MongiIG

Explore the potential rebound of the Japanese yen in 2024 as the Bank of Japan (BoJ) considers rate hikes. Analysing the yen against USD, EUR, and GBP, we uncover the implications of BoJ's policy changes. Source: Bloomberg Forex Bank of Japan Japanese yen Euro USD/JPY EUR/JPY Written by: Diego Colman | Market Analyst, New York Publication date: Friday 23 February 2024 07:30 The Japanese yen has weakened significantly against its top peers in 2024, owing to the Bank of Japan's (BoJ) dovish stance. While major central banks globally have aggressively raised rates over the past two years to combat inflation, the BoJ has remained steadfast, maintaining highly accommodative policy settings. However, the era of significantly relaxed monetary policy in Japan may be nearing an end, potentially as early as the early months of the second quarter. This shift could mark the beginning of a sustained upswing for the yen, suggesting the worst may be behind us. Wage negotiations spark hope: a turning point for Japan's monetary policy If annual compensation negotiations between major Japanese firms and unions, expected to conclude around mid-March, result in substantial pay increases above 4.0%, policymakers might gain the confidence needed in the sustainability of wage growth to finally move away from negative interest rates. We will learn more about the BoJ's monetary policy outlook in the coming weeks, but the indicators seem to be aligning for a rate hike in late March or, more likely, April. As markets begin to anticipate this scenario, the yen may gradually start to rally. USD/JPY technical analysis USD/JPY climbed on Thursday, approaching resistance at 150.85. If gains pick up pace in the coming days and break above the 151.00 handle, buyers may get emboldened to initiate a bullish assault on last year’s high near 152.00. On the flip side, if sellers return and drive the exchange rate lower, technical support appears around 149.70, followed by 148.90. Further losses from this point onward may usher in a pullback towards 147.50 in the near term. USD/JPY daily chart Source: TradingView EUR/JPY technical analysis EUR/JPY extended its advance on Thursday, steadily approaching last year’s peak around the 164.00 handle. Bears need to strongly defend this ceiling; failure to do so might lead to an upward push toward trendline resistance at 165.00. In case of a bearish reversal, support is anticipated at 161.50 and 160.70 thereafter. On further weakness, all eyes will be on the 100-day simple moving average located near 159.60. Below this level, the 50-day simple moving average could act as the next shield against additional losses. EUR/JPY daily chart Source: TradingView GBP/JPY technical analysis GBP/JPY rallied on Thursday, hitting a fresh multi-year high above 190.50. With bullish momentum intact, additional upside potential is likely in the short term, with the next resistance threshold at 192.50, followed by 196.00, marking the highs of 2015. Conversely, should the upward momentum wane, resulting in a market retracement, support is seen around the psychological 190.00 level, and subsequently at 188.50. Further down, bears are likely to set their sights on the 50-day simple moving average in the vicinity of 185.50. GBP/JPY daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

The Nikkei 225, several US and european equity indices are trading in new record highs following Nvidia's better-than-expected earnings amid global risk on sentiment. China's new home prices dropping the most in ten months and UK consumer confidence weakening in February have done little to dampen the buoyant mood but perhaps the German IFO business climate index may do so, at least in the short-term. The US dollar paused its recent spell of depreciation as US yields rallied to a near three-month high, initial jobless claims in the week ending February 17 fell to a five-week low and as existing homes sales rebounded to a five-month high, reinforcing the view of a soft landing in the USA. The euro remained stable as European Central Bank officials agreed that it was too early to discuss interest rate cuts, despite indications of cooling inflationary pressures across the Eurozone, as shown in the minutes from the most recent ECB meeting.

Hi @AhmedMarsh Welcome to the community and congratulations! All the best with your trading journey. MongiIG

Tematica CIO, Chris Versace, thinks so. He tells IGTV's Angeline Ong why he thinks NVIDIA's parabolic share price trend could continue for some time. Written by: Angeline Ong | Financial Analyst, Presenter and Content Editor, London Publication date: Thursday 22 February 2024 17:07 Versace believes this even as the chip giant’s CEO told analysts that there was no way the company can "reasonably" keep up on demand in the short term as the company ramps up production. (AI Video Summary) NVIDIA's impressive earnings results Chris Versace, the Chief Investment Officer (CIO) of Tematica, recently sat down with Angeline Ong to chat about the latest financial results from NVIDIA, a popular technology company. Despite some concerns about meeting high expectations, NVIDIA impressed everyone by delivering impressive results, especially in its data center business. In fact, the company even provided higher guidance than expected, which led to increased expectations for its earnings per share (EPS) and higher price targets. Potential challenges in meeting short-term demand Versace believes that NVIDIA could be valued at a whopping $950 per share based on its compound annual growth rate. However, there might be some challenges in meeting the short-term demand as the company ramps up its production. Even though competition might cause prices to decrease, there is still a strong demand for artificial intelligence (AI) from major companies and investors, which will likely continue for several quarters. Versace explains that AI is currently at a similar stage of development as the internet and the dot-com bubble were in the past. Billions of dollars are being invested in generative AI technology, which has significant long-term potential to disrupt various industries. There is, however, a risk of there being too much supply in the market, which could lower prices. NVIDIA's impact on higher treasury bond yields and rate cuts On a different note, the bond market has been affected by NVIDIA's impressive results, resulting in higher treasury bond yields. As a result, investors now expect interest rate cuts to begin no earlier than June. Versace mentions that the timing of these rate cuts will depend on upcoming economic data. Recently, inflation data has been moving in the wrong direction, leading to a more cautious sentiment from the Federal Reserve (Fed). If the economy remains strong and the Fed cuts rates too early, it could worsen inflation. Therefore, Versace believes that the Fed will wait for sustained data aligning with their goals before making any rate cuts. Looking ahead, Versace points out the key data releases for the following week, such as the final January manufacturing PMIs and the January PCE price index. These reports will provide more insight into the speed of the economy, job creation, and inflation. If the PCE index moves in the wrong direction based on previous data, it could indicate that the Fed will wait even longer to cut rates. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Wednesday's FOMC minutes confirmed that the Fed remains "highly attentive" to inflation risks with some officials warning of downside risks in overly restrictive policy but others seeing risks of inflation progress stalling. Despite 'higher for longer' rates remaining on the cards, the US dollar stays under pressure with June rate cut expectations remaining unchanged at around 54%. Equity indices rallied as Nvidia revenues soared in the fourth quarter as the world’s most valuable chip manufacturer benefited from a spending spree on artificial intelligence. The Nikkei 225 hit a new record high after 34 years while global stock indices advance on positive sentiment.

