Wealth Wednesday
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Market Data
Local
Global
*Data as of 4pm WAT
Market News
Local
Global
Market Commentary:
Currencies/Macro:
The US dollar index fell by 0.4%, impacted initially by strong Eurozone service sector PMIs and subsequently by weaker US PMI figures. EUR/USD appreciated from 1.0639 to 1.0711.
In the US, PMIs were disappointing with the composite index at 50.9 (expected 52.0) and services at the same level, both down from previous figures. Manufacturing fell below the neutral 50 mark to 49.9. Employment reached its lowest since June 2020, and there was a notable moderation in prices paid and received.
The Richmond Fed manufacturing survey showed slight improvement to -7, with a softening in price pressures and wages. U.S. new home sales unexpectedly surged by 8.8%, significantly above forecasts.
Eurozone PMIs were robust, with the composite index climbing to 51.4 and services reaching 52.9, both exceeding expectations and indicating ongoing economic recovery. However, manufacturing remained in contraction at 45.6.
UK PMIs also strengthened, with the composite at 54.0 and services at 54.9, both ahead of estimates and showing continued expansion in the services sector, though manufacturing dipped to 48.7.
The Bank of England’s Chief Economist highlighted ongoing concerns about inflation, suggesting more work is needed to anchor inflation expectations firmly.
Interest Rates:
The US 2-year Treasury yield decreased from 5.00% to 4.91%, and the 10-year Treasury yield dropped from 4.65% to 4.57%.
Market expectations are for the Fed funds rate, currently at 5.375% (mid), to remain unchanged at the upcoming meeting on May 2, with a 75% likelihood of a rate cut by September.
Commodities:
Crude markets were buoyed by several factors, including a decline of 3.23 million barrels in US crude inventories last week, as reported by API, and a rally in US equity markets accompanied by a weakening US dollar. The June WTI contract rose by 1.78% to $83.36, while the June Brent contract increased by 1.7% to $88.48.
Market attention is also on the legislative progress in the US, with the Ukraine and Israel support bill, which aims to expand sanctions on Iran’s crude exports, passing a procedural vote. The bill will move to a full Senate vote on Wednesday.
In the gas sector, Shell and TotalEnergies are among the companies reportedly negotiating to acquire stakes in Abu Dhabi National Oil Co’s upcoming LNG export project, with a potential final investment decision expected soon.
European gas prices dropped 3% due to weak demand and improved weather conditions, despite news of a leak at the Hammerfest gas facility in Norway. Traders seemed to disregard this incident in their broader market assessments.
Investment Tip of The Day
Maintain a balance between growth-oriented and income-generating investments to create a diversified portfolio that can perform well in various market conditions. Growth investments can offer higher returns through capital appreciation, while income-generating assets provide regular earnings, such as dividends or interest. This balance can help stabilize your portfolio's performance over time, reducing risk and providing steady income streams.