Thursday's Markets Update (April 25, 2024)

25 Apr 2024 by rate3

On Thursday, stocks recovered after falling at opening as GDP growth came in much weaker than expected at 1.6%, while inflation remained high. Disappointing earnings from Meta and IBM added to the morning's dump. Globally, the yen hit a new high at 155, faced with a rising dollar, while Brent stabilized at 88 due to a temporary pause in the Middle East situation. BTC and ETH lingered above 64.7 and 3.1 after Wednesday's slump. The rest of the crypto market was mostly in the green, with Uniswap and Polygon adding up to 3%.

Details

The economy grew slower than expected in Q1 2024, at an annual rate of 1.6%. Consumer spending, especially on goods, weakened. Business investment slowed too while spending on services increased. Government spending remained positive. Trade also contributed to the slowdown as exports fell and imports jumped. (BEA)
Core inflation rose faster than expected in Q1, hitting 3.7% annualized. This is up from 2% in the prior quarter and exceeds forecasts (3.4%). Overall inflation also rose, reaching 3.4% annualized. (BEA)
Jobless claims unexpectedly fell to a 2-month low of 207,000, further indicating a tight labor market. This gives the Fed more flexibility to delay rate cuts and focus on controlling inflation. (DOL)
The Kansas City Fed's manufacturing index plunged in April to -13 from March's -9, with production and new orders down. Activity weakened across durable and non-durable goods. Despite the slowdown, businesses are slightly more optimistic about the future, especially regarding production. (KFed)

Crypto

Turkey leads the world in using stablecoins, relative to its GDP. This is because the Turkish lira is volatile. The report suggests this trend is happening in other countries with unstable currencies, like Georgia. (source)

World Markets

UK car production dropped 27% in March due to factory adjustments for new electric car models. This is despite steady domestic demand. Exports fell sharply, but electric vehicles still make up a significant portion of production. The industry expects continued volatility as factories shift to electric vehicle production. (SMMT)

Currencies

The Japanese yen hit a new 34-year low (155) against the dollar as the Bank of Japan meets. While the BOJ is expected to hold rates steady, comments from the Governor Ueda suggest future hikes if inflation rises or the yen weakens further.
The Mexican peso weakened to a five-month low (17.1) against the US dollar. This comes as Mexican inflation rose and economic activity surged, suggesting the Bank of Mexico might raise interest rates. However, investor focus is on the US Fed's hawkish stance due to high US inflation and a strong job market, which strengthens the dollar.

Commodities

Oil (Brent) prices held steady around $88 a barrel after dropping earlier. Investors are unsure how delayed US rate cuts might affect oil demand. Strong US economic data suggests the Fed may hold rates higher. Focus is now on US GDP and inflation data this week. Despite this, a surprise drop in US oil stockpiles and easing tensions in the Middle East are providing some support to oil prices.