11 March 2024 - FTMO

Weekly market recap

Your weekly global financial market newsletter

  • The cryptocurrency Bitcoin continues its unstoppable growth, having surpassed its all-time high of $69,040 from November 2021 at the end of last week, only to surpass the $70,000 per Bitcoin mark first on Monday morning and continue its rise through $71,000. The market value has now exceeded $1.4 trillion, which is more than the market value of the entire US high yield bond market.
  • Thus, over the past month, bitcoin has gained nearly 50% and has added more than 253% over the past year. The interest in spot ETFs for this cryptocurrency and the impending halving seems to be pushing the interest in the cryptocurrency ever higher, and we can only speculate how long this boom in the cryptocurrency market will last. Curiously, big players in the market, such as billionaire Bill Ackman, are increasingly considering investing in Bitcoin, and he believes that the price of Bitcoin could "go to infinity".
  • Another interesting news that helps the growth of the cryptocurrency is Monday's announcement of The London Stock Exchange (LSE) that it will start accepting applications for the admission of Bitcoin (BTC) and Ethereum (ETH) crypto exchange-traded notes (ETNs) in Q2, 2024.

Indices

While Friday’s labour market data helped US equities to set new intraday all-time highs, the major indices ultimately posted losses for the day and week. Small caps and value titles in particular fared well, and the biggest declines came from large technology firms led by Tesla, Nvidia and Apple, whose iPhone sales in China have been disappointing.

Stocks in Europe mostly gained and also attacked their all-time highs. Most of the gains came on Thursday after the ECB meeting and the decision to keep rates at current levels. STOXX Europe 600 Index gained 1.14%, France’s CAC 40 Index added 1.18% and Germany’s DAX rose 0.45% and the UK’s FTSE 100 Index declined by 0.30%.

US30
-0.93%
US100
-1.55%
US500
-0.26%
GER30
+0.45%

Commodities

The price of gold has been flying upwards in the recent weeks and on Friday the yellow metal again surpassed its all-time highs. The price reached USD 2,180 per troy ounce, helped by Friday’s ambiguous US labour market data. As Fed chief Jerome Powell said in his testimony before congress that central bankers need to be sure that inflation is heading towards the targeted 2%, the labour market data is a good sign for investors that a rate cut may not be far away. This, of course, helps gold, whose price may already break the $2,200 per troy ounce level this week and could easily continue higher. Increased interest in buying physical gold by central banks should also help gold to continue its incline.

Gold
+4.57%
Silver
+4.98%
BRENT
-1.97%
NATGAS
-1.38%

Forex

The dollar index fell to 102.5 on the week, its lowest level since mid-January. The dollar was hurt by Friday’s US labour market numbers, which showed signs of cooling. A possible interest rate cut soon is obviously bad news for the US dollar. However, the biggest losses for the greenback came on Wednesday and Thursday in response to Jerome Powell’s aforementioned testimony before Congress. Thus, it lost the most against the Japanese yen, the Australian dollar and the British pound, with a weekly loss of 1.4%.

Last week’s winner can be considered the Japanese yen, which reached its highest level in a month. The rise was driven by the growing speculation of an interest rate hike by the Bank of Japan. However, central bank officials rather tempered the optimism and reminded themselves that they need more data to consider ending the extremely easy monetary policy.

EUR/USD
+0.92%
USD/JPY
-2.05%
GBP/USD
+1.63%
USD/CAD
-0.59%

Macro

Jerome Powell on Wednesday and Thursday testified at the House Financial Services Committee hearing. Powell recalled that the committee’s decisions will depend on the economic data, and the current level of interest rates is at an all-time high. He also confirmed that a rate cut should happen later this year, but that the FOMC will not make that move until it is certain that inflation is sustainably close to the 2% target. “Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2%,” he said.

While Friday’s US NFP numbers came in above expectations (275K vs. 198K), overall the labour market data was received rather negatively. Relatively strong downward revisions in both January and December and a rise in unemployment from 3.7% to 3.9%, as well as a drop in Average Hourly Earnings, rather disappointed investors.

The European Central Bank left its key interest rate unchanged at 4.0% during its Thursday’s meeting.

What to watch out for this week

  • The most anticipated number next week in the US will be the CPI report for February. Headline inflation is expected to stagnate at 3.1% YoY, core inflation is expected to fall from 3.9% to 3.7% in February, the lowest since April 2021. On a month-over-month basis, headline inflation is expected to rise from 0.3% to 0.4% and core inflation is expected to fall from 0.4% to 0.3%.
  • Retail sales are expected to rise by 0.8% in February after a 0.8% decline in January, and the core number is expected to rise by 0.5% after a 0.6% decline. Moreover, the Michigan consumer sentiment, is expected to be at 76.9 in March, unchanged from February and slightly below January's two-and-a-half-year high of 79.
  • In the UK, GDP data is mainly expected to show the economy growing by 0.2% in January after a slight 0.1% decline in December. The unemployment rate is expected to hold steady at 3.8% in January, remaining at its lowest level in a year.
  • In Germany, inflation data for February will be published. On a MoM basis, inflation is expected to rise by 0.4% after rising by 0.2% in January, while on an annual basis it is expected to slow to 2.5% after rising by 2.9% in January.
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Source: forexfactory.com
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