Daily Digest: Tuesday 19th March
USA
As the FOMC rate decision edges closer, US indexes traded up, the Dow ($INDU) led gains rising 0.83% to 39,110.76, followed by the S&P 500 ($SPX) rising 0.56% to 5,178.51, and Nasdaq 100 ($NDX) rising 0.26% to 18,032.21.
As expected Nvidia ($NVDA) announced the release of their newest generative AI focussed GPU codenamed 'Blackwell’ during the first night of their Annual General Conference. After a negative start, shares closed up 1.07%, with traders once again taking focus on the $900 per share level. The release of Nvidia’s latest innovation should help maintain the firms competitive advantage through 2024, supporting strong revenue growth and profit performances. On the theme of big tech and AI, Apple ($AAPL) shares continued to trade higher, rising a further 1.36% following yesterdays announcement of a potential AI partnership with Alphabets ($GOOGL) Gemini program.
Europe
The FTSE 100 (FTSE) managed to erase yesterday’s losses rising 0.19% to 7,737.35 ahead of Wednesday’s CPI print, YoY CPI is expected to come in around 3.5%, 0.5 percentage points lower than the last print. A decline in CPI supports calls for BOE rate cuts through the second half of the year, in the long run benefitting UK equity performance.
There was very little in the way of domestic macro catalysts for Central European markets through the day. The STOXX 600 (€SXXP) rose 0.26% to 505.27, as the index eyes last weeks highs, meanwhile the DAX (€GDAXI) rose 0.31% to 17,988.13, and the CAC (€FCHI) rose 0.65% to 8,201.05.
Rest of the World
The Bank of Japan has ended their 17 year negative rate and yield curve control experiment, hiking rates 0.1%, to a range of 0-0.1%. This pivot comes as the country began experiencing inflationary pressures accompanied by higher wage growth, as it exited deflation. A change of rates pushed the Nikkei (¥N225) 0.66% higher, with the index now trading at 40,003.60, having broken the 40k level for the first time since March 8th. By 4pm GMT the Japanese Yen had fallen over 1% against the dollar approaching the ¥151 level. Rising inflationary pressures across the nation don’t seem to have hampered equity performance, as markets appear to show confidence in the BOJs ability to address inflation, leveraging an arsenal of proven tools. Poor Japanese Yen performance can, in part, be attributed to a strengthening of the US dollar, driven by rising speculation over the direction of US rates, as traders await Wednesday’s Fed decision. If US rates are held constant, US bonds will remain favourable for foreign investors. Therefore, instead of turning to Japanese bonds, whose yields have only marginally increased, they will continue to purchase US treasuries.
Despite trading off the back of a strengthening economic outlook, the Shanghai Stock Exchange Composite Index (¥SSE) fell 0.72% through Tuesday, closing at 3,062.76.
Cryptocurrencies
Cryptocurrencies continued to slide through the day, as total market capitalisation fell to $2.41 trillion from highs of $2.77t last week. Bitcoin led declines, falling 5.3% to $63,810.80, while Ethereum fell 6.78% and the third largest untethered altcoin Binance Coin (BNB) fell 6.39%.
Crypto Stocks
Despite announcing the purchase of a further 9,245 Bitcoin at an average price of $67,382, MicroStrategy ($MSTR) shares extended declines. Prices fell a further 5.67% after yesterday’s 15% decline, with prices now standing at $1,417.50, down from highs of $1,782 last week. Investor jitters seem to stem from a decline in cryptocurrency prices, though this remains somewhat unsubstantiated as the average purchase price of MicroStrategy’s holdings remain around $35,160 per coin.
Shares in US domiciled cryptocurrency exchange Coinbase Global Inc ($COIN) fell 3.96%, once again mirroring declines in cryptocurrency pricing. However, Coinbase revenues should remain strong as trading volume remains high, with the firm benefiting from both buy and sell-side action.
Commodities
Crude prices continued to rally, rising 0.54% to $83.17 , the first time it has surpassed this level since November of last year. US weekly Crude inventories release tomorrow with analysts expecting a further drawdown which should support upward momentum.
Gold prices lacked any real direction for the second session running as prices fell 0.16% to $2,160.80 per ounce. Hesitation comes as traders await the US FOMC rates decision, gold traders would favour rate cuts, however the general consensus amongst analysts for tomorrow is a hold of current rates.
What to watch
UK CPI YoY
ECB’s Lagarde Press Conference
US Fed Funds Rate Decision
US Crude Inventories
Earnings:
Micron ($MU)
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/
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