Friday's Markets Update (August 30, 2024)

31 Aug 2024 by rate3

On Friday stocks closed August with gains as the PCE price index matched expectations. The Dow reached a new all-time high (ATH). Dell's earnings boosted its stock, while Intel surged on restructuring news. Internationally, the unemployment rate in the Euro Area reached 6.4%, the lowest level since 1995. BTC and ETH continued to significantly underperform the stock market, forming bearish patterns as traders remained ambivalent about both economic and political conditions. Meanwhile, Q2 saw 2.5% increase in venture capital funding for crypto startups.

Details

The core PCE price index, the Fed's favored inflation indicator, increased 0.2% in July, matching expectations and June's rise. Year-over-year, core PCE inflation was 2.6%, below forecasts, suggesting the Fed may start lowering interest rates soon. 1Y trend: "Side" (BEA)
The Chicago PMI increased slightly in August, indicating a less severe economic slowdown in the region. While still below expansion levels, it improved from the previous month. New orders, production, and supplier deliveries contributed to the rise, but reductions in backlogs and employment limited the gains. 1Y trend: "Side" (ISM)
The University of Michigan’s consumer sentiment index increased slightly in August but fell short of forecasts. Consumers’ views on current conditions improved, but their expectations for the future remained unchanged. Inflation expectations declined for the coming year but stabilized for the next five years. 1Y trend: "Up" (SCA)

Crypto

Trump continues to pursue a crypto-focused agenda. He has been actively courting the cryptocurrency industry, promising regulatory changes. Recently, Trump unveiled his plans to make America a global crypto capital, hinting at a new venture called "World Liberty Financial" launched by his son Eric Trump. (source)
Blockchain-based protocols wrapped up Q3 2024 with fewer deals but high-value funding and industry optimism. Notable raises include PIP Labs' $80M Series B for its Story Protocol, valuing it at $2.25B, and Andrena's $18M for decentralized wireless internet. Gameplay Galaxy secured $24M for blockchain gaming. New funds targeted Web3 startups, such as Parafi Capital's $120M crypto fund and Open Network Ventures' $40M early-stage TON ecosystem fund. Q2 2024 saw a modest 2.5% increase in venture capital funding for crypto startups to $2.7B. (source)

World Markets

The Eurozone's inflation rate dropped to 2.2% in August 2024, down from 2.6% in July. This is the lowest rate since 2021. While this is good news for the European Central Bank, inflation remains above its target. Energy prices fell significantly, but inflation for services and food increased. 1Y trend: "Down" (EC)

Currencies

The Euro weakened against the Dollar, reaching a two-week low of 1.108. This was due to lower-than-expected inflation data in the Eurozone, which increased the likelihood of a European Central Bank interest rate cut in September 12. Inflation rates fell in all major Eurozone economies. 1Y trend: "Up"
The Euro Area's unemployment rate slightly decreased from 6.5% in June to 6.4% in July. This marks the lowest unemployment rate since the data began in 1995. 1Y trend: "Side" (EC)
The Chinese yuan has strengthened against the dollar, reaching one-year low of 7.09 driven by corporate demand. Companies are selling dollars to buy yuan, which could accelerate. The yuan's appreciation is also supported by expectations of lower interest rates. 1Y trend: "Side"

Commodities

Oil prices fell to $73.5 due to OPEC+ plans to increase oil production and weaker-than-expected Chinese demand. Despite recent supply disruptions, OPEC+ is expected to proceed with its planned output hike. Oil inventories are at their lowest since January, but demand remains weak, causing price forecasts to be lowered. 1Y trend: "Side"

On Week 36, some key economic indicators will be released, including, August unemployment rate, ISM Manufacturing PMI, S&P Global Manufacturing PMI Final, Balance of Trade, and JOLTs Job Openings data. Internationally, the Eurozone will release retail sales, Manufacturing PMI, and GDP growth rate. China’s Caixin Services PMI will also be published.