Beginning of 2024: US economy shines, crypto market fluctuation

At the beginning of 2024, the US economy shows a strong momentum. Although a slight rebound in inflation data may delay the rate cut timeline, the overall economic performance has instilled confidence in the market and consumers. In the stock market, US stocks continue to hit new highs, with technology stocks, especially AI-related companies, regaining market favor. However, Tesla faces the challenge of a decline in gross profit for the first time in many years. The Asia-Pacific stock market performs remarkably, while European stock markets remain relatively stable. In the crypto market, the Bitcoin ETF was approved as expected, but due to the selling pressure from some early investors, the market is under short-term pressure. However, as the selling pressure eases, the market is gradually stabilizing and showing signs of recovery.

The economic data from the United States released at the beginning of the year is eye-catching. In December, non-farm employment increased by 216,000, significantly exceeding the expected 175,000. This impressive start brings investors the first wave of good news for the new year. However, the hot job market has also raised concerns about inflation. In December, the Consumer Price Index (CPI) rose by 3.4% year-on-year, higher than the expected 3.2%, and far exceeded the Federal Reserve's 2% inflation target. Nevertheless, the market generally believes that the possibility of interest rate hikes is extremely low, but the timing of rate cuts may be later than previously expected.

The market's judgment on the economic trend is also reflected in the movement of US Treasuries. Throughout January, the yield on the US ten-year Treasury bond showed a steady upward trend, indicating that the market expects a rebound in inflation.

Manufacturing data also exceeded expectations. The January Markit Manufacturing PMI preliminary value reached 50.3, hitting a new high since October 2022, far exceeding the expected 47.6. This indicates a trend of increasing orders in both the manufacturing and service sectors, with the business environment continuing to improve.

GDP growth was also better than expected, with the annualized quarterly growth rate of the U.S. GDP in the fourth quarter increasing by 3.3%, and the annual growth rate reaching 2.5%. The consumer confidence index also rose, with the University of Michigan consumer confidence index hitting a new high in a year and a half.

In the stock market, the S&P 500 index has followed the Dow Jones Industrial Average to reach a historic high, surpassing the previous peak of January 4, 2022. The Nasdaq Composite Index is just about 5% away from its all-time high, while the Nasdaq 100 index has already broken through to a new high.

Market focus has shifted back to technology stocks, with Nvidia and Microsoft hitting historic highs again. The wave of artificial intelligence is widely regarded as a long-term driver for the market, expected to last for years or even decades. Looking back at 2023, the "Big Seven" tech companies in the US recorded significant gains, becoming the main source of excess returns in the market.

It is worth noting that despite the impressive performance of most tech giants, Tesla faces challenges. The company's global electric vehicle deliveries in the fourth quarter were surpassed by BYD for the first time, and the total gross profit for 2023 experienced a decline for the first time in many years, decreasing by 15% compared to 2022, with cash flow also down by 42%.

In the international market, the stock markets in Japan and India have performed remarkably. The Mumbai Sensex 30 index has reached a historical new high, and the Nikkei 225 index is close to its peak in 1990. The German DAX index and the French CAC 40 index are consolidating at high levels.

The crypto market has experienced a wave of fluctuation. On January 11, the Bitcoin spot ETF of 11 companies was approved, providing ordinary investors with a more convenient channel for Bitcoin investment. However, the market did not rise as expected but instead fell. The main reason is that early investors who purchased the Grayscale Bitcoin Trust (GBTC) began to sell off in large quantities.

After Gray's transformation into an ETF, early investors can finally sell their holdings through the ETF. These investors have been unable to redeem for a long time, coupled with substantial profits, leading to large-scale selling pressure. It is estimated that GBTC has seen a net outflow of 4.3 billion USD.

Although the market is under pressure in the short term, Bitcoin ETFs provide a more convenient investment avenue for retail and institutional investors, which is still beneficial for attracting incremental funds into the market in the long run. Currently, the price of Bitcoin has stabilized and has shown a certain degree of recovery.

Overall, the stock market performed well at the beginning of 2024, while the crypto market experienced some fluctuations. However, considering the overall improvement in the U.S. economy and ample market liquidity, the crypto market is expected to regain upward momentum after digesting short-term selling pressure. With the cold January behind us, the market is expected to welcome a warmer spring.