Oil prices continue to rise steadily. There is an outflow of funds from Bitcoin ETFs

April 3, 2024

At the end of yesterday, the Dow Jones Index (US30) was down 1.00%, while the S&P 500 Index (US500) decreased by 0.72%. The NASDAQ Technology Index (US100) closed negative 0.95%. Stocks declined as 10-year T-note yields rose to a 4-month high on Tuesday amid strong economic data. The US ISM manufacturing index rose the most in 1.5 years, dampening prospects for a Fed rate cut.

San Francisco Fed President Daley said yesterday that three 25 bps rate cuts in 2024 are a “reasonable baseline projection”. However, there is no need to cut rates now, given the economy’s strength. She added that if inflation is more resilient, the Fed could cut rates less, and if inflation falls faster, a rate cut may be warranted.

The February JOLTS survey unexpectedly increased US job openings by 8,000 to 8.756 million, indicating a stronger labor market than expectations of a decline to 8.730 million.

Tesla (TSLA) is down more than 5% and topped the NASDAQ (US100) losers list after reporting first-quarter vehicle deliveries of 386,810 units, well below the consensus forecast of 449,080 units.

Bitcoin (BTC/USD) fell more than 5% to a one-week low on Tuesday, dragged down by falling demand for bitcoin ETFs and stronger-than-expected US economic news that pushed back the prospect of a Federal Reserve interest rate cut. According to Bloomberg, investors withdrew $86 million from 10 spot bitcoin ETF funds on Monday.

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Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) fell by 1.13%, France’s CAC 40 (FR40) closed down 0.92% yesterday, Spain’s IBEX 35 (ES35) declined 0.89%, and the UK’s FTSE 100 (UK100) closed negative 0.22%.

S&P’s Eurozone Manufacturing PMI for March was revised upward by 0.4 to 46.1 from a previously reported reading of 45.7. The ECB’s 1-year inflation expectations for February fell to 3.1% from 3.3% in January, the lowest in 2 years. The Eurozone will release March inflation data today, which will be closely watched amid speculation that the European Central Bank is preparing to cut rates in June. Eurozone inflation has remained high since the start of the year and needs to fall further for the ECB to go for a summer rate cut, so the next three inflation reports are key for markets. If inflation delivers an upward surprise, bets for a rate cut will be pushed back.

WTI crude prices rose above $85 a barrel on Tuesday, hitting their highest level since October. Oil supplies faced fresh threats from attacks on Russian energy facilities by Ukraine and escalating conflict in the Middle East. Iran vowed to retaliate against Israel for an airstrike that killed two of its top generals and five other military advisers at the Iranian embassy compound in Damascus. In addition, Mexico’s state-owned oil company Pemex is set to cut crude exports in the coming months, adding to fears of an existing supply shortage. OPEC will hold a joint ministerial meeting today to assess market conditions and members’ compliance with production targets, with current production policies expected to remain unchanged.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.09%, China’s FTSE China A50 (CHA50) was down 0.21%, Hong Kong’s Hang Seng (HK50) jumped by 2.36% on Tuesday, and Australia’s ASX 200 (AU200) was negative 0.11%. The Hang Seng Index (HK50) today pulled back from a near 3-week peak reached in the previous session as fears intensified after a powerful earthquake struck Taiwan this morning, collapsing at least 26 buildings and injuring 56 people. In China, some railroad tracks were reportedly closed.

Core inflation in Japan’s capital slowed in March, and factory output unexpectedly fell in the previous month, adding uncertainty over how soon the Bank of Japan could raise interest rates again after emerging from negative interest rates. Several weak signs in the economy may encourage the central bank to hold off on another rate hike and give investors a reason to keep selling the yen, putting pressure on the Japanese authorities to intervene in the market to support the currency.

S&P 500 (US500) 5,205.81 −37.96 (−0.72%)

Dow Jones (US30) 39,170.24 −396.61 (−1.00%)

DAX (DE40) 18,283.13 −209.36 (−1.13%)

FTSE 100 (UK100) 7,935.09 −17.53 (−0.22%)

USD Index 104.97 +0.43 (+0.41%)

Important events today:

– Japan Services PMI (m/m) at 03:30 (GMT+3);
– China Caixin Services PMI (m/m) at 04:45 (GMT+3);
– Eurozone Consumer Price Index (m/m) PMI at 12:00 (GMT+3);
– OPEC Meeting (m/m) at 12:15 (GMT+3);
– US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
– US ISM Services PMI (m/m) at 17:00 (GMT+3);
– US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
– US Fed Chair Powell Speaks at 19:10 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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Oil prices continue to rise steadily. There is an outflow of funds from Bitcoin ETFs