Wednesday's Markets Update (February 21, 2024)

22 Feb 2024 by rate3

On Wednesday, investors disregarded cautious Fed minutes hinting at a possible delay in interest rate cuts, leading to flat stock markets. Gold and oil prices increased due to geopolitical factors. The crypto market experienced a correction, with major altcoins such as Algorand (-4%), Solana (-2%), and Polygon (-2%) in the red, as BTC fell to $51.4K and ETH to $2.9K.

Details

30-year fixed mortgage rates increased to 7.06% in the week ending February 16th, hitting the highest level since early December, driven by rising Treasury yields and higher inflation. This marked a total increase of 28 bps over the previous three weeks. MBA's chief economist Mike Fratantoni noted that potential homebuyers are sensitive to these rate changes as affordability remains strained due to limited supply and increased home values.(MBA)

Crypto

VanEck's HODL Bitcoin ETF witnessed a massive surge in trading volumes, surpassing its daily average by over 2,200%, as individual traders drove the activity. This comes on the eve of a fee reduction from 0.25% to 0.20%, positioning HODL as the third-largest Bitcoin ETF in the U.S. The surge reflects growing investor interest in Bitcoin and cryptocurrency markets, coinciding with Galaxy Digital receiving a buy rating and a 30% upside potential price target from an analyst.(source)

World Markets

Nikkei 225 gained 1.1% and Topix Index rose 0.7%, approaching 34-year highs, as technology stocks surged following Nvidia's positive earnings report. However, Japan's private sector activity slowed in February, with services growth easing and manufacturing activity contracting further. Tokyo Electron, Advantest, SoftBank Group, Screen Holdings, and Disco Corp led the technology sector's advance with significant gains.
In December 2023, Mexico's retail sales declined 0.2% YoY, underperforming expectations, due to lower sales in auto vehicles (-9.9%), hardware & glass (-7.8%), and health items (-5.4%). However, e-commerce (+31.2%), self-service and department stores (+7.4%), and household goods (+5.7%) saw improvements. Month-on-month, retail sales fell by 0.9%, missing the consensus of a 0.2% rise.(Inegio)

Commodities

Gold prices rose to $2,024, marking the fifth straight session of gains, after the FOMC minutes indicated policymakers' caution in easing policy. The Fed is expected to maintain rates in March and May but may cut borrowing costs by 25 basis points in June. Safe-haven demand for gold increased due to geopolitical tensions in the Middle East, as Houthi militants targeted US ships in the Gulf of Aden, disrupting shipping routes.