Daily Digest: Monday 8th April
USA
The US Dollar drove higher on Monday, propelled by analyst revisions to rate cut expectations, a narrative supported by JP Morgan CEO Jamie Dimon following the release of his end of year review of the current business environment. Rate cut expectations seem to have been pushed from a general consensus of June into July of this year. The move pushed investors toward the US Dollar, as foreign investors require the currency to purchase US bonds, which are likely to continue offering relatively high coupon rates through the start of Summer. As of 21:10 GMT, the USD was trading against the Euro at 1.0858.
In terms of equities, US indexes traded within narrow ranges, the prevailing trend being negative. The Nasdaq 100 ($NDX) led losses falling 0.05% to 18,100.19, followed by the S&P 500 ($SPX) which fell 0.04% to 5,202.39, and finally the Dow ($INDU) fell 0.03% to 38,892.80.
Big tech remained at the epicentre of equity market activity, with chip manufacturer Taiwan Semiconductors ($TSM) awarded a $6.6bn grant to support an expansion of operations in the state of Arizona. The firm has also been given provisional access to additional loan funding, taking the total cash pool above $10bn. TSM shares rose 1% through trading, reaching $142.78, as investors continue to back government initiatives aimed at boosting US microchip output and AI development.
A Monday rebound comes as a welcome relief for Tesla ($TSLA) investors, after the company closed Q1 as the worst performing company within the S&P 500s magnificent seven. Shares rose 4.90% to $172.98 following Elon Musk’s announcement that the firms ‘Robotaxi’ will be unveiled to the public in August of this year. The project utilises Tesla’s market leading self-driving technologies to run fully autonomous taxi services. Additionally, Musk moved to suggest that reports of the abandonment of an affordable, mass market EV were false, further supporting sentiment through the weekend.
Europe
European markets traded higher through Monday. The UK’s benchmark index, the FTSE 100 (FTSE) rose 0.41% to 7,943.47, with gains relatively evenly spread across constituents.
In mainland Europe, the STOXX (€SXXP) rose 0.47% to 508.93, while the German DAX (€GDAXI) rose 0.79% to 18,318.97, and French CAC (€FCHI) rose 0.72% to 8,119.30.
Rest of the World
The Nikkei 225 (¥N225) managed to trade higher through Monday, rising back above the 39,000 level, closing 0.91% up at 39,347.04. The index benefited from traders pricing in strong US employment data, while domestic stimuli didn’t seem to be at play. The Yen remains at the forefront of attention as it continued to trade down against the US Dollar, falling to ¥151.921 as of 13:21 GMT. The currency continues to edge closer to the psychologically significant ¥152 level, which will likely see Japanese officials attempting another verbal intervention shoring up Yen confidence. It is now just under three weeks until the next BOJ monetary policy decision on the 26th, which should exert some influence over currency markets, with a further rate hike benefiting holders of the Yen. In the meantime, equity traders should benefit from a depreciation of the Yen in two ways: Japanese domiciled equities become relatively less expensive for foreign investors, encouraging investment where fundamentals are strong. Additionally, a depreciation of the domestic currency should cause an increase in the economic activities of Japanese companies, as exports increase due to goods being comparatively cheaper for overseas buyers.
The Shanghai Stock Exchange Composite Index (¥SSE) tumbled 0.72% off the open, falling to 3,047.05. Meanwhile, the Indian Nifty 50 (₹NSEI) rose 0.68% to 22,666.30 as momentum trends upwards following a short consolidation last week.
Commodities
Crude Oil prices fell slightly off their opening level, trading at $86.65 per barrel as of 21:00 GMT, a 0.3% session decrease. Catalysts for activity remain largely the same as last week in terms of geopolitics, the focus remaining on tensions in the Middle East.
Gold prices were reactive through the morning session, driven down by widening expectations that the US may not enter the rate cut cycle during their June meet. This narrative was reinforced by JP Morgan’s Jamie Dimon, though a true picture should come to light on Wednesday as the US posts its CPI data for March. Despite the aforementioned downturn, gold prices had rise 0.52% to $2,357.70 per ounce as of 21:00 GMT.
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice