Finance Friday
Ranora Daily - Your daily source for reliable market analysis and news.
HAPPY INTERNATIONAL WOMENS DAY!!!
Market Data
Local
Global
*Data as of 4pm WAT
Market News
Local
Global
Biden to propose new $5,000 tax credit for first-time home buyers
Weekly jobless claims unchanged; trade deficit widens in January
Meta is building a giant AI model to power its ‘entire video ecosystem,’ exec says
Global banking watchdog cracks down on big lenders gaming capital rules
U.S. bank profits drop 44% in Q4 as big firms cover failed bank costs
Market Commentary:
Currencies/Macro:
The US dollar experienced a decline against all major G10 currencies. The EUR/USD initially dropped after the European Central Bank's (ECB) announcement but rebounded from 1.0868 to 1.0949, marking a two-month peak. The GBP/USD appreciated by 80 pips or 0.6% to 1.2810, its highest level since 28 December. Meanwhile, the USD/JPY decreased by 135 pips to 148.05.
The ECB maintained its policy settings, with the deposit rate staying at 4.0%, aligning with widespread expectations. The ECB's statement recognized the decrease in inflation, adjusting its projections to forecast an average inflation rate of 2.3% for this year and 2.0% by 2025. However, it also highlighted persistent domestic price pressures, notably from wage growth. ECB President Christine Lagarde clarified in the press conference that rate cuts were not considered, emphasizing the need for further data before any policy adjustments. She indicated that June might provide a clearer opportunity for reassessment rather than April.
In the US, Federal Reserve Chair Jerome Powell reiterated his previous message during his second testimony of the week, this time before the Senate Banking Committee, suggesting the Fed is nearing the point where it might feel confident to commence easing. Cleveland Fed President Loretta Mester echoed Powell's sentiments, stating that the current policy stance is appropriate but opening the possibility for easing later in the year if economic trends align with expectations.
The latest US jobless claims data showed initial claims at 217,000, closely matching the consensus forecast of 216,000. However, continuing claims increased slightly to 1.906 million, exceeding the expected 1.880 million and the previous figure of 1.898 million.
Interest Rates:
The yield on the US 2-year Treasury note declined from 4.56% to 4.51%, while the 10-year yield decreased to 4.05% before stabilizing at around 4.09%, marking a net change of -1 basis point. Market expectations for the Federal Reserve's funds rate, set at 5.375%, forecast no change for the upcoming meeting on 20 March, but there is an 85% probability of an interest rate cut by June.
In the credit markets, indices continued their trend of tightening, with the Main index improving by half a basis point to 52.5 and the CDX index also tightening by half a basis point, now nearing the 50 mark. U.S. investment-grade (IG) cash credit remained relatively stable, showing a flat to one basis point improvement as issuance persisted in the U.S., contrasting with Europe, where issuance tapered off in anticipation of the European Central Bank's meeting. In the U.S., seven issuers accessed the market, pricing a total of USD 7.6 billion.
Commodities:
Despite a notable decrease in the US dollar and a more favorable risk sentiment influenced by Federal Reserve Chair Jerome Powell's comments suggesting interest rates could be cut soon, crude oil prices did not find significant support. The April West Texas Intermediate (WTI) contract dropped by 0.25% to $78.93, while the May Brent contract remained stable at $82.97. The continuous decline in gasoline inventories over five weeks has resulted in the lowest stock levels since November 2022, with diesel inventories hitting their lowest point since March 2022. However, refined fuels saw better performance, with April heating oil increasing by 1.24% and New York April gasoline rising by 11% over the past week. A recent Houthi attack on the bulk commodity carrier True Confidence, which resulted in two crew fatalities, prompted the International Transport Workers Union to advocate for rerouting ships around the Cape of Good Hope to ensure safe passage through the Red Sea. JP Morgan predicted that Russia would adhere to its new OPEC+ production cuts but expressed skepticism about Russia's commitment to reducing exports. The firm anticipates Brent could reach $88 to $90 in April, reflecting tighter Q2 balances. Meanwhile, China's crude oil imports demonstrated stability in January and February, with a 5% year-on-year increase, and coal and natural gas imports also saw significant rises. The US Department of Energy is soliciting bids for up to 3 million barrels for the Strategic Petroleum Reserve, with deliveries scheduled for September. Total has initiated the process of restarting its Donges refinery, which had been offline since February 20 due to technical issues, contributing to the tight supply of processed fuels in Europe.
In the metals market, the positive risk sentiment led to price increases, with copper rising by 0.75% to $8,641, aluminum up by the same percentage to $2,252, nickel increasing by 1% to $17,890, and zinc by 1.4% to $2,529. Chinese imports of copper ore and concentrates remained consistent with last year's figures during January and February. The China Nonferrous Metals Industry Association convened a meeting of at least 15 copper smelters in Beijing to address the drop in processing fees, with discussions anticipated regarding coordinated production cuts.
Iron ore prices managed to maintain levels above $115, despite Yunnan province's plans to reduce steel output in response to subdued demand. The April SGX iron ore contract slightly decreased by 10 cents to $115.75, while the 62% Mysteel index rose by $1.45 to $118.45. Steel production cuts in Yunnan are being implemented due to significant losses experienced by mills, with steel demand reportedly weaker than expected following the Lunar New Year holiday.
Investment Tip of The Day
Utilize financial planning tools and software to track your investments, budget, and financial goals. These tools can provide valuable insights and analytics, helping you to make informed decisions, identify trends, and adjust your strategies proactively. Effective use of technology can streamline your wealth management process and optimize your financial planning.