There were a number of significant developments in the markets this week, including surprising inflation readings, declines in the cryptocurrency market and hopes for China's industry, which posted its best performance in more than a decade. In addition, many other events took place in the financial markets. What else could we have learned?
Macroeconomic data
We began our macroeconomic data with Monday's reading of home sales under construction for January in the United States, which rose by as much as 8.1% m/m. (1% m/m was expected). This is the highest reading since September 2020. Could this mean that, despite high interest rates, the property market is starting to recover for this economy?
We started Tuesday with the publication of the US CB Consumer Confidence index. The reading fell short of expectations, coming in at 102.9 (108.5 was expected). On the same day, we learned about the PMI Industrial Sentiment Index for the Chinese economy, which positively beat expectations, coming in at 52.6 (50.5 was expected). This is the highest reading for this economy in more than 10 years! The ChinaH index rose by almost 5% this week.
Source: Conotoxia MT5, CHINAH, Daily
Wednesday brought us data from Germany, such as the PMI industrial business sentiment index, which came in at 46.3 points (46.5 points were expected). In addition, we learned about the CPI inflation reading for February, which came in at 8.7% (8.7% was expected). However, it appears that despite further interest rate increases in the euro area, inflation does not want to fall. The US manufacturing PMI came in slightly worse than analysts' consensus, at 47.7 points (48 points expected).
Thursday seemed to be crucial for this week. First, we had a look at inflation in the euro area, which, like inflation in Germany, surprised negatively. It turned out to be higher than expected at 8.5% (8.2% was expected). On the same day, we learnt the reading of new claims for unemployment benefits in the United States, which came in at 190,000 (195,000 was expected). It seems that the labour market remains as strong as ever for this economy.
The stock market
A large proportion of sectors ended the week on declines. The largest declines of at least 2% included the utilities sector and the retail services sector. The largest increases of 3.4% came from the materials sector. In second place was the industrial companies sector with an increase of 1.66%.
Source: https://www.sectorspdr.com/sectorspdr/tools/sector-tracker
The companies that had the biggest changes during the week were Tesla's (Tesla) shares down more than 5%, the shares of online short-term rental platform Booking.com (Booking) up more than 6%, or rail holding company Union Pacific Corporation, which rose almost 10%.
Source: https://finviz.com/map.ashx?t=sec&st=w1
Currency and cryptocurrency market
The US dollar has been weakening in the foreign exchange market against other currencies, with the EUR/USD pair rising by 0.6%. This may be linked to expectations of an interest rate increase in the euro area due to higher-than-expected inflation. The only one of the major pairs to rise during the week is the New Zealand dollar pair against the US dollar.
Source: Conotoxia MT5, EURUSD, Daily
At the end of the week we saw declines in the cryptocurrency market. The price of bitcoin fell by almost 4% during the week. It seems that this may be related to the so-called Silvergate, the bank that disconnected the ability to make transfers for one of the largest cryptocurrency exchanges Coinbase. Additionally, as is the case every week, investors can look forward to an influx of fresh funds into this market, which could be measured by, among other things, stablecoin capitalisation, which is down by as much as 2.1% m/m.
Source: Conotoxia MT5, BTCUSD, Daily
Grzegorz Dróżdż, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
