January 2024 Macroeconomic Report: US Stocks Hit New Highs, Crypto Market Under Short-term Pressure

At the beginning of 2024, the U.S. economy showed an encouraging trend. Although a slight rebound in inflation data may delay the interest rate cut process, the overall economic performance has injected strong confidence into the market. In terms of the stock market, U.S. stocks continued their upward momentum and reached new highs, with technology stocks, particularly those related to artificial intelligence, regaining market attention. However, a certain electric vehicle manufacturer faced its first decline in gross profit in many years. The Asia-Pacific stock market performed well, while European markets remained relatively stable.

The crypto market is witnessing a significant event as the Bitcoin ETF has been approved as scheduled. However, this has been followed by selling pressure from a large cryptocurrency investment institution, resulting in short-term pressure on the market. Nonetheless, as the selling intensity weakens, the market is gradually stabilizing and showing a certain degree of rebound.

The U.S. labor market started the year strong, with non-farm employment increasing by 216,000 in December, far exceeding the expected 175,000. Private sector job growth also surpassed expectations, reaching 164,000. This data 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 previous month's 3.1% and the expected 3.2%, far exceeding the Federal Reserve's 2% inflation target. Nevertheless, the market generally believes that the interest rate hike cycle has ended, but the timing of interest rate cuts may be later than previously expected.

The yield on the US 10-year Treasury bonds showed an overall upward trend in January, reflecting the market's expectations for rising inflation. At the same time, economic data continued to exceed expectations: the January Markit Composite PMI preliminary value was 52.3, and the Manufacturing PMI preliminary value reached 50.3, marking a nearly 15-month high. The annualized quarter-on-quarter GDP growth rate for the fourth quarter was 3.3%, and the annual growth rate reached 2.5%, both exceeding market expectations.

Consumer confidence index has also significantly rebounded, with the University of Michigan consumer confidence index reaching a new high in a year and a half. These data collectively affirm the resilience and vitality of the U.S. economy.

In terms of the stock market, the S&P 500 index has followed the Dow Jones index to reach a historical high, surpassing the previous high from January 2022. Although the Nasdaq Composite Index has not reached a new high, it is only about 5% away from its previous peak. Tech stocks have once again become the focus of the market, with a certain chip giant and a certain software giant both achieving historical highs.

However, the stock price of a certain well-known electric vehicle manufacturer has been continuously declining, and its leading position in the global electric vehicle market is being challenged. The company's gross profit in 2023 has decreased for the first time in many years, dropping by 15% compared to 2022, and cash flow has also significantly reduced by 42%.

Other global markets also showed positive performance. The Sensex30 index in Mumbai, India, reached a new all-time high, while Japan's Nikkei 225 index approached its high from 1990. The German DAX index and the French CAC40 index consolidated at high levels.

The crypto market has ushered in a milestone event, with 11 companies' Bitcoin spot ETFs being approved. This provides ordinary investors with a more convenient channel for Bitcoin investment. However, the market did not rise as expected; instead, it was pressured by the sell-off from early investors.

The holdings of a large cryptocurrency investment institution have significantly decreased since January 11, which is considered the main reason for the market decline. Some analysts believe that this wave of selling pressure comes from early investors and does not represent the views of the entire crypto market.

According to the latest research report from a certain investment bank, considering that the institution's net outflow has reached 4.3 billion USD, analysts believe that the profit-taking phase is basically complete, and the downward pressure on Bitcoin should have largely ended. Affected by this news, the price of Bitcoin has begun to stabilize around 40,000 to 41,000 USD, showing a certain degree of recovery.

Although short-term prices are influenced by various factors, Bitcoin ETFs provide a more convenient investment channel for retail and institutional investors, and this hard logic of incremental capital inflow still exists. Therefore, there is still an optimistic outlook on the long-term trend of the crypto market in 2024.

Overall, the stock market performed well at the beginning of 2024, while the crypto market experienced some fluctuations. However, there is no significant risk in overall market liquidity, and the U.S. economy remains in a good state. In this environment, the crypto market is expected to strengthen again after digesting short-term selling pressure. The fundamental logic of incremental capital entering the market remains unchanged, and the market is expected to welcome spring after experiencing winter.