng index shedding 1.1%. Major Apple suppliers, including Samsung Electronics, AAC Technologies Holdings, and SK Hynix, fell 2-3%. Anticipation of less dovish minutes from the Fed’s December meeting added pressure. Australia’s ASX 200 sank 1%, while Japanese markets were closed for a week-long holiday.  
  • Futures suggest the dark mood will carry on into Europe with a lower open expected while Wall Street was seen little changed on Wednesday morning after the tech-heavy Nasdaq Composite posted its worst session since October. Investors await the latest Federal Reserve meeting minutes later in the day. 
  • Oil prices stabilised in Asian trade, rebounding from previous losses as the dollar strengthened amid uncertainties about early Fed rate cuts. Crude prices faced a bleak outlook due to oversupply concerns. Despite China’s increased oil import quotas, weak economic data affected sentiment. The stronger dollar, influenced by Fed minutes and upcoming nonfarm payrolls data, weighed on crude demand. Tensions in the Red Sea provided limited support, with disruptions having minimal impact on global oil supplies. 
  • Construction spending in the US increased by 0.4% month-over-month to a seasonally adjusted annual rate of $2,050.1 billion in November of 2023, following an upwardly revised 1.2% rise in October and missing market estimates of 0.6% growth. Private spending advanced by 0.7% in the period, driven by a 1.1% increase in the residential segment, particularly in single-family projects and multi-family housing projects. Simultaneously, spending on the non-residential segment went up by 0.2%. Meanwhile, public spending was 0.7% lower. Yearly, construction spending grew by 11.3% in November. 
  • Top-rated U.S. companies, including Toyota, Ford, UBS, BNP Paribas, and Lloyds, raised over $29 billion in debt on Tuesday, signalling a robust start to the new year in the corporate bond market. The companies tapped into investor demand anticipating lower interest rates later in the year. The issuance aimed to take advantage of low Treasury yields and tightening credit spreads, primarily to refinance upcoming maturities amid a substantial bond maturity wall in 2024 and 2025. Bond desks expected high demand as investors sought to lock in yields before potential Fed rate cuts. 
  • Apple’s shares fell nearly 3.6% to a seven-week low yesterday after Barclays downgraded it to “underweight” due to concerns about weak demand for its devices in 2024, particularly the iPhone and Mac. This marks the second brokerage to have a “sell” rating on Apple, contributing to its most bearish recommendations in at least two years. The decline erased over $100 billion of Apple’s market capitalization, closing at $185.64. Barclays cited lackluster performance of the iPhone 15 and warned of mounting risks for Apple’s services business. 
  • Tesla delivered 494,989 electric vehicles in Q4 2023, beating market estimates but falling short of CEO Elon Musk’s 2 million annual target. However, it lost its top EV maker spot to China’s BYD, which delivered 526,409 vehicles. Tesla’s year-end sales push helped achieve a record 1.8 million deliveries for 2023. BYD’s success, driven by price cuts, indicates a consumer shift towards more affordable EV options amid high interest rates. Tesla shares remained flat. Regulatory scrutiny over Autopilot and concerns about maintaining demand after tax credit expirations pose challenges. 
  • Rivian Automotive’s Q4 deliveries fell short of estimates at 13,972 vehicles, reflecting tough competition and higher interest rates impacting electric vehicle demand. The 10% drop from the previous quarter was attributed to slower deliveries amid holiday schedules. Despite the miss, Rivian exceeded its annual production target, delivering 57,232 units. The company, backed by Amazon, has maintained price stability, avoiding discounts. Analysts suggest its R1T pickup, priced at $73,000, may not face significant competition from Tesla’s Cybertruck. 
  • Wells Fargo upgraded shares of Booking Holdings and Expedia to Equal Weight from Underweight, citing achievable gross bookings growth estimates. The price target for Booking was raised to $3,459 from $2,402, and for Expedia to $159 from $91 per share. Wells Fargo sees a 4-5% rise in global lodging gross bookings in 2024, with a premium for Booking and Expedia, anticipating another strong year of Asia nights growth for both companies. For Expedia, the analysts note the “One Key” impact and foresee a balance with slower business-to-business growth. 
  • Oppenheimer upgraded Moderna to Outperform from Perform yesterday, setting a $142 price target. The analysts cite increasing visibility on COVID-19 vaccine sales, a clearer financial framework, and key catalysts in 2024 and 2025. They anticipate Moderna becoming a five-product commercial company by 2026, noting positive execution addressing previous concerns. 
  • Deutsche Bank downgraded Estee Lauder to Hold from Buy on Tuesday, maintaining a $146 price target. Analysts express concerns about near-term downside risks related to China inventory/brand recovery delays and the possibility of challenges in the US market conditions. Long-term, they see growth opportunities for EL in skincare, anti-aging, and makeup recovery.