Stock Markets

Stocks are moving toward record highs albeit on light volumes, The 30-stock Dow Jones Industrial Average (DJIA) climbed by 2.16% for the week while the Dow Jones Total Stock Market advanced by 1.77%. The broad-based S&P 500 Index added 1.85% where midcaps climbed farther than small caps. Meanwhile, the technology-tracking Nasdaq Stock Market Composite gained by 1.14%, the NYSE Composite rose by 2.05%, and the Russell 1000, 2000, and 3,000 indexes all saw gains. The CBOE Volatility Index (VIX), which measures investor risk perception, declined by 6.97%. The quiet trading week found little impetus in a generally light economic calendar, although certain individual stocks moved in reaction to first-quarter earnings releases.

Corporate profits remain one of the most important determinants of long-term market returns. Last week, the S&P 500 extended its gains for the month and is now less than 1% off its record high. Over the past three weeks, the rebound was driven by a better-than-expected earnings season. Now the first-quarter earnings season is coming to an end, which signifies that the market will once more look to inflation data and Fed policies. Inflation and possible rate cuts by the Federal Reserve will continue to dominate the narrative across financial markets as participants continue to address a “higher-for-longer” interest rate environment.

U.S. Economy

Economic news was generally light throughout the week, except for the weekly jobless claims that were higher than expected and caused a market reaction. In the week ended the previous Wednesday, 231,000 claimed unemployment benefits, the highest level since August. In addition, continuing claims rose to 1.79 million, breaking a four-week downward streak. These developments were taken by investors and analysts as signs that the broader economy might be cooling. Friday appears to have brought confirmation of this. The University of Michigan reported that its preliminary index of consumer sentiment in May fell unexpectedly to 67.4, down from a final reading of 77.2 in April. This marks the indicator’s lowest level in six months. The survey’s chief researcher noted, “While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions.” The report surmised that consumers expressed concerns that unemployment, inflation, and interest rates were moving in an unfavorable direction in the year ahead.

Metals and Mining

The gold market saw a robust performance this week, which was mostly perceived by fund managers and market analysts as the continuation of official sector demand that may significantly dominate the marketplace for the foreseeable future. Emerging market central banks have been setting a record pace by purchasing more than 2,000 tons of gold in the last two years. Unlike developed market central banks, the emerging market economies have felt the need to diversify their sovereign debt holdings and exposure to the U.S. dollar. However, the buying pressure is not felt solely among central banks. According to the World Gold Council’s monthly central bank data, the State Oil Fund of the Republic of Azerbaijan bought three tons of gold over the first quarter of 2024. This is a revelation that sovereign wealth funds and other non-traditional players may drive demand in the gold market, which may have a significant impact on the price of the precious metal.

Spot prices of precious metals were firmly up for the week. Gold gained 2.55% over its close last week at $2,301.74 to end the week at $2,360.50 per troy ounce. Silver advanced by 6.10% from last week’s close at $26.56 to rest at this week’s closing price of $28.18 per troy ounce. Platinum registered a 4.20% gain to close this week at $997.63 per troy ounce from last week’s close at $957.44. Palladium ended the week higher by 3.76% from its close last week at $944.49 to its close this week at $980.03 per troy ounce. The three-month LME prices of industrial metals also did well in this week’s trading. Copper, which closed at $9,910.00 per metric ton this week, rose to $10,004.00 for a 0.95% gain. Aluminum, which ended at $2,551.50 last week, was last traded at $2,529.50 per metric ton this week, for a slight decline of 0.86%. Zinc, last priced at $2,903.00 a week ago, gained 0.95% this week to end at $2,930.50 per metric ton. Tin gained by 0.34% from its closing price last week at $31,983.00 to end this week at $32,093.00 per metric ton.

Energy and Oil

After several weeks of decline, oil prices are one more gaining upward traction. Some bullish sentiment is resulting from falling U.S. crude inventories and robust Chinese imports. China’s oil imports have climbed year-over-year to approximately 10.88 million barrels per day last month. This is a 5.5% increase compared to April 2023, with refinery activity boosted by improving manufacturing activity as well as high-flying activity during the Labour Day holiday. Since early April, Brent futures are poised to register their first weekly gain and are moving closer to $85 per barrel. This trend is further strengthened by Israel’s Rafah operation and the easing of the U.S. labor market where jobless claims were the highest in eight months.

Natural Gas

For the report week from Wednesday, May 1 to Wednesday, May 8, 2024, the Henry Hub spot price rose by $0.38 from $1.63 per million British thermal units (MMBtu) to $2.01/MMBtu. Regarding the Henry Hub futures, the price of the June 2024 NYMEX contract increased by $0.255, from $1.932/MMBtu at the start of the report week to $2.187/MMBtu by the week’s end. The price of the 12-month strip averaging June 2024 through May 2025 futures contracts rose by $0.087 to $2.967/MMBtu.

International natural gas futures prices rose during this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.16 to a weekly average of $10.46/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.70 to a weekly average of $9.77/MMBtu. In the week last year corresponding to this week (from May 3 to May 10, 2023), the prices were $11.28/MMBtu in East Asia and $11.61/MMBtu at the TTF.

World Markets

European equities gained positive territory over this trading week. The pan-European STOXX Europe 600 Index advanced by 3.01% higher in local currency terms, on better-than-expected corporate earnings. Also, a driving factor was increased optimism that major central banks would soon start cutting interest rates. Major stock indexes likewise surged. Italy’s FTSE MIB climbed by 3.06%, France’s CAC 40 Index added 3.29%, and Germany’s DAX advanced by 4.28%. The UK’s FTSE 100 Index gained 2.68% to a new record high. The UK economy expanded by 0.6%, much stronger than expected, in the first quarter of 2024. It technically exited the recession that began in the second half of 2023, according to a first estimate from the Office for National Statistics or ONS. The growth was supported by increases in production and an expansion in services. Furthermore, the Bank of England signaled that it is considering cutting interest rates in June. According to economists, a decision to lower borrowing costs in June is likely as long as the labor market and services inflation data in the next two months do not surprise significantly on the upside.

Japan’s equities suffered marginal losses, on the back of hints by Bank of Japan (BoJ) Governor Kazuo Ueda that the central bank could raise interest rates early. Japan’s Nikkei 225 Index and the broader TOPIX Index closed slightly lower this week over last week’s close. The BoJ may raise interest rates should there emerge upside risks to the price outlook, given that inflation may have become more susceptible to the effects of weakness in the yen. At present, U.S.-Japan interest rate differentials remain very high, prompting some observers to believe in the likelihood of another interest rate hike to support sustainable yen appreciation. Over the week, the yen fell to a high-JPY157 range versus the U.S. dollar, from a previous JPY 153. This was despite a common observation among market participants that authorities had recently intervened on two occasions in the foreign exchange markets to prop up the yen, as suggested by the accounts of the BoJ. The yield on the 10-year Japanese government bond closed the week broadly unchanged close to a six-month high at approximately 0.9%. Participants in BoJ’s April meeting were shown to be turning extremely hawkish. However, signs of weakness in economic data may delay these possible rate hikes. For instance, real (adjusted for inflation) wages fell 2.5% in March year-on-year, worse than the 1.8% drop in February.

China’s stock markets registered gains for the week, buoyed by hopes of economic recovery following holiday spending during the previous week’s Labor Day holiday. The Shanghai Composite Index advanced by 1.6% while the blue-chip CSI 300 rose by 1.72%. The Hong Kong benchmark Hang Seng Index shot up by 2.64%. Tourism revenue over the five-day holiday increased by 7.6% compared to the 2023 holiday and surpassed pre-pandemic levels, as shown by data from the Ministry of Culture and Tourism. Domestic revenue was also higher this year by 12.7%, and international trips picked up as well. Box-office sales were registered at RMB 1.53 billion which is approximately the same as last year. However, average spending per traveler declined by 11.5% from 2019, indicative of consumers remaining cautious about spending. Regarding trade, China’s exports rose by 1.5% in April from a year ago, higher than the 7.5% decline in March. While European shipments fell, exports to Southeast Asian nations improved, and sales to the U.S. remained roughly the same. Imports advanced by 8.4% in April which is better-than-expected, reversing the 1.9% decline in March. These importation changes were attributed by analysts to increased raw materials shipments rather than improved consumer demand. The overall trade surplus increased from $58.55 billion in March to $72.35 billion in April.  

The Week Ahead

Included among the important economic reports scheduled for release this week are CPI and PPI inflation results, retail sales data, and business inventories for March.

