Thursday's Markets Update (May 2, 2024)

02 May 2024 by rate3

On Thursday, stocks rose as traders were relieved by a less hawkish Fed statement. However, a timeline for cuts remains unclear, while economic data continued to show resilience in the job market accompanied by a continuing slump in manufacturing. Internationally, the yen re-depreciated after a short relief rumored to BoJ interventionist efforts. Oil and BTC attempted to recover, forming a triple bottom on the 1H chart. The rest of the crypto market was also in the green, with Polkadot and Polygon up more than 4%.

Details

Job cuts fell 28% in April to 64,789, the lowest in 14 months. This is despite expectations of slower hiring and potential future cuts due to rising labor costs. The auto industry led the cuts, primarily due to Tesla's workforce reduction. (CH)
Jobless claims remained near a two-month low at 208K, below expectations. This ongoing labor market tightness gives the Fed room to delay raising interest rates to fight inflation. (DOL)
Factory orders increased 1.6% in March, as expected, with durable goods leading the gain. Transportation equipment, like cars and airplanes, saw a strong rise in orders. Excluding transportation, the increase was more modest. (Census)

Crypto

There was a record outflow of money from spot BTC ETFs, with over half a billion dollars leaving funds. This comes after a period of slowing demand and a recent dip in BTC's price. Fidelity Investments' ETF saw the biggest outflow, while BlackRock's had its first ever. Analysts suggest some investors are taking profits after Bitcoin's strong start to the year. (source)

World Markets

Manufacturing activity in the Eurozone continued to contract in April but at a slightly slower pace than in March. New orders fell sharply, but output decline eased and employment remained steady. Despite lower prices, business sentiment improved to a 14-month high. (PMI)
Italy's factory output prices fell less steeply in March, down 9.6% compared to a year ago (10.8%). This is the smallest decline in 9 months. Lower energy costs due to new supply chains are the main reason for the ongoing deflation. However, some sectors like consumer goods saw small price increases. (Istat)
Argentina's central bank cut interest rates by 10 points to 50%, the fifth cut since December. This follows a slowdown in inflation and aims to boost the economy. The government is prioritizing spending cuts to further reduce inflation, aiming for 3.8% by September.(Bcra)

Currencies

Dollar rebounded slightly after a steep drop on Wednesday. The Fed hold interest rates steady and signaled future cuts, despite most analysts expected hawkish declarations from Powell.
The Japanese yen weakened again (155.5) after briefly strengthening to 153 on suspected intervention by Japanese authorities. This is the second intervention this week, but Japan won't confirm their actions. To fight the weakening yen, Japan might offer tax breaks to companies that convert profits back to yen.

Commodities

Oil (WTI crude) prices held around $79 as the reserves are replenished at that price. However, prices are still near lows due to hopes for peace in Israel and rising oil stockpiles.