Daily Digest: Friday 29th March
USA
US markets were closed as the nation observes the Easter break, with trading resuming on Monday.
Though markets were shut, economic releases continued through Friday, the key data print being February’s Personal Consumption Expenditure. The PCE price index is the FEDs preferred inflation monitoring tool, indicating the health of consumer spending across all aspects of the economy, encompassing both goods and services. As noted last month, PCE increases imply higher levels of disposable income, alongside rising consumer confidence. February figures showed a 0.3% rise in US PCE, falling in line with analyst expectations. This made Fed Chair Powell’s afternoon address somewhat easier, stating the monetary policy committee while remaining cautious, is receiving the additional confirmations needed to consider initiating the cutting cycle.
Europe
Markets across Europe were also shut through Friday, with trading resuming next Tuesday.
Rest of the World
As mentioned yesterday, Tokyo Area CPI figures were released on Thursday evening. The print is a key leading economic indicator for Japanese economists, measuring CPI across the nations most populous city. The Tokyo Area CPI figures for the month of March came in at 2.4%, in line with analyst expectations, marking a 0.1 percentage point decrease from February’s 2.5% print. This suggests that while price inflation remains positive, it is still 0.4 percentage points above the BOJ target level of 2%. As inflation persists at a higher than target level, the likelihood of future hikes is increased.
Amplified discourse around the direction of future monetary policy should theoretically yield some much needed relief for the Japanese Yen, though other FX price influences shouldn’t be ignored. The currency has been centre point of FX news of late, as prices broke new 30-year lows earlier this week, currently trading against the US Dollar at ¥151.299 as of 17:40 GMT. If the rate hike cycle continues, demand for Japanese bonds will rise, as the coupon rate offered to investors increases. In order for foreign investors to benefit from higher domestic rates, they must convert their foreign currencies to the domestic currency, increasing currency demand and strengthening prices.
The benchmark Japanese equity index, the Nikkei 225 (¥N225) managed to stem Thursday’s losses, rising 0.5% to 40,369.44, as traders exercised support at the 40,250-40,300 level at least four times during the session.
In China, positive momentum on the Shanghai Stock Exchange Composite Index (¥SSE) continued, closing 1.01% up at 3,041.17. Meanwhile, the Indian Nifty 50 (₹NSEI) rose 0.92% to 22,326.9, marking a third consecutive session of gains, as trader convictions strengthen, with the index just shy of its all-time highs.
Cryptocurrencies
Cryptocurrency trading slowed slightly through Friday, though crypto markets don’t observe traditional holidays with trading available 24/7, meaning sentiment may change over the weekend. The total cryptocurrency market capitalisation fell to $2.63 trillion from $2.66 trillion 24 hours prior. In terms of individual activity Bitcoin prices fell 1.5% to $69,615.59, while Ethereum lost 1.75% falling to $3,497.85.
Doge also undertook a period of consolidation after yesterday’s rise, falling around 3.36% in the last 24 hours, as traders lock in profits and retest strategies.
Commodities
Like equities, commodity markets were closed on Friday. Crude prices closed on Thursday 0.07% down at $83.11, while Gold closed 0.73% up at $2,254.80. When Gold trading resumes next week, February's US PCE release should be of significant influence, signalling a somewhat optimistic picture, suggesting the Fed may be closer to easing monetary policy at its next meet.
What to watch
Chinese Manufacturing PMI (Sunday 31st March)
US ISM Manufacturing PMI (Monday 1st April)
Japanese Final Manufacturing PMI (Monday 1st April)
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