InvestMacro

By JustMarkets

At Friday’s stock market close, the Dow Jones Index (US30) decreased by 0.18% (for the week -0.63%). The S&P 500 Index (US500) was down 0.65% (for the week -0.14%). The NASDAQ Technology Index (US100) closed negative 1.16% (for the week -1.10%).

Although the US economy added 275K jobs, unemployment jumped to 3.9%, and wage growth slowed. The data indicates that the labor market has begun to cool down. Investors’ first reaction to the report was a rise in risk assets and a fall in the dollar. Market expectations for the first rate cut in June were confirmed and strengthened. But since this is not a new scenario and such a consensus has been priced in over the past month, the positivity was not enough for long, and investors sold off all the growth by the end of Friday. Current market conditions suggest index weakness will continue this week as investors take profits after the recent market rally. That said, this week promises to be even more volatile with the release of inflation data on Tuesday, March 12, and the quarterly derivatives expiration on Friday. Usually, these periods are when new trends are born, or old trends are reversed.

Also on Friday, shares of Nvidia (NVDA) fell more than 5%, its worst single-day performance since late May. But the stock ended the week up more than 6% amid a rally that has boosted its market value by more than $1 trillion this year.

Bitcoin hit a new all-time high above $70,000, helped by investor demand for new US spot bitcoin ETFs launched this year and expectations of lower global interest rates. Billions of dollars have poured into ETFs over the past few weeks. Also, let’s not forget the bitcoin “halving” that will take place in April 2024. In addition, the market has received support ahead of an expected upgrade to the Ethereum blockchain platform. Bitcoin’s previous boom in 2021 was followed by a “crypto winter” when bankruptcies and collapses of major cryptocurrency companies left millions of investors destitute, prompting regulators to step up regulation.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 0.16% (for the week +0.40%), France’s CAC 40 (FR40) added 0.15% (for the week +1.18%) on Friday, Spain’s IBEX 35 (ES35) was down 0.13% (for the week +2.34%), and the UK’s FTSE 100 (UK100) closed negative 0.43% (for the week -0.30%).

Nagel, representative of the ECB Governing Council and President of the Bundesbank, said on Friday that an interest rate cut before the summer is increasingly likely. His colleague, ECB Governing Council representative Villeroy de Gallo, added that the first rate cut is very likely to come in the spring.

Oil prices closed 1% lower on Friday as markets remain wary of weak demand from China, even as the OPEC+ producer group extended supply cuts. Both benchmarks fell for the week, with Brent down 1.8% and WTI crude prices decreased by 2.5%. Currently, traders in the energy market are focusing on the timing of possible rate cuts by the Fed and ECB. Lower interest rates may increase demand for oil by accelerating economic growth.

Asian markets traded yesterday without any unified dynamics. Japan’s Nikkei 225 (JP225) was down 1.28% for the week, China’s FTSE China A50 (CHA50) lost 0.28% for the 5 trading days, Hong Kong’s Hang Seng (HK50) was down 1.66% for the week, and Australia’s ASX 200 (AU200) was positive 1.31%.

Japan’s economy returned to growth in the fourth quarter of 2023, averting a technical recession. Revised data showed that the country’s GDP grew by 0.4% and 0.1% year-on-year and 0.1% quarter-on-quarter, respectively, reversing preliminary contraction figures of 0.4% and 0.1% for the period. The latest data reinforced speculation that the Bank of Japan may start raising interest rates in April.

Chinese consumer prices rose by 0.7% year over year in February 2024, above market forecasts of 0.3%, and a turnaround from the sharpest 0.8% drop in 14 years in January. The latest result was the first consumer inflation since August last year, reaching the highest level in 11 months. But despite the rise in consumer prices, producer prices remain in deflation.

S&P 500 (US500) 5,123.69  −33.67 (−0.65%)

Dow Jones (US30) 38,722.69 −68.66 −0.18%)

DAX (DE40) 17,814.51 −28.34 (−0.16%)

FTSE 100 (UK100) 7,659.74 −32.72 (−0.43%)

USD Index 102.74 −0.08 (−0.08%)

• – Japan GDP (q/q) at 01:50 (GMT+2).

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.

By JustMarkets

At Thursday’s stock market close, the Dow Jones Index (US30) was up 0.34%, the S&P 500 Index (US500) added 1.03%, and the NASDAQ Technology Index (US100) closed positive 1.51%. Meanwhile, the S&P 500 (US500) and NASDAQ (US100) indices rose to new record highs. Stocks rose Thursday on speculation that the Fed and ECB will begin cutting interest rates as early as June.

