WEEKLY MARKET RECAP
Your weekly global financial market newsletter
- Ukrainian President Zelenskiy warned of a possible escalation of the Ukraine conflict into World War III and asked nations such as Germany and the United States for support. He expressed disappointment in Germany’s response to Russia’s actions in Ukraine and highlighted the need for a stronger stance. Zelenskiy noted bipartisan support for Ukraine in the U.S., emphasising that U.S. policy is not dependent on a single person, including former President Donald Trump.
- The conflict in Gaza continues, particularly in Khan Younis, where medical facilities face collapse. Israel’s offensive intensifies, with airstrikes reported in Gaza City. The UN calls for the resumption of funding for Palestinian refugees. The Gaza Health Ministry reports a high toll, reaching 26,422, while Israel claims to have killed 9,000 Gaza fighters. The healthcare system is strained, and hospitals are being bombed, hindering medical response. Israel accuses Hamas of using civilian areas. Displaced families endure harsh conditions, and protests in Israel demand more action for hostages.
- Three U.S. service members were killed and dozens may be wounded in an unmanned aerial drone attack near the Syrian border in northeastern Jordan. President Biden blamed Iran-backed groups for the attack, the first deadly strike against U.S. forces since the Israel-Hamas conflict in October. At least 34 personnel were evaluated for possible traumatic brain injury, and the attack is considered a major escalation in the already tense Middle East situation, prompting threats of accountability from Biden and Defense Secretary Austin. Republican opponents criticised Biden’s response and linked the attack to his handling of Iran.
Indices
Equities continued their upward trend, pushing the Dow Jones Industrial Average and the S&P 500 Index to new record highs and marking the latter’s 12th weekly gain in the last 13. The market’s ascent was broadly distributed, although the small-cap Russell 2000 Index lagged, remaining nearly 20% below its historical intraday high. In domestic currency evaluations, the pan-European STOXX Europe 600 Index concluded the week with a 3.11% gain, buoyed by positive corporate results and China’s announcement of additional stimulus measures. The European Central Bank’s decision to keep interest rates unchanged and convey a potentially more dovish stance further supported the stock market, with Germany’s DAX rising by 2.45%, and the UK’s FTSE 100 Index adding 2.32%.
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US30 +0.65% |
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US100 +0.62% |
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US500 +1.06% |
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GER40 +2.45% |
Commodities
Oil prices experienced a second consecutive weekly rise, settling at their highest levels in nearly two months. Positive indicators of U.S. economic growth, Chinese stimulus efforts, and Middle East supply concerns contributed to the increase. Brent crude futures closed at $83.55 per barrel, and U.S. West Texas Intermediate crude reached $78.01 per barrel, marking the highest close since November. Several factors, including geopolitical risks and a significant decline in U.S. crude stocks, influenced the upward trend, resulting in the largest weekly gains since October 13. Gold prices remained within a narrow range, heading for a second consecutive weekly decline as traders awaited cues on U.S. interest rates, with upcoming inflation data and a Federal Reserve meeting in focus. Copper prices, however, were poised for a strong weekly performance due to China’s additional stimulus measures, boosting expectations for robust demand. The anticipation of U.S. monetary policy signals, coupled with positive economic indicators, may limit significant gains in gold, while copper gains were driven by optimism surrounding China’s economic stimulus. The Israel-Hamas conflict and Middle East tensions provided some support for gold as a safe-haven asset. The focus now turns to U.S. PCE inflation data and the upcoming Fed meeting for further market direction. Copper prices eased slightly but were set for a positive week, driven by optimism about China’s economic outlook. Analysts remain cautious about the impact of monetary stimulus on China’s economy, and upcoming PMI data is awaited for additional economic insights.
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Gold -0.53% |
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Silver +0.95% |
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BRENT +6.49% |
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NATGAS +7.84% |
Forex
The U.S. dollar stabilised following strong U.S. growth data, with the Dollar Index unchanged at 103.372. The positive tone from the U.S. GDP estimate, indicating a 3.3% annualised growth in Q4 2023, contributed to the dollar’s strength. The focus turns to the release of the PCE price index data, the Fed’s preferred inflation gauge, for further insights into rate-cut expectations. The euro traded lower against the dollar at 1.0827 after the European Central Bank meeting, where President Christine Lagarde hinted at the possibility of a rate cut this summer. The GfK German consumer sentiment index fell, indicating challenges for Germany’s economic recovery. In Asia, the USD/JPY rose to 147.82, and the USD/CNY traded higher at 7.1809 after the PBOC’s move to reduce banking reserve requirements sparked optimism about China’s economic recovery.