Explore how gold outperformed other commodities in 2023 and what investors can expect in 2024 amidst economic uncertainties and geopolitical tensions. Source: Bloomberg Forex Shares Commodities Inflation United States Gold as an investment IG Analyst Publication date: Wednesday 21 February 2024 01:21 Tom Bailey, Head of ETF Research at HANetf Gold's stellar performance in 2023 Gold showcased remarkable resilience in 2023, surpassing expectations in a high-interest-rate environment and outperforming commodities, bonds, and global equities (excluding US stocks). Before examining the prospects of the yellow metal in 2024, let's first understand the investment case for gold and its key price drivers. The unique appeal of gold Gold is a unique asset class. During periods of economic uncertainty, investment demand for a safe-haven asset drives gold prices. At the same time, during periods of economic expansion, pro-cyclical consumer demand can support gold price performance. These two factors give gold the ability to provide stability in a range of economic environments. Most other commodities typically do not have this unique profile. We can divide gold demand into three categories: Economic expansion: positive for gold consumption as an expanding economy increases demand for jewellery and electronics Risk and uncertainty: gold tends to shine in times of heightened risk and uncertainty, attracting investors seeking a safe haven Opportunity cost: gold faces headwinds when bonds provide higher yields, and tailwinds when bonds provide lower yields. 2024 outlook: the US economy's impact on gold The first factor to consider for gold’s outlook, therefore, is the outlook for the US economy. Gold’s fortunes in 2024 will partially depend on whether the US economy achieves a soft landing, hard landing, or no landing. In its latest outlook, the World Gold Council detailed which aspects of gold demand will be positive or negative in the three potential economic scenarios, as shown in the table below. The global economy faces three likely scenarios in 2024 Source: World Gold Council The dynamics of a soft landing A soft landing is now widely expected, meaning the opportunity cost becomes a potential driver of gold prices. In such a scenario, the Federal Reserve will be in a position to cut interest rates and bring down US bond yields. That makes gold, a non-income producing asset, relatively more appealing. However, such a scenario could potentially detract from gold prices as risk and uncertainty recede, meaning less demand for gold as a safe-haven asset. Balancing act: risk vs. reward in gold investment According to the World Gold Council, these two competing factors may balance each other out, with gold prices potentially flat, assuming a soft landing is achieved. But, as the World Gold Council also notes, there is some upside potential. That potential upside, we believe, could come in the form of geopolitical risk. A geopolitically unstable world While investors have always considered geopolitical risk, the urgency was less in recent decades. As academic studies have shown, the end of the Cold War marked a more benign geopolitical environment, with conflicts declining. However, this benign geopolitical environment, many fear, may now be coming to a close. With the global order potentially in flux, there is a sense that the world is now beset by growing tensions between major powers and, with it, greater risk of geopolitical shocks. Gold: a safe haven amidst global uncertainty Gold is a potential hedge against geopolitical shocks. This was exemplified by the outbreak of the Israel-Hamas conflict in 2023. Between 3% and 6% was added to gold's overall performance in that year, according to the World Gold Council. Historical data shows that gold has a strong correlation with geopolitical risk. As Mark Rosenberg, founder and CEO of GeoQuant notes, gold has a strong correlation with the GeoQuant Global Political Risk Index, sitting at around 0.72. Correlations (day-on-day): 1 Jan 2017-7 Dec 2020 Source: Correlations (day/day) between GeoQuant geopolitical risk indicators Election year uncertainties: gold's role amid political risks 2024 is also a year marked by major global elections, including those in the US, the EU, and India. The current US election poses a notable political risk to investors, with the prospects of Donald Trump's return to the White House or disputes over the validity of the election. As data from GeoQuant shows, US political risk is also very tightly correlated with gold. The geopolitical case for gold in a shifting world order But the current geopolitical environment adds a longer-term potential case for holding gold. Following Russia's invasion of Ukraine, the US responded with robust sanctions, leveraging the central role of the US dollar to the global financial system. Some have accused the US of "weaponising" the US dollar. This, some argue, risks chipping away at the US dollar's global reserve status, as countries decide to diversify away from the dollar. Economic historian Barry Eichengreen has warned that the more the US uses the dollar to pursue its geopolitical interests, "the stronger the incentive for governments to invest in alternatives, and the faster the movement will be." As a result, following sanctions on Russia in 2022, there has been growing talk of de-dollarisation. This has been spearheaded by Russia and China, alongside some members of the BRICS Group. While the prospect of another currency replacing the global dominance of the US dollar looks unlikely, it is an added risk to consider in the face of geopolitical shocks and a world of increased international tensions. Gold, therefore, offers a potential hedge against this. Central Banks and the rush to gold amid currency concerns Indeed, in the absence of any other contender for reserve currency status, countries diversifying away from the dollar have opted for gold. Accordingly, central banks have been buying gold at record rates in recent years, with the People's Bank of China leading the way. Potential geopolitical shocks, therefore, may further add to this sense of de-dollarisation, particularly if such shocks come in the form of growing US-China tensions. This will potentially be constructive for gold prices, adding to its appeal as a hedge. Is inflation defeated? The enduring value of gold Longer term, the case for gold as an inflation hedge should still be considered. The world's major economies have made significant progress in bringing down the inflation spikes experienced in 2021 and 2022. But are we now set to return to the low inflation environment of the past 30 years? There are reasons to believe not. After all, a key driver of lower inflation was globalisation, with the entry of China and former Communist countries into the global economy in the 1990s. We are now potentially faced with a period of deglobalisation, with terms such as "reshoring" or "friendshoring" growing in popularity. Related to this, we have seen a return to industrial policy, such as with the US' Inflation Reduction Act. Such policies have the potential to be inflationary. So, if such an outlook is correct, gold and other commodities offer the potential to act as a store of value while inflation erodes the value of paper currency. Gold's resilience in high inflation: a historical perspective According to research from PGIM, while higher inflation periods proved challenging for equities and bonds, they have been positive for precious metals such as gold. PGIM's research paper 'Portfolio Implications of a Higher US Inflation Regime' compared returns of different asset classes in periods between 1973 and 2021 when inflation was above 4%. During such "high inflation regimes", real returns for stocks and bonds were negative while real returns for precious metals were positive. During the 1973-2021 timeframe, across the periods of high inflation, the average inflation rate was 7.4%. Over those periods, precious metals returned, in nominal terms, 7.9%, and in real terms, 0.5%. If we are due a period of structurally higher inflation, gold is a potentially attractive asset class. Historical return outcomes in low- and high-inflation regimes Q2 1973 – Q4 2021 Source: Datastream; Bloomberg; FactSet; PGIM Quantitative Solutions. Data as of 31.12.2021. Source: Datastream; Bloomberg; FactSet; PGIM Quantitative Solutions. Data as of 31.12.2021. Source: Datastream; Bloomberg; FactSet; PGIM Quantitative Solutions. Data as of 31.12.2021. How to gain exposure to gold? Investors looking for gold exposure may wish to consider the Royal Mint Responsibly Sourced Physical Gold ETC (RMAU). This ETC was the first financial product to be sponsored by the Royal Mint and the first gold ETC to be launched in partnership with a European Sovereign Mint. All the gold within the ETC is custodied at the Mint rather than a bank's vault. Uniquely, retail investors can redeem for physical bars and coins, adding to its appeal as a safe-haven asset. Crucially, all the bars are London Bullion Market Association (LBMA) post-2019 responsibly sourced good delivery bars – the highest standard available. A green twist: recycled gold bars The ETC was also the first gold ETC to introduce recycled gold bars. Recycled gold is less carbon-intensive than mined gold, adding to its sustainable appeal. Alternatively, investors may wish to consider gold mining stocks. Typically, in a bull market for gold, mining stocks have outperformed the price of the commodity itself. ESG-focused gold mining investments The AuAg ESG Gold Mining UCITS ETF (ESGO) offers exposure to an equal-weighted basket of 25 ESG-screened companies that are active in the gold mining industry. The gold mining ETF tracks the Solactive AuAg ESG Gold Mining Index, which focuses on companies that have low ESG risk characteristics. The fund uses Sustainalytics to screen the mining universe for their ESG credentials, attributing a risk score based on their findings. Only the top 25 companies with the lowest ESG risk are included within the index. This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