Key Topics to Watch

• Fed Vice Chair Philip Jefferson and Cleveland Fed President Loretta Mester together on panel (May 13)
• Producer price index for April
• PPI year-over-year
• Core PPI for April
• Core PPI year-over-year
• Fed Gov. Lisa Cook speaks (May 14)
• Fed Chair Jerome Powell speaks (May 14)
• Consumer price index for April
• CPI year-over-year
• Core CPI for April
• Core CPI year-over-year
• U.S. retail sales for April
• Retail sales minus autos for April
• Empire State manufacturing survey for May
• Home builder confidence index for May
• Business inventories for March
• Minneapolis Fed President Neel Kashkari speaks (May 15)
• Fed Gov. Michelle Bowman speaks (May 15)
• Initial jobless claims for May 11
• Philadelphia Fed manufacturing survey for May
• Housing starts for April
• Building permits for April
• Import price index for April
• Import price index minus fuel for April
• Industrial production for April
• Capacity utilization for April
• New York Fed President Williams speaks (April 16)
• Fed Vice Chair for Supervision Michael Barr testifies (April 16)
• Cleveland Fed President Loretta Mester speaks (April 16)
• Atlanta Fed President Raphael Bostic speaks (April 16)
• U.S. leading economic indicators for April
• Fed Governor Christopher Waller speaks (April 17)

Markets Index Wrap-Up

Stock Markets

Major indexes have all registered gains for the week as they continue their uptrend after a brief period of consolidation. The 30-stock Dow Jones Industrial Average (DJIA) added 1.14% while its Total Stock Market Index rose by 0.63%. The broad S&P 500 Index climbed by 0.55% with Midcap 400, Small Cap 600, and Super Composite 1500 chalking gains of 1.17%, 1.36%, and 0.60% respectively. The technology-heavy Nasdaq Stock Market Composite advanced by 1.43%, while the Russell 1000, 2000, and 3000 indexes all ended higher for the week, indicating that gains were broad among equities. The CBOE Volatility Index (VIX), an indicator of risk perception among investors, was down by 10.25% signifying growing optimism.

While the indexes ended generally higher, the trading week was volatile and featured a raft of economic and earnings data. The week was busy with first-quarter earnings reports, although a rebound in overall sentiment on the last trading day appeared to have been driven by a spillover positive reception to Apple’s earnings release after trading closed on Thursday. The company beat consensus revenue estimations, however, investors were further energized by Apple’s announcement that it would buy back USD 110 billion of its shares, the largest such repurchase in history.

U.S. Economy

Last week, the Federal Reserve held interest rates steady since inflation readings for 2024 reveal that growing inflation has not yet been solved. The Fed noted that conditions are not improving at a pace that supports a policy change anytime soon. Analysts feel that while the next Fed action will be to cut rates, it may occur much later in the year, or possibly in the next year. Another defining factor last week was news of developments in the labor market. Early in the week, labor cost data sparked concerns that inflation may prevail for a longer period. The Labor Department reported that employment costs rose by 1.2% in the first quarter, or at an annualized rate of nearly 5%, which was the fastest pace in a year and well above expectations. A separate report revealed that home prices rose in February at their fastest pace in eight months. Both reports contributed to a sharp fall in stock prices on Tuesday.

However, later in the week, the jobs report came in cooler than expected and allayed inflation worries while signaling employment conditions that remain supportive for consumers. The main driver of the end-of-week rally appears to be the nonfarm payrolls report released on Friday morning. It showed that employers added 175,000 jobs in April, which is the lowest number since November and less than consensus estimates. The lower figure may buoy optimism as it may be a sign that economic activity is cooling down and lowering inflation may soon follow. The report also indicated a surprise slowdown in monthly wage increases, from 0.3% in March to 0.2% in April. The year-over-year gain in wages slid to 3.9%, the slowest pace in almost two years. The unemployment rate climbed slightly to 3.9% while the average weekly hours worked also slowed modestly.

Metals and Mining

In what may be signs of a possibly fatigued market, traders took advantage of the recent rally to realize some profits and wait for further consolidation. The gold market manages to hold support above $2,300 per ounce, however, it closes this week with a slight loss. There is every indication that gold continues to consolidate after its massive $400 rally as sentiment normalizes. Focus once more shifts towards actions the Federal Reserve may take in its monetary policy and interest rates. Before the disappointing employment figures released last Friday, the Fed already signaled that it will not be reversing interest rates soon; this will limit the upside to the gold market in the short term. The consolidation period is not, however, entirely disadvantageous. It allows investors the chance to establish tactical positions at lower prices and avoid chasing the market when the rally resumes. Some major banks see the gold challenging new ceilings within the year. Goldman Sachs, for instance, sees prices rallying to $2,700 before the year ends.

The spot prices of precious metals ended the week mixed. Gold closed the week at $2,301.74 per troy ounce, down by 1.55% from its close last week at $2,337.96. Silver ended the week at $26.56 per troy ounce, lower from its close last week at $27.21 by 2.39%.        Platinum ended the week 4.41% higher than last week’s close at $917.04 to close this week at $957.44 per troy ounce.      Palladium came down by 1.43% from its closing price of $958.15 last week to end at $944.49 per troy ounce this week. Also closing mixed for the week were the three-month LME prices for industrial metals. Copper ended this week at $9,910.00 per metric ton, down by 0.56% from last week’s closing price of $9,965.50. Aluminum closed this week at $2,551.50 per metric ton, lower than last week’s closing price of $2,569.50 by 0.70%. Zinc ended the week at $2,903.00 per metric ton, which is higher than last week’s close at $2,844.00 by 2.07%. Tin, which closed last week at $32,411.00, last traded this week at $31,983.00 per metric ton, lower by 1.32%.

Energy and Oil

A notable drop in oil prices has been triggered by the disappointing money markets with more hotter-than-expected U.S. inflation data. The prognosis is aggravated by higher crude inventories and slackening geopolitical risk. For instance, on the heels of U.S. sanctions, demand for Venezuela’s heavy barrels cut this country’s oil exports by a whopping 38% month-over-month to a mere $545,000 barrels per day, prompting at least six VLCCs to leave Venezuela empty in recent weeks. Despite these factors, both WTI and Brent prices fell by more than $5 per barrel since last week. Neither was the sentiment boosted by falling middle distillate and gasoline cracks. It seems that only a high-impact supply distribution would be capable of breaking the bearish streak currently prevailing in the oil market.

Natural Gas

For the report week from Wednesday, April 24, to Wednesday, May 1, 2024, the Henry Hub spot price rose by $0.04 from $1.59 per million British thermal units (MMBtu) to $1.63/MMBtu. Regarding Henry Hub futures, the May 2024 NYMEX contract expired on Friday at $1.614/MMBtu, down by $0.04 from the beginning of the report week. The June 2024 NYMEX contract price descended to $1.932/MMBtu, down by $0.05 from the beginning to the end of the report week. The price of the 12-month strip averaging June 2024 through May 2025 futures contracts declined by $0.05 to $2.880/MMBtu.

International natural gas futures prices declined for this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell by $0.21 to a weekly average of $10.31/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.30 to a weekly average of $9.07/MMBtu.  By comparison, in the week last year corresponding to this week (the week from April 26 to May 3, 2023), the prices were $11.54/MMBtu in East Asia and $12.32/MMBtu at the TTF.  

World Markets

In Europe, equities slightly lost some ground in the week just ended. The pan-European STOXX Europe 600 Index lost 0.48% in local currency terms. Amid mixed corporate earnings and uncertainty about the interest rate outlook after June, investors seem to exhibit greater caution in taking market positions. Major European stock indexes ended mixed. Losing ground were Italy’s FTSE MIB which declined by 1.81%, France’s CAC 40 Index which slid by 1.62%, and Germany’s DAX which fell by 0.88%. On the other hand, advancing by 0.90% was the UK’s FTSE 100 Index as it surged to a new high due to strength in the mining and energy stocks. There was a general decline in European government bond yields this week even as policymakers downplayed the growing concerns regarding future possible interest rate increases by major central banks. The yield on the German 10-year government bond dropped to 2.5%; likewise, the yield on the 10-year UK government bonds also eased. The first-quarter gross domestic product (GDP) report indicated that the economy grew faster than expected by expanding by 0.3% after it shrank 0.1% in the last quarter of 2023. The contraction for the last three months of 2023 was the result of a downward revision from 0.0%, which means that the Eurozone’s economy was in a technical recession during the second semester of 2023. Annual consumer price growth was steady in April at 2.4%. However, core inflation (excluding volatile components, namely energy and food prices) slowed from 2.9% to 2.7%.

