Friday's Markets Update (April 5, 2024)

05 Apr 2024 by rate3

On Friday, stocks increased in a technical recovery after Thursday's sharp downturn, despite strong jobs data. The unexpected drop in unemployment and continued wage growth suggest a robust labor market, potentially delaying Fed rate cuts. Despite Friday's gains, the market is on track for a weekly decline. Globally, gold hit a new ATH, silver surged above $27, and Zimbabwe is launching a new currency. The crypto market was mostly in the red, despite BTC recovering slightly above $68K. Solana (-5%) and Algorand (-3%) led the decline.

Details

Unemployment unexpectedly dipped to 3.8% in March, defying expectations. Job gains were strong (498th) and the labor force participation rate increased. Despite Fed rate hikes, the job market remains tight. (BLS)

Crypto

Grayscale reshuffled its crypto funds based on index rebalancing. Cardano and Cosmos were removed from some funds and proceeds reinvested in existing holdings. The Large Cap Fund now holds mostly Bitcoin and Ethereum as well as 4.52% of Solana, and ~3% in XRP and Avalanche, while the Smart Contract Platform Ex-Ethereum Fund focuses on Solana and Cardano (plus, 12.25% - Avalanche, 8.53% - Polkadot and 6.25% Polygon). The DeFi Fund remains unchanged (8% - Uniswap, 20.41% - MakerDAO, and 13.17% - Lido). (source)
BlackRock added big names like Goldman Sachs and Citigroup as authorized participants for its Bitcoin ETF. This move suggests major financial institutions are increasingly interested in being part of the cryptocurrency market. (source)
Crypto VC funding surged 38% and funding reached projects not seen since late 2021. This might signal a new wave, similar to pre-bull run periods. Crypto-focused VCs like Andreessen Horowitz are leading the charge. (source)

World Markets

Hong Kong's Hang Seng index ended flat (16,723.92) despite initial morning losses. Positive retail sales and business activity data lifted investor sentiment. Upcoming US jobs data and China inflation figures are on watch. Financials gained, while tech, property, and consumer stocks fell. The index is down 1.1% for the week due to Fed rate hike concerns and geopolitical tensions. The index reached its 1997 level whenHong Kong was officially handed back to China by the United Kingdom on July 1. Overall, the Index halved (ATH ~32.7K) since the "Umbrella Movement" hit Hong Kong in 2014. It was a political movement that emerged in response to proposed reforms to the electoral system by the Chinese government, which were viewed by many in Hong Kong as restrictive.

Currencies

The Mexican peso surged to a near 7-year high (over 16.49 per USD) due to low volatility, high interest rates, and economic strength. Even with a recent rate cut, Mexico's high real rates make the peso attractive (carry trade). Some central bank officials worry about inflation but support the peso's stability.
Zimbabwe is launching a new currency to replace its failing dollar. Backed by foreign currencies, gold, and other valuables, it aims to tackle inflation and a weak economy. This is the first move by the new central bank governor to address Africa's weakest currency. The new currency launches at a set rate on April 8th with lower interest rates (20% vs 130%).

Commodities

Silver prices surged above $27 after strong jobs data reduced expectations of Fed rate cuts. The data showed unexpected job gains and steady wage growth. This aligns with comments from Fed officials suggesting slower rate cuts. Silver is up 6.5% for the week due to Middle East tensions and hopes for future easing.
Food prices edged up in March, ending a three-month decline. Vegetable oils surged 8% to a year-high, while dairy prices reached an 11-month peak. Meat prices also rose slightly. However, cereal and sugar prices fell, with cereals reaching a 40-month low. This is due to strong competition among wheat exporters and a production increase in India for sugar. (FAO)

On Week 15, investors eye key data: US inflation, FOMC minutes, consumer confidence, and trade figures. Global focus includes interest rate decisions, inflation announcements, and China's economic data.