Speaking in front of the US Senate on Thursday, Fed Chairman Jerome Powell indicated the central bank could move closer to revising its restrictive policy if signs of moderate inflation prove sustainable. Recent data also showed that weekly US jobless claims were slightly higher than expected, and Q4 labor costs were revised downward. The US trade deficit for January widened to $67.4 billion, exceeding expectations of $63.3 billion and becoming the most significant deficit in 9 months, a negative for Q1 GDP. Investors are now awaiting Friday’s release of the much-anticipated February employment report for more information on the state of the US labor market.

The monthly Nonfarm payrolls labor market report will be released in the US today. The economy is expected to add 190,000 jobs in February after adding 353,000 in January. The unemployment rate will likely remain at 3.7%, and wage growth will slow from 4.5% to 4.3% year-over-year. If the data comes out in line with economists’ forecasts, it would indicate a slight cooling of the labor market, increasing the likelihood of an FOMC rate cut in April. The USD index will be under pressure in such a scenario, and risk assets (EUR, GBP, indices) will be supported. On the contrary, if the labor market data comes out better than expected, it will indicate the stability of the labor market and will postpone the first rate cut to a later date. In such a scenario, the dollar index could gain significant support, negatively impacting risk assets, indices, and gold.

Equity markets in Europe rallied yesterday. Germany’s DAX (DE40) rose 0.71%, France’s CAC 40 (FR40) gained 0.77%, Spain’s IBEX 35 (ES35) added 1.20% on Thursday, and the UK’s FTSE 100 (UK100) closed positive 0.17%.

The ECB, as expected, left the deposit rate unchanged at 4.5% and said that keeping borrowing costs at this level for “quite some time” would make a “significant contribution” to bringing consumer price growth back to the 2% target. The ECB lowered its 2024 eurozone GDP forecast to 0.6% from its December forecast of 0.8% and cut its 2024 eurozone inflation forecast to 2.3% from its December forecast of 2.7%. ECB President Lagarde said the eurozone economy remains weak, and wage growth is slowing. She added that consumer price growth is slowing, but she and her colleagues are not convinced that monetary easing can begin now. Swaps put the odds of a 25 bps ECB rate cut at 14% at the next meeting on April 11 and 93% at the meeting on June 6.

WTI crude prices rose above $79 a barrel on Friday, rebounding from the previous session’s losses, as heightened tensions in the Middle East continue to raise supply concerns and a Houthi attack on a commercial ship in the Red Sea this week left people dead.

Natural gas prices (XNG) fell sharply on Thursday amid ample US gas inventories. The EIA’s weekly natural gas inventory data showed a 40 billion cubic foot fall on Thursday, which was in line with expectations. However, it was far less than the five-year average for this time of year of 93 billion cubic feet. This kept US natural gas inventories at 30.9% above the five-year average.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 1.23%, China’s FTSE China A50 (CHA50) lost 0.23%, Hong Kong’s Hang Seng (HK50) decreased by 1.27% on the day, and Australia’s ASX 200 (AU200) was positive 0.39% on Thursday.

Australia’s economy grew less than expected in the fourth quarter, supporting bets that the Reserve Bank of Australia (RBA) may start cutting rates this year. After weak GDP data, the Commonwealth Bank of Australia reiterated its forecast for an overall rate cut of 75 basis points this year.

S&P 500 (US500) 5,157.36  +52.60 (+1.03%)

Dow Jones (US30) 38,791.35 +130.30 (+0.34%)

DAX (DE40)  17,842.85 +126.14 (+0.71%)

FTSE 100 (UK100) 7,692.46 +13.15 (+0.17%)

USD Index 102.81 −0.56 (−0.54%)

• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – German Producer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – US FOMC Member Williams Speaks (m/m) at 14:00 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+2);
• – US Unemployment Rate (m/m) at 15:30 (GMT+2);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+2).

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.

By JustMarkets

As of Wednesday’s stock market close, the Dow Jones Index (US30) was up 0.20%, the S&P 500 Index (US500) added 0.51%, and the NASDAQ Technology Index (US100) closed positive 0.58%.

Fed Chairman Powell said in front of Congress that it would likely be appropriate to begin reducing borrowing costs at some point this year. Still, the committee does not expect it will be appropriate to reduce the target range for the federal funds rate until it has more confidence that inflation is moving steadily toward 2%.

The latest economic data showed that US job openings for January, according to JOLTS, fell by 26,000 to 8.863 million, indicating a slight cooling in the labor market. Investors now await the main Nonfarm Payrolls report tomorrow.