Japanese stocks returned gains on the back of perceptions that the Japanese authorities had intervened in the foreign exchange markets twice during the week to prop up the yen. The Nikkei 225 Index rose by 0.8% while the broader TOPIX Index climbed by 1.6%. The likelihood that such interventions had taken place was suggested by changes in the Bank of Japan’s (BoJ’s) accounts. Authorities, however, avoided confirming having intervened to halt the historic slump of the currency. The yen strengthened to approximately JPY 153 versus the U.S. dollar, from about JPY 158 at the end of the week before. The yield on the 10-year Japanese government bond finished the week unchanged at 0.9%, near a six-month high, despite increased intraweek volatility. The markets are reacting to strong U.S. wage data that raised concerns that the Federal Reserve will maintain interest rates higher for longer. The BoJ lifted interest rates from negative territory in March for the first time in seven years. Many are thus anticipating two further rate hikes that are expected to occur within the coming year. Japan’s monetary policy remains among the most liberal in the world, and for the time being, financial conditions are expected to remain accommodative.

Markets in mainland China were closed from Wednesday for the Labor Day Holiday, and Chinese stocks rose during the shortened trading week on hopes that the government will ramp up support for the economy. The Shanghai Composite Index rose by 0.52% while the blue-chip CSI 300 inched up by 0.56%. In Hong Kong, its stock market benchmark Hang Seng Index ascended by 4.67%. The Hong Kong markets were also closed on Wednesday but reopened on Thursday. The mainland stock markets are scheduled to open on Monday, May 6. At its April meeting held on Tuesday, China’s 24-member Politburo, which is its top decision-making body, pledged to implement prudent monetary and fiscal support to shore up demand. According to government officials, China intends to make flexible use of monetary policy tools to restore growth. These tools include possible cuts to interest rates and the reserve requirement ratio, which sets the amount of cash that banks must set aside in reserve. In the economy, the official manufacturing Purchasing Managers’ Index (PMI) was better than expected (50.4 in April down from 50.8 in March) and marked a second consecutive monthly expansion. The nonmanufacturing PMI was 51.2 which was below consensus expectations, easing from 53 in March but remaining expansionary.  

The Week Ahead

Outstanding consumer credit data, the Michigan Consumer Sentiment Survey, and wholesale inventories are among the important economic releases in the coming week.

Key Topics to Watch

• Richmond Fed President Tom Barkin speaks (May 6)
• New York Fed President Williams speaks (May 6)
• Minneapolis Fed President Kashkari speaks (May 7)
• Consumer credit for March
• Wholesale inventories for March
• Fed Vice Chair Philip Jefferson speaks (May 8)
• Boston Fed President Susan Collins speaks (May 8)
• Fed Gov. Cook speaks (May 8)
• Initial jobless claims for May 4
• San Francisco Fed President Mary Daly speaks (May 9)
• Fed Governor Michelle Bowman speaks (Mau 10)
• Consumer sentiment (prelim) for May
• Chicago Fed President Austan Goolsbee speaks (May 10)
• Fed Vice Chair for Supervision Michael Barr speaks (May 10)
• Monthly U.S. federal budget for April

Markets Index Wrap-Up

Stock Markets

All major indexes are up this week. The Dow Jones Industrial Index (DJIA) inched up by 0.67% while the Dow Jones Total Stock Market Index climbed by 2.70% over last week, The S&P 500 Index also gained by 2.67% which mirrored the Total Stock Market Index; likewise, the S&P’ Small Cap 600, Mid Cap 400, and Super Composite 1500 components all recorded gains above 2%, indicating that the rally was across the board. The technology-heavy Nasdaq Stock Market Composite Index outperformed the broad indexes by registering a leap of 4.23%. The NYSE Composite rose by 1.74%, and the Russell 1000, 2000, and 3,000 Indexes all exceeded 2.60% gains. Risk perception among investors abated as indicated by the CBOE Volatility Index (VIX) which descended by 19.67%.

Most major equities benchmarks, including the S&P 500 Index, broke through a string of three consecutive weekly losses as investors became energized by the first-quarter earnings reporting season’s busiest week. Analysts were expecting overall earnings for the S&P 500 to have shot up by 3.7% in the first quarter year-on-year. According to FactSet, analysts anticipated as of the end of the week that “both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises” would be “above their 10-year averages.” Nasdaq’s overperformance this week can be partly attributed to strength in Apple and a late rebound in chipmaker NVIDIA. Late in the week, Google parent Alphabet surged in reaction to the announcement that its first-quarter earnings were better than expected and the company’s first dividend payment. On the other hand, Facebook parent Meta Platforms plunged (at one point wiping out nearly USD 200 billion in market value) after its CEO Mark Zuckerberg announced plans to continue spending heavily on artificial intelligence and similar technologies.

U.S. Economy

The week began with strong buying interest pushed by some downside surprises in economic data. On Tuesday, some poorer-than-expected economic reports were received as good news because they could mean reduced pressure on inflation and interest rates. U.S. manufacturing activity fell back into contraction territory in April, reported at 49.9 by S&P Global’s gauge, which is well below the expected 52.0. S&P Global’s gauge of services sector activity came in at 50.9, lower than the expected 52.0, although it remains expansionary.

On Thursday, more negative economic news was released which, this time around, elicited pessimistic reactions among investors. According to the Commerce Department, their advanced estimate of economic performance showed that GDP was expanding at an annualized rate of 1.6% which is well below the consensus estimate of 2.5%. It is also the slowest economic growth rate in almost two years. The causes were traced to a sharp slowdown in government spending, a widening trade deficit, and consumers reining in spending particularly on goods. Other data released on Wednesday indicated that businesses continued to increase capital spending in March albeit at a slower pace (0.3%) than in February (revised lower to 0.4%).

Thursday’s inflation data also triggered concerns of “stagflation” (rising prices simultaneous with flagging growth) taking place in the U.S. The Commerce Department reported that core personal consumption expenditure (core PCE which is less food and energy expenses) index rose at an annualized 3.7% during the first quarter. This is more than expected and well above both the 1.7% increase in the fourth quarter and the 2% long-term inflation target of the Federal Reserve.  

Metals and Mining

After chalking up months of impressive gains, it is somewhat expected for precious metals prices to give in to selling pressure and consolidate its gains, falling by more than 4% in the first two trading days of the week and giving up $100. While some are alarmed that gold saw its worst decline in nearly two years on Monday, a general assessment will point to the fact that despite falling by more than 4%, gold prices are still up by more than 17% from their highs in mid-February. The price action may look somewhat extreme, but it is still a healthy correction in a bullish uptrend. It is sensible for some profit-taking to take place as investors await the Federal Reserve’s guidance on monetary policy in the coming week, although it is safe to assume that the Fed will remain on hold through the summer and avoid adopting sudden changes until after the 2024 U.S. general elections in November.  

This week, the spot prices of precious metals were generally down. Gold fell by 2.26% from last week’s close of $2,391.93 to end this week at $2,337.96 per troy ounce. Silver declined by 5.36% from its closing price of $28.69 last week to settle at $27.21 per troy ounce. Platinum, which ended last week at $935.54, closed this week at $917.04 per troy ounce for a loss of 1.98%. Palladium descended by 7.10% from last week’s ending price of $1,031.38 to this week’s close at $958.15 per troy ounce. The three-month LME prices of industrial metals ended mixed. Copper closed at $9,965.50 per metric ton, 0.91% above its last weekly close of $9,876.00. Aluminum closed this week at $2,569.50 per metric ton, lower by 3.73% from its last weekly close of $2,669.00. Zinc ended this week at $2,844.00 per metric ton, down by 0.28% from last week’s closing price of $2,852.00.  Tin, which closed last week at $35,582.00, ended this week at $32,411.00 per metric ton, for a loss of 8.91%.

Energy and Oil

Oil prices have thus far failed to gain sufficient momentum to break out above the psychological resistance level of $90 per barrel, even if it is headed towards the first weekly gain since early April. Several factors have added some upside in the trading range, such as a higher-than-expected draw in U.S. crude inventories, a notable slowdown in U.S. manufacturing that triggered hopes of a June interest rate cut, and continuing tensions in the Middle East. Brent may be expected to continue trading around the $89 per barrel mark. In the meantime, Iraq promised to commit to OPEC+ limits following months of overproduction when the country overshot its quota by 200,000 barrels per day (b/d) during the first quarter. Regardless of the OPEC+ meeting outcome in early June, Iraq now pledges to cap its oil exports at 3.3 million b/d until the end of the year,

Natural Gas

For the report week from Wednesday, April 17 to Wednesday, April 24, 2024, the Henry Hub spot price rose by $0.09 from $1.50 per million British thermal units (MMBtu) to $1.59/MMBtu. Regarding Henry Hub futures, the price of the May 2024 NYMEX contract decreased by $0.059, from $1,712/MMBtu at the start of the report week to $1.653/MMBtu by the week’s end. The price of the 12-month strip averaging May 2024 through April 2025 futures contracts rose by $0.033 to $2.802/MMBtu.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia ascended by $0.32 to a weekly average of $10.51/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, declined by $0.35 to a weekly average of $9.38/MMBtu. For comparison, on the week last year corresponding to this week (beginning April 19 and ending April 26, 2023) the prices were $11.90/MMBtu in East Asia and $12.84 at the TTF.  

