Friday's Markets Update (August 16, 2024)

17 Aug 2024 by rate3

On Friday, stocks surged, fueled by improved consumer sentiment and a sharp decline in building permits, hinting at a possible Fed rate cut. This momentum set major indexes on track for their best week of the year. It seems investors are less concerned about a recession compared to a week ago. However, this sudden rally may also be attributed to an optimistic segment of traders stepping in to buy "cheaper stocks," lured by technical indicators suggesting they are "oversold." Globally, gold reached a new all-time high, as predicted. Meanwhile, BTC and ETH remain below 60K and 2.7K, respectively, with a rise in anti-crypto Democratic candidate polls cited as one of the reasons.

Details

Consumer sentiment (Michigan Consumer Sentiment) improved in August, ending a five-month decline. People feel better about their finances and the future economy. Inflation expectations remain steady. 1Y trend: "Down" (ISR)
In July, building permits dropped by 4% to an annual rate of 1.396M, marking a four-year low and falling short of expectations. Approvals for multi-unit buildings decreased by 12.4% to 408,000, while single-family authorizations fell slightly by 0.1% to 938,000. Permits declined in the Midwest, South, and West, while the Northeast saw a 16.2% increase. 1Y trend: "Side" (Census)

Crypto

Former President Donald Trump's campaign has appointed co-chairs for his presidential transition team, known for its pro-crypto perspective. The team aims to shape policies supportive of the crypto industry while vetting candidates for key government positions and creating a business-friendly policy agenda. (source)

World Markets

China's foreign direct investment continued to decline in July (to -29.60%), marking the lowest point since the 2009 financial crisis. This trend contrasts with the historical average and highlights current economic challenges. 1Y trend: "Down" (CN)
Malaysia's economy surged in Q2, growing 5.9%. All sectors contributed, with services, manufacturing, and agriculture leading the way. Construction boomed while mining slowed. The economy is gaining momentum, but challenges remain. 1Y trend: "Up" (Dosm)

Currencies

The dollar index fell, nearing a seven-month low. Stronger-than-expected US economic data fueled expectations for a smaller Fed rate cut, but overall bets are on multiple cuts this year. A rebound in the UK and Japanese currencies also pressured the dollar. 1Y trend: "Up"

Commodities

Gold hits record high above 2.5K amid geopolitical tensions and Fed uncertainty. Housing market weakens as interest rates rise. Investors anticipate multiple Fed rate cuts but debate the pace.

On Week 34, traders' focus will be on the FOMC Minutes, the S&P Global Composite PMI Flash, Existing Home Sales, as well as Fed Chair Powell's speech. Internationally, key manufacturing and resource-producing countries, including Japan and Canada, will publish their inflation and industrial data.