WEEKLY MARKET RECAP
Your weekly global financial market newsletter
WEEKLY MARKET RECAP
Your weekly global financial market newsletter
Geopolitical concerns, stern statements from Federal Reserve officials, and a surge in long-term bond yields to the highest levels in 16 years appeared to have a negative impact on market sentiment. This caused the S&P 500 Index to experience its most significant weekly decline in a month. In particular, the Nasdaq Composite Index, performed poorly and almost approached the bear market territory, finishing the week down 19.91% from its intraday highs in early 2022. Additionally, growth stocks underperformed compared to their value counterparts. In Europe, the STOXX Europe 600 Index, denominated in local currency, concluded the week with a 3.44% decline, driven by concerns about the interest rate prospects and fears of escalating conflicts in the Middle East. Furthermore, disappointing earnings reports contributed to the prevailing risk-off sentiment. All major Continental stock indices also closed in negative territory, with Germany’s DAX losing 2.56% and the UK’s FTSE 100 Index declining by 2.60%.
US30 -1.61% |
US100 -2.90% |
US500 -2.39% |
GER40 -2.56% |
Brent crude futures closed above $92 per barrel on Friday, marking their second consecutive weekly gain. This increase is due to concerns over the supply in the global oil market amid the Israel-Hamas conflict that has the potential to spread across the Middle East. After Hamas released two U.S. hostages in Gaza, oil prices initially eased from $90, but ongoing concerns about the conflict’s expansion in the Middle East caused prices to rise. Additionally, oil prices were supported by expectations of a larger market deficit in the fourth quarter following extended supply cuts by top producers Saudi Arabia and Russia through the end of the year. Meanwhile, gold rose to around $1,980 per ounce on Friday, reaching its highest level in three months, as escalating tensions in the Middle East increased demand for the precious metal as a safe-haven asset. This marks the second consecutive weekly gain for gold, with a rise of over 2% this week.
NATGAS -9.74% |
On Friday, the Dollar Index maintained stability above 106 as investors persisted in evaluating the Federal Reserve’s monetary policy outlook, considering recent statements from Fed Chair Jerome Powell. Powell mentioned that inflation remains excessively high and would likely require reduced economic growth, emphasizing that the current monetary policies had not yet become overly restrictive. Nevertheless, the market anticipates the central bank to leave interest rates unchanged during the November meeting. Furthermore, the most recent data revealed that initial jobless claims were lower than expected the previous week. Additionally, various economic indicators, including existing home sales, retail sales, industrial production, housing starts, and building permits, exceeded expectations in September.
EUR/USD +0.79% |
USD/JPY +0.19% |
GBP/USD +0.18% |
USD/CAD +0.42% |
Bitcoin’s value surged past $30,000 per coin, driven by optimism over the SEC’s potential approval of direct-investment Bitcoin exchange-traded funds (ETFs) and BlackRock’s pursuit of a spot Bitcoin ETF. Crypto experts expect a post-approval price range of $60,000 to $100,000. If approved, these ETFs could lead to a significant market surge. Institutions planning similar ETFs may advise their clients to allocate at least 1% of their portfolios to Bitcoin, which would potentially lead to a $156 billion influx into the crypto market, increasing Bitcoin’s market cap significantly. Cryptocurrency market participants await SEC approvals for direct Bitcoin ETFs by early January.
BTC +9.99% |
ETH +4.53% |
LTCUSD +3.58% |
XMRUSD +3.43% |
In the UK, inflation remained unexpectedly stable at an annual rate of 6.7% in September, mainly due to rising gasoline prices, while services inflation accelerated to 6.9%. Additionally, separate data for the three months through August revealed a 7.8% year-on-year increase in wage growth, excluding bonuses, close to a record high. Bank of England (BoE) Chief Economist Huw Pill said policymakers still needed to take action to ensure inflation returns to the 2% target ahead of this data release.
In the European Union, several European Central Bank (ECB) policymakers, including ECB President Christine Lagarde, Robert Holzmann of Austria, and Yannis Stournaras of Greece, raised concerns about the inflation risk brought on by the surge in oil prices due to the Middle East conflict. ECB Chief Economist Philip Lane mentioned to a Dutch newspaper that the central bank might need to wait until spring to have confidence in the return of inflation to the 2% target. Bundesbank President Joachim Nagel echoed Lane’s comments, emphasizing that price pressures remained elevated in the eurozone, with significant upside risks still present.
In the United States, Richmond Fed President Thomas Barkin, speaking at a real estate conference in Washington, expressed his reservations about weakening demand and the moderation of inflation. Fed Chair Jerome Powell’s remarks at the Economic Club of New York initially provided a boost to sentiment when he acknowledged a clear tightening of financial conditions. However, market sentiment receded after Powell stated that he saw no indications that the current Fed policy stance would lead to an economic recession.
The markets were further influenced by positive economic surprises, raising concerns about extended periods of elevated interest rates. The Commerce Department reported a 0.7% rise in retail sales for October, double consensus expectations, with particularly strong performance in online retail and food services, indicating ongoing discretionary spending strength. Nevertheless, retail sales rose just 3.8% last year, roughly in line with consumer inflation. The industrial sector showed weaker performance, with overall industrial production increasing by 0.3% in September but remaining relatively flat, up 0.8% year-on-year. The housing sector also demonstrated the impact of rising rates and labor supply constraints, with housing permits experiencing their sharpest 10-month decline, falling 4.4% this month, despite an unexpected increase in housing starts for September.
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