WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Major indices ended the week with mixed results amidst significant earnings releases and economic data. The S&P 500 Index and Dow Jones Industrial Average reached intraday highs, but small-cap indices experienced losses. Market advances were also limited, with an equally weighted version of the S&P 500 recording a modest decline. January concluded with the S&P 500 posting a 1.6% gain for the month, while the equal-weight S&P 500 decreased by 0.90%, and the small-cap Russell 2000 Index fell nearly 4.0%. In terms of local currency, the pan-European STOXX Europe 600 Index finished the week approximately flat, with major stock indices showing weakness overall. Germany’s DAX declined by 0.25%, and the UK’s FTSE 100 Index dropped by 0.26%.
US30 +1.43% |
US100 +1.27% |
US500 +1.38% |
GER40 -0.25% |
Gold fell to approximately $2,030 per ounce on Friday due to a rebound in the dollar and Treasury yields following strong U.S. jobs data, diminishing expectations of early Federal Reserve rate cuts. The U.S. economy added 353,000 jobs in January, surpassing estimates. Brent crude futures settled at around $79 per barrel, set to lose about 5% for the week amid easing tensions in the Middle East. Reports suggested a possible ceasefire between Israel and Hamas, raising hopes for reduced disruptions to global trade and oil flows. However, conflicting statements emerged about the ceasefire’s existence. OPEC+ maintained its current production policy, with global oil demand expected to rise by 2 million barrels per day in 2024, exceeding earlier forecasts.
NATGAS -3.77% |
The U.S. Dollar Index rose to a seven-week high following robust nonfarm payroll data for January, with 353,000 jobs added, surpassing expectations. Average hourly earnings also rose by 0.6%. The positive data reduced expectations of near-term Federal Reserve rate cuts. The dollar had weakened recently due to falling Treasury yields, but concerns about U.S. regional banks eased, leading to a recovery in yields. The Dollar Index reached 104.04, the highest since December 12. Traders cut the probability of a March rate cut to 21%, down from 38%, and a May cut to 75%, down from 94%. The euro, sterling, and Australian dollar weakened against the dollar. Bitcoin fell 0.19% to $43,020.
EUR/USD -0.61% |
USD/JPY +0.13% |
GBP/USD -0.56% |
USD/CAD +0.07% |
Major cryptocurrencies including Bitcoin, Ethereum, and XRP, are exhibiting a notable trend in profitability, according to on-chain analytics firm Santiment. The firm notes that Bitcoin, Ethereum, and XRP Ledger currently have more than 80% of their existing supplies in profit, a trend last observed in March 2022. The “Total Supply in Profit” metric indicates the percentage of the total supply in a network currently in profit, offering insights into whether a coin’s value has increased or decreased since its creation. While BTC, XRP, and ETH are at historically high levels of profit, Santiment believes that a significant signal of long-term growth would be a breach below 75% of their profit reserves.
BTC +2.36% |
ETH +1.60% |
LTCUSD -0.15% |
XMRUSD -1.08% |
In the United Kingdom, the Bank of England (BoE) has decided to keep its key interest rate unchanged at 5.25%, maintaining the almost 16-year high. However, there are indications that the BoE is open to considering a reduction in interest rates, marking a departure from previous statements suggesting the possibility of rate hikes. Governor Andrew Bailey emphasised the need to see more evidence of inflation consistently dropping to the 2% target before contemplating rate cuts. While acknowledging this shift, Bailey noted a change in the primary question from determining how restrictive measures need to be to understand the duration of maintaining the current position. Positive developments in the housing market have surfaced as mortgage rates show a decline. The BoE reported an increase in net mortgage approvals for house purchases in December, reaching a six-month high. Simultaneously, the Nationwide Building Society’s house price index for January exceeded expectations, indicating a 0.7% rise since December.
In the eurozone, the unexpected news is that the economy managed to avoid a recession in the final quarter of 2023. Gross domestic product (GDP) remained unchanged compared to the previous three months and showed a 0.1% increase compared to the same period a year earlier. While Germany experienced a contraction, expansions in Spain and Italy contributed to offsetting the overall decline. Additionally, the annual consumer price inflation rate eased to 2.8% in January from 2.9% in December, with the core rate, excluding volatile components, also seeing a slight decrease to 3.3%.
In the United States, the week featured the Federal Reserve’s policy meeting which ended with no changes in short-term interest rates, in line with expectations. In his post-meeting press conference, Fed Chair Jerome Powell expressed scepticism about the likelihood of a rate cut in March. By the end of the week, futures markets indicated a diminished probability of a rate cut, dropping from 47.7% to 20.5% compared to the previous week. Further reducing the prospects of a rate cut, the Labor Department’s report on Friday revealed a robust job market performance in January. Nonfarm jobs increased by 353,000, nearly double consensus estimates, and upward revisions for November and December were noted. Average hourly earnings exceeded expectations, rising by 0.6%, resulting in a year-over-year increase of 4.6%. While the unemployment rate remained steady at 3.7%, the unexpected reduction in the average workweek from 34.3 to 34.1 hours raised some concerns. The positive job data coincided with an earlier report on increased job openings in December, reaching their highest level in three months. The week also brought positive news for the manufacturing sector. Revisions to January’s gauges of factory activity, as reported by S&P Global and the Institute for Supply Management, exceeded expectations, indicating the sector’s best growth pace since September 2022.
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