US dollar dynamics - anticipating FX market volatility ahead of FOMC minutes release and technical forecasts for major currency pairs. Source: Bloomberg Forex Shares United States dollar USD/JPY EUR/USD USD/CAD Written by: Diego Colman | Market Analyst, New York Publication date: Wednesday 21 February 2024 06:16 The US dollar fell modestly on Tuesday on the back of subdued US yields in a session lacking significant drivers. Volatility in the FX space, however, may accelerate later in the week, courtesy of a high-impact event on the US calendar on Wednesday: the release of the FOMC minutes. The minutes will surely provide a greater degree of clarity regarding the central bank’s assessment of the inflation outlook, and the possible timing of the first rate cut, so traders should parse and analyse the document closely. Based on recent comments from several Fed officials, the readout of the last meeting may signal limited interest for immediate rate cuts, in response to stagnating progress on disinflation. This scenario should boost US Treasury yields, bolstering the US dollar in the process. In the unlikely event that the minutes demonstrate a greater inclination among policymakers to initiate the easing cycle sooner rather than later, the opposite response could materialise, i.e., a pullback in yields and the greenback. Regardless of the outcome, we could see larger FX market swings in the coming days. Fundamentals aside, the remainder of this article will center on the technical outlook for major US dollar pairs such as EUR/USD, GBP/USD and USD/JPY. Here we'll assess the crucial price thresholds that currency traders should be aware of in the upcoming sessions. EUR/USD technical analysis EUR/USD continued its recovery on Tuesday after rebounding from support near 1.0700 last week. If gains persist in the upcoming days, resistance is anticipated around the 200-day simple moving average at 1.0820. Beyond this threshold, all eyes will be on 1.0890, followed by 1.0950. In the event of a market reversal, initial support can be identified near 1.0725 and 1.0700 subsequently. Bulls will need to vigorously protect this technical floor; failure to do so could result in a pullback towards 1.0650. On further weakness, attention will be squarely on 1.0520. EUR/USD daily chart Source: TradingView USD/JPY technical analysis USD/JPY ticked down and fell below the 150.00 handle on Tuesday. Should weakness persist throughout the week, support emerges at 148.90, followed by 147.40. Further losses from this point onward may bring the 50-day simple moving average near 146.00 into focus. On the other hand, if bulls return and push prices back above the 150.00 handle, we could soon witness a retest of the 150.85 region. Although overcoming this ceiling might present a challenge for the bulls, a decisive breakout could usher in a rally toward last year’s high in the vicinity of 152.00. USD/JPY daily chart Source: TradingView USD/CAD technical analysis USD/CAD consolidated to the upside on Tuesday, further moving away from its 200-day simple moving average and trendline support near 1.3480. If gains gather momentum over the next few days, overhead resistance looms at 1.3545, followed by 1.3585. Above these levels, the spotlight will be on 1.3620. Conversely, if prices pivot to the downside and head lower, the first floor to monitor is located at 1.3480. This area might offer stability for the pair during a retracement, but in the event of a breakdown, a rapid decline towards the 50-day simple moving average at 1.3415 could be imminent. USD/CAD daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

