Friday's Markets Update (May 24, 2024)

24 May 2024 by rate3

On Friday, stock market was mixed. S&P rebounds and Nasdaq rises, fueled by AI stocks, especially Nvidia. Dow is stagnant after a big drop. Consumer confidence data eases inflation fears. On global markets, Chinese foreign investments continue to decline. BTC and ETH are both flat, hanging below 69K and 3.8K despite ETH ETF approval. The rest of the crypto market is mostly in the green, with Uniswap surging 12%.

Details

Consumer confidence is down (69.1, lowest in 6 months) despite slight revisions. Inflation worries remain high (3.3% expected this year), but long-term outlook is steady. Upbeat views on current conditions couldn't offset concerns about future business climate, job security, and income growth. Rising interest rates also dampen sentiment. Trend: "UP" (SCA)
Orders for durable goods like machinery and electronics grew 0.7% in April, exceeding expectations and marking 3 straight months of gains. Demand for transportation equipment (cars, planes) was particularly strong (1.2% increase). This suggests continued investment in manufacturing and business spending. (Census)

Crypto

SEC quietly approved Ethereum ETFs without a public vote, raising questions about transparency. Some experts say it's a standard process and won't be overturned, while others point to technical details suggesting a longer road ahead. Regardless, this move paves the way for more crypto ETFs in the future. (source)

World Markets

China's foreign investment is down to CNY 360.2B YoY. It plunged 27% in the first 4 months of 2024, with April hitting a new low. Tech manufacturing saw some investment, while hospitality boomed. Investments from Spain and Germany are rising, but overall, things are cooling down. Trend: "Down" (CH)
Brazil's consumer confidence plunged to a 1-year low (89.3) in May due to recent floods and a central bank rate hike. While current conditions held steady, worries about the future (down from 102.2) dragged sentiment down. Trend: "Up"
Spanish factory prices (PPI) continue to drop for 14 months straight. April saw a 6.6% plunge year-over-year, driven by cheaper energy and materials. However, consumer and capital goods prices rose slightly. Trend: "Up" (INE)
Nigeria's economy grew at a steady 2.98% YoY in Q1 2024, extending its expansion streak to 14 quarters. Still it is lower than the 3.46% growth recorded in the previous 3 months. Oil continued to lead growth, though at a slower pace. The non-oil sector, driven by services, also grew solidly. However, agriculture weakened due to weather and security concerns. Trend: "Down" (Nstat)

Commodities

Natural gas prices are down due to a supply surge. Production is rising as drillers react to earlier high prices, leading to stockpiles exceeding the 5-year average. Warmer weather forecasts for later this week may further reduce demand. Trend: "Up"

On Week 12, economic data releases dominate the financial landscape. Focus is on inflation, spending, and GDP growth. Globally, inflation, GDP, and unemployment are key for major economies like Europe, Canada, and Brazil. Japan releases consumer confidence, industrial data, and BOJ Governor's comments.

Comment: World's PMI Update

This week's world's PMIs confirmed what we have already known.

North America is showing large corporate services sector expansion with manufacturing and SMEs doing otherwise under heavy pressure from high Fed rates. With that, the overall PMI still results in slight growth, which, however, serves as a basis for upbeat over-exaggerated political rhetoric and the Fed continuing its restrictive policies for an indefinite time.

At the same time, the EU economic dynamic is opposite. Although PMI data from the major economies of Germany, Britain, and France continues to fluctuate up and down on both services and manufacturing sides, the general trend is down. However, ECB politicians keep changing their stance with more regard to the Fed than to their own local economic conditions.

On the other hand, Asian economies, which largely depend on their exports to America and the EU, are mixed. Indian PMI is growing steadily as more enterprises re-shore from neighboring China, while Chinese economic prospects go up and down depending on news from the CPC, which periodically pledges government support for the country's still struggling construction and private equity sectors.

The two biggest South American economies, those of Brazil and Argentina, are going in separate directions, with the former growing from 2021 lows on increasing demand and prices for its staple exports - food and energy - while the latter contracts, battling record-high inflation.

The situation in Africa's leading economies of Nigeria, South Africa, and Egypt, stringent in their food supplies and heavily dependent on world resource pricing, is not looking good on the inflation side and widely fluctuating on the resource side, leading to generally not optimistic outlooks for this continent.

Overall, the world's production and services picture remains mixed with the EU visibly underperforming, which puts pressure on Asia, South America and Africa, while North America is incapable of dragging the rest of the world without substantial growth in the Chinese economy.