Market news – Week 2, April 2023

The US stock market surged for a third consecutive week as all 3 major indices — the S&P 500, Nasdaq, and Dow Jones — registered over 3% gains each.

Forex

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Continuing its upward movement, the EUR/USD pair closed the week at 1.0841 USD, despite some buoyancy observed in the USD as a result of favourable inflation data released on Friday, 31 March. The USD started the week under pressure due to the ongoing financial turmoil in the US banking system, but made a recovery as fears eased due to upbeat data releases.

The Core Personal Consumption Expenditures (PCE) Price Index — which is the US Federal Reserve’s (Fed) preferred gauge of inflation — was at 0.3% from January to February, down sharply from 0.6% in the previous monthly update. The inflation data has raised hopes of the Fed pausing its recent spate of interest rate hikes.

The British pound sterling outperformed the dollar for a third consecutive week and consolidated above the 1.2300 USD mark. It eventually closed the week at 1.2335 USD. Meanwhile, the USD/JPY pair retreated from its 2-week high and slid below 133.00 USD.

On the events front, the Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) data is scheduled for a Monday, 3 April, release, while the ISM Non-Manufacturing Index numbers will be out on Wednesday, 5 April. The all-important non-farm payrolls (NFP) data for March will be released on Friday, 7 April.

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Commodities

Gold prices remained within touching distance of the 2,000 USD mark, but couldn’t break through it and eventually closed the week at 1,969.17 USD — lower than the week prior.

The prices of the yellow metal have enjoyed a resurgence as investors flocked to the safety of gold over worries about the potential fallout from the failure of several banks in the United States and the problems at Credit Suisse in Switzerland. Those fears have now eased. The record fall in treasury yields also boosted demand for the precious commodity. However, the yields bounced back towards the end of last week, with the 10-year US Treasury yield up to 3.49% on Friday, 31 March — rising from 3.38% at the end of the week prior.

Oil prices marked a second consecutive week of gains, with prices up by over a dollar on Friday, 31 March. This comes on the back of factors including supply tightening in some parts of the world and easing of inflation in the United States.

Reduced supply of crude from the Kurdistan region of Iraq contributed to the gains, as well as the Organization of the Petroleum Exporting Countries (OPEC) appearing on course to stick to its Monday, 27 March, decision to cut production. Oil prices were also impacted by reduced inflation in the US, as this raised the prospect of the Fed halting its interest rate hikes. These developments point towards further surge in oil prices.

Cryptocurrencies

The cryptocurrency market appeared unaffected by the slew of regulatory enforcements being championed and administered over the last few weeks. Binance attracted regulatory action in the US, while cryptocurrency exchange firm Beaxy.com ceased operations after being charged by the Securities and Exchange Commission on Wednesday, 29 March.

Though the prices of digital assets have recovered since the start of 2023, trading volumes and liquidity in the market have dried up when measured over the past year. Even as an eye-catching upsurge in Bitcoin this year made it the best-performing asset in the first quarter, a widening US regulatory crackdown and the collapse of a few cryptocurrency-friendly banks have tempered investor enthusiasm.

Bitcoin, the world’s largest cryptocurrency, was trading at 28,202.50 USD at the time of writing. Meanwhile, Ethereum — the second-largest digital currency by market capitalisation — was trading at 1,795.37 USD. The size of the global cryptocurrencies market marginally increased from 1.15 trillion USD to 1.18 trillion USD during the week.

Meanwhile, in a latest episode of crackdown on the industry, the world’s biggest crypto exchange Binance and its CEO and founder Changpeng Zhao (commonly known as CZ) were sued by the US Commodity Futures Trading Commission (CFTC) on Monday, 27 March, claiming willful evasion of US law and allegedly breaching derivatives rules.

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US stocks

The resurgence in the US stock market continued for another week as all 3 major stock indices registered gains over 3% each. The S&P 500 rose the highest at 3.48% followed by Nasdaq at 3.25%. The Dow Jones was up by 3.2%.

Over the course of the first quarter of 2023, Nasdaq registered the biggest gains at 17% on the back of the strong performance by technology stocks — which constitute a large part of the index. In comparison, the S&P 500 — which saw a historic high in January — was up 0.75%. The Dow Jones was up by 0.9% for the quarter.

The stock performance has remained unhampered by the banking crisis that has gripped the United States over the last few weeks (however, those tensions have since eased). Experts predict that stocks will eventually take a hit if persisting fears of recession materialise.

The non-farm payrolls (NFP) data — which will be out on Friday, 7 April — will reveal the extent of the strength of the US labour market and will be a key gauge of the state of the American economy.

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