World Markets

In tandem with U.S. equities markets, the pan-European STOXX Europe 600 Index broke a three-week losing streak and gained 1.74% for the week, as sentiment was boosted by an easing of Middle East tensions and some encouraging corporate earnings results. Most major stock indexes likewise advanced. France’s CAC 40 Index climbed by 0.82%, Italy’s FTSE MIB added 0.97%, and Germany’s DAX surged by 2.39%. Climbing to fresh all-time highs was the UK’s FTSE 100 Index, ascending by 3.09%. European government bond yields shot up to their highest levels this year. Stronger than expected U.S. economic data suggested that inflation may prove sticky, raising expectations that the Federal Reserve would maintain interest rates higher for longer and force other major central banks to follow suit. The yield on the benchmark 10-year German government bond spiked briefly above the 2.6% level. Due to hawkish comments from some policymakers, it has become doubtful that the expected lowering of interest rates in June will materialize.  

Japan’s stock markets gained over the week. The Nikkei 225 Index as well as the broader TOPIX Index both gained by 2.3%. The Bank of Japan, (BoJ) at its April meeting kept its monetary policy unchanged, a dovish signal to most investors. However, the BoJ governor, Kazuo Ueda, suggested that in the second semester of this year, confidence to raise interest rates further is set to increase. In the fixed-income markets, the yield on the 10-year Japanese government bond rose to 0.91% from 0.84% in the previous week. The yen continues to weaken, and authorities have refrained from intervening despite intense speculation favoring such intervention. The yen weakened to about JPY 156.8 versus the U.S. dollar, from approximately 154.6 at the end of the previous week. On the other hand, the Tokyo-area core consumer price index (CPI) rose 1.6% year-on-year in April, down from 2.4% in March and lower than consensus expectations, suggesting that inflationary pressures are easing. Business confidence remains positive as the pace of hiring rose across the private sector, and expansion in activity may likely be sustained at least in the short term.

In China, as investors grew more optimistic about the economy, equities rose over the week. The Shanghai Composite Index moved up by 0.76% and the blue-chip CSI 300 gained by 1.2%. Hong Kong’s benchmark Hang Seng Index shot up by 8.8%. According to 15 economists polled by Bloomberg, China’s economy is poised to grow by 4.8% this year, higher than a median forecast of 4.6% last month. The country’s gross domestic product (GDP) grew by 5.3% in the first quarter year-over-year, which is above the consensus estimates and slightly faster than the 5.2% year-over-year expansion in the final quarter of 2023. Economists downgraded their inflation forecasts, however, as the economy continues to be dragged down by declining producer prices and a persistent property market slump.

The Week Ahead

The FOMC meeting, the nonfarm payrolls report, and consumer confidence data are among the important economic releases scheduled for the coming week.

Key Topics to Watch                  

• Employment cost index for the First Quarter
• S&P Case-Shiller home price index (20 cities) for February
• Chicago Business Barometer (PMI) for April
• Consumer confidence for April
• ADP employment for April
• Construction spending for March
• ISM manufacturing for April
• Job openings for March
• FOMC interest-rate decision
• Fed Chair Powell press conference
• Auto sales for April
• Initial jobless claims for April 27
• U.S. trade deficit for March
• U.S. productivity for the First Quarter
• U.S. unit-labor costs for the First Quarter
• Factory order for March
• U.S. employment report for April
• U.S. unemployment rate for April
• U.S. hourly wages for April
• Hourly wages year-over-year
• ISM services for April
• Chicago Fed President Austan Goolsbee speech
• New York Fed President John Williams speech

Markets Index Wrap-Up

Stock Markets

Most major stock indexes are down for the week, except for the 30-stock Dow Jones Industrial Index (DJIA) which gained a slim 0.01%. All broader indexes lost ground and incurred losses. The Dow Jones Total Stock Market plummeted by 3.07% while the broad S&P 500 Index lost 3.05%. The technology-heavy Nasdaq Stock Market Composite plunged even deeper by 5.52%, and the NYSE Composite slumped by 1.02%. The inventor risk-perception indicator CBOE Volatility Index (VIX) rose by 8.09% for the week, suggestive of the heightened volatility expected in the market.

This is the third consecutive week of broad losses as concerns continue to mount over tensions in the Middle East. Furthermore, fears that interest rates may remain “higher for longer” continue to weigh on investor sentiments. As rising rates placed a higher theoretical discount on future earnings, mega-cap technology shares lagged, as the plunge by the Nasdaq this week showed. Advanced chipmaker supplier ASML Holdings missed its first-quarter revenue target, and this fact appears to weigh on the sector and general optimism toward companies with artificial intelligence (AI)-related earnings.

Relief that Iran’s well-telegraphed retaliatory strike on Israel did not result in worst-case scenarios probably prompted more optimistic trading when the week began. However, when the Israeli war cabinet decided to retaliate “clearly and forcefully,” stock prices tumbled on Friday when Israel conducted strikes on air defense facilities in Iranian territory as well as on Iran-backed groups in Iran and Iraq.

U.S. Economy

Strong economic data that were released during the week seemed to increase concerns among investors that the Federal Reserve would push back interest rate cuts, previously hinted to take place in June, to instead take place in the fall, or worse, in 2025. The Commerce reported on Monday that retail sales rose by 0.7% in March, which is well above consensus expectation of about 0.3%. February’s gain was revised upward to 0.9%. Partly at work were rising gas prices (note, the data was not adjusted for inflation), but the robustness was broad-based and included healthy gains in discretionary categories like bars, restaurants, and online retailers. On the other hand, there were downward surprises in housing market data. These may have advanced fears of growing inflation by signaling further tightness in supply. These include housing starts and permits in March which came in well below expected volumes and declined from February, with housing starts falling to the lowest level in seven months. The level of existing home sales also declined, although it did so mostly in line with expectations, as the average 30-year mortgage rate climbed above 7% for the first time since December.

Metals and Mining

Despite the stellar performance of gold and silver, the spot prices of precious metals ended mixed. Gold ascended by 2.03% from its closing price last week at $2,344.37 to its closing price this week at $2,391.93 per troy ounce. Silver ended trading this week at $28.69 per troy ounce, 2.91% above last week’s close of $27.88. Platinum, which ended last week at $976.74, closed this week at $935.54 per troy ounce for a decline of 4.22%. Likewise, palladium fell by 2.00% from its week-ago closing price of $1,052.45 to this week’s close at $1,031.38 per troy ounce. The three-month LME prices of industrial metals ended mostly on the upside. Copper came from last week’s price of $9,457.50 to end this week at $9,876.00 per metric ton, chalking up a 4.43% increase. Aluminum climbed by 7.02% this week from last week’s close at $2,494.00 to end week at $2,669.00 per metric ton. Zinc ended this week at $2,852.00 per metric ton, 0.83% higher than last week’s close of $2,828.50. Tin, which last traded at $32,353.00 one week ago, ended this week at $35,582.00 per metric ton, for a gain of 9.98%.

Energy and Oil

Oil prices exhibited increased volatility in recent trading sessions, which was largely attributable to the heightened risks surrounding the Israel-Iran conflict. Brent prices ratcheted above $90 per barrel on initial reports of Israeli strikes on Iranian soil. They plunged back to $86 per barrel after Tehran dismissed any serious impacts that the strikes were alleged to have caused. Due to these most recent and pressing concerns, the reimposition of oil sanctions on Venezuela was foregone for the meantime by the market as the U.S. Department of State let its 6-month waiver to allow Venezuela to freely trade its crude expire. The Department of State claimed that President Maduro failed to fulfill his pre-election commitments and provided oil companies a 45-day grace period to wind down operations in the country.

Natural Gas

For the report week beginning Wednesday, April 10, to Wednesday, April 17, 2024, the Henry Hub spot price fell by $0.38 from $1.88 per million British thermal units (MMBtu) to $1.50/MMBtu. Regarding the Henry Hub futures, the price of the May 2024 NYMEX contract decreased by $0.173, from $1.885/MMBtu at the start of the report week to $1.712/MMBtu at the week’s end. The price of the 12-month strip averaging 2024 through April 2025 futures contracts declined by $0.059 to $2.769/MMBtu.

International natural gas futures prices rose this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.62 to a weekly average of $10.19/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $1.15/MMBtu to a weekly average of $9.73/MMBtu. For comparison, in the week last year corresponding to this report week (week beginning April 12 and ending April 19, 2023), the prices were $12.56/MMBtu in East Asia and $13.35/MMBtu at the TTF.

