We're past the US GDP release which exceeded the expectations. Instead of 2.6% growth, we saw a 2.9% print. Let's have a look at eToro's Pawel Majtkowski's comment on this release.
USA GDP is the big one this week, what asset could benefit the most from the lower/higher-than-expected print? Are you of the opinion GDP will be seriously taken into consideration by FED?
US GDP in the fourth quarter of 2023 increased by 2.9% (annualized - seasonally adjusted). This is a result better than the expectations of economists, who expected an increase of 2.6%. Growth slowed down slightly from 3.2% in Q3, but the data show that the US economy is still avoiding recession. Growth is driven by both US (up 1.4%) and global consumer spending in the form of US exports (up 0.6%). It is this unrelenting demand that keeps the economy from going into recession. Foreign demand for US goods is supported by a weakening dollar and China's growing opening up. However, at the same time, the value of unsold production in the form of inventories is growing (the largest increase, i.e. by 1.5%).
The US real estate market is doing worse. Housing demand fell for the seventh quarter in a row, which is not surprising given the pace and scale of interest rate hikes. The weakness of the housing market is a big risk for the market, but this pessimism is slowly penetrating the wallets of average Americans.
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This good data gives the Fed more room for maneuver in raising interest rates. However, the market pivot and the end of the hike cycle seems to be imminent. The market expects a rate hike at the next Fed meeting next week. However, the question remains whether interest rates will reach 5% (at the next meeting).
The end of the series of interest rate hikes in the US is a chance for the markets to get out of the bear market and rebuild calmly. We anticipate that this process will take place gradually. Company valuations should improve while profits and financial results deteriorate. However, it is already evident that the results of American companies are better than expected and 65% of S&P500 companies that published results exceeded their previous forecasts.