China adds further support to the ailing economy; and brent crude oil drops at prior swing low, propped up by the 200 SMA, meanwhile, WTI oil oscillates around key, long-term trend filter. Source: Bloomberg Shares Commodities Price of oil Price WTI China Written by: Richard Snow | Analyst, DailyFX, Johannesburg Publication date: Wednesday 21 February 2024 05:02 China adds further support to the ailing economy In the early hours of Tuesday morning, it was confirmed that the five-year loan prime rate dropped by more than expected, in yet another show of support for not only the Chinese economy, but for the real estate sector in particular. Chinese economy is expected to grow by a meager 5% again this year with several concerns still lingering. The real estate sector appears void of confidence especially after a court order to liquidate the large developer, Evergrande and while the rest of the world is battling inflation, China is dealing with the threat of deflation - lower prices year on year. Nevertheless, the added support did little for oil markets as prices head lower. Concerns around global economic growth persist, as China is a major contributor to oil demand. If doubts around China’s economic recovery persist, this could be seen in a lower oil price. Brent Crude oil drops at prior swing low, propped up by the 200 SMA Crude oil prices have put in a phenomenal recovery, rising over 9% from the early February swing low. Price action appears to have found resistance at the $83.50 mark, where prices have since turned lower towards the $82 mark. Cross section may be supported here given that the $82 mark it's followed very closely by the 200-day simple moving average, meaning continued bearish momentum below the long-term trend filter will be required to avoid a period of sideways trading. The zone highlighted in purple corresponds to the fortunes of the local Chinese stock market, which sold off aggressively, but has since stabilized on the back of state linked investment institutions buying up shares and ETFs in large quantities to restore confidence in the market. However, $83.50 remains as immediate resistance with the RSI turning lower before reaching overbought levels. Immediate support is at $82.00 followed by the 200 SMA. Brent Crude oil (UK oil) daily chart Source: TradingView WTI oil oscillates around key long-term trend filter WTI crude oil is lower on Tuesday and tests a very key level comprised of the 200-day simple moving average, and the long-term level of significance at $77.40. Over the more medium-term, price action trades higher, within an ascending channel, marking a series of higher highs and higher lows. Should we see further bearish momentum from here, oil prices may look to test the 50-day simple moving average down at the $73.84 mark before potentially making another test of channel support. Oil prices continue to react to global growth prospects which appear to have worsened given that the UK and Japan have already confirmed recessions. In addition, Europe's largest economy, Germany, is said to already be in a recession according to the Bundesbank. WTI crude daily chart Source: TradingView IG client sentiment reveals narrowing of shorts and longs, distorting signals Oil-US crude: retail trader data shows 63.69% of traders are net-long, with the ratio of traders long to short at 1.75 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests oil-US crude prices may continue to fall. Positioning is more net-long than yesterday, but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed oil-US crude trading bias. Oil-US crude client positioning chart Source: DailyFX This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Gold prices surge as US treasury yields fall: navigating XAU/USD's ascend amid economic uncertainties and fed's monetary policy shifts. Source: Bloomberg Forex Shares Commodities Gold Federal Reserve United States dollar Written by: Diego Colman | Market Analyst, New York Publication date: Wednesday 21 February 2024 05:35 Gold (XAU/USD) rose for the fourth straight session on Tuesday (+0.50% to $2,027), firmly establishing itself above the $2,025 mark, supported by declining US Treasury yields and a subdued US dollar, with risk-averse sentiment on Wall Street likely reinforcing the metal’s advance. Factoring in recent gains, XAU/USD has risen more than 2% from last week’s lows near $1,985, set in the wake of hotter-than-anticipated US inflation numbers. Despite this positive performance, the Federal Reserve's monetary policy trajectory could cap gold’s upside in the near term, so caution is warranted. Earlier in 2024, bullion's prospects looked brighter on the assumption that the Fed would deliver aggressive easing measures this year. However, overly dovish expectations have since moderated on account of strong US labour market data, and stagnating progress on disinflation. Traders may further unwind dovish wagers on the FOMC’s path if incoming information continues to reflect economic strength and sticky price pressures. This is because these two factors could push policymakers to delay the start of their easing cycle and diminish the scale of subsequent rate reductions. There are no major events on the US economic calendar in the coming days, but next week will see the release of January PCE figures. The report is poised to shed light on recent inflation dynamics, and offer insights into the Fed's next move, so traders should keep a close eye on it. Gold price technical analysis Gold prices extended their recovery on Tuesday, pushing towards confluence resistance near $2,030, where the 50-day simple moving average converges with a descending trendline drawn from last year’s high. If bulls manage to trigger a breakout over the coming trading sessions, a rally toward $2,065 could be around the corner. On the flip side, if sellers return and spark a bearish reversal off current levels, technical support emerges at $2,005, followed by $1,990. From here onwards, additional losses could result in a pullback towards $1,975. On further weakness, all eyes will be on the 200-day simple moving average. Gold price daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Forex traders will be keeping an eye on the USD today for any volatility with the release of the FOMC minutes tonight. Written by: Angela Barnes | Financial presenter/producer, London Publication date: Wednesday 21 February 2024 10:30 The Federal Reserve made it clear that they will not lower interest rates until they see a decrease in inflation - and recent CPI data has shown that inflation is not going down as quickly as expected. We could therefore expect some upside on the dollar, as IGTV’s Angela Barnes explains. The U.S. dollar The value of the USD might change a lot soon because of some important reports coming out. Right now, the value of the dollar is not really going up or down, but that could change. The people who control the money in the U.S. have said that they will only lower interest rates if inflation goes down. But it seems like inflation is not going down as quickly as they thought, so the dollar could actually become more valuable. The stock markets The people who trade in the stock market are adjusting their predictions about when and if the government will lower interest rates. This has caused the value of the dollar to go up since the beginning of the year. There's a tool that shows the chances of the government lowering interest rates, and right now, the chances are pretty low for the next meeting in March. But the chances go up for the meeting in May, and by the meeting in June, it's almost certain that they will lower rates. These increasing chances of lowering rates could affect how much the dollar is worth. So, to sum it up, the release of some important reports could make the value of the dollar change a lot. Right now, the value of the dollar is steady, but the government's stance on lowering rates and the slower-than-expected decrease in inflation might make the dollar more valuable. The predictions of the traders have also influenced the value of the dollar in recent months. It's unlikely that they will lower rates in the next meeting, but the chances go up for future meetings and this could affect the worth of the dollar. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Centrica shares sold off after releasing FY23 results, and the FTSE 100 company has been volatile since. Where next? Source: Bloomberg Shares Centrica Dividend Equity Share repurchase Debt Written by: Charles Archer | Financial Writer, London Publication date: Tuesday 20 February 2024 20:03 Centrica returned mixed FY23 results last week, as subsidiary British Gas saw full-year profits increase tenfold to £750 million — while the company as a whole saw profits fall by 17% to £2.8 billion. The FTSE 100 operator saw its shares fall to just 130p this morning. While it recovered to 133p per share through the day, it closed at just below 130p. While Centrica remains up by more than 25% over the past year, it has only risen by circa 6% over the past five years. Interestingly, it sports a low price to equity ratio of less than 2, with a less-than-inspiring dividend of 3.1%. Centrica share price: full-year results In full-year results, Centrica’s adjusted operating profit fell slightly year-over-year to £2.8 billion, excluding disposed Spirit Energy Norway assets — this compares to the £3.3 billion of a year before, but was above the company-compiled consensus of £2.26 billion. The energy provider’s adjusted EPS therefore also fell to 33.4p. On the other hand, statutory operating profit came in at £6.5 billion, and statutory EPS rose to 70.6p compared to a loss of 13.3p in 2022; this was at least partially due to the unwinding of unrealised hedge positions from last year. Centrica still saw free cash flow of £2.2 billion, and this included £200 million in working capital inflow compared to the £700 million outflow of 2022. It also retains a significantly strengthened balance sheet compared to last year — with a closing net balance of £2.7 billion, some £1.5 billion more than in 2022. While the dividend yield may not look inspiring, total cash returns in 2023 reached some £800 million, while the full year dividend was hiked by 33% to 4p per share. Meanwhile, the £1 billion share buyback programme is expected to return even more cash to investors and will run until July 2024. In addition to the financial positives, CEO Chris O’Shea enthuses that ‘we’ve improved security of supply through doubling the capacity of the Rough gas storage facility, through extending the life of the Morecambe Bay gas field into the 2030s, and through investing to extend the life of our nuclear power stations.’ Where next for Centrica shares? Citigroup analysts called the share price slump on Monday ‘harsh,’ noting that the fall perhaps stemmed from ‘an investor meeting feedback referencing Centrica not wanting the entire equity story to be around share-buybacks.’ The stock has responded positively; further, it’s building more momentum in its £600 million to £800 million per annum green-focused investment plan. The company has committed £140 million of voluntary support since the start of 2022 to struggling customers and O’Shea noted in a media call both that the company’s bad debt charge had almost doubled to a ‘little over £500 million’ and that ‘people that we think are struggling to pay, they might continue to struggle. I can't predict where that's going to go.’ It’s worth noting the background to British Gas’s profits: the jump from £72 million was arguably mostly due to OFGEM allowing the energy supplier to recover £500 million of losses from its 7.5 million customers, that it suffered in the aftermath of Russia’s invasion of Ukraine. But the company has also benefitted from governmental help for consumers to pay their energy bills. And while gas prices have fallen sharply over the past year, energy bills remain higher than in the past. Perhaps a key risk is political; British Gas was part of a well-publicised scandal in 2023 when it emerged debt agents working for the energy supplier had broken into vulnerable people's homes to force-fit prepayment meters. Given that the subsidiary has seen profits rocket on the back of government support and higher bills, it may feel like a politically easy target in an election year. Looking ahead, O’Shea notes that the ‘strong underlying operational performance’ has continued into early 2024 — but that ‘sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023.’ The FTSE 100 business ended today down 8% year-to-date. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Following China stocks hitting multi-week highs, European and US Stock indices and the US dollar are under pressure as traders await speeches by Fed members Bostic and Bowman, FOMC minutes and Nvidia earnings. In the UK CBI industrial order expectations and a speech by MPC member Dhingra will be looked at and in the euro zone consumer confidence in an otherwise relatively empty economic calendar.

