WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Major U.S. stock indices closed in negative territory for the second straight week, impacted by a combination of mixed corporate earnings reports and concerns about rising interest rates. Notably, the 10-year U.S. Treasury yield briefly exceeded the 5% threshold for the first time in 16 years, adding to this concern. In local currency terms, the pan-European STOXX Europe 600 Index ended the week with a 0.96% decline, reflecting uncertainties surounding interest rates, economic conditions, and conflict in the Middle East. The prominent stock market indices also recorded declines, with Germany’s DAX losing 0.75% and the UK’s FTSE 100 Index recording a loss of 1.50%.
US30 -2.14% |
US100 -2.61% |
US500 -2.53% |
GER40 -0.75% |
U.S. natural gas futures approached the $3.6 per million British thermal units (MMBtu) threshold, reaching levels not seen since January. This uptrend was driven by forecasts of increased demand and reduced gas supplies. Unusually low temperatures in the Pacific Northwest of the United States persisted for several days, underscoring seasonal price fluctuations. At the same time, the latest data from the U.S. Energy Information Administration (EIA) revealed that U.S. utilities injected 74 billion cubic feet of gas into storage during the week ending October 20.On Friday, the price of gold surpassed $2,000 per ounce, marking its third consecutive weekly increase. This rise can be attributed to the geopolitical uncertainties in the Middle East, which have provided support to the precious metal. Notably, Israeli forces conducted their largest ground operation in Gaza during the ongoing conflict with Hamas, despite ongoing diplomatic efforts to postpone a full-scale ground invasion.
NATGAS +5.77% |
On Friday, the Dollar Index pared its early gains to trade at around 106.5, remaining near the November highs. This followed the release of PCE inflation data, which suggested that price pressures in the United States were starting to ease but still remain elevated. These figures had little impact on the prevailing expectation that interest rates will remain high for an extended period of time. Core PCE prices rose in line with forecasts, but the headline PCE saw a slightly larger increase than expected. At the same time, personal spending exceeded estimates, while income fell slightly short of expectations. Currently, traders believe that the probability that the Federal Reserve will maintain its current interest rates in the upcoming week is close to 99%. The most significant buying activity was observed against the Euro and the Swiss Franc. Over the course of the week, the U.S. dollar gained about 0.5%. This week, the dollar strengthened on a weaker euro, influenced by a gloomy growth outlook in the Eurozone and the belief that the European Central Bank’s tightening cycle may have reached its conclusion.
EUR/USD -0.28% |
USD/JPY -0.15% |
GBP/USD -0.37% |
USD/CAD +1.15% |
Recent on-chain data suggests aggressive accumulation of Bitcoin by whales, with these large investors purchasing over 30,000 BTC worth around $1 billionin the past five days. Institutional activity in Bitcoin is also increasing, with a surge in transactions exceeding $100,000, reaching a new high in 2023. The price of Bitcoin recently surpassed $35,000, a level not seen since May 2022, marking a 14.44% increase in the last week. Despite the recent surge, Bitcoin’s market value to realized value (MVRV) ratio indicates that it may not be as overheated as in previous bull markets. Past bull markets reached MVRV levels of 300% or more, while the current figure stands at 150%, suggesting potential for further growth.
BTC +15.65% |
ETH +9.54% |
LTCUSD +6.74% |
XMRUSD +2.14% |
In the UK, new data from the Office for National Statistics, using an updated methodology, reveals that the unemployment rate rose to 4.2% in the three months to August from 4.0% in the March-to-May period. Additionally, a purchasing managers’ survey indicates that business activity in the private sector continued to decline for the third consecutive month in October.
In Europe, despite a streak of ten consecutive interest rate increases, the European Central Bank (ECB) decided to keep its key deposit rate at 4.0%. The ECB emphasized that maintaining this rate for an extended period would help bring inflation down to its medium-term target of 2%. The Governing Council expressed concern that previous monetary policy tightenings had already had a significant impact on financing conditions and were increasingly dampening demand. ECB President Christine Lagarde noted that the eurozone economy remains weak and is likely ro remain so for the rest of the year.
According to purchasing managers’ surveys from S&P Globa; the decline in business activity in the eurozone accelerated at the beginning of the fourth quarter,. The early estimate of the HCOB Eurozone Composite Purchasing Managers’ Index (PMI), which covers both manufacturing and services, fell more than expected to 46.5 from 47.2 in September, reaching a 35-month low. This marked the fifth consecutive month that the PMI was below the 50 mark, indicating shrinking business output. The manufacturing sector’s PMI declined the most, and the slowdown in services sector also intensified. Leading indicators pointed to a challenging economic environment in Germany, with the S&P Global composite PMI remaining in contractionary territory and falling to a two-month low.
In the United States, notable economic news for the week included a GDP report that exceeded expectations, indicating that the U.S. economy grew at an annualized rate of 4.9% in the third quarter, driven by robust consumer spending. This was the strongest performance since the end of 2021 and more than double the growth seen in the second quarter. Other data showed positive signs, with home sales reaching a 19-month high and S&P Global’s flash U.S. Composite Purchasing Managers’ Index (PMI) rising slightly since September.
Meanwhile, the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, provided mixed evidence of easing inflation. On a monthly basis, core PCE, which excludes volatile food and energy costs, rose to 0.3% in September from 0.1% in August, although the year-over-year measure declined to 3.7% in September from the previous 3.8%. Despite inflation remaining significantly above the Fed’s long-term goal of 2%, the central bank is widely expected to maintain current interest rates at its October 31-November 1 policy meeting.
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