Thursday's Markets Update (February 1, 2024)

02 Feb 2024 by rate3

On Thursday, recent data showed rising jobless claims accompanied by drastically increased cuts in the private sector and slowing labor cost growth. Stocks reacted with a moderate rise. Financials underperformed while communication services outperformed. On the world's markets, the Euro area's inflation declined to 2.8% while unemployment held at 6.8% with Spain recording 11%. Also, the BoE kept its rate at 5.25% and the Nigerian Naira plummeted on the central bank's factual devaluation. On the crypto market, traders followed WS buying in the dip and brought most popular tokens into the green with Chainlink leading the charge with a 9% increase. BTC and ETH growth is much less pronounced (around +1%).

Details

US employers announced 82,307 job cuts in January 2024 - a 136% increase from the 34,817 cuts announced in Dec 2023, the most in ten months and the highest January total since 2009. The financial (23238) and technology (15806) sectors experienced the most job cuts. Layoffs were driven by economic trends, anticipated policy changes, and increased automation and AI adoption.(Challenger)
Unemployment benefit claims rose for a second week to 224K, the highest since November, with California, NY, and Oregon experiencing the most significant increases. Continuing claims also rose, reaching a nine-week high, indicating a soft slowdown in the labor market.DOL
The ISM Manufacturing PMI improved to 49.1 in January 2024, the highest since October 2022, indicating a less severe contraction in the manufacturing sector. Demand and output stabilized, while inventories fell at(ISM)

Crypto

Ethereum has seen a price and activity resurgence, with data showing 101K new ETH addresses created daily alongside 484K interacting, 28% faster than three months ago. This growth signals a thriving ecosystem for the second-largest cryptocurrency.(crypto)
Polygon Labs laid off 60 employees, about 19% of its workforce. Departing staff received severance packages while remaining employees will get at least a 15% raise starting in 2024, reflecting continued web3 job market demand.(source)

World Markets

The Euro Area inflation rate declined to 2.8% YoY in January 2024, meeting expectations. The core inflation rate eased to 3.3%, still reaching the lowest level since March 2022. On a monthly basis, consumer prices fell 0.4% after rising 0.2% in December. (Eurostat). FYI: Euro Area (Zone) is a monetary union, which accept EURO as their currency. Euro Area excludes: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden.
The Euro Area unemployment rate held steady at a historically low 6.4% in December 2023, as expected, with youth unemployment dipping to 14.4%. The number of unemployed fell by 17 thousand on the month to 10.909 million. Spain had the highest jobless rate at 11.7%, while Germany had the lowest at 3.1%.(Eurostat)
Bank of England kept the Bank Rate unchanged at 5.25% for the fourth consecutive time, in line with expectations. Two policymakers preferred a 25bps increase, while one preferred a decrease. The central bank acknowledged more balanced inflation risks and expected GDP growth to gradually pick up. CPI inflation is projected to temporarily hit the 2% target in Q2 2024 before increasing again in Q3 and Q4.(BoE)

Currencies

The Nigerian naira hit a record low of 1,250.5 per USD, nearing the parallel market rate, after the central bank revised its exchange rate methodology, marking the currency's second devaluation in seven months. This steep drop defies efforts by the central bank and government to boost forex liquidity despite a backlog of $7 billion in matured forwards. The bank warned banks against underreporting transactions amid risks of misinformation and manipulation. About $2.5 billion of the backlog has been paid across key sectors, though dollar shortages persist for Africa's largest economy.