WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Stocks closed mostly higher during the shortened holiday week, although the gains were limited, with an equally weighted version of the S&P 500 Index posting a modest loss. The focus was primarily on growth stocks, and information technology stocks, boosted by a rally in semiconductor shares, outperformed. Notably, NVIDIA, a major AI chip company, and its competitor Advanced Micro Devices (AMD) showed strong performance. Markets observed the Martin Luther King, Jr., holiday on Monday. In terms of local currency, the pan-European STOXX Europe 600 Index ended the week 1.58% lower due to remarks from central bank officials, prompting financial markets to reduce expectations of an early interest rate cut. Major stock indices experienced overall weakness, with Germany’s DAX down 0.89%, and the UK’s FTSE 100 Index losing 2.14%.
US30 +0.72% |
US100 +2.86% |
US500 +1.17% |
GER40 -0.89% |
Oil prices closed slightly lower on Friday but marked a weekly gain due to Middle East tensions and disruptions to oil production, offsetting concerns about the Chinese and global economies. Brent futures settled at $78.56 per barrel, down 54 cents, and U.S. West Texas Intermediate crude fell to $73.41, down 67 cents. Despite concerns over China’s economic growth, which fell below expectations in Q4, and global economic concerns, geopolitical risks in the Middle East, including tensions in Gaza and supply disruptions in Libya, supported prices for the week. Additionally, the extreme cold in the U.S. led to a 30% shutdown of oil output in North Dakota, contributing to the overall supply concerns. The International Energy Agency raised its 2024 global demand forecast, but conflicting projections and uncertainties remain. The first-month Brent contract’s premium over the six-month contract rose to $2.15 per barrel, indicating a perception of tighter supply. Money managers reduced their net long U.S. crude futures and options positions in the week to Jan. 16, according to the U.S. Commodity Futures Trading Commission.
NATGAS -24.01% |
The U.S. dollar experienced a slight decline on Friday, ending a five-session winning streak but still poised for a weekly gain. Economic data, including positive consumer sentiment and strong labour market indicators, reduced expectations of rapid interest rate cuts by the Federal Reserve. The Dollar Index, tracking the greenback against six currencies, was down 0.08% at 103.26, ending its recent winning streak but still up 0.8% for the week. Market expectations for a Fed rate cut in March have dropped below 50%, with May seen as a more likely month. Fed officials, including Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly, emphasised the need for more inflation data before considering rate cuts. The euro rose slightly against the dollar, while the yen remained flat. Sterling weakened after UK retail sales showed a significant slump in December. In the cryptocurrency market, bitcoin gained 2.04% to $41,900.00 but was on track for its second consecutive weekly decline following U.S. approval of spot bitcoin exchange-traded funds.
EUR/USD -0.47% |
USD/JPY +2.26% |
GBP/USD -0.38% |
USD/CAD +0.14% |
The cryptocurrency sector has witnessed a substantial comeback, led by a 150% surge in Bitcoin’s value, driving the total market capitalization of cryptocurrencies beyond $1.6 trillion. Other major digital currencies, such as Ether and Solana, have also recorded significant gains. Mainstream financial institutions, most notably BlackRock, a major global asset manager, have demonstrated a growing interest in cryptocurrencies, reflecting broader acceptance in traditional finance. At the same time, regulatory agencies are actively working on frameworks to regulate the cryptocurrency market, aiming to balance innovation, consumer protection, and financial system integrity. This regulatory involvement suggests a move toward more organised market conditions, potentially boosting confidence in the digital asset space among both retail and institutional investors.
BTC -2.01% |
ETH -2.14% |
LTCUSD -0.48% |
XMRUSD +0.96% |
In the United Kingdom, the annual inflation rate unexpectedly rose to 4.0% in December from 3.9% in November, marking the first increase in 10 months. This acceleration was partially attributed to higher tobacco prices. Core inflation, excluding volatile energy and food prices, remained steady at 5.1%. Despite this, mixed signals emerged for policymakers, as wage growth (excluding bonuses) slowed to its weakest pace in almost a year, rising 6.6% in the three months to November. However, retail sales volumes in December were much weaker than expected, experiencing a significant 3.2% sequential decline—the largest month-over-month decline since January 2021.
In Europe, European Central Bank (ECB) President Christine Lagarde indicated that a rate cut in the summer was “likely”, contrary to the market’s expectation of a spring cut. Lagarde emphasised the need for crucial wage information to influence a policy decision by late spring. Meanwhile, the German economy contracted by 0.3% in the final quarter of 2023, narrowly avoiding a technical recession. The preliminary estimate suggests a 0.3% contraction for the entire year.
In the United States, December retail sales exceeded expectations, indicating a solid state of the consumption side of the economy. Retail sales rose 0.6% in October, with online sales reaching a new record high, growing by 1.5%. The University of Michigan’s preliminary report revealed a significant jump in consumer sentiment in January to its highest level in almost three years. Expectations for rate cuts in 2024 decreased sharply during the week, with futures markets showing just a 13.1% chance of seven or more rate cuts in 2024, compared to 61.5% the previous week, according to the CME FedWatch Tool. The likelihood of a rate cut in March also declined from 81.0% to 47.4%, influenced in part by comments from Fed Governor Christopher Waller, who emphasised a cautious approach given the healthy state of the economy.
All information provided on this site is intended solely for the study purposes related to trading on financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of FTMO and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity and it is advised not to risk more than one can afford to lose!