World Markets

European stocks traded lower this week as the pan-European STOXX Europe 600 Index closed lower by 1.18% than last week, due to rising tensions in the Middle East. The major indexes in the region were mixed. While France’s CAC 40 Index was little changed, Italy’s FTSE MIB rose by 0.47% and Germany’s DAX dipped by 1.08%. The UK’s FTSE 100 declined by 1.25%. The lackluster performance of UK stocks may be partly accounted for by the annual consumer price growth rate reported at 3.2%. This should have been cause for celebration since the inflation rate fell to its lowest level in two and a half years, but the reported slowdown fell short of expectations forecasted by analysts and the Bank of England (BoE). In the broader Europe, several European Central Bank (ECB) policymakers at the IMF meeting reiterated that the likely target date for lowering borrowing costs is in June, provided there were no further unexpected economic shocks. ECB leadership emphasized, however, that the policy should correspond to incoming economic data, such as oil prices which the ECB is monitoring “very closely.”

Japanese equities suffered a deep sell-down last week amid the rise in geopolitical tensions in the Middle East and the uncertainties attendant to them. The Nikkei 225 Index plunged by 6.2% while the broader TOPIX Index declined by 4.8%. Another contributor to the stock sell-off is concern that AI-related demand is waning sooner than expected. In fixed-income investing, the yield on the Japanese government bond closed the week broadly unchanged from the week before, at around 0.84%. The Bank of Japan (BoJ) Governor Kazuo Ueda reprised comments he has made before that a rate hike may be warranted should weakness in the yen exert significant upward pressure on inflation. Although speculation continues regarding potential intervention by Japanese authorities in the currency markets to prop up the yen, no such move was taken. The U.S., South Korean, and Japanese leaders nevertheless met to discuss current conditions in the foreign exchange markets, with a sharp focus addressing the sharp depreciation of the Japanese yen and the South Korean won.

After the economy expanded by more than expected during the last quarter, the Chinese stock market rallied. The Shanghai Composite Index climbed by 1.52% while the blue-chip CSI 300 added 1.89% for the week. The Hong Kong benchmark Hang Seng Index declined by 2.89% as investor sentiment was dampened by the escalating geopolitical tensions in the Middle East. China’s GDP grew by an above-consensus 5.3% year-on-year for the first quarter of this year, accelerating modestly from the 5.2% growth in last year’s fourth quarter. The economy grew by 1.6% on a quarterly basis, rising from the fourth quarter’s 1.4% expansion. Other data, though, provided a mixed picture of the economy. In March, industrial production grew by 4.5% from a year earlier, which is lower than expected. This is down from the 7% growth achieved in the January to February period. The retail sales for March expanded by a lower-than-expected rate of 3.1% from a year ago, due to seasonal factors such as the slowdown of catering and auto revenue after the Lunar New Year Holiday. Although property investment fell by 9.5% year-on-year, fixed asset investment rose by more than forecasted in the first quarter from a year ago.  

The Week Ahead

The first-quarter GDP report and the PCE inflation data are among the important economic releases to look forward to this week.

Key Topics to Watch

• S&P flash U.S. services PMI for April
• S&P flash U.S. manufacturing PMI for April
• New home sales for March
• Durable-goods orders for March
• Durable-goods minus transportation for March
• Gross Domestic Product (GDP) for the first quarter
• Initial jobless claims for April 20
• Advanced U.S. trade balance in goods for March
• Advanced retail inventories in March
• Advanced wholesale inventories in March
• Pending home sales in March
• Personal income (nominal) in March
• Personal spending (nominal)
• PCE index
• PCE (year-over-year)
• Core PCE index
• Core PCE (year-over-year)
• Consumer sentiment (final) for April

Markets Index Wrap-Up

Stock Markets

The major indexes this week all headed southward on the back of a hotter-than-expected inflation report and rising concerns of an impending Iranian retaliatory strike on Israel. The Dow Jones Industrial Average (DJIA), which tracks 30 large companies on the New York Stock Exchange and the Nasdaq, dipped by 2.37% from last week; the Dow Jones Total Stock Market did slightly better with a decline of only 1.71%. The broader S&P 500 Index fell by 1.55%, while the technology-tracking Nasdaq Stock Market Composite slid only by 0.45%. The NYSE Composite Index gave up 2.67%, while the Russell 2000 Index did worse than Russell 1000 or 3000, suggesting that small-cap stocks fell further than their large-cap counterparts.

Stocks pulled back towards the end of the week in reaction to reports that Iran was preparing to directly attack facilities on Israeli soil for the first time.  Oil prices jumped on the news because of the implications of possible oil supply disruptions. The U.S. dollar also rose since it is typically viewed as a “safe haven” in times of international turmoil. The CBOE volatility index (VIX), the indicator of investor risk perception, rose by 7.99% on heightened volatility expectations. This is the VIX’s highest level since November 2023.

U.S. Economy

In the wake of the higher-than-expected inflation report, futures markets began pricing in roughly a 20% chance of a rate cut at the Federal Reserve’s meeting in June versus roughly 50% before its release. Central bank officials had a busy week for commentary at which they appeared to confirm a change in their perspective following the CPI release. The latest data did not increase the confidence of Richmond Fed Chief Thomas Barkin in disinflation, according to him, while Boston Fed President Susan Collins remarked that the recent data argue against an imminent need to cut rates. The consumer inflation data helped drive the yield on the benchmark 10-year U.S. Treasury note to its highest intraday level since November before Treasuries rallied on Friday as investors pursued U.S. dollar-based assets.

Metals and Mining

Gold continued its unprecedented rally, and with it the rest of the precious and industrial metals markets. Gold saw an intra-day price swing of $98, with volatility coming second only to the December rally that pushed gold above $2,150 an ounce. Thereafter, gold consolidated above the $2,000-per-ounce level, with some investors expecting prices to correct to $1,950. But the consolidation held above $2,000 and broke out last month. The anticipation for a pullback thus makes this week’s price action exciting, with investors who missed the initial rally now expected to buy on dips, creating a latent demand. There is a clear consensus in the marketplace that this rally is far from over.

The spot prices of precious metals were up over the week. Gold gained 0.63% from its close last week at $2,329.75 to its close this week at $2,344.37 per troy ounce. Silver closed 1.46% higher than its last price a week ago of $27.48 to its last trading price this week of $27.88 per troy ounce. Platinum climbed by 4.96% from last week’s close at $930.56 to this week’s close at $976.74 per troy ounce. Palladium, which ended last week at $1,005.63, closed this week at $1,052.45 with a gain of 4.66%. The three-month LME prices of industrial metals also chalked up gains. Copper advanced by 1.05% from last week’s closing price of $9,359.00 to end this week at $9,457.50 per metric ton. Aluminum last traded this week at $2,494.00 per metric ton, which is 2.02% higher than its last trading price one week ago at $2,444.50. Zinc shot up by 6.92% from last week’s close at $2,645.50 to this week’s close at $2,828.50 per metric ton. Tin surged by 12.95% from its closing price last week at $28,643.00 to this week’s closing price of $32,353.00.

Energy and Oil

The recent oil price rally slowed down considerably over the week due to inventory builds in the U.S., higher-than-expected inflation numbers that would likely postpone any interest rate cuts by the Federal Reserve, and attempts by Iran to play down the risk of an attack on Israel. On Friday morning, Brent was trading above the $90-per-barrel level, leaving plenty of upside risk yet in the oil markets. In the meantime, OPEC lowered its 2024 supply forecast in its latest monthly report. OPEC kept its demand forecast for this year at 2.24 million barrels per day (b/d), however, it lowered non-OPEC liquids production growth in 2024 to 990,000 b/d. This revised figure is down by 70,000 b/d from the previous month’s outlook.  

Natural Gas

For the report week from Wednesday, April 3, to Wednesday, April 10, 2024, the Henry Hub spot price rose by $0.02, from $1.86 per million British thermal units (MMBtu) to $1.88/MMBtu. Regarding Henry Hub futures, the price of the May 2024 NYMEX contract increased by $0.044, from $1.841/MMBtu at the start of the report week to $1.885/MMBtu at the end of the week. The price of the 12-month strip averaging May 2024 through April 2025 futures contracts rose by $0.01 to $2.829/MMBtu.

International natural gas futures prices increased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.06 to a weekly average of $9.57/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.17 to a weekly average of $8.58/MMBtu. In the week last year that corresponds to this week (the week from April 5 to April 12, 2023), the prices were $12.61/MMBtu in East Asia and $13.84/MMBtu at the TTF.

