Daily Digest:
w/c 4 March 2024: US stock averages higher again to end the week, prodding at record levels; upcoming week's focus on the Fed's Powell testimony before Congress and the US Employment report

“Risk off” theme continues – stocks plunge, US Dollar gains, commodities slump. Pound gets crushed after UK mini-budget

Intermediate

Macroeconomic/ geopolitical developments

  • The key focus last week was the Federal Reserve Open Market Committee (FOMC) decision, statement and press conference on Wednesday. This brought an anticipated 75bp rate hike, but also a more hawkish tone than markets had anticipated, with rates possibly now moving to a higher peak in 2023 up to 4.50% and staying elevated.
  • In addition, downbeat comments from Fed Chair Powell assisted to the “risk off” move in global assets.
  • Powell stated “no one knows whether this process (of raising rates) will lead to a recession or, if so, how significant that recession would be.”
  • The Bank of Japan (BoJ) Japan intervened in the Forex market to support the Yen for the first time since 1998 after after USDJPY moved above 145.00.
  • The UK mini-budget saw tax-cuts, the cancellation of national insurance and corporation tax increases, supply-side reforms, plus a GBP 60 billion energy support package.

Global financial market developments

  • The major US stock averages suffered prominent losses last week for a second successive week.
spx
  • European and Asian equity indices were also appreciably lower.
  • US 10yr yields moved up through the June and 2022 yield peak.
  • US Dollar strength renewed and extended, DXY hit a new multi-decade peak.
DXY
GBPUSD
  • Gold hit further new multi-month low.
  • Oil plunged Friday to another new multi-month low, with risks still lower.
  • Copper sold off for a bear tone.

Key this week

  • Central Bank Watch: A quiet week for Central Banks, but Federal Reserve Chair Powell speaking on Tuesday, and we also get the Bank of Japan (BoJ) Meeting Minutes earlier that day.
  • Macroeconomic data: Also, a relatively quiet week for data with US Durable Goods Orders, GDP and PCE the standouts, with the UK GDP, plus German CPI, Retail Sales & Unemployment also released in Europe.
DateKey Macroeconomic Events
26/09/22German IFO Survey
27/09/22US Durable Goods Orders
28/09/22Bank of Japan (BoJ) Meeting Minutes; Fed Chair Powell speaks
29/09/22German CPI; US GDP and PCE
30/09/22UK GDP; German Retail Sales & Unemployment; US PCE

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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