Monday's Markets Update (March 25, 2024)

25 Mar 2024 by rate3

On Monday, new home sales decreased, Texas manufacturing slowed down while Chicago's picked up, stocks paused after last week's record highs. DJ fell, S&P dipped, Nasdaq remained flat. Consumer staples and industrials led declines, while energy outperformed. Intel and Microsoft dropped on China news (Intel processors ousted from government PCs). Chipmakers surged. Internationally, Yuan rose on government's support while cocoa continued to rally. BTC and ETH led the crypto market, gaining over 6%, driven by technical factors and forming a 'double top' pattern.

Details

New home sales dipped slightly in February (662Th annualized rate) compared to January, missing expectations. This aligns with rising mortgage rates. Sales dropped in some regions but rose in others. The median home price was $400,500. There's currently an 8.4-month supply of new homes available. (Census)
Chicago Fed's economic growth index rose slightly to 0.05 in February, indicating a modest pick-up in economic activity. Improvement was seen in production, sales, and inventories compared to last month. (ChicagoFed)
Texas manufacturing slowed down in March according to a Dallas Fed survey. Production, new orders, and shipments all fell. Business outlooks also weakened, with increased uncertainty. This suggests slower growth for Texas manufacturing. (DallasFed)
10-year Treasury yield rose as investors wait for clues on Fed rate cuts. Atlanta Fed Bostic expects a single cut instead of the two while Powell hinted on three cuts. Key inflation data and Fed official comments are eyed. Bets on a June rate cut are rising.

Crypto and Local Banks

Iceland ditches Bitcoin mining for "real" farms. Worried about food security and energy use, the country prioritizes agriculture and self-sufficiency, aiming to feed its people and lessen reliance on imports. Renewable energy will focus on homes and essential industries, not digital currencies. (source)
Hundreds of small banks are struggling after last year's troubles. Sources analyzed about 4th institutions and found 282 with high levels of commercial real estate exposure and unrealized losses from the rate surge. Mergers have stalled. Behind doors, fearing publicity regulators are quietly pressuring banks to improve their finances. (CNBC)

World Markets

Ghana's central bank held interest rates at 29% to fight inflation. Inflation eased slightly to 23.2% but remains high. Economic growth in 2023 (+2.9%) exceeded targets (+2.3%), but the trade surplus narrowed due to lower exports.

Currencies

China's Yuan strengthened to 7.25 after state banks intervened and signaled support. This follows recent weakness on economic growth worries.

Commodities

Rice futures prices fell to a 4-month low of $17.8 per hundredweight as the USDA forecast larger global rice supplies and slightly lower demand (Pakistan's high stocks, India's growing production).
Cocoa prices continued its unprecedented rise, hitting a record high of $9.4K a ton (+45% in March). This explained by supply concerns in top growers Ivory Coast and Ghana. Poor harvests hurt by El Niño rains and heat. Ghana cut its production forecast. Prices may rise further as the smaller mid-crop season approaches.