Hello and welcome to a new week - hope you have a good one!
The latest Global Cross Asset Market Monitor [Market Chart Pack] is attached below:
Topdown Charts Global Cross Asset Market Monitor 02022026
Global Markets Monitor -- Notable Developments
Stocks largely in consolidation mode across most markets last week. Rotation remains a key theme. One area of particular interest has been listed infrastructure, which has seen surging flows on the back of thematic aspects e.g. AI (datacenters, electrical utilities), general infrastructure (re)building in developed economies, but also commodity-linked infrastructure.
In fixed income rates have been largely in a holding pattern, but notably up off the lows. Credit spreads and CDS pricing remain contained around the lows, but volatility is starting to pickup in commodities and FX.
In FX, the US dollar remains under pressure, just about every other major currency/group gaining against the USD (and commodity currencies in particular gaining ground). Commodities as a group are gaining ground; energy and industrial metals buoyant, agri mixed, and precious metals overall a picture of strength but increasingly volatile (especially silver; down large double-digits on Friday).
Market themes: Industrial Metals...
-Industrial metals have seen big breakouts.
--but are approaching technically troublesome areas.
-Expect monetary metals (gold, silver) to become more volatile as the macro environment begins to shift more in favor of base metals.
Industrial metals have had a strong run in recent weeks and months, chalking up big breakouts. This partly reflects an improving global growth outlook, but also rising thematic demand (e.g. especially copper for the rise of EV’s, electrification, robotics, and AI). Short-term though copper is hitting the upper end of its trend channel, and the GSCI industrial metals index is approaching levels where a similar rally previously stalled.
Global industrial metal mining stocks have likewise been surging, confirming the strength in industrial metal prices. But another key intermarket dynamic that has been playing out is basically a transition in leadership from monetary metals as the debasement trade plays through and on the back of monetary + fiscal easing -- to now nascent strength in industrial metals as growth begins to turn up.
Indeed, we likely see precious metals become more volatile as we enter the later innings of the precious metals bull market, and improve growth drives rotation and flows into more cyclical aspects like base metals.
Macro & Markets: This week we get all the January PMIs, rate decisions from the RBA, BoE, ECB, and payrolls.
In markets, US 10yr yield pressuring resistance, DXY rebounding after initial breakdown, major pullback in gold off the highs, initial pullback in WTI crude from resistance, bitcoin breaking down, stocks down slightly but still trending higher…
Research Agenda: I’ll be working on the monthly pack this week.
And, in case you missed it -- the key conclusions from the latest Weekly Macro Themes report (let me know if you did not receive it):
1. GSV vs ULG: bullish Global/Small/Value vs US/Large/Growth as clear signs of bullish rotation emerge against a backdrop of record cheap relative value.
2. Global Equities (ex-US): remain bullish global ex-US equities given attractive valuations, strong technicals, monetary tailwinds, and improving macro-fundamentals.
3. Small (+Mid) Caps: remain bullish small caps given cheap absolute and relative valuations, light allocations, prospect of bullish rotation, and improving technicals.
4. Value vs Growth: constructive on value vs growth given an initial improvement in technicals from extremes in relative price and extremes in relative value.
5. Defensives: on watch for relative upside given extreme cheap relative value (and record low allocations, market cap), but the trend is not their friend as cyclicals lead the charge for now.
Best regards,
Callum Thomas
Head of Research | Topdown Charts Limited | www.topdowncharts.com
Mobile: (+64) 22 378 1552
Email: callum.thomas@topdowncharts.com