German and UK stock markets end the week strong, defying US inflation worries with Germany's booming factory orders and an optimistic European manufacturing outlook signaling economic recovery. Source: Bloomberg Forex Indices FTSE 100 Stock market Inflation Germany Written by: Tony Sycamore | Market Analyst, Australia Publication date: Tuesday 20 February 2024 05:13 While US equity markets limped into the weekend on concerns over hotter-than-expected inflation data, the German and UK stock markets ended the week on a solid note. Despite a lack of AI names, the DAX has followed US equity markets to new highs in 2024, due to several important factors. The energy shock from the Russian invasion of Ukraine has now subsided. Sentiment towards the Chinese economy, which Europe and particularly Germany is leveraged to, appears to be turning high, albeit from a low base. Finally, global manufacturing appears to have turned higher and falling inflation will likely allow the ECB to cut rates in the coming months. While Germany has been late to join the manufacturing upswing, data released last week showed factory orders in Germany surged by 8.9% in December, compared with a market forecast of a flat reading. It was the strongest rise since June 2020, boosted by large orders across several industries. Further signs of optimism are expected to be viewed in the Euro Area flash PMIs set to be released this week. What is expected from the Euro Area HCOB PMIs (Thursday, 22 February at 8.00pm) The Euro-Area Manufacturing PMI surged to 46.6 in January, the highest in ten months, with services stable around 48 for a third month. This month, the manufacturing PMI is projected to rise to 47.0 from 46.6, and the services PMI is anticipated to edge higher to 48.7, up from 48.4. The composite PMI is expected to increase to 48.8 from 47.9 in January. HCOB composite flash PMI chart Source: TradingEconomics FTSE technical analysis Following a strong rally at the end of last week, the FTSE starts the new week eying resistance at 7750/65ish, which has held for the past nine months. If the FTSE can see a sustained break above 7750/65ish, it would open up a test of the April 7936 high, with scope to the 8047 high. However, should the FTSE again reject resistance at 7750/60ish, the FTSE would likely rotate back towards the support at 7550/00, coming from the 200-day moving average and last week's 7492 low. FTSE daily chart Source: TradingView DAX technical analysis In our updates in mid to late January, we noted that due to the nature of the three-wave decline from the early January the 17,123 high to the mid-Jan 16,464 low, it was likely a corrective sequence, and that the DAX would push to new highs. The Dax has since made a fresh record high at 17255. However, given the continued evidence of bearish RSI divergence and based on our wave count, which suggests the up move is mature, we remain of the view that a 5-10% pullback is not too far away. DAX daily chart Source: TradingView Source: TradingView. The figures stated are as of 20 February 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

We're diving into USD/JPY in the second instalment of our Technical cheat sheet video series, focusing on the FX pair at the notorious 150 'red line' – a level renowned for its volatile shifts. Forex USD/JPY Technical analysis Written by: Monte Safieddine | Market analyst, Dubai Publication date: Tuesday 20 February 2024 09:23 We delve into historical events to craft an overview rooted in past technical analyses and fundamental factors. Our discussion spans strategies for both conformists and contrarians across weekly and daily timeframes, highlighting essential levels to watch. This time around, traders are approaching the event with heightened caution compared to their previous encounters. This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

As Japan faces recession, markets remain optimistic about a historic interest rate hike by the Bank of Japan in April, despite recent inflation trends and sharp increases in yen short positions amidst FX intervention warnings. Source: Bloomberg Forex Shares Japanese yen USD/JPY Japan Inflation Written by: Richard Snow | Analyst, DailyFX, Johannesburg Publication date: Tuesday 20 February 2024 02:04 Markets anticipate April for potential rate hike Markets have remained unfazed by Japan's recent entry into a recession, continuing to signal a high likelihood that the Bank of Japan will opt to increase interest rates by 0.1% in an effort to exit its prolonged negative interest rate policy. Source: Refinitiv The Bank's conditions for this significant hike include establishing a "virtuous relationship" between wages and prices. Inflation has stayed above the 2% target for more than a year, although it has decreased in the latest two reports, raising questions about the sustainability of price pressures above the 2% target. Wage negotiations are in progress, expected to conclude by mid-March. This is the foundation for market speculation that the April meeting will bring the crucial rate hike. CoT report indicates significant increase in yen shorts despite FX intervention warnings Recent CoT data shows a surge in yen short positions, contradicting last week's warnings from Japan's principal currency official, Kanda, and the Bank of Japan's Deputy Governor, Shun’ichi Suzuki. Both officials have voiced their concerns over sharp and volatile FX movements (yen depreciation), with Kanda even suggesting FX intervention as a potential measure. Positioning via Commitment of Traders Report (includes data up to 13 Feb) Source: TradingView USD/JPY cautiously maintains the 150 level Despite warnings of FX intervention, USD/JPY continues to hold the 150 level. Indeed, current price action is creating a pennant-like formation, indicating a possible bullish continuation under normal market conditions. However, the potential for intervention poses a significant risk, making upward movements a gamble with a low risk-to-reward ratio, as historical FX interventions have typically caused the yen to shift by approximately 500 pips, mostly downward. Should bulls manage to push prices towards 146.50, it may prompt scrutiny from the finance ministry, potentially leading to requests for FX quotes from banks. This approach has historically preceded large-scale yen purchases. Support is currently at 146.50, with resistance noted at the recent peak of 150.88, followed again by 146.50. USD/JPY daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