World Markets

European stocks lost some of their value as investors factored in hawkish signals from the European Central Bank that key rates, which the markets expect to lower rates soon, will continue to be held steady for the meantime. The pan-European STOXX Europe 600 Index declined by 0.26% for the week in local currency terms. Major stock indexes followed the trend. France’s CAC 40 Index slid by 0.63%, Italy’s FTSE MIB lost 0.73%, and Germany’s DAX declined by 1.35%. On the contrary, the UK’s FTSE 100 Index defied gravity to end the week with a 1.07% gain. The supportive factor of the index is the weakness of the British pound relative to the U.S. dollar. Furthermore, the UK GDP expanded for two consecutive months suggesting that the country’s economy exited recession. The FTSE 100 includes many multinationals that generate meaningful overseas revenue denominated in dollar terms. Despite trending lower earlier in the week, the yields on German, Italian, and French government bonds jumped on news that U.S. inflation came in hotter than expected in March. Yields pulled back subsequently from these highs after the European Central Bank (ECB) held key rates steady while strongly hinting that they may soon be lowered.

Japanese equities rose over the week partly in reaction to the stronger-than-expected U.S. inflation report. The Nikkei 225 Index gained 1.4% and the broader TOPIX rose by 2.1%. Investors speculated as to whether Japan’s monetary authorities would intervene to support the yen as it hovered close to a 34-year low. Following a higher-than-expected U.S. inflation reading and subsequent increase in U.S. Treasury yields, the Japanese government bond yield rose to 0.84% from 0.77% at the end of the prior week. During the week, it briefly touched its highest level since November 2023. The finance ministry authorities stated that they were investigating the factors that prompted the currency moves and that they would act on excessive yen weakness. Bank of Japan (BoJ) Governor Kazuo Ueda, meanwhile, ruled out a rate hike in response to a weak yen. From his pronouncements, the central bank assured that it would not alter its monetary policy directly in response to exchange rate moves. Japan’s monetary policy remains one of the most accommodative in the world. Market expectations now appear to converge around two further rate hikes within the next 12 months.

Chinese stocks pulled back as weak inflation data drew attention to the lackluster demand permeating China’s economy. The Shanghai Composite Index declined by 1.62%, while the blue-chip CSI 300 fell by 2.58%. The Hang Seng Index, Hong Kong’s benchmark, experienced early gains in the week that were, however, pared by apprehensions about the flagging recovery. The country’s consumer price index rose by a below-consensus 0.1% in March year-on-year, down from 0.7% in February. The core inflation rose by 0.6% but was weaker than the 1.2% increase in February. The producer price index fell by 2.8% from last year. This is its 18^th month of declines and accelerating from its February 2.7% drop. China’s exports and imports fell in March, reversing the gains realized from January and February. Exports shrank by 7.5% year-on-year in March, which was worse than expected and accelerating from a 7.1% rise in the January-to-February period. These latest results dealt a setback to China’s reliance on external demand to bolster its economy. They added further pressure on Beijing to roll out additional stimulus measures to achieve its 5% annual growth target.

The Week Ahead

Retail sales data, housing starts, and leading economic indicators are among the important economic reports scheduled for release in the coming week.

Key Topics to Watch

• Dallas Fed President Lorie Logan speaks in Tokyo
• Empire State manufacturing survey for April
• U.S. retail sales for March
• Retail sales minus autos for March
• New York Fed President John Williams TV appearance (Monday, April 15)
• Business inventories for February
• Home builder confidence index for April
• San Francisco Fed President Mary Daly speaks
• Housing starts for March
• Building permits for March
• Fed Vice Chair Philip Jefferson speaks
• Industrial production for March
• Capacity utilization for March
• Fed Chair Jerome Powell speaks
• Fed Beige Book
• Cleveland Fed President Loretta Mester speaks
• Fed Governor Michelle Bowman speaks (Wednesday, April 17)
• Initial jobless claims
• Philadelphia Fed manufacturing survey
• Fed Govern0or Michelle Bowman speaks (Thursday, April 18)
• New York Fed President John Williams speaks (Thursday, April 18)
• Existing home sales for March
• U.S. leading economic indicators for March
• Atlanta Fed President Raphael Bostic speaks (11 a,m., Thursday, April 18)
• Atlanta Fed President Raphael Bostic speaks (5.45 p,m., Thursday, April 18)
• Chicago Fed President Austan Goolsbee speaks

Markets Index Wrap-Up

Stock Markets

The WSJ Markets report shows that the Dow Jones Industrial Average (DJIA) fell by 2.27% while the Dow Jones Total Stock Market dropped by 1.10% for the week. The broader S&P 500 Index gave up 0.95% of its value which was mirrored in the performance of small, mid, and large-cap stocks. Technology stocks fared only slightly better as the Nasdaq Stock Market Composite lost 0.80%, while the NYSE Composite slumped by 1.04%. The CBOE Volatility Index (VIX), the indicator of investor risk perception, rose by 23.21%.

The pull-back, particularly among the large-cap indexes, occurred in tandem with U.S. Treasury yields increasing in response to signs that the manufacturing sector might finally be gaining traction. Growth stocks fared better than value shares while small-caps fell further than large-caps, suggesting that the market performance has once more narrowed. Oil prices reached their highest level since October causing energy stocks to outperform, largely on worries over rising tensions between Israel and Iran and a decision by major exporters to maintain production limits despite tight supply. The technology sector also got a boost from some late strength in Microsoft stock.

U.S. Economy

The release of the March ISM manufacturing report drove the equities market on Monday. Readings came in well above expectations and indicated expansion, though barely, for the first time in 16 months. More importantly from an inflation perspective, the ISM prices paid index surprised on the upside and seemingly confirmed recent data showing a rebound in input prices. On the other hand, the ISM services report which was released on Wednesday appeared to have a calming effect on the markets. Although it still indicated expansion, the services index slid back for the second consecutive month. More significantly, the index of prices paid fell back to its lowest level since the pandemic lockdowns began in March 2020. This data appeared to increase market participants’ hopes that a Federal Reserve rate cut may materialize in June, as reflected in futures prices.

Typically, among the most closely watched indicators of growth and inflation pressures, the Friday jobs report from the Labor Department appeared to further reassure investors. In March, employers added 303,000 jobs which is well above expectations and the most in almost a year. The solid gains came with only a modest increase in average hourly wages, from 0.2% in February to 0.3% in March, an encouraging sign from a wage pressures standpoint. Part of the reason may be traced to a rise in the labor force participation rate, indicating that employers might be enjoying an easier time filling empty slots.

Metals and Mining

This was another remarkable week that saw a nearly 5% gain for gold in a rally that seemed unstoppable. The yellow metal took off to quickly pierce what was initially thought to be a significant resistance at $2,300 so soon after it broke out of the $2,200 level. Gold’s movement this week re-established this precious metal as a global monetary asset rather than a U.S. dollar-centric asset. One of the most bullish banks on gold at the start of the year, Bank of America, reiterated its target of $2,400 per ounce. Analysts note how gold demonstrates less dependence on U.S. interest rates and monetary policy, making it less vulnerable to a future Federal Reserve decision on the likelihood of when a rate reversal takes place. In this environment, gold prices are not sensitive to whether U.S. bond yields rise or the currency strengthens. Central banks will continue to accumulate gold to diversify their foreign reserves into an asset without any third-party geopolitical risks. According to analysts, those who missed the gold rally should turn their attention to silver as the next vehicle.

The spot prices of precious metals are mostly up this week. Gold surged by 4.48%, closing this week at $2,329.75 per troy ounce, from last week’s close at $2,229.87. Silver ended this week at an impressive 10.10% higher than last week’s close at $24.96, to close this week at $27.48 per troy ounce. Platinum jumped by 2.11% from its last traded price one week ago at $911.29 to its last traded price this week of $930.56 per troy ounce. Palladium bucked the trend to end lower by 1.07%, dipping from its close last week at $1,016.55 to its close this week at $1,005.63 per troy ounce. The three-month LME prices of industrial metals closed bullish this week. Copper, which traded last at $8,867.00 one week ago, ended 5.55% up at $9,359.00 per metric ton. Aluminum shot up by 4.60% from last week’s close at $2,337.00 to this week’s close at $2,444.50 per metric ton. Zinc surged by 8.47% from its previous weekly close at $2,439.00 to close this week at $2,645.50 per metric ton. Tin gained 4.34% from its last week’s price of $27,451.00 to this week’s last trading price of $28,643.00 per metric ton.

Energy and Oil

On Friday morning, at the back of the current wave of bullish news, Brent prices broke out of the $90 per barrel threshold and quickly shot through the $91 per barrel level. Contributing factors are the anticipation of Iran’s retaliatory strike on Israel, a developing shortage in Mexico’s exports, and the continuation of OPEC+ cuts, which have recently boosted sentiment in the global oil market. It is possible, however, that the potential of the Fed not cutting interest rates this year may douse hopes on the sustainability of the oil price rally. One other consideration is the decision of the U.S. Energy Department to scrap its tender to buy 3 million barrels of strategic petroleum stocks in August and September. The decision was made to “keep the taxpayer’s interest at the forefront” in light of WTI rising to $86 per barrel in the same week.

