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 On Recovery Stall

Intermediate

Macroeconomic/ geopolitical developments

  • On the data front, Monday saw the release of the US ISM Manufacturing PMI activity data, which was below expectations, and also showed falling price pressures (fuelling a risk on theme to start the week, month and quarter).
ISM
  • Further easing inflation fears and adding to the risk on tone, the US job openings (JOLT) data for August fell to its lowest level in more than a year and by the most in nearly 2.5 years, by more than expected.
  • The Reserve Bank of Australia (RBA) interest rate decision and statement on Tuesday brought a less than expected 0.25% rate hike (consensus was for 0.5%), which assisted in a “risk on” rally across global asset classes.
Reserve Bank of Australia
  • This “pivot” by the RBA sparked market hopes of similar pivots by other central banks globally, and most notably, potentially by the Fed.
  • However, US Federal Reserve speakers remained extremely hawkish in comments throughout last week, in the face of the pivot chatter.
  • On Wednesday the OPEC+ group of oil exporters announced a 2 million barrels per day cut in target production, at the upper end of market expectations (sending the oil price higher and raising inflation fears).
  • The US Employment report on Friday saw 263K jobs added last month, close to expectations, whilst the unemployment rate fell to match a five-decade low at 3.5%.
  • This data release saw markets react with risk off moves across financial assets.

Global financial market developments

  • The major US stock averages posted modest gains last week, though gave up much of the early weekly gains
  • The S&P 500 added 5.6% in the first two sessions of October, posting its best two-day advance since 2020 and the third-best start to an October since 1930!
SPX
  • Subsequent losses from Wednesday, however, saw much of these gains surrendered.
  • European and Asian equity indices also posted weekly gains.
  • US 10yr yields were lower then back higher, but closed at a higher yield for the week.
10YR Yield
  • US Dollar weakened the strengthened again, as DXY closed at a new multi-decade peak.
  • GBPUSD advanced then failed lower after the prior week’s plunge and rebound from a record low.
GBPUSD
  • Gold rebounded further after hitting a multi-month low at the end of September.
Gold
  • Oil surged before and then in the wake of the OPEC+ production cut decision, having hit a multi-month low at the end of September.
Oil
  • Copper rallied and then sold off, retaining a bear tone.
Copper

Key this week

  • Central Bank Watch: We get the FOMC Minutes on Wednesday.
  • Macroeconomic data: Key data comes Thursday with the release of US CPI.
DateKey Macroeconomic Events
10/10/22Columbus Day holiday, US Bond markets closed
11/10/22UK Employment report
12/10/22UK GDP, Manufacturing and Industrial Production; US PPI; FOMC Minutes released
13/10/22German CPI; US CPI
14/10/22China CPI; US Retail Sales

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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