A short description of defensive stocks, and five of the best defensive stocks to watch in 2024. These are the five largest defensive FTSE 100 companies. Source: Bloomberg Shares GSK plc Market trend Diageo AstraZeneca Unilever Written by: Charles Archer | Financial Writer, London Defensive stocks are companies whose underlying business is expected to generate reliable revenue and profits regardless of the wider economic environment. This could be because they hold a dominant market position, hold a reputation for value for money, or even simply provide the bare necessities. Accordingly, they are usually blue-chip companies benefitting from inelasticity of demand, making them ‘safe havens.’ In other words, if they raise prices to match inflation, consumers will continue to buy the products regardless. Defensive companies rarely deliver significant capital growth, and therefore tend to underperform during bull markets, even underperforming passive investment in indices such as the FTSE 100. But in bear markets, they can appear more attractive for the consistent earnings. By contrast, cyclical stocks are businesses which tend to outperform in the good times and fall sharply during downturns. These might include consumer discretionary stocks, miners, or oilers, all of which depend on a healthy economy to thrive. Investing in defensive stocks — and particularly the timing of an investment — is not simple. If you reposition your portfolio too early, you might miss out on additional growth before a downturn becomes too severe. And when the economy recovers, defensive stocks can become undervalued as investors sell in favour of growth. This makes buying these types of shares in a bull market and then selling them in bear market a popular contrarian investing strategy; though as always, this is harder to do than it sounds. The following FTSE 100 dividend stocks can be considered to be some of the more popular defensive companies to own in the UK as many have a reliable history of paying out. But remember, past performance is not an indicator of future returns. The best defensive stocks to watch These stocks are the largest defensive stocks on the FTSE 100, if you consider defensive sector companies to be only those which deal in healthcare, consumer staples, utilities or tobacco. AstraZeneca Unilever GSK Diageo British American Tobacco AstraZeneca AstraZeneca is a multinational pharmaceutical titan which focuses on the development and commercialisation of novel prescription medicines. It works in areas such as cardiovascular, oncology, and respiratory medication — though has a presence across almost the entire development market. Healthcare sector stocks remain highly defensive, and AstraZeneca is no exception. In FY23 results, total revenue rose by 6% to $45.8 billion, despite a decline of over $3.7 billion in covid-19 medication sales. When excluding covid-10 medicines, revenue rose by 15%, with oncology revenue up by 21%. And the company boasted a core product sales gross margin of 82%. CEO Pascal Soriot enthuses that he expects ‘another year of strong growth in 2024, driven by continued adoption of our medicines across geographies. Our differentiated and growing portfolio of approved medicines, global reach and rich R&D pipeline give us confidence that we will continue to deliver industry-leading growth.’ Excitingly, the company recently reported success in its Laura Phase III trial for its Tagrisso treatment, which showed a ‘statistically significant and highly clinically meaningful improvement’ in progression-free survival. Unilever Unilever is a multinational consumer goods company which produces a wide range of products including food, drinks, cleaning agents, beauty and personal care products. Some of its well-known brands include Dove, Ben & Jerry’s, and Hellmann's. While the company has arguably underperformed in recent years, it is working at a turnaround plan. FY23 results saw underlying sales growth at the FTSE 100 defensive company rise by 7% — with a turnover of €59.56 billion. Encouragingly, the business’s underlying operating margin rose by 60bps to 16.7%. CEO Hein Schumacher notes that ‘2023 Full Year results show an improving financial performance, with the return to volume growth and margins rebuilding. We are moving with speed and urgency to transform Unilever into a consistently higher performing business.’ GSK GSK — formerly GlaxoSmithKline — is a global biopharma company which aims to positively impact the health of 2.5 billion people by the end of 2030. After spinning out consumer healthcare company Haleon, GSK’s R&D focus is on four therapeutic areas: infectious diseases, HIV, respiratory/immunology and oncology. FY23 sales rose by 5% year-over-year to £30.3 billion, and by 14% when excluding covid-19 based sales. Top vaccine patent Shingrix, which protects against shingles, generated £3.4 billion alone. Further, adjusted operating profit rise by 12%, reflecting ‘strong sales ex COVID and higher royalty income, partly offset by increased investment in R&D and new product launches.’ With 71 vaccines and specialty medicines now in clinical development, CEO Emma Walmsley notes the company is ‘now planning for at least 12 major launches from 2025, with new Vaccines and Specialty Medicines for infectious diseases, HIV, respiratory and oncology. As a result of this progress and momentum, we expect to deliver another year of meaningful sales and earnings growth in 2024.’ Diageo Diageo is a global leader in premium alcoholic drinks, controlling over 200 brands and with sales in nearly 180 countries. The company owns distilleries which produce 40% of all Scotch whisky including Johnnie Walker — and it also owns Guinness, Smirnoff, Baileys, Captain Morgan, Tanqueray and Gordon's. In recent interim results, net sales declined by 1.4% to $11 billion, driven by an unfavourable foreign exchange impact and the widely reported net sales declines in Latin America and the Caribbean. Accordingly, operating profit fell by 11.1% to $3.3 billion — though this fall was just $205 million when excluding the LAC region. CEO Debra Crew admitted that ‘the first half of fiscal 24 was challenging for Diageo and our sector, particularly as we lapped strong growth in the prior year and faced an uneven global consumer environment…looking ahead to the second half of fiscal 24, despite continued global economic volatility, we expect to deliver improvement in organic net sales and organic operating profit growth at the group level, compared to the first half.’ British American Tobacco British American Tobacco is one of the world’s largest tobacco companies, boasting a brand portfolio including Lucky Strike, Dunhill, and Pall Mall. In terms of defensiveness, tobacco is a popular investing theme given the addictive nature of nicotine — though of course there is an ESG element to consider. However, the company is contending with changing consumer preferences and government intervention. It wrote off circa £25 billion in value of its US-based cigarette portfolio in December 2023 as smoker rates fall — while the UK is planning to implement a ban on disposable vapes soon. In full-year results, revenue dropped by 1.3% (though rose by 3.1% at constant rates). For context, ‘new category’ revenue grew by 21% — and revenue from non-combustibles now makes up 16.5% of the group’s overall revenue. Importantly, new categories achieved profitability in 2023 after years of losses and two years ahead of target, contributing £398 million to the profit pile. CEO Tadeu Marocco notes that the ‘refined strategy commits us to 'Building a Smokeless World', a predominantly smokeless business, with 50% of our revenue from Non-Combustibles by 2035.I am confident that the choices we have made will drive our long-term success and create sustainable value for all our stakeholders.’ This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Microsoft, Apple, Nvidia, Alphabet and Amazon could be the best AI stocks to watch next month. These stocks are the largest AI stocks in the US based on market capitalisation. Source: Bloomberg Shares Artificial intelligence Microsoft Amazon Nvidia Apple Inc. Written by: Charles Archer | Financial Writer, London 2023 was arguably the year of AI — the NASDAQ Composite rose by 43% in the calendar year, driven by AI-fuelled bubbles in Nvidia alongside the rest of the so-called ‘magnificent seven.’ The year was immediately preceded by the launch of revolutionary — and crucially, free to use — ChatGPT, which was swiftly followed by a response from both Alphabet in the form of Bard (now Gemini) while many other tech companies soon followed. In March 2023, the more advanced GPT-4 hit the market, which was swiftly followed by multiple AI-generated imagery tools — in one case, a realistic fake image of Pope Francis wearing a certain clothing brand circulated the internet, highlighting the openness of AI to abuse. That same month, tech leaders from across the US spectrum signed an open letter urging a pause on AI development for six months to assess the risks. A couple of months later, ChatGPT gained internet connectivity — and was soon incorporated into Bing, Microsoft’s search engine. For context, Microsoft has a significant stake in ChatGPT’s parent, OpenAI. Add in the constant stories of academic controversies, and the months-long Writers Guild of America strike over concerns that AI had the potential to replace human writers, and it’s easy to see how AI is already embedded throughout the global markets. AI is already in use across a wide variety of real-world applications, including in entertainment, social media, art, retail, security, sport analytics, manufacturing, self-driving cars, healthcare, and warehousing alongside dozens of other sectors. Every Netflix recommendation, every supermarket rewards purchase, and every football match is analysed ever more relentlessly in order to provide more and better data. And analysts think the sector will only grow. Of course, there will be casualties; whether Microsoft or Meta, virtually every tech company is engaged in layoffs. While much of this can be blamed on higher interest rates, arguably AI is already replacing some workers. Best AI stocks to watch There is some disagreement on what constitutes an AI stock — and whether it must be the main focus of a company or simply be a significant growth area. Here we have listed the top AI stocks in the US based on companies where AI is a growth area and ordered by market capitalisation. Microsoft Apple Nvidia Alphabet Amazon Microsoft Microsoft is the original global computing power, so it makes sense that the US behemoth tops the list of the best AI stocks to watch — and is now the most valuable company in the world. The business already had a strong relationship with OpenAI prior to the ChatGPT launch and has invested $13 billion into the company since 2019. In Q2 results, revenue increased by 18% year-over-year to $62 billion, while net income rose by 33% to $21.9 billion. CEO Satya Nadella enthuses that ‘we’ve moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.’ Most recently, the US titan has agreed a decade-long partnership with Vodafone to bring generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers. Vodafone will invest $1.5 billion in customer-focused AI developed with Microsoft's Azure OpenAI and Copilot technologies and will replace its physical data centres with Azure cloud services — meanwhile, Microsoft plans to become an investor in Vodafone's managed IoT platform. On the other hand, Copilot has reportedly disappointed some early adopters. Market Capitalisation: $2.90 trillion Apple Apple is in the middle of a sea change — it’s now topped Samsung as the largest smartphone maker by volume in the world but has lost its crown to Microsoft as the largest company on the planet. Investor hopes for continued growth may lie in future innovation, and in particular, the long-awaited Vision pro headset which releases on 2 February in the US with a $3,499 price tag. For context, Meta’s Quest 3 can be reliably found on sale for circa £500. However, the release of the Apple headset has been met with mixed results — and Meta CEO Mark Zuckerberg even released an informal video arguing that the cheaper device is not only better value for money, but better overall. In better news, Apple’s Keyframer AI tool has impressed new users with its ability to animate images using text descriptions. In Q1 results, Apple saw revenue rise by 2% year-over-year to $119.6 billion, while quarterly earnings per diluted share increased by 16% to $2.18. CEO Tim Cook noted the company’s ‘all-time revenue record in Services’ and also enthused that the company’s ‘installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments.’ Market Capitalisation: $2.82 trillion Nvidia Nvidia is arguably the prime beneficiary of the AI boom, last week overtaking Alphabet in market capitalisation, and then eclipsing Amazon a day later. While this rise may be unsustainable, Q3 results saw revenue rise by 206% year-over-year and 34% quarter-on-quarter to $18.12 billion. CEO Jensen Huang now considers that ‘NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off.’ Barclays analysts remain particularly enthusiastic over the AI company, noting that ‘With supply constraints, customers are often using the entire NVDA platform in order to get priority shipments of accelerators.’ Q4 results are to be released on 21 February. Market Capitalisation: $1.39 trillion Alphabet Google parent Alphabet may control 84% of the global search market share — but Yahoo was once king of search too. In addition to launching Bard, AI is already used across many of Google’s current functions. And it’s got at least two more AI-focused projects; its coding-focused Generative Language API, and DeepMind which it acquired in 2014. In Q4 results, CEO Sundar Pichai enthused that ‘we are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come.’ Quarterly revenue rose by 13% year-over-year to $86 billion. Perhaps most importantly, Alphabet is now ready to launch Gemini 1.5. This is seen as the company’s serious answer to ChatGPT-4, with Pichai arguing that it ‘represents one of the biggest science and engineering efforts we've undertaken as a company.’ Then there’s its new custom-built AI chips to consider — Apple may win its crown back before too long. Market Capitalisation: $1.79 trillion Amazon Amazon is well-known as the largest e-commerce retailer in the world, but the company is also a growing operator in the AI space. It offers several cutting-edge AI tools within its AWS business, including Code Whisperer and SageMaker — and clients can customise Amazon’s own machine learning model. Of course, competitors have their owns services, but Amazon is by far the largest cloud computing company, with circa a third of the global market share. Within its e-commerce offering, Amazon uses AI to identify consumer trends, manage inventory and also make personalised product recommendations — including targeted advertising. Then there’s the smart devices, including Alexa and the Fire tablets. CEO Andy Jassy enthuses that the AI opportunity will be ‘tens of billions of dollars of revenue for AWS over the next several years.’ Q4 net sales increased by 14% year-over-year to $170 billion. Market Capitalisation: $1.58 trillion This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Hi @Muhaammaadd Welcome to the IG Community! Looking forward to your insightful posts and engagement with other members. All the best - MongiIG

