ETF Express: Week Ending 19 January 2024

ETF Express is Global X’s weekly coverage of the latest ETF Market Moves, Thematic Spotlight and Commodity Calls.

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• Semiconductor firms and big tech (FANG, N100, NDQ, SEMI) were the top performers last week after TSMC, the world’s largest semiconductor manufacturer, announced a 20% increase in projected revenue for 2024 on the back of demand for chipsets designed for Artificial Intelligence.¹
• Crypto and blockchain ETFs (CRYP, EBTC, EETH) were the poorest performers of the week after it was reported FTX sold close to US$1 billion of Grayscale’s newly converted Bitcoin ETF (GBTC) in its ongoing liquidation plan.²
• There were $535.5 million in reported inflows for the week and $168 million in outflows, marking a strong week of net inflows for the Australian ETF industry.

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Semiconductors to Soar in 2024 Thanks to AI

AI & Semiconductors

After outperforming in 2023, artificial intelligence (AI) remains the driving force behind semiconductor industry growth. TSMC, the world’s largest semiconductor manufacturer, rallied almost 13% last week after its projected revenue for 2024 grew more than 20% thanks to strong demand for high-end chipsets used for the training and deployment of AI.³ The demand for these chips is so strong that TSMC likely will not be able to offer enough capacity to support all of its customers for the year.

TSMC is not the only one in the semiconductor industry that is high on AI this year. Chip designers Nvidia and AMD have both rallied more than 20% this YTD on AI bullishness and are counting on the AI accelerator and data centre markets to buoy sales.

Nvidia, a major benefactor of last year’s AI rally, grew its revenue by 205% YoY in its most recent quarterly earnings, smashing analyst expectations and raising its January 2024 quarter forecasts.⁴ The company sold roughly 650,000 of its US$30,000 AI accelerator chips last year, resulting in record-breaking revenues.⁵ This year, Nvidia has already committed to fulfilling backorders of more than 1.5 million chips.⁶

AMD, while initially not as quick to capitalise on the growing AI demand, released their own iteration of a data centre-oriented AI chipset last December and will be looking to contest Nvidia’s leadership.⁷ In their announcement presentation, AMD forecasted that the AI chip market will reach US$400 billion by 2027, implying a compound annual growth rate for the industry of more than 70%.⁸

Explore semiconductors with SEMI.

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Copper

Bullish

• China tariffs against Australian copper have seemingly been dropped as the country imported over 10,000 tonnes of copper ore and concentrate from Australia in the last month.⁹ It’s the highest volume of Australian copper imports since June 2021, when China announced an ‘unofficial’ ban on Australian commodities.
• Australian copper exports to China were just 7kgs in 2022, and only 1kg in the first 11 months of 2023.¹⁰

Bearish

• Weak Chinese economic data and lowered expectations for a PBOC rate-cut has weighed on copper prices this year. Chinese GDP disappointed last week, up 5.2% against expectations of 5.3%. Retail sales figures were also a miss, up 7.4% YoY against analysts’ forecasts of 8%.¹¹ China is the world’s largest consumer of copper.

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Gold

Bullish

• Conflict in the Middle East is attracting safe-haven inflows for gold. Last Wednesday, the US officially put the Houthi rebels on its list of international terror groups after a second attack on a US ship in the Red Sea.¹² The Irael-Hamas conflict also continues as Israeli Prime Minister Benjamin Netanyahu rejected a Hamas ceasefire deal over the weekend.¹³

Bearish

• A string of positive US data has seen March rate cut odds plummet from more than 75% to less than 50%. US unemployment claims fell to its lowest since 2022, retail sales figures were better than expected, and 2023 Q4 GDP estimates were raised from 2.2% to 2.3%.¹⁴
• The prospect of rates staying higher for longer has renewed US dollar strength in the near term. A stronger US dollar reduces the appeal of non-yielding assets which include precious metals such as gold.

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Crude Oil

Bullish

• Russian energy firm Novatek has suspended operations at its Ust-Luga fuel export terminal after a Ukrainian drone attack caused fires in the complex.¹⁵ The Ust-Luga Sea Port is one of two Russian energy-export seaports in the Baltic Sea and is responsible for the shipping of jet fuel, gas, oils, and petroleum products.
• Crude oil prices rose last week after the IEA forecasted strong growth in global oil demand for 2024. The IEA expects oil demand to grow by more than 1.2 million barrels per day in 2024, up from 180,000 barrels per day in its previous estimate.¹⁶

Bearish

• China’s slowing economy, exemplified by its weaker than expected Q4 GDP and retail sales figures, has raised concerns around oil demand in the region for 2024.

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^{Forecasts are not guaranteed, and undue reliance should not be placed on them. This information is based on views held by Global X or referenced sources as at 23rd January 2024.}