Trending Stocks May Lose Their 9 Weeks of Gains

As of Friday, Asian stocks have been experiencing volatility. A similar trend is evident globally, as trending stocks seem to be losing their 9-week winning streak. Meanwhile, the dollar is in a strong position, as traders are less certain about aggressive rate cuts.

The MSCI index for the Asia-Pacific region outside of Japan fell by 0.49%. The markets performing the poorest were in China and Hong Kong. China’s blue chips are down 0.62%, while the Hang Seng has declined by a notable 0.8%. Concurrently, the MSCI World Index moved sideways over the day and suffered a 1.78% drop over the entire week. This indicates that markets are finally showing signs of slowing down after the previous 9 weeks of gains during the last stock market rally.

This trend may be indicative of December being a period of excessive optimism. Now, markets and investors are starting to view the markets with more sober eyes and more modest goals.

Macroeconomic Factors and the Federal Reserve’s Shifting Stance on Rate Cuts

Particular concerns are being raised about macroeconomic factors, which could significantly impact stock market predictions. There remains a range of unknown variables that could affect markets in unexpected ways. Tracking economic indicators in the coming weeks will be crucial.

The Federal Reserve (Fed) has shown increased hesitation in making rate cuts. Recent labour market data in the US has prompted the Fed to reconsider the direction of the US economy. While the Fed appears confident in its control over inflation, some officials have even indicated the possibility of rate hikes if necessary.

Now, traders have moderated their expectations regarding rate cuts and their impact on trending stocks. Previously, they were certain of rate cuts in March, but now they believe there is only a two-thirds chance of such cuts happening.