Wednesday's Markets Update (May 1, 2024)

01 May 2024 by rate3

On Wednesday, stocks rebounded following the Fed's decision to hold its rate steady at 5.2-5.5%. Manufacturing activity continued to edge down as job openings reached an 18-month low. On the world's markets, oil dropped on hopes of easing tensions in the Middle East, while the yen depreciated against the dollar despite alleged interventions by the BoJ. BTC dropped sharply, falling by more than 4% to below 57K and breaking an important technical support level at 60K. The rest of the crypto market was mixed, with some major coins such as Polkadot gaining more than 5%.

Details

The Fed held interest rates steady at 5.2 - 5.5% again in May due to high inflation and a strong job market. While inflation has eased slightly, progress towards the Fed's 2% target has stalled. The Fed won't cut rates until it's confident inflation is on a steady path down. (FED)
Manufacturing activity (ISM) contracted in April after a brief period of growth. New orders and employment fell, especially in textiles, food, and machinery. However, production remained positive despite lower backlogs. Additionally, prices paid by manufacturers surged to a 22-month high due to rising costs for oil and materials. (ISM)
Job openings fell to an 18-month low of 8.4 million in March, missing expectations (8.7). Construction and finance sectors saw the biggest drops, while education jobs increased. Openings fell sharply in most regions except the Northeast. (BLS)

Crypto

Hong Kong's new BTC and Ether ETFs flopped in their debut week, trading just $11.2 million. This pales in comparison to the $4.6 billion traded by similar ETFs on the first day in the US. (source)

World Markets

Japan's manufacturing PMI fell slightly to 49.6 in April, but it's the slowest decline in 8 months. Factory activity is still contracting, but the rate of decline is easing, with output and new orders shrinking less severely. Export orders, especially to China and the US, remain weak. Despite this, businesses are cautiously optimistic due to improving demand. (SP)
Australia's manufacturing activity contracted further in April. Manufacturers face rising costs and weak demand, with some regions seeing sluggish exports. While the chemicals sector remains in a slump, the minerals & metals industry showed signs of recovery, despite ongoing challenges. (AIG)

Currencies

Japan's yen weakened again to near 158 per dollar. An earlier rally fueled by suspected government intervention (up to USD 35B) was short-lived. Officials haven't confirmed intervention but signaled potential action. The weak yen is due to Japan's ultra-low interest rates and strong US wage data boosting expectations of tighter Fed policy.

Commodities

Oil prices fell below $80 a barrel in May, the lowest in a month. This drop is due to a larger-than-expected increase in US stockpiles and rising hopes for peace in the Middle East. US oil production also jumped, adding to the supply glut. Investors are still watching the Fed's policy decisions for clues on future oil demand.