Market news – Week 2, March 2023

After their poor showing in the week prior, the US stocks indices rebounded last week with the Nasdaq rising the highest.

Forex

The EUR/USD pair experienced gains following weakness in the US dollar to close out the week at 1.0631 USD. The pair saw wide fluctuations over the course of the week before the euro rallied on Friday, 3 March, to register some gains.

Meanwhile, the GBP/USD pair also registered weekly gains, closing the week at 1.2045 USD; while the USD/JPY pair was down to 135.84 USD.

There is a strong likelihood of volatility in the US dollar this week with the US Federal Reserve chair Jerome Powell set to give a 2-day testimony to the US Senate (scheduled for Tuesday and Wednesday, 7–8 March), and the release of the non-farm payrolls (NFP) data on Friday, 10 February. The latter has been billed as the most highly-anticipated economic report of the week since it comes on the back of the January data that showed over half a million new job additions in the US economy and revealed the lowest unemployment level since 1969.

Among other reports, the US crude oil inventories and the jobless claims data are also due this week. While the former will be released on Wednesday, 8 March, the latter will be out a day later on Thursday, 9 March.

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Commodities

Gold prices saw a bullish revival last week after their recent bear run, rising on the back of the weakness in the US dollar — since gold is priced in US dollars, a depreciated currency makes it more affordable for international buyers — and strong economic data in China. The yellow metal closed out the week at 1,856.36 USD.

The risk of a likely increase in the US lending rates kept the precious metal prices from rising further. However, China is a major consumer of gold and its upbeat economic performance could see the prices of the yellow metal rise further.

Similarly, oil prices marked a recovery from their recent downturn and gained nearly 1 USD per barrel on Friday, 3 March, to close the week higher. The surge in crude prices was driven by optimism around demand from China, the world’s top oil importer. China’s services sector in February grew at its fastest pace in 6 months, while its manufacturing sector registered a stunning growth not seen since April 2012.

Meanwhile, following a Friday, 3 March, Wall Street Journal (WSJ) report about the United Arab Emirates (UAE) considering leaving the Organization of the Petroleum Exporting Countries (OPEC) and increasing oil production, prices fell more than 2 USD per barrier. However, the prices recovered after a Reuters report refuted the WSJ story. The UAE is OPEC's third-largest oil exporter after Saudi Arabia and Iraq.

Cryptocurrencies

Last week, the cryptocurrency industry was left reeling from the fallout of the troubles at cryptocurrency-friendly US bank Silvergate Capital as prices of digital tokens fell.

Following the November 2022 implosion at Futures Exchange (commonly known as FTX), which had been a large client of the bank, Silvergate saw nearly 70% of its digital-asset-related deposits leave its coffers in the fourth quarter of 2022. The bank, in a report to the Securities and Exchange Commission (SEC), stated that it would need to delay the filing of its annual report as it analysed the impact of several events on its business.

Bitcoin’s price on Friday, 3 March, marked a 2-week low for the cryptocurrency as investors digested the fallout from Silvergate Capital and evaluated its ability to stay in business. The digital token was trading at 22,436 USD at the time of writing, while Ethereum — the world’s second-largest cryptocurrency — was trading at 1,565 USD. The global cryptocurrency market capitalisation stood at 1.03 trillion USD on Sunday, 5 March.

Meanwhile, in a development that will likely boost the cryptocurrency space, payments firm Visa has said that it has no plans to slow down its cryptocurrency plans despite reports hinting otherwise amid a brutal bear market. Visa also filed new trademark applications in October last year, which hinted at its potential plans for a cryptocurrency wallet and a metaverse product.

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US stocks

*Net change and net change (%) are based on the weekly closing price change from Friday to Friday.

The 3 major US stock indices rebounded last week after their downturn the week before and registered substantial gains. The Nasdaq was the biggest gainer with a 2.58% rise. The S&P 500 was up 1.90%, while the Dow Jones registered a 1.74% upswing for the week. For the S&P 500, the latest result snapped a string of three weekly losses in a row.

The stocks were boosted by the positive developments in the US economy in February. The Institute for Supply Management (ISM) survey — which tracks economic activity across the US services sector — on Friday, 3 March, described companies as “mostly positive about business conditions”, and showed its highest reading since June 2022. Similar services sector expansion was reported on Friday in the Eurozone and China.

Out of the 11 equity sectors, only information technology managed to report a positive outcome in February. Meanwhile, the S&P 500, which registered a 6.2% rise in January, was down a staggering 17.2% from its record high on January 3, 2022.

As the fourth-quarter earnings season concluded, it revealed an average 4.9% decline in earnings in the S&P 500 companies. This marks the first quarterly decline since the third quarter of 2020. The energy sector was the strongest performer, with earnings growth of 57.0% in the latest quarter.

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