Weekly house view | Making history

Weekly house view | Making history

The CIO's view of the week ahead.

The week in review

The week was marked by blow-out results from the world’s leading AI-related chip maker. Seen as a bellwether for the AI boom, the company’s guidance was also strong. Together with a small number of tech-related companies, this continued to drive the S&P 500’s performance (up 1.7%[i] over the week in USD). Europe’s Stoxx 600 reached a record, helped by business surveys showing that the downturn in the euro area economy may be easing. And with a gain of 1.4%[ii] (in yen), Japan’s Topix approached highs last seen in 1989. Other Asian markets such as those in Korea and Taiwan also benefited from the enthusiasm surrounding chip makers. A decline in jobless claims for the week ending 16 February and a general reassessment of the outlook for rate cuts pushed short-term US Treasury yields modestly higher over the week. The US dollar index declined last week, while oil prices softened.

Quote of the week

Accelerated computing and generative AI have hit the tipping point. Demand is surging.
— Said by the CEO of the world’s leading AI-related chip maker after it reported a 769 percent annual profit rise in its fourth quarter.

Key data

Annual inflation in the euro area was confirmed at 2.8% in January, down from 2.9% in December. S&P Global’s composite purchasing manager index (PMI) for the euro area rose to a preliminary 48.9 in February from 47.9 last month, with services offsetting continued weakness in manufacturing, particularly in Germany. The German Ifo Business Climate Index reached 85.5 in February, improving from the January print of 85.2. Led by services, the composite PMI for the US declined to 51.4 in February from 52 in January. The Conference Board Leading Economic Index (LEI) for the US fell by 0.4% in January to 102.7 compared with a 0.2% decline in December. In the six months to end-January, the LEI declined 3%. Japanese imports declined an annual 9.6% in January while exports rose 11.9%. S&P Global’s PMI for Japanese manufacturers slid to 47.2 in February, its lowest level since August 2020. The composite PMI fell to 50.2.

[i] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2019, 31.5%; 2020, 18.4%; 2021, 28.7%; 2022, -18.1%; 2023, 26.3%.
[ii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, TOPIX (net 12-month return in JPY): 2019, 15.2%; 2020, 4.8%; 2021, 10.4%; 2022, -5.1%; 2023, 25.1%.
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