Weekly review 12 February 2024: US growth continues to surprise


Positive market sentiment continued last week. Globally, equities ended up slightly higher than the week before and the spread market was calm. Interest rates rose somewhat, and the euro appreciated against the dollar.

Finnish equities were again among the weakest globally, and the Helsinki exchange is now in negative territory year-on-year. Although small signs of a pick-up were seen in the latter half of last year, the trend looks bleak for other time frames.

The commercial real estate market bubbled when the US, German and Japanese banks reported credit loss provisions for real estate loans they issued. The upset remains moderate, however.

News in the USA focussed greatly on the New York Community Bank, whose share price has plummeted in recent weeks. In the USA, problems concern particularly smaller banks, some of which are major financers specifically in the troubled commercial real estate sector. In larger banks, exposure to the sector is smaller, for which reason fears of a wider system crisis in the financial sector remain limited. It is nevertheless wise to keep an eye on the situation.

Economic data looks good, although the models say it shouldn’t

Economic data has brightened once again against expectations in both the USA and Europe. The start of the year has appeared quite similar to the end of last year, meaning economic data has surprised with its positivity time and time again. Growth in Europe has been muted but still better than expected. Meanwhile, in the USA, the labour market report, which also showed signs of cracking at the end of the year, gained strength, and the ISM PMIs published last week exceeded market expectations. Moreover, banks’ lending criteria have loosened slightly, which usually indicates an easing economic situation.

In the midst of high inflation and an interest rate hike cycle, all economic models predicted that US economic growth should take a turn for the worse, but that has not happened. If the country’s economic data remains strong, however, keeping inflation within the target figures in the long term could become a major problem. This is because economic growth drives inflation prospects, but in the wrong direction. The Fed is in no rush to start cutting interest rates, and investors should take the most optimistic forecasts with a grain of salt.

Tech companies set the pace for the earnings season

More than half of US companies have now reported their earnings. The average earnings growth among companies that have reported so far is around 5 per cent, i.e. slightly better than expected. Growth has not been consistent across all sectors, however, with large tech companies clearly pushing the average up. US banks have shown weaker earnings, leading to announcements of personnel cuts. Earnings of energy companies, basic industry and the health-care sector also declined as expected.

Of the seven major S&P 500 tech companies – i.e. the Magnificent Seven – Apple, Meta and Microsoft reported better-than-expected results, while Tesla and Amazon disappointed. Alphabet’s result was in line with expectations, and Nvidia will report on its earnings only next week.

In Europe, the earnings season appears sluggish as expected. Roughly a third of companies have now reported their earnings, which are down an average of over 10 per cent compared to last year. In particular, energy and raw material companies’ earnings have fallen significantly.


Nothing presented here is or should be taken as an investment recommendation or solicitation to subscribe for, buy or sell securities. When making investment decisions, the investor must carefully familiarise themselves with the information given on the financial instruments and understand the related risks. The investor must base their decision on their own assessment, goals and financial situation. Risk is always inherent in investment activities. The value of the investment instruments may increase or decrease. The past performance of investment instruments is no guarantee of future performance.

Show all releases and news