SVET Reports
Thursday's Markets Update (November 7, 2024)
On Thursday, equities rose, extending the post-election rally. The tech sector led the gains, fueled by the Fed's 25 basis points rate cut and hopes for reduced regulation under Trump's administration. However, bank and financial services stocks declined due to concerns about potentially higher interest rates and increased fiscal deficits. Gold, oil, and the dollar stabilized. The Eurozone construction sector continued to contract, while the Argentine manufacturing sector's decline slowed. BTC and ETH are in deep green, with ETH leading the charge for the first time in almost half a year with a 6% gain.
Details
The Fed cut interest rates by 25 basis points to 4.50-4.75%, as expected. While the economy continues to grow and the labor market remains strong, inflation has slowed but remains above the Fed's 2% target. The Fed will continue to monitor economic data and adjust rates accordingly. 1Y trend: "Side" (Fed)
Jobless claims rose slightly in the last week of October, but remained below recent averages, suggesting a resilient labor market. However, total claims increased, signaling potential weakness. While some states like California and Michigan saw increases, Florida experienced a decline after hurricane-related volatility. 1Y trend: "Up" (DOL)
Crypto
France's gambling regulator, the National Gaming Authority (ANJ), is likely to block access to Polymarket. This decision reflects growing concerns about its classification as gambling under French law. Polymarket, which gained popularity during the presidential election with over $3.2B in wagers, allows users to bet on various outcomes using cryptocurrency. A French trader's significant $30M bet on Trump reportedly caught the ANJ's attention, highlighting the platform's regulatory challenges. (source)
World Markets
The Eurozone construction sector continued to contract in October, though at a slower pace. New orders declined across sectors, leading to decreased employment and input buying. Germany experienced the sharpest decline, while France and Italy saw milder contractions. While cost pressures eased, job cuts persisted, especially in Germany and France. 1Y trend: "Down" (PMI)
Eurozone retail sales grew 2.9% YoY in September. This is a significant increase compared to the historical average of 1.09%. While the pandemic years saw extreme fluctuations, with record highs and lows, the recent growth indicates a recovery in consumer spending. 1Y trend: "Up" (EU)
Germany's trade surplus narrowed in September, as exports declined and imports increased. Exports to the EU and third countries, including China and the UK, weakened. Imports from the EU and non-EU countries, notably China and Russia, grew. Despite the monthly decline, Germany still maintains a significant trade surplus for the year. 1Y trend: "Down" (DE)
The Bank of England cut its interest rate by 25 basis points to 4.75%, as expected. This decision was driven by slowing inflation, particularly in services. However, the Bank anticipates that the government's expansionary budget could push inflation higher in the short term. Despite this, the Bank forecasts a gradual decline in inflation over the medium term. 1Y trend: "Side" (UK)
Argentine industrial production continued to decline in September, though at a slower pace. Most sectors contracted, but the rate of decline eased in some areas. Food and beverage production accelerated, and manufacturing rebounded. MoM, industrial output increased, indicating a potential stabilization in the sector. 1Y trend: "Down" (AR)
China's exports surged in October, driven by anticipation of future tariffs. This marked the fastest growth in nearly two years, with significant increases in shipments to various regions, including the US, EU, and ASEAN. For the year-to-date, exports have grown steadily, boosted by strong performance in sectors like agriculture, electronics, and automobiles. 1Y trend: "Down" (CN)
Currencies
The dollar index slightly recovered but remained lower at 104.5 as traders analyzed the latest FOMC decision. The Fed cut the fed funds rate by 25bps, and Powell emphasized decisions will be made on a case-by-case basis. Investors anticipate a further rate cut in December and significant cuts in 2025, while the dollar rallied 1.7% following Trump’s victory. 1Y trend: "Side"
Commodities
Gold remained around $2,700 following a 25 basis point rate cut by the Fed. Fed Chair Powell stated that upcoming elections wouldn't affect Fed decisions, while noting that positive economic data has lessened downside risks. Markets anticipate higher interest rates due to the new president's policies aimed at increasing tariffs and cutting taxes, which could lead to larger deficits and inflation. Gold dropped 3% yesterday as Trump’s victory strengthened the dollar, prompting investors to sell. 1Y trend: "Up"