SVET Markets Weekly Update (April 1–5, 2024)

05 Apr 2024 by rate3

On Week 14 jobs data fluctuated, leaving analysts bewildered. Meanwhile, Fed officials added to the confusion with their mixed messages on rate cuts.

Globally, tensions between aging world leaders led to a downturn in commodities such as oil, gold, silver, zinc, and aluminum. Additionally, food prices, including meat and dairy, saw increases. Central banks, including the ECB in Frankfurt, sought to prop up struggling EU economies, while counterparts in China and India moved to devalue their currencies for competitive advantage. In Central and South America, as well as much of Africa, inflationary pressures persisted, forcing policymakers to maintain high interest rates despite lackluster economic performance.

The crypto market, largely influenced by North American corporate investors, mirrored the stock market’s volatility, resulting in BTC and ETH experiencing a classic bearish double-top formation on daily charts. However, this pattern could shift to a bullish continuation flag if geopolitical tensions ease.

On Monday, stocks dipped after Q1 gains as manufacturing surprisingly grew, keeping the Fed on hold as inflation eased. Tech stocks rose (Microsoft, Nvidia, Amazon, Meta) while utilities lagged. Globally, China PMI surprised on the upside; oil remained steady. The dollar rose on manufacturing data, while the Turkish lira fell on local election results. Crypto markets plunged, with BTC forfeiting 3% and ETH dropping more than 5%. Major alts saw even steeper cuts, with Bitcoin Cash, Solana, Polkadot, and Polygon sliding more than 7%.

Details

The manufacturing sector grew marginally in March after 16 months of decline, exceeding expectations (PMI to 50.3). New orders and production rose, but employment continued to fall. Prices kept rising due to high material costs. (ISM)
Crypto

Milei’s election win in November 2023 was met with excitement by digital asset supporters who hoped for a BTC-led future for Argentina. However, despite initial promises, Milei’s government has disappointed the crypto community by implementing new registration requirements for crypto firms in line with FATF rules. The National Securities Commission of Argentina has introduced a Registry of Virtual Asset Services Providers, requiring crypto firms to register or risk being banned from the country.(source)
World Markets

The Caixin China General Manufacturing PMI rose to 51.1 in March 2024, surpassing market expectations and marking the fifth consecutive month of factory activity growth. This was fueled by increased new orders domestically and abroad, with foreign sales reaching a year high and output seeing the largest increase since May. However, employment continued to decline as firms remained cautious about costs. (PMI)
Spain’s new car sales dipped 4.7% in March after a strong February. Despite the March decline, sales for the first quarter are still up 3.1% year-on-year. (Anfac)
Mexico’s manufacturing PMI held steady at 52.2 in March, showing continued growth despite slightly slower hiring. New orders and output rose, but worries about US demand dampened optimism. Manufacturers raised prices due to higher input costs. (PMI)
In March, the Russia Manufacturing PMI rose to 55.7, indicating the sector’s strongest growth since August 2006. Output and new orders saw significant increases, with foreign demand rising for the first time in five months. This led to higher employment rates and increased input buying to replenish stocks.
Currencies

The dollar rose close to a two-month high after data suggested manufacturing growth and inflation are on the rise. Investors are looking ahead to economic reports and Fed comments this week for clues on future interest rate cuts. The dollar gained against major currencies like the Euro.
The Turkish lira dropped to a new low of 32.4 per USD following Erdogan’s AKP party’s defeat in local elections. Concerns arose over potential shifts in economic policies, but Erdogan vowed to address inflation. Turkey’s inflation hit 67.07% in February 2024, prompting citizens to invest in gold and USD-linked assets. The central bank raised interest rates by a significant 4,150 bps over the past year amid economic challenges.
Commodities