Natural Gas

For the report week beginning Wednesday, March 27, and ending Wednesday, April 3, 2024, the Henry Hub spot price ascended by $0.42 from $1.44 per million British thermal units (MMBtu) to $1.86/MMBtu. Regarding the Henry Hub futures price, the price of the May 2024 NYMEX  contract increased by $0.123, from $1.718/MMBtu at the beginning of the report week to $1.841/MMBtu at the week’s end. The price of the 12-month strip averaging May 2024 through April 2025 futures contracts climbed by $0.091 to $2.818/MMBtu.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.02 to a weekly average of $9.51/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.32 to a weekly average of $8.42/MMBtu. By comparison, the week last year that corresponds to this report week (the week from March 29 to April 5, 2023), the prices were $12.96/MMBtu in East Asia and $14.96/MMBtu at the TTF.

World Markets

European stocks descended this week as the pan-European STOXX Europe 600 lost by 1,19% in local currency terms during the holiday-shortened trading week. The drop interrupted 10 consecutive weeks of gains, attributable to investor reactions to hawkish comments from some U.S. Federal Reserve policymakers. Higher crude oil prices also heightened doubts about the timing of anticipated future interest rate cuts. Italy’s FTSE MIB plunged by 2.13%, France’s CAC 40 Index lost 1.76%, and Germany’s DAX dropped by 1.72%. The UK’s FTSE 100 Index slid by 0.52%. The headline inflation in the eurozone slowed down more than expected to 2.4% in March from 2.6% in February. Also decelerating was core inflation, which excludes volatile food and energy prices, from 3.1% to 2.9%. However, the year-over-year increase in service prices came in at 4.0% for the fifth straight month. The economic data suggests that after stagnating for the past year, the economy may be picking up. S&P Global revised its forecast, from 49.9 to 50.3 in March, for the eurozone’s composite purchasing managers’ index (PMI) which includes manufacturing and services. This is significant because a reading north of 50 indicates expansion in private-sector business activity.

Japanese stocks were under selling pressure for the week, causing the Nikkei 225 Index to slump by 3.4% and the broad TOPIX fall by 2.4%. The reasons were traced to heightened geopolitical tensions and continued uncertainty about the Federal Reserve’s monetary policy direction. Both weighed in general on global equities; on the domestic scene, Japanese investors remained concerned about whether the authorities would conduct an intervention to prop up the falling yen. According to the Finance Ministry, they remained ready to respond to excessive moves in the foreign exchange markets. The Japanese currency maintains its rate at the high-JPY 151 level against the U.S. dollar, its lowest level in the last 34 years. Over the past three years, the yen’s weakness has given Japan’s exporters an advantage, providing dollar-earning companies a major boost in so far as they derive a large share of their revenues from abroad. Speculation about intervention was propelled by signals from Bank of Japan (BoJ) Governor Kazuo Ueda that the central bank could use monetary policy to address the historic weakness in the yen. They have indicated that any action taken on the normalization of monetary policy relies on two preconditions being met – the 2% inflation target attained sustainably, and growth in wages.

Chinese equities advanced in the holiday-shortened trading week in reaction to data that suggests that the economy could be gaining traction. The Shanghai Composite Index rose by 0.92% while the blue-chip CSI 300 gained by 0.86%. The Hong Kong benchmark Hang Seng Index advanced by 1.10%. Financial markets in mainland China suspended operations on Thursday and Friday in observance of the Qingming Festival. Also known as Tomb Sweeping Day, these are the holidays when Chinese people honor their ancestors by cleaning and placing offerings on their tombs. In Hong Kong, the markets were closed on Thursday but reopened on Friday. March economic indicators strengthened hopes that China may soon see a full economic recovery. The official manufacturing PMI climbed to 50.8 in March (which was better than expected) from 49.1 in February, largely due to a rebound in production and exports, thus marking the first expansion since September 2023. The nonmanufacturing PMI grew to 53.0, a better-than-forecasted outcome for March, from 51.4 in February. On the other hand, the value of new home sales by the country’s top 100 developers dipped by 49% in March from one year ago, easing from the 60% drop in February. Although sales rose by 93% from the previous month, they remained weak compared with the monthly average for the third and fourth quarters of last year.  

The Week Ahead

The CPI and PPI inflation data, as well as the FOMC minutes from the March meeting, are among the important economic data scheduled to be released in the coming week.

Key Topics to Watch

• Chicago Fed President Austan Goolsbee’s radio interview
• NFIB optimism index for March
• Consumer price index for March
• Core CPI for March
• CPI year-over-year
• Core CPI year-over-year
• Fed Gov. Michelle Bowman speaks (Wednesday, April 10)
• Wholesale inventories for March
• Chicago Fed President Austan Goolsbee speaks (Wednesday, April 10)
• Minutes of Fed’s March FOMC meeting
• Monthly U.S. federal budget for March
• Initial jobless claims for April 6, 2024
• Producer price index for March
• Core PPI for March
• PPI year-over-year
• Core PPI year-over-year
• Fed Gov. Michelle Bowman speaks (Thursday, April 11)
• Boston Fed President Susan Collins speaks
• Chicago Fed President Austan Goolsbee speaks (Thursday, April 11)
• Atlanta Fed President Raphael Bostic speaks (Thursday, April 11)
• Import price index for March
• Import price index minus fuel for March
• Consumer sentiment (prelim) for April
• Atlanta Fed President Raphael Bostic speaks (Friday, April 12)
• San Francisco Fed President Mary Daly speaks

Markets Index Wrap-Up

Stock Markets

This shortened trading week ahead of the Holy Week holy days, the Dow Jones Industrial Average (DJIA) ended higher by 0.07% and the DJ Total Stock Market gained by 0.32%. The broad S&P 500 Index rose by 0.24%; however, the technology-heavy Nasdaq Stock Market Composite lost by 0.14%. The NYSE Composite Index climbed by 0.54%. The indicator of investor risk perception, the CBOE Volatility Index (VIX), inched up by 0.70%, suggesting the expectation of increased volatility ahead.

As indicated by the S&P 500 Index which recorded new closing and intraday highs to end the week, the market’s advance was notably broad as most of the indexes ended the first quarter of 2024 with strong gains. The equal-weighted version of the S&P 500 Index gained 1.64% which is well ahead of the gains realized by the market-weighted version. Small-cap stocks easily outperformed large caps; the Russell 1000 Value Index surged by 1.79%, outperforming its growth counterpart which declined by 0.60%. Markets were closed on Friday in observance of the Good Friday holiday. They are scheduled to reopen on Monday ahead of other international markets. When they do reopen, analysts expect trading volumes to pick up to some degree as investors weigh the impact of the collapse of the Francis Scott Key Bridge in Baltimore and the degree to which it cut access to the nation’s largest ports. The port of Baltimore is the primary port for car and truck shipments.

U.S. Economy

The broader economic implications of the Baltimore port shutdown remain uncertain amid promises made by President Joe Biden that federal aid will soon be coming to quickly reopen the port. This week’s economic calendar saw a report released by the Commerce Department that durable goods rose by 1.4% in February which is slightly more than expected. Part of this increase, however, was due to a revision in January’s steep decline, from 6.2% to 6.9%. If volatile defense and aircraft segments were excluded (to arrive at a gauge that is considered more closely reflective of business spending plans), orders are seen to rise by a solid 0.7%, much more than anticipated and partly reversing two months of declines. In February, new home sales fell unexpectedly, although the report of the decline came in the wake of previous news of a jump in sales of existing homes.

Consumer indicators released this week were mixed, indicative of uncertainty in the direction of the economy. The Conference Board announced on Tuesday that its index of consumer confidence slightly declined in March, which defied consensus expectations for an increase. The Board’s chief researcher noted that “Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future.” A different and more optimistic assessment by another research institute came on Thursday from the University of Michigan’s rival gauge of consumer sentiment. This metric was revised upward to its highest level in 21 months, attributable in large part to waning inflation concerns. This chief researcher noted that “Over the first three months of 2024, consumers have consistently expressed that the economy appears to be holding its course. However, with the general election looming on the horizon, many mentioned that their views remain tentative and subject to change.”