Palantir (PLTR) closed higher by more than 9% after receiving a $178.4 million contract from the US Army to develop and produce ten prototype ground stations that use artificial intelligence and machine learning to process target information from space, airborne and ground sensors. JD.com (JD) closed higher by more than 16% after reporting fourth-quarter sales of ¥306.1 billion ($42.6 billion), beating the consensus forecast of ¥300 billion, and initiating a $3 billion share repurchase program. Hewlett Packard Enterprise (HPE) closed higher by more than 3% amid strong demand for the company’s artificial intelligence-focused servers. Orders for these servers totaled $3 billion, up $500 million from the last quarter.

At its March meeting, the Bank of Canada (BoC) kept its overnight rate target at 5%. It pledged to continue normalizing the bank’s balance sheet as policymakers remain concerned about risks to the inflation outlook. The bank said it would maintain its quantitative tightening policy until a further weakening in core inflation. The latest data showed that CPI inflation eased to 2.9% in January, but on an annualized and three-month basis, core inflation was from 3% to 3.5%. Policymakers forecast inflation to remain near 3% in the first half of this year and then gradually decline. The bank also noted that GDP growth remains weak and below potential, and employment continues to grow more slowly amid signs that wage pressures may be easing. At the press conference, Bank Governor Macklem said it was too early to consider cutting rates as more time is needed to ensure inflation falls to the 2% target.

Equity markets in Europe rallied yesterday. Germany’s DAX (DE40) rose by 0.10%, France’s CAC 40 (FR40) gained 0.28%, Spain’s IBEX 35 (ES35) increased by 0.79% on Wednesday, and the UK’s FTSE 100 (UK100) closed positive 0.43%.

Eurozone retail sales for January rose by 0.1% m/m, weaker than expectations of 0.2% m/m. German trade data was better than expected: exports for January rose by 6.3% m/m, stronger than expectations of 1.5% m/m and the largest increase in 3-1.5 years. In addition, January imports rose by 3.6% m/m, stronger than expectations of 1.8% m/m and the largest increase in 11 months.

In his pre-election budget statement, Treasury Secretary Jeremy Hunt announced plans for permanent tax cuts in line with slowing inflation to stimulate economic growth and support public services. The Office for Budget Responsibility (OBR) predicts that inflation will fall below the Bank of England’s target in the coming months and will also revise growth forecasts upwards.

The ECB’s monetary policy meeting will take place today. The ECB is forecast to leave the interest rate at 4.5%. In recent weeks, almost all ECB officials have unanimously argued that a premature rate cut could set a dangerous precedent for anchoring inflation. As a result, money markets have pushed back the likelihood of a first-rate cut from April to June. ECB chief Lagarde will likely reiterate that data remains lacking and refrain from giving clearer guidance on policy easing. Such a stance would be a moderately negative scenario for the euro.

WTI crude futures fell slightly to $79.1 a barrel on Wednesday, retreating from a four-month high after EIA data showed a smaller-than-expected rise in weekly US crude inventories. The US crude inventories rose by 1.367 million barrels last week, less than market expectations for a 2.116 million increase. On Tuesday, the API reported a modest 423,000 barrel rise in nationwide inventories.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.02%, China’s FTSE China A50 (CHA50) lost 0.76%, Hong Kong’s Hang Seng (HK50) was up 1.70% on the day, and Australia’s ASX 200 (AU200) was positive 0.12% on Wednesday.

S&P 500 (US500) 5,104.76 +26.11 (+0.51%)

Dow Jones (US30) 38,661.05 +75.86 (+0.20%)

DAX (DE40)  17,716.71 +18.31 (+0.10%)

FTSE 100 (UK100) 7,679.31 +33.15 (+0.43%)

USD Index 103.37 −0.42 (−0.41%)

• – Australia Trade Balance (m/m) at 02:30 (GMT+2);
• – China Trade Balance (m/m) at 05:00 (GMT+2);
• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
• – Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
• – Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Trade Balance (m/m) at 15:30 (GMT+2);
• – Canada Trade Balance (m/m) at 15:30 (GMT+2);
• – Eurozone ECB Press Conference at 15:45 (GMT+2);
• – US Fed Chair Jerome Powell Testifies at 17:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 17:00 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – US FOMC Member Mester Speaks (m/m) at 18:30 (GMT+2).

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.

By JustMarkets

As of Tuesday’s stock market close, the Dow Jones Index (US30) decreased by 1.04%. The S&P 500 Index (US500) lost 1.02%. The NASDAQ Technology Index (US100) closed negative at 1.65%. All 3 indices fell off the lows of the week. Weakness in technology stocks impacted the overall market as negative corporate news hamstrung technology stocks. Apple (AAPL) fell more than 2% after Counterpoint Research data showed that iPhone sales in China fell by 24% in the first six weeks of this year. Tesla (TSLA) closed down more than 4%, adding to Monday’s 7% loss after car shipments in China fell. In addition, Advanced Micro Devices (AMD) quotes fell more than 1% after the US government blocked a plan to sell artificial intelligence chips to China.

