Capitalising on tumbling interest rates, Americans snapped up cheaper mortgages in 4Q23, as evidenced by mortgage balances increasing by $112 billion to $12.25 trillion, a sign of the housing market's rebound after November's peak rates. The mid-6% rates particularly lured millennials seeking their first homes. However, homeowners might be tapping equity to consolidate high-interest debt, as non-housing debt rose faster. This resilience aligns with broader economic data, showcasing the American consumer's strength in adapting to a higher interest rate environment. Delinquency rates on loans remained at historically low levels, but certain sectors, like auto and credit card loans, showed signs of reverting to pre-pandemic patterns.
Consumer discretionary stocks pushed the S&P 500's to another record close, with Ford's earnings and Uber's first annual operating profit cheering investors while Chipotle's also impressed. Snap's revenue miss triggered a 34% plunge, pulling the price closer to the Morgan Stanley target. Enphase Energy is the biggest winner, jumping 17% on the Oppenheimer analyst upgrade even though it missed its earnings target.
Gold prices, once touching unseen levels in anticipation of rate cuts, now face a murkier outlook as central banks are reluctant to ease. Though analysts maintain optimism, Perth Mint's plummeting gold sales paint a picture of faltering demand. Meanwhile, silver gained popularity with the launch of Australian bullion coins, reaching a three-month high.
Crude's third-day rally is likely to extend into Thursday as Israeli-Palestinian ceasefire efforts fall through after Netanyahu rejects deals and fears additional US action against Iran. While US gasoline stocks unexpectedly tightened, crude stockpiles swelled to 5.5 million barrels, exceeding expectations of 1.8 million. China's lower inflation data, however, eased concerns about slowing demand in the world's top oil importer.
The U.S. dollar fell slightly after a high on Monday, digesting Fed commentary and awaiting key inflation data next week. Meanwhile, concerns about deflation in China resurfaced after weak inflation readings. China's central bank is expected to prioritise yuan stability ahead of Lunar New Year, capping some downside risks.