Despite the People's Bank of China (PBoC) cutting its five-year loan prime rate (LPR) by 25bps to 3.95% instead of the expected 15bps Chinese stocks remained under pressure. This even though the cut represented the first rate reduction since June 2023 and the largest since that rate was introduced in 2019. The Reserve Bank of Australia (RBA) minutes of its February monetary minutes which showed that it was appropriate not to rule out another rate hike, had little impact on the Australian dollar. Following Monday's US holiday European stocks hover near their recent multi-year highs amid a light economic calendar.

Rolls-Royce on track for significantly improved operating profits. Source: Bloomberg Shares Roll-Royce Price Business jet Written by: Chris Beauchamp | Chief Market Analyst, London Publication date: Monday 19 February 2024 16:26 Rolls-Royce on track for significantly improved operating profits. British engine maker Rolls-Royce is on track to deliver significantly improved operating profits in the second half of 2022, according to forecasts. The company's major business units are all expected to contribute to the better performance, led by a recovery in commercial aerospace and defence work. Rolls-Royce's operating profit for the second half of the year will likely come in around £830 million, a major increase from £527 million in the second half of 2021. The gains are being driven primarily by the company's civil aviation segment, where wide-body flying activity has rebounded robustly. Within civil aviation, Rolls-Royce is forecasting original equipment revenue to climb approximately 7% to £1.4 billion in the second half. More importantly, higher-margin aftermarket service revenue is projected to jump 16% to £2.4 billion. The company is also benefiting from increased business jet engine deliveries. The defence unit is poised to see its operating profit hit £298 million, as military spending ramps up in Europe and the Middle East amid the conflict in Ukraine. Rolls-Royce is well-positioned to capitalise on demand for defence services, which offer superior margins. Meanwhile, the power systems division is likely to post a 31% increase in operating profit to £213 million. Growth is expected to be powered by strong gains in aftermarket activity. Across its major business units, Rolls-Royce is demonstrating an ability to translate increased demand, particularly for high-value aftermarket work, into significantly better profitability. The second half rebound solidifies a recovery story for the company after a turbulent period marked by the pandemic's impact on commercial aerospace. With its outlook brightening, Rolls-Royce appears on course to continue rebuilding its balance sheet and financial performance. Investors are likely to cheer the better-than-expected profits as a sign of the company's progress in executing its turnaround strategy. Analyst ratings for Rolls Royce Refinitiv data shows a consensus analyst rating of ‘buy’ for Rolls Royce with 4 strong buy, 10 buy, 4 hold and 1 sell – and a mean of estimates suggesting a long-term price target of 357.35 pence for the share, roughly 8% higher than the current price (as of 19 February 2024). Source: Refinitiv Technical analysis of the Rolls Royce share price Rolls Royce’s share price remains on track for its August 2018 peak at 379.0p, judging by the swift near 385% ascent it has seen from its October 2022 low. The British multinational aerospace and defence company’s share price is now grappling with its August 1997 and February 2019 peaks at 341.3p to 344.4p which may short-term, act as resistance. Rolls Royce Monthly Candlestick Chart Source: TradingView On the daily chart the Rolls Royce share price, which has risen by more than 10% year-to-date, continues to break through resistance and thus advance. Rolls Royce Daily Candlestick Chart Source: TradingView Monday’s rise above the 8 February high at 325.7p is another stepping stone towards the August 2018 high at 379.0p. While the October-to-February uptrend line at 306.3p underpins, the medium-term uptrend will remain intact. For long-term bullish momentum to be maintained, the Rolls Royce share price should ideally remain above its mid-December low at 287.3p. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

