Economic Indicators & Central Banks:
- Risk appetite boosts Bitcoin and Gold to new record highs – boosted by expectations for US rate cuts, geopolitical tensions & the risk of a pullback in equity markets.
- The remarkable ascent of Bitcoin, which has already seen a 55% surge year-to-date, has been fueled by investors’ increased allocation of funds into US spot ETF products. Additionally, the prospect of global interest rate decreases has contributed to the rally.
- On Tuesday, Treasury yields corrected lower, while the weaker ISM data encouraged profit taking, especially with stretched valuations and growing uncertainty over the FOMC’s stance ahead of Chair Powell’s Humphrey Hawkins testimony.
- US equities futures and European contracts edged higher ahead of Federal Reserve Chair Jerome Powell’s testimony.
- Attention turns now to labor market data on JOLTS and ADP today, Jobless claims Thursday, and NonFarm Payrolls Friday. It could be difficult to assess whether the boost is just a give-back or a real indicator of easing in tight labor market conditions.
Market Trends:
- The NASDAQ (US100) dropped -1.65% as the AI rally takes a breather. The S&P500 (US500) was down -1.02%. The Dow (US30) declined -1.04%. Weakness in the broad index was broadbased, though Target was a big winner after an earnings beat.
- The Hang Seng rebounded thanks to gains in Chinese tech giant Alibaba Group Holding Ltd and Tencent Holdings Ltd, and the Hong Kong index is currently up 1.9%.
- The Nikkei (JPN225) corrected slightly, however, and the CSI300 couldn’t sustain yesterday’s rally and is down -0.4%.
- DAX (GER40) and US futures are in the red, as the focus turns to Fed Chair Powell’s congressional testimony.
Financial Markets Performance:
- The USDIndex retests 2-week support at 103.50.
- The Yen strengthened against the US Dollar, while the GBP boosted higher ahead of Britain’s budget announcement. The EUR retests yesterday’s highs ahead of the European Central Bank’s policy decision, with investors keen on any indications of future rate adjustments amidst persistent inflationary pressures.
- Bitcoin experienced a 5% jump, reaching an intraday peak of $66,540 amidst volatile market conditions, closely trailing Tuesday’s record peak of $69,202. The funds into US spot ETF crypto products and the possibility of a global decline in interest rates have added fuel to the rally.
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Andria Pichidi
Market Analyst
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