Oil prices stabilized around $83 per barrel, hitting a 5-month high, with anticipation for OPEC+’s meeting to extend production cuts. Investors are monitoring Ukrainian drone strikes on Russian refineries, peace efforts in Gaza, and Chinese manufacturing growth.
On Tuesday, stocks dropped sharply as strong economic data (job openings, factory orders) dimmed hopes of a Fed rate cut in June. Tesla slumped due to lower-than-expected deliveries. On world markets, silver is up on growing geopolitical threats. Eurozone production activity remains subdued, the Euro weakened on ECB rate cut expectations, and the Indian rupee depreciated as regulators aim to compete with China. BTC and ETH continued their vertical downfall alongside stock indexes, dropping another 7% each. Some other major coins, including Uniswap and Avalanche, shrank by more than 8%.

Details

Job openings rose to 8.76 million in February, exceeding expectations. Gains were seen in finance, government, and some service sectors. Openings fell in information technology and federal government. Job growth varied regionally, with the West showing the strongest increase. (BLS)
Crypto

Singapore tightened crypto rules (PS Act) to protect users and ensure financial stability. All crypto businesses, even those indirectly involved, must comply. Regulations apply to cross-border transfers. The Monetary Authority of Singapore (MAS) oversees these measures to combat money laundering and terrorism financing. (source)
World Markets

Eurozone factory activity (PMI) remained in decline for March, but the rate softened. This revision to 46.1 reflects improving supply chains and a slower drop in output. New orders and exports also fell less sharply. Despite some optimism, job cuts continued due to weak growth expectations. (SP)
German inflation eased to 2.2% in March, the lowest in nearly 3 years, meeting market expectations. This brings it closer to the ECB’s target of 2%. Both overall and EU-harmonized rates declined. Food and energy price drops led the slowdown, while services inflation rose slightly. Core inflation also dipped to its lowest level since mid-2022. (DE)
French manufacturing PMI dipped in March, extending a 14-month decline. However, the drop slowed, with some restocking and backlog clearing. New orders contracted further, leading to job losses. Despite this, manufacturers remain optimistic about future demand due to expected economic improvement. (SP)
Currencies

The euro weakened to a near two-month low below $1.08. Investors expect the ECB to cut rates more than the Fed this year as German inflation slows to a 20-month low of 2.2%. While French inflation dipped, rates in Italy and Spain rose slightly.
The Indian rupee weakened past 83.4 to the dollar, near a record low. This is due to expectations of less central bank support (RBI) and potential weakening of the Chinese yuan (PBoC). A weaker rupee could help Indian exports compete with China’s. High energy prices also pressured the rupee as India imports oil and coal.
Commodities

Silver surged past $25.50 per ounce, a year-high, on Middle East tensions and safe-haven demand. Industrial use, like solar panels backed by IKEA’s EV grant, also boosted prices. However, strong US economic data dampened hopes of an immediate Fed rate cut, sending those bets below 60%. Investors now focus on jobs data and Fed speeches for clues on future rate changes.
On Wednesday, stocks edged higher after mixed economic data. The services sector slowed, but job growth remained strong. Tech stocks rose except for Microsoft and Intel, which dropped due to the earthquake in Taiwan. Globally, Eurozone inflation is down to a 2-year low, while gold and oil continued to over-perform amid tense geopolitical disputes. The crypto market’s slide paused, with BTC and ETH hovering above major resistance levels at 66K and 3.3K respectively. Meanwhile, some major coins continued to slump, with Bitcoin Cash and Litecoin down more than 8%.

