Tech-Fueled Surge Propels S&P 500 to Third Consecutive Record, while 3M Faces Decline  | Daily Market Analysis

Key events:

• USA - S&P Global US Manufacturing PMI (Jan)
• USA - S&P Global Services PMI (Jan)
• Canada - BoC Interest Rate Decision
• USA - Crude Oil Inventories

The S&P 500 achieved a record high for the third consecutive session on Tuesday, driven by optimistic sentiments in the tech sector. The S&P 500 climbed 0.3%, reaching a new closing peak of 4,864.11, while the NASDAQ Composite also set a record with a 0.4% increase. In contrast, the Dow experienced a slight decline of 0.3%, equivalent to 95 points.

3M Company (NYSE: MMM) faced an 11% decrease, leading the industrial sector lower, as the company's weaker-than-expected full-year guidance overshadowed Q3 results that surpassed Wall Street analyst expectations.

Tech stocks continued their upward trajectory, with a focus on the upcoming earnings report from streaming giant (NASDAQ: NFLX) scheduled after the market's close.

Verizon Communications (NYSE: VZ) witnessed a notable 6% surge following the unveiling of an annual earnings forecast that surpassed expectations, expressing confidence in its growth prospects for 2024.

Gold prices exhibited a modest rise amidst a declining US dollar, with spot gold reaching $2,026.95 per ounce, and gold futures on COMEX closing at $2,028.60 per ounce. Additionally, platinum and silver experienced positive gains, with silver reaching $22.47 per ounce.

In the currency market, the Australian Dollar retreated despite positive preliminary Purchasing Managers Index data from Australia. Released monthly by Judo Bank and S&P Global, Australia's PMI showcased improvements in business activity for January across all sectors. Although the Manufacturing PMI, Services PMI, and Composite PMI all exhibited positive shifts, the AUD faced headwinds. Australian shares, particularly in miners and energy stocks, continued their ascent, contributing to the AUD/USD pair's performance.

Meanwhile, the US Dollar maintained stability despite a decline in the 2-year United States bond yield. The US Dollar Index held its recent gains, driven by risk aversion sentiment amid heightened geopolitical tensions in the Middle East. The US military's targeted strikes on facilities used by Iranian-backed groups in Iraq influenced the risk-off atmosphere.

USD/CHF saw a decline near 0.8690 during the Asian session, attempting to break its winning streak that started on January 11. Swiss National Bank President Thomas Jordan addressed the strong Swiss Franc, noting its role in capping inflation but expressing confidence in the economy's avoidance of a recession. The outlook suggests weak growth, with economic indicators such as Real Retail Sales and the ZEW Survey – Expectations eagerly awaited for insights into the trajectory of the Swiss National Bank's interest rates.

The Japanese Yen edged higher in the Asian session on Wednesday, temporarily halting the overnight retracement slide from a one-week high. However, the upward movement lacked sustained buying momentum. Bank of Japan Governor Kazuo Ueda's comments during the post-meeting press conference indicated that conditions for phasing out extensive stimulus and lifting short-term interest rates from negative territory were aligning. This, coupled with the risk of heightened geopolitical tensions in the Middle East and an uncertain global economic outlook, supported the safe-haven appeal of the JPY.

Despite the BoJ lowering its forecast for core consumer prices for fiscal 2024, holding back JPY bulls from aggressive bets, the overall bullish sentiment surrounding the US Dollar is likely to limit the downside for the USD/JPY pair. The BoJ tempered expectations for an immediate tightening of its ultra-loose policy, contributing to the cautious stance in the currency market.

Market attention now turns to crucial US economic indicators, with the flash Purchasing Managers' Index scheduled for today, and fourth-quarter Gross Domestic Product figures and personal consumption data expected tomorrow. These releases are anticipated to provide valuable insights into the health of the US economy and could influence the Federal Reserve's stance on interest rate policies.