FTSE 100 probes resistance while DAX and Nikkei consolidate below last week’s highs Outlook on FTSE 100, DAX 40 and Nikkei 225 as earnings season is coming to an end and US markets are shut for President’s Day. Source: Bloomberg Written by: Axel Rudolph FSTA | Senior Financial Analyst, London Publication date: Monday 19 February 2024 12:46 FTSE 100 flirts with resistance zone The FTSE 100’s swift rally off last week’s 7,464 low amid positive earnings, softer UK inflation and much stronger-than-expected retail sales and despite the country slipping into a technical recession, has taken the index to 7,722, a near six-week high on Friday. This level remains in play on Monday which is likely to be a quiet one as US markets are shut for its President’s day. Minor support below the psychological 7,000 mark is seen along the 55-day simple moving average (SMA) at 7,618. Source: ProRealTime DAX 40 retraces lower from last week’s record high The DAX 40 index is seen coming off last week’s record high at 17,197 and nears Friday’s 17,060 low. If it were to give way, at least a minor top would be formed with the early February high at 17,020 being back in sight, together with the psychological 17,000 mark. Minor resistance above Monday’s 17,109 intraday high can be found at Thursday’s 17,123 high. Source: ProRealTime The Nikkei 225 consolidates below its 34-year high The Nikkei 225’s swift ascent to last week’s 34-year high at 38,876 is taking a breather as the index is short-term consolidating. A rise above 38,876 would put the 1989 all-time record high at 38,957 and also the psychological 40,000 mark on the cards. Slips may find support at Friday’s 38,239 low, a slip through which would put the minor 38,000 mark back on the cards. Source: ProRealTime

Gold and oil prices still rising but cocoa comes under pressure While gold and WTI have moved higher in recent sessions, cocoa prices have fallen back from record highs. Source: Bloomberg Written by: Chris Beauchamp | Chief Market Analyst, London Publication date: Monday 19 February 2024 12:30 Gold still rising The price continues to gain, rallying off the lows seen last week, and could now push higher and challenge previously-broken trendline support. Beyond this would like trendline resistance from the early December record high, which held back progress at the beginning of February. From there the price would target horizontal resistance at $2060. A reversal back below the 100-day simple moving average (SMA) might indicate that another test of last week’s low at $1984 was possible. Source: ProRealTime WTI holding above 200-day moving average Last week saw the price push on and close above the 200-day SMA for the first time in three weeks. Further gains now target the late January high at $78.94, and then on to the $80 high that marked the peak in November. A Overall a short-term bullish view continues to prevail, with the price having created higher highs and higher lows since the December low. With this in mind, a pullback towards trendline support from December could see the price head back below $74 and the 50-day SMA but leave the bullish view intact. A close below $73 might begin to suggest a fresh bearish view, targeting the February low at $71.30. Source: ProRealTime Cocoa prices drop back Cocoa prices have finally seen a pullback from their record highs, though this only takes them to a one-week low. Short-tern trendline support from the January low comes into view around 5280. A break below this could see the price head back to 4755, or on to the rising 50-day SMA. The solid uptrend seen since the end of 2022 has recently morphed into a more dramatic move higher, though the price could drop back towards 4500 without even beginning to imperil the overall move higher. Source: ProRealTime

Sentiment amongst retail traders reaches extreme sell territory, while CoT speculators opt to hold on to their heavy buy bias. Source: Bloomberg Shares Federal Reserve Federal Open Market Committee Consumer price index Inflation Commitments of Traders Written by: Monte Safieddine | Market analyst, Dubai Publication date: Monday 19 February 2024 07:28 More disappointing pricing data, and cautious Fed member speak. Quite a bit to digest late last week, with more disappointing data on the pricing front. PPI (Producer Price Index) for the month of January was hotter than anticipated at 0.9% year-on-year (y/y) headline, with its core up 2%, and anything but controlled growth month-on-month (m/m) with readings of 0.3% and 0.5%, respectively. The preliminary readings out of UoM (University of Michigan) showed consumer inflation expectations up a notch to 3% for the 12-month but held for the five-year at 2.9%, and its consumer sentiment figure rising again, if only slightly this time around, to 79.6. Trade pricing data released the day before that also showed hotter m/m growth, and with retail sales down for the same period by 0.8%, it wasn’t the narrative optimists had hoped for. In Federal Reserve (Fed) member speak, there was Daly advocating patience and three rate cuts this year, and Bostic prior on “returning our policy stance to a more neutral stance in the summer time.” Large-cap US equity indices were in for a slight retreat, undoing intraweek record highs with tech suffering, while small-cap finished higher. Over in the bond market, Treasury yields finished the week higher, and so too in real terms, breakeven inflation rates creeping up again, and market pricing (CME's FedWatch) closer to fully pricing in a Fed hold next month, via majority holding in May, and looking at the first rate cut in June. Week ahead: earnings from Nvidia, FOMC minutes, and preliminary PMIs. As for the week ahead, a light start with a US holiday today, and it’ll remain light until we get minutes out of the latest FOMC (Federal Open Market Committee) meeting on Wednesday. The weekly inventory data out of API and EIA will be pushed out a day to Wednesday and Thursday, respectively. On the latter day is when we’ll also get preliminary PMIs (Purchasing Manager’s Index) where manufacturing and services are expected to remain in expansionary territory even if only just for the former. There will be more housing data, be it the weekly mortgage applications on Wednesday, or existing home sales on Thursday, this after building permits and housing starts released last Friday for the month of January were a clear miss and down on prior readings. In earnings, there’s Home Depot and retail giant Walmart tomorrow, and the big one on Wednesday with the last of the magnificent seven to report, Nvidia, now the third-largest US company by market capitalization. The implications are far larger for the tech sector, given the investment flows that have been going into tech and AI. Dow technical analysis, overview, strategies, and levels Even after last Tuesday's CPI (Consumer Price Index) shock, and its previous weekly 1st Resistance level managed to hold, favoring conformist buy-after-significant reversals, that outperformed on the move back up, with the small weekly change keeping the technical boxes here unchanged and so too its technical overview. As for the daily time frame late last week, going well past Thursday's 1st and 2nd Resistance level before the pullback on Friday brought it back beneath the 2nd Resistance, in all conformist buy-breakouts winning out there, and contrarian sell-after-reversals stopped out. Source: IG IG client* and CoT** sentiment for the Dow CoT are on hold in heavy buy territory at 73%, with relatively small changes in both long and short positioning (longs +673 lots, shorts +114). IG clients started off the week beneath extreme sell levels and last Tuesday's price drop was an initial boon, but the recovery thereafter, even if partial, has pushed sentiment to an extreme short 80%. Source: IG Dow chart with retail and institutional sentiment Source: IG *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of the start of this week for the outer circle. Inner circle is from the start of last week. **CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior. This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.