New quarter. New Blood. New money. Less Fed cuts expected. China's optimism is rising. Bets are on for the S&P500 to pull back and the ASX200 to rise

It comes as the Feds preferred inflation gauge (PCE) came in line with the Fed's expectations, but manufacturing data came out stronger than expected. So, now bets have been slashed for the Fed Fund to only cut rates by 0.7% this year, instead of 1% (which is what the market thought coming into this year). Two weeks ago the market expected 0.8% of Fed cuts this year. On top of that the chance of a June cut is now slimmer, with 50% chance. If that reduces again, we could see profit taking. Plus there's just an over 60% chance of a cut in September and December. So there is caution in the air. Based on what the Fed Chair Jay Powell said at the weekend, and reading between the lines, the next catalyst might been to look for labour conditions strengthening. If they do they’d you’d probably see bets paired back AGAIN for Fed rate cuts.

Why do I say this? Well, the Fed said it would not overreact to the recent two months of higher CPI. But would react if it sees any unexpected weakness in the labour market. So instead of reducing rates too soon (which could cause inflation to pop back up and the Fed would have to rush in), it would prefer to assess and monitor and then respond. Jay Powell also said, that if the Fed however held off too late in cutting rates, that could also damage the labour market.

China's manufacturing sectors appear to have started strong in 2024 – and we saw strong numbers across the board, adding to signs the economy is stabilizing. The Caixin manufacturing purchasing managers index rose to 51.1, the highest in more than a year. Industrial output rose 7% in January-February from the same period a year earlier, the National Bureau of Statistics said earlier, the fastest growth in two years and significantly topping estimates. And lastly - we're seeing building activity hold up remarkably well.

This is why the road ahead looks long for metal demand, solar panels, EVs and wind farms.