Details

Service sector growth slowed (ISM PMI to 51.4). New orders, inventories, and employment weakened. Prices eased but remain a concern. (ISM)
Private businesses added 184K jobs in March, the most in 8 months. Service sectors like leisure/hospitality led gains. Goods production added jobs in construction and mining, but manufacturing saw little growth. (ADP)
World Markets

Eurozone inflation dipped to a 28-month low of 2.4% in March, missing expectations. Both headline and core inflation rates fell. Energy prices led the decline, while food and goods price growth slowed. Service inflation remained steady. Monthly inflation stayed positive at 0.8%. (Eurostat)
Eurozone unemployment held at a record low 6.5% in February, despite a slight rise in jobless numbers. Youth unemployment remained flat at 14.6%. Spain has the highest rate (11.5%), while Germany enjoys the lowest (3.2%). This is an improvement from 6.6% unemployment a year ago.
Turkey’s inflation surged to a 16-month high of 68.5% in March, exceeding forecasts slightly. Transportation and housing costs rose the fastest, while food inflation eased. Core inflation climbed to 75.2%. Despite a slower monthly increase, high prices remain a major concern. (Tuik)
Currencies

The dollar weakened after a surprising slowdown in service sector growth (ISM PMI). This data clashed with other strong economic indicators this week like job growth and factory orders. Investors now await Fed Chair Powell’s comments as hopes for a June rate cut hover around 59%.
Commodities

Oil prices hit a 5-month high above $86 per barrel after OPEC+ extended production cuts. Supply concerns due to attacks on Russian facilities, Middle East tensions, and a focus on output reduction by key members like Iraq pushed prices higher.
Gold surged to record highs above $2,280 per ounce. Rising tensions in the Middle East and Ukraine fueled demand for safe havens. Mixed signals on Fed policy exist, with some expecting 3 rate cuts this year. Investors await Friday’s US jobs report and Fed comments for clues on interest rates.
On Thursday, stocks rose as hopes for Fed rate cuts grew again after jobs data and Powell switched to dovish comments once more. All sectors gained, with tech (Meta +3%) and real estate leading. Alphabet fell on news of potential AI search fees. On world markets, ECB bureaucrats reiterated their pro-growth stance, weakening the Euro as service PMI grew, while copper prices jumped on China’s economic recovery hopes. The crypto market improved on technical volatility, with BTC reaching 68K and ETH — 3.4K. Bitcoin Cash (+7%) and Binance (+5%) were among the best daily performers.

Details

Jobless claims unexpectedly surged to 221Th, the highest in two months. This contradicts recent strong labor data, suggesting higher interest rates might be slowing the job market. (DOL)
Job cuts jumped to 90,309 in March, the highest in 15 months. Tech (14,224) and government (36,044) led the losses. This brings Q1 job cuts to 257,254, exceeding Q4 2023 but down from Q1 2023. Cost-cutting is the main driver, with tech still leading job cuts overall. (Challenger)
Imports surged to a 16-month high of $331.9B in February, driven by a $7.1B increase in goods. Consumer goods (phones, household items) led the rise, followed by food, beverages, and auto parts. Service imports also climbed, with travel and transportation sectors showing the biggest gains. (Census)
Crypto

Memecoins dominated the crypto market in Q1 2024 (RWA being the second), surging over 1300% on average. Solana (SOL) was a major driver. This outpaced other sectors by a wide margin, with Brett (over 7700% gains) leading the pack. The sector now boasts 6 major cryptocurrencies by market cap. This impressive performance has caused mixed reactions within the crypto market. (source)
World Markets

Eurozone services sector PMI (51.5 in March) grew modestly after 6 months of decline. Sales improved, but mainly domestically. Businesses added staff, though slower than before. Price pressures eased to multi-month lows. Service providers remain optimistic about future activity. (SP)
Currencies

Dollar weakens for a third day (104) as expectations of Fed rate cuts grow. Jobless claims and March job cuts rose, and service sector growth slowed. Investors await Friday’s jobs report for clues. Fed Chair Powell signaled rate cuts likely in 2024, but data dependence remains. The Euro and other currencies gained against the dollar.
Commodities

Copper prices soared to a 14-month high (over $4.20/lb) due to a weaker dollar and supply concerns. Lower US interest rates (expected due to weak service sector data) boosted demand from global manufacturers and key importers like China (despite some demand worries there). Mine disruptions in Africa added to supply risks, prompting Chinese smelters to cut output.
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.