SVET Markets Weekly Update (April 03–07, 2023)

09 Apr 2023 by rate3

During the shorter week of Good Friday, corporate traders were primarily focused on technical analysis and used the market uncertainties caused by a discrepancy between leading and lagging indicators to quickly close their positions on both sides.

Notable Macroeconomic Updates:

Unemployment Rate (March): 3.5 percent (fact), 3.6 percent (consensus), 3.6 percent (previous);
ISM Manufacturing PMI (March): 46.3 (fact), 47.5 (consensus), 47.7 (previous);
ISM Non-Manufacturing PMI (March): 51.2 (fact), 54.5 (consensus), 55.1 (previous);
JOLTs Job Openings (Feb): 9.931M (fact), 10.4M (consensus), 10.563M (previous);
Initial Jobless Claims (Apr/01): 228K (fact), 200K (consensus), 246K (previous).
Monday markets ranged with NASDAQ (o:12146, c:12189) and BTC (o:28163, c:28081) staying at their Friday’s closing while the Manufacturing PMI coming in at 49.2 in March, in line with the preliminary estimate of 49.3 and above February’s 47.3. This reading showed the weakest pace of contraction in the US manufacturing sector in the current five-month sequence of decline, as output rose for the first time since last October and employment increased modestly.

On Tuesday, neither the oil producers’ announcement that they will reduce their production starting in May nor the JOLTs report, which showed that the number of job openings fell by 632K to 9.9M in February 2023 (the lowest level since May 2021, as market expectations were 10.4M), improved traders’ mood. As a result, NASDAQ (o: 12208, c: 12126, down by 0.7 percent) and BTC (o: 28267, c: 28189, down by 0.3 percent) declined. JOLTs signaled that the labor market might have started cooling. Over the month, the largest decreases in job openings were in services (-278K) and transportation (-145,000).

On Wednesday, the ISM Services PMI report indicated a decline in demand and employment, along with an improvement in capacity and logistics. Additionally, there was a decrease in price pressures, which was the lowest since September 2020. The PMI figure fell to 51.2, down from 55.1 in the previous month, which exceeded the analytics forecast of 54.5 by a considerable margin. This leading indicator suggests a possible recession, with the slowest growth in the services sector over the past three months. As a result, the NASDAQ experienced a slight decline (opening at 12081 and closing at 11996, down by 0.7%), while BTC also decreased by 1.1% (opening at 28568 and closing at 28240).

On Thursday, the number of unemployment benefits decreased to 228K for the week ending April 1st, which was better than the expected figure of 200K, indicating improved conditions with job layoffs. However, institutional players continued to dominate trading activities, primarily driven by technical indicators. This resulted in a controversial outcome, with the NASDAQ rising by 1.2 percent (opening at 11,939 and closing at 12,087), and BTC increasing by 0.7 (opening at 27,903 and closing at 28,107).

On Good Friday, as the markets were closed, there was not much activity for crypto traders, and BTC remained unchanged (opening at 27,892 and closing at 27,897). Meanwhile, the Bureau of Labor Statistics (BLS) reported that the unemployment rate for March had slightly declined to 3.5 percent, which contradicted analytics predictions that it would remain at 3.6.

It is expected that trading activities in Week 15 will continue to focus on exploiting volatility. On Wednesday, the BLS will release inflation rate statistics, including the core rate, with previous readings at 5.5 percent and expectations at 5.6 percent. The release of the FOMC Minutes on the same day is likely to add to the confusion in the markets. Furthermore, on Friday, the Retail Sales figures will be published, showing how much further the economy declined in March, with previous figures indicating a 0.4 percent decrease and forecasts for no improvement.