WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Throughout the week, most major indices experienced an upward trend, highlighted by the S&P 500 Index reaching unprecedented levels and breaking above 5,000 for the first time. However, this progress was relatively limited, as evidenced by an equally weighted version of the index consistently lagging behind the standard market-weighted version for four out of five weeks. The pan-European STOXX Europe 600 Index saw a modest increase of 0.19% due to positive company earnings updates, although the potential for prolonged high-interest rates restrained gains. Germany’s DAX remained largely unchanged but hovered near its all-time high, while the UK’s FTSE 100 Index declined by 0.56%.
US30 +0.04% |
US100 +1.81% |
US500 +1.38% |
GER40 +0.05% |
Brent crude rose 0.7% to $82.19 a barrel, while U.S. West Texas Intermediate crude rose 0.8% to $76.84 a barrel. The rise followed Israeli Prime Minister Benjamin Netanyahu’s rejection of a Hamas ceasefire proposal, with oil futures buoyed throughout the week. U.S. energy firms added four oil and natural gas rigs, bringing the total to 623, the highest since mid-December. Domestic production in the U.S. returned to a record level of 13.3 million barrels per day. Continued air strikes on the Gaza Strip and disruptions at Russian oil refineries also contributed to the price increase. Gasoline and diesel prices strengthened, with gasoline futures rising 9% to $2.34 per gallon and heating oil futures increasing by 11% to $2.96 per gallon. Russia’s increased crude exports in February, despite OPEC+ agreements, and U.S. sanctions on entities violating price caps on Russian oil also impacted oil prices.
NATGAS -10.59% |
Although consumer price revisions in the US showed lower-than-expected increases in December, market sentiment towards the Fed’s rate cuts remained unchanged. The Dollar Index fell slightly, while the euro edged up. Fed officials reiterated that rate cuts are not imminent, strengthening the dollar against the yen. Japanese officials expressed concern over the yen’s depreciation, but traders paid little attention. The upcoming release of January’s CPI data in the U.S. is awaited. Expectations for a rate cut in March by the Fed have decreased, with a higher likelihood seen for May. Sterling strengthened, and both the euro and pound remained resilient amid central banks’ resistance to early rate reductions. The Swiss franc weakened as traders considered potential intervention by the Swiss National Bank. Bitcoin experienced a notable increase in value.
EUR/USD 0.00% |
USD/JPY +0.60% |
GBP/USD -0.01% |
USD/CAD -0.01% |
Bitcoin rose 5% on Friday, reaching a one-month high, driven by increased buying activity ahead of April’s halving event and a decrease in outflows from exchange-traded funds (ETFs). The cryptocurrency peaked at $47,705, its highest level since January, following regulatory approval for the first U.S.-listed spot bitcoin exchange-traded products. Currently, Bitcoin is up 3.5% at $46,946, set for a weekly gain of 10%, the highest since October. Despite reaching a two-year high above $49,000 in January, Bitcoin faced downward pressure due to profit-taking after the approval of ETFs by the Securities and Exchange Commission. However, recent data suggests a slowdown in ETF outflows, contributing to Friday’s price surge. Analysts attribute the increase to anticipation of April’s halving event, which aims to limit bitcoin supply by halving the reward for producing tokens. Historically, bitcoin prices have rallied following halvings, with previous cycles coinciding with election years in the US. Notably, inflows across all bitcoin ETFs have turned positive, indicating renewed investor interest. Although the dollar’s recent rise has dampened the cryptocurrency’s performance, analysts expect this effect to fade over time.
BTC +12.36% |
ETH +8.62% |
LTCUSD +6.15% |
XMRUSD -26.26% |
In the United Kingdom, the economy appeared more resilient at the start of the new year, a factor that might reinforce the Bank of England’s cautious approach to policy easing. According to updated survey data, the unemployment rate for the three months ending in November was estimated at 3.9%, lower than both the previous month’s reported rate of 4.2% and the Bank of England’s forecast of 4.3% for the final quarter of 2023. Additionally, the final reading of the purchasing managers’ index (PMI) for services in January was notably higher than the initial estimate, registering at 54.3. This marked the third consecutive month of PMI readings above 50, indicating expansion in the services sector.
In the eurozone, senior officials of the European Central Bank (ECB) continued to caution against premature interest rate cuts. Isabel Schnabel, a member of the Executive Board, argued against early rate reductions in an interview with the Financial Times, citing factors such as stable service prices, a resilient labour market, and disruptions to supply chains due to attacks on vessels in the Red Sea. Chief Economist Philip Lane emphasised the need for more evidence before policymakers could be confident about inflation settling at the ECB’s 2% target.
In the United States, the main economic surprises of the week were revealed in S&P Global’s services sector activity reading, which unexpectedly surged to a four-month high, indicating solid expansion (rising from 50.5 in December to 53.4 in January). The Institute for Supply Management’s gauge also showed robust growth at 55.8, but its measure of service prices surged to its highest level in nearly a year. This contrasted sharply with recent data showing falling prices for many manufacturing inputs. Additionally, the Labor Department revised its initial estimate of December consumer inflation from 0.3% to 0.2%.
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