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EUR/USD -0.40% |
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USD/JPY +0.02% |
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GBP/USD +0.01% |
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USD/CAD +0.12% |
Crypto
Rachel Aguirre, U.S. Head of BlackRock’s iShares Products, expressed satisfaction with the performance of the iShares Bitcoin Trust (IBIT), stating that it had recorded a remarkable trading volume of $3 billion within the first two weeks of trading. The ETF attracted over $1.6 billion in inflows after its release, highlighting strong investor demand for Bitcoin exposure. Aguirre emphasised BlackRock’s commitment to providing investors access to Bitcoin and welcomed recent regulatory developments, expressing a positive view toward SEC Chairman Gary Gensler’s stance on the cryptocurrency industry.
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BTC +0.03% |
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ETH -8.95% |
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LTCUSD -5.64% |
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XMRUSD +6.20% |
Macro
The UK saw a higher-than-expected increase in business activity in January, pointing to a possible exit from recession. The S&P Global/CIPS UK preliminary composite PMI rose to 52.5, reaching its highest level in seven months. Despite this positive development, disruptions in the Red Sea led to a rise in input prices in the manufacturing sector for the first time since April, potentially contributing to a rise in inflation.
In Europe, the European Central Bank (ECB) maintained its key interest rates at record highs, emphasising a commitment to sufficiently restrictive monetary policy to achieve the 2% inflation target. ECB President Christine Lagarde, while deeming it premature to discuss rate cuts, acknowledged a more dovish tone by recognizing the ongoing disinflation process. Eurozone business activity showed signs of stabilisation, with the composite Purchasing Managers’ Index (PMI) rising to 47.9 in January from 47.6 in December, marking the eighth consecutive month of decline.
In the United States, the economic calendar revealed surprises, with manufacturing activity in the Mid-Atlantic region weaker than expected. However, national readings showed positive trends, as the S&P Global flash manufacturing index returned to expansion territory for the first time since April 2023. Business conditions strengthened towards the end of 2023, with a 3.3% growth in gross domestic product (GDP) and a core personal consumption expenditure (PCE) price index aligning with the Fed’s target. Personal spending in December surpassed expectations, rising by 0.7%.
What to watch out for this week
- In the United States, a week packed with crucial events includes the Federal Reserve’s first policy meeting of the year, the release of key data like the US jobs report, ISM Manufacturing PMI, and JOLTs job openings. It is expected that Fed policymakers will uphold interest rates at 23-year highs, and investors will be watching closely for signals of possible rate cuts later in the year. Economic data projections suggest a likely increase of 162K in non-farm payrolls for January, a slight decrease from the previous month, with the jobless rate expected to remain stable at 3.7%. Additionally, the ISM PMI is likely to reveal ongoing contraction in the manufacturing sector.
- In Europe, major Eurozone countries, including Spain, Germany, France, and Italy, are set to release preliminary Q4 GDP growth, inflation, business surveys, and unemployment rates. The consensus indicates a stalled Euro Area economy in Q4, with variations in individual country performances. Inflation in the Euro Zone is expected to ease to 2.8% in January. Germany anticipates a rebound in retail sales, while France’s industrial production is expected to rise for the second consecutive month. Updated PMI figures in Italy and Spain suggest positive trends in the manufacturing sector.
- In the United Kingdom, the Bank of England is expected to uphold interest rates at a 15-year high of 5.25% in its February meeting, prompting investor interest in potential adjustments to its tough stance on borrowing costs. Additionally, data on the Bank of England’s monetary indicators, Nationwide housing prices, labour productivity, and final manufacturing PMI will be unveiled.
Day:
Impact:
Restrictions:
Description
Instrument
Dates
UTC+01:00
Forecast
Previous
Core Machinery Orders m/m
JPY19 Feb 2024
00:50
Expired2.7
-4.9
Rightmove HPI m/m
GBP19 Feb 2024
01:01
ExpiredNo forecast
1.3
German Buba Monthly Report
EUR19 Feb 2024
12:00
ExpiredNo forecast
No previous value
Bank Holiday
CAD19 Feb 2024
14:00
ExpiredNo forecast
No previous value
Bank Holiday
USD19 Feb 2024
14:00
ExpiredNo forecast
No previous value
IPPI m/m
CAD19 Feb 2024
14:30
Expired-0.1
-1.5
RMPI m/m
CAD19 Feb 2024
14:30
Expired0.7
-4.9
Disclaimer
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