Today, investors expect Federal Reserve Chairman Jerome Powell to address the US Congress, where he may give clues on the timing and extent of interest rate cuts this year.

The Bank of Canada (BoC) will meet today. The Bank of Canada is forecast to leave the interest rate unchanged at 5%. The highlight of the last Bank of Canada meeting in January was removing the phrase “The Bank remains prepared to raise the policy rate further if needed” from the accompanying statement. History is likely to repeat itself at the current meeting. Recent data showed that Canada’s Q4 GDP was stronger, retail sales were stronger, and the labor market was more robust than expected. The overall CPI fell to 2.9% from 3.4% in December (consensus was 3.3%), and core inflation slowed to 3.3% from 3.6% as expected. According to economists, with such data, the Bank of Canada will not launch its first rate cut until June. The probability of such a scenario is 70%. In the short term, the current meeting is unlikely to change the picture of CAD. Moreover, the decline in CPI may prompt the Bank of Canada to give a more optimistic forecast of disinflation and hint more clearly at the easing of monetary policy. Given the market’s rather conservative assessment of the Bank of Canada’s rate cut, the balance of risks is tilted in favor of a decline in the Canadian dollar.

After hitting an all-time high of $68,970 on Tuesday, bitcoin (BTC/USD) fell more than 7% amid profit-taking by funds. Bitcoin is up more than 63% this year and hit an all-time high on Tuesday thanks to steady inflows into 11 spot bitcoin ETFs that began trading in January and have attracted nearly $8 billion.

Equity markets in Europe were flat yesterday. Germany’s DAX (DE40) was down 0.10%, France’s CAC 40 (FR40) decreased by 0.30%, Spain’s IBEX 35 (ES35) was up 0.47% on Tuesday, and the UK’s FTSE 100 (UK100) closed positive 0.08%.

Silver prices pulled back from a 2-month high to close slightly lower after weaker-than-expected US economic reports on January factory orders. January ISM services were bearish for industrial metals demand.

WTI crude futures are holding near $78 a barrel on Wednesday after losing more than 2% over the past two sessions as weaker demand outweighed an extension of OPEC+ supply cuts. The latest data on factory orders and the US services sector showed signs of a slowdown in US economic activity, adding to fears of weaker energy demand from the world’s largest oil consumer. Analysts also noted a lack of strong stimulus signals from major oil importer China after the country set its growth target for this year at “around 5%”. Meanwhile, major oil producers, including Saudi Arabia, Russia, Iraq, and the UAE, extended voluntary oil production cuts for the second quarter.

Natural gas prices added to Monday’s gains on Tuesday and hit a 1-month high. Natural gas prices have risen since last week after EQT Corp, the largest US natural gas producer, said it would cut net production by 30-40 billion cubic feet through March in response to low prices.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.55%, China’s FTSE China A50 (CHA50) was up 1.32%, Hong Kong’s Hang Seng (HK50) lost 1.01% for the day, and Australia’s ASX 200 (AU200) was negative 0.25% for Tuesday.

Hong Kong stocks jumped 1.3% in Wednesday morning trading, partially recovering from a sharp drop the previous day as investors awaited new supportive measures from Beijing following the announcement of China’s 2024 economic growth target of around 5.0% during the opening of the annual plenary session on Monday. The Chinese government also unveiled its annual military budget for this year, which will total 1.67 trillion yuan, up 7.2% from 2023. The Hang Seng Index attempted to break a two-week low, helped by widespread growth across all sectors, including basic materials, industrials, and technology.

The Australian economy grew 0.2% QoQ in 4Q 2023, below the upwardly revised 3Q figure and market estimates of 0.3%. This was the ninth consecutive period of quarterly growth but the slowest pace in the last 5 quarters.

S&P 500 (US500) 5,078.65 −52.30 (−1.02%)

Dow Jones (US30) 38,585.19 −404.64 (−1.04%)

DAX (DE40)  17,698.40 −17.77 (−0.10%)

FTSE 100 (UK100) 7,646.16 +5.83 (+0.08%)

USD Index 103.80 −0.03 (−0.03%)

• – Australia GDP (q/q) at 02:30 (GMT+2);
• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – German Retail Sales (m/m) at 09:00 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – UK Spring Forecast Statement at 14:30 (GMT+2);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
• – Canada BoC Interest Rate Decision at 16:45 (GMT+2);
• – Canada BoC Rate Statement at 16:45 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+2);
• – US Fed Chair Jerome Powell Testifies at 17:00 (GMT+2);
• – Canada BoC Press Conference at 17:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Daly Speaks (m/m) at 19:00 (GMT+2).

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.