WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
The S&P 500 Index posted its biggest weekly rise in nearly a year on signals of an economic slowdown and what was widely viewed as a dovish monetary policy statement from the Federal Reserve. This led to a significant drop in long-term bond yields. Although growth stocks and the Nasdaq Composite Index, which is technology-focused, performed well, the gains were widespread. The small-cap Russell 2000 Index stood out with its best weekly performance since October 2022. In terms of local currency, the STOXX Europe 600 Index in Europe recovered from the previous week’s decline, finishing 3.41% higher. Major stock indices around the world also saw strong rallies, driven by expectations that interest rates may have reached their peak. Germany’s DAX rose 3.42%, while the UK’s FTSE 100 Index gained 1.73%.
US30 +5.07% |
US100 +6.48% |
US500 +5.85% |
GER40 +3.42% |
Gold surpassed the $2,000 per ounce mark on Friday, moving closer to its highest point in more than five months. This rise was supported by a weaker US dollar and declining Treasury yields, driven by fresh economic data that reinforced expectations of the US Federal Reserve concluding its interest rate hikes. The US labor report revealed a lower-than-expected job addition in October, with the jobless rate edging higher. On Wednesday, the Federal Reserve decided to keep its policy rate unchanged, emphasizing the need to assess the impact of previous measures, which, in turn, improved the outlook for non-interest-bearing assets. Meanwhile, Brent crude futures experienced a 2% drop, falling below $85.2 on Friday. This placed them on track for a second consecutive week of decline, bringing oil prices back to levels before the conflict in the Middle East that began on October 7. Concerns about supply disruptions have eased, but the demand outlook remains bleak. In the US, the ISM Services PMI fell more than expected, and in China, the largest importer, the manufacturing sector contracted again, while the services sector exhibited only slight growth.
NATGAS -0.14% |
On Friday, the Dollar Index fell 1% to below 105.3, marking its lowest level in over six weeks. This decline followed the release of the latest jobs report, which revealed a more significant slowdown in the job market than expected, reinforcing the belief that the Federal Reserve is unlikely to implement further interest rate hikes. The report showed that the US economy added 150,000 jobs in October, about half of the downwardly revised 297,000 jobs added in September, and below market forecasts of 180,000. Additionally, the unemployment rate reached a 21-month high, and wage growth decelerated more than expected. The dollar’s decline also coincided with the decline in Treasury yields, as the benchmark 10-year US yield hit a three-week low, falling below 4.6%.
EUR/USD +1.56% |
USD/JPY -0.15% |
GBP/USD +2.10% |
USD/CAD -1.51% |
In October 2023, Bitcoin mining revenue increased by $131.45 million compared to the previous month, making it the second-highest month for Bitcoin block rewards in 2023. This increase was notable despite a $5.44 million decrease in fee earnings. A total of 463 EH/s was contributed to the Bitcoin blockchain by 43 different mining pools, with Foundry USA and Antpool leading the way, each claiming around 28% and 27% of the block rewards respectively. The network difficulty reached a record high of 62.46 trillion, making it the most challenging environment for Bitcoin miners. This data highlights the robustness and decentralized nature of the Bitcoin mining industry. It will be interesting to observe how these trends develop in November and what impact they have on the broader cryptocurrency market.
BTC +1.11%/span> |
ETH +4.73% |
LTCUSD +2.82% |
XMRUSD -2.77% |
United Kingdom: The Bank of England (BoE) maintained its interest rates at 5.25% for the second consecutive meeting, asserting that these rates would remain at a restrictive level for an extended duration. BoE Governor Andrew Bailey emphasized that the need for further rate hikes would be closely monitored and that it was premature to consider rate cuts.
The BoE’s latest forecasts assume that the inflation rate will halve by the end of the year, falling below the 2% target by the end of 2025, a later time frame than previously estimated. The BoE foresees minimal economic growth of 0.1% for the rest of this year, with stagnation expected in 2024. The UK housing market remained subdued, with the lowest mortgage approval level (43,328) in September, comparable to January.
Eurozone: Inflation in the Eurozone decreased more than expected, reaching an annual rate of 2.9% in October, compared to 4.3% in September. A drop in energy and food prices contributed significantly to this decrease, possibly due to weaker economic growth in the region. GDP contracted 0.1% in the third quarter, and Germany, the largest economy in the Eurozone, also reported a similar decline. The adjusted jobless rate in Germany rose to 5.8% in October, exceeding September’s figure of 5.7%.
According to purchasing managers’ surveys by S&P Global, business activity in the eurozone deteriorated at the beginning of the fourth quarter. The early estimate of the HCOB Eurozone Composite Purchasing Managers’ Index (PMI) declined more than expected, falling from 47.2 in September to 46.5 in October, marking a 35-month low. This is the fifth consecutive month that PMI has been below the 50 level, indicating reduced business output. The manufacturing sector recorded the most significant decline, while the services sector also continued to slow. Leading indicators pointed to a challenging economic environment in Germany, with the S&P Global Composite PMI remaining in declining territory and hitting a two-month low.
United States: The week in the US brought with it a plethora of policy statements, economic reports, and geopolitical developments. The Federal Reserve’s policy meeting ended with no rate changes, as widely expected. However, the post-meeting statement indicated that the recent surge in long-term Treasury yields had achieved some of the intended tightening in financial conditions. Fed officials also appeared comfortable with positive economic data, revising the description of economic growth from “solid” to “strong.”
The employment report on Friday suggested that the labor market was cooling, with wage pressures expected to follow suit. Employers added 150,000 jobs in October, fewer than expected and the lowest since June, with a downward revision of September’s gains. The unemployment rate reached 3.9%, the highest level since January 2022.
Average hourly earnings rose 0.2%, below expectations, but September’s increase was revised upward to 0.3%. The 12-month gain fell to 4.1%, its lowest in over two years, still above the typical 3% level, in line with the Fed’s inflation target of 2%. The Labor Department’s quarterly Employment Cost Index showed a slight positive surprise, with wages and benefits increasing by 4.3% annually. Productivity growth for the quarter exceeded expectations, with unit labor costs falling. The 4.7% productivity gain was the most significant since businesses started reopening in the early stages of the pandemic in the third quarter of 2020.
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!