Metals and Mining

This week, the spot prices of precious metals gained over the previous week. Gold rose by 2.98%, from $2,165.44 to this week’s $2,229.87 per troy ounce. Silver appreciated by 1.18%, rising from the previous week’s close at $24.67 to this week’s close at $24.96 per troy ounce. Platinum climbed by 1.44% from its previous weekly closing price of $898.35 to this week’s closing price of $911.29 per troy ounce. Palladium added 2.90% to its previous week’s close of $987.93 to this week’s close of $1,016.55 per troy ounce. The three-month LME prices of industrial metals were mixed. Copper lost 0.93% from last week’s close at $8,950.50 to this week’s close at $8,867.00 per metric ton. Aluminum gained by 1.54% from its last weekly closing price of $2,301.50 to this week’s closing price of $2,337.00 per metric ton. Zinc fell by 3.39% from the previous week when it closed at $2,524.50 to this week’s close of $2,439.00 per metric ton. Tin gave up 1.51% of its previous week’s end at $27,872.00 to close this week at $27,451.00 per metric ton.

Energy and Oil

Oil market players appear to increasingly rely on OPEC+ production cuts remaining in place for the rest of the year. If this continues as expected, combined with an improving macroeconomic outlook, crude prices could be expected to reach $90 per barrel sooner than previously thought. If the U.S. fourth-quarter GDP proves to be better than expected, it may consolidate market expectations surrounding an interest rate cut by June and dispel the demand woes of early 2024. This week ICE Brent hovers about $87 per barrel whilst WTI trades around $83 per share. In the meantime, the U.S. ramps up its sixth round of targeted Iran sanctions as the Department of Treasury sanctioned a Houthi-linked network of companies that allegedly moves Iranian oil through forged documents.  

Natural Gas

For the report week beginning Wednesday, March 20, and ending Wednesday, March 27, 2024, the Henry Hub spot price declined by $0.13 from $1.57 per million British thermal units (MMBtu) to $1.44/MMBtu. Concerning Henry Hub futures prices, the April 2024 NYMEX contract expired on Tuesday at $1.575/MMBtu, down by $0.12 from the close of the previous week. The May 2024 NYMEX contract price decreased to $1.718/MMBtu, lower by $0.13 from the previous week. The price of the 12-month strip averaging May 2024 through April 2025 futures contracts declined by $0.09 to $2.728/MMBtu.

This week, International natural gas futures price changes were mixed. The weekly average front-month futures prices for LNG cargoes in East Asia rose by $0.21 to a weekly average of $9..48/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.11 to a weekly average of $8.74/MMBtu. In the week last year corresponding to this report week (the week from March 22 to March 29, 2023), the prices were $12.72/MMBtu in East Asia and $13.47/MMBtu at the TTF.   

World Markets

In a week of generally light trading ahead of the Easter holiday weekend, most European markets saw modest gains. The STOXX Europe 600 Index reached a record intraday high this week, gaining by 0.59% in local currency terms. The market’s gains were noteworthy since they came despite confirmation of a significant slowdown in some major economies. As the European Central Bank (ECB) flagged a possible rate cut for June, European government bond yields declined over the week. The decision to cut rates depends on whether wage growth continues to moderate. ECB council member Fabio Panetta was the latest to flag a turn in the rate cycle, with data showing eurozone bank lending stagnated again in February. The UK entered a technical recession in the fourth quarter of 2023 for the first time since early 2020. The economy contracted by 0.3% following a third-quarter contraction of 0.1%, as confirmed by the UK’s Office of National Statistics. In Germany, the Federal Statistical Office reported that sales in that country plunged by 1.9% in February, well below consensus expectations for a small increase and the biggest drop in 17 months. Leading economic institutions in that country expect the economy to grow by 0.1% in 2024, cutting the prior forecast of 1.3%. Hopes for a stronger recovery have been dented by high-interest rates, weak global demand, and political uncertainty. On the whole, however, data suggests that European consumers are growing slightly more optimistic because of the region’s easing energy concerns.

Japan’s stock markets plummeted through Thursday’s trading as investors focused on the sharp decline of the yen. The currency hovered near JPY 152 against the dollar, a sign that many perceived may trigger authorities to intervene in the foreign exchange markets to prop up the yen. After a meeting on Wednesday, the country’s three main monetary authorities suggested that they could be ready to stage an intervention. It is the strongest hint to date after the currency dipped to a 34-year low. Since Japan’s large-cap exporters derive a significant share of their earnings from overseas, they benefited largely from the historic weakness in the yen which is now threatened by a possible government intervention. The yield on the 10-year Japanese government bond dipped to about 0.70% on Thursday from 0.74% at the end of the weak prior. This dovetailed the historic monetary policy shift by the Bank of Japan (BoJ) wherein it raised interest rates from negative territory for the first time in nearly seven years. The market’s expectations are for two more BoJ interest rate hikes within the coming 12 months. The end of the central bank’s negative rates policy is the first step toward monetary policy normalization.

Chinese stocks ended the week on Thursday, down due to concerns about the continuing property sector downturn which continues to weigh on investor confidence. The Shanghai Composite Index declined by 1.23% while the blue-chip CSI 300 retreated by 0.68%. The Hong Kong benchmark Hang Seng Index inched upward by 0.25%. At the China Development Forum, an annual summit for global business leaders, Chinese Premier Li Qiang announced to the Forum participants that the country is open to foreign investment. He also pledged that the government will accelerate measures to support growth in several sectors, including biological manufacturing artificial intelligence, and the data economy. Beijing’s pro-business message, however, coincides with many investors seeking evidence that China will further increase policy support to meet its growth goals. If the government conducts pro-market reforms, International Monetary Fund Managing Director Kristalina Georgieva said that China’s economy could expand a further 20% over the next 15 years.  

The Week Ahead

The March nonfarm payrolls report and the ISM manufacturing PMI are among the important economic data scheduled for release this week.

Key Topics to Watch

• S&P U.S. manufacturing PMI (final) for March
• Construction spending for February
• ISM manufacturing for March
• Fed Governor Lisa Cook speaks
• Factory orders for February
• Job openings for February
• Fed Governor Michelle Bowman speaks (Tuesday, April 2)
• Cleveland Fed President Loretta Mester speaks (Tuesday, April 2)
• San Francisco Fed President Mary Daly speaks
• U.S. auto sales for March
• ADP employment for March
• S&P U.S. services PMI (final) for March
• Fed Governor Michelle Bowman speaks (Wednesday, April 3)
• ISM services for March
• New York Fed President John Williams moderates discussion
• Fed Chair Jerome Powell speaks
• Fed Vice Chair for Supervisions Michael Barr speaks
• Fed Governor Adriana Kugler speaks (Wednesday, April 3)
• Initial jobless claims for March 30
• U.S. trade balance for February
• Philadelphia Fed President Patrick Harker speaks
• Richmond Fed President Tom Barkin speaks (Thursday, April 4)
• Chicago Fed President Austan Goolsbee speaks
• Cleveland Fed President Loretta Mester speaks (Thursday, April 4)
• Minneapolis Fed President Neel Kashkari speaks
• Fed Governor Adriana Kugler speaks (Thursday, April 4)
• U.S. nonfarm payrolls for March
• U.S. unemployment rate for March
• U.S. hourly wages for March
• Hourly wages year-over-year
• Richmond Fed President Tom Barkin speaks (Friday, April 5)
• Dallas Fed President Lorie Logan speaks
• Fed Governor Michelle Bowman speaks (Friday, April 5)
• Consumer credit for March

Markets Index Wrap-Up

Stock Markets

U.S. stock markets across the board have rallied during trading the week. The Dow Jones Industrial Average (DJIA) rose by 1.97% and the Dow Jones Total Stock Market climbed even higher, up by 2.27% for the week. The latter was closely mirrored by the S&P 500 Index which gained by 2.29%, but they were both outperformed by the technology-tracking Nasdaq Stock Market Composite which rose by 2.85%. The NYSE Composite gained by 1.48% and, consistent with the robust performance of the markets, the investor risk perception indicator, the CBOE Volatility Index (VIX), dipped by 9.37% for the week.

The markets welcomed the dovish messaging that the Federal Reserve transmitted by leaving the federal funds rate unchanged at 5.25% to 5.50% during its March FOMC meeting. The Fed also released an updated set of economic projections but underscored that it would maintain its outlook regarding rate cuts this year. Communication services led the gains for the week along with technology shares, accounting for the Nasdaq’s outperformance. Artificial intelligence chipmaker NVIDIA reached a record high on Friday, helped by a late rise that resulted in the stock’s market capitalization rising to almost $2.4 trillion. Also boosting sentiment in the technology sector are reports that Apple might partner with Google parent Alphabet in offering generative artificial intelligence tools. Lagging sectors included health care and real estate. In the coming week, trading is scheduled to end on Thursday in observance of the Good Friday holy day.

U.S. Economy

The inflation readings for January and February were somewhat hotter than expected. Nevertheless, Fed Chair Jerome Powell commented that the Fed sees “inflation coming gradually down to 2% on a sometimes-bumpy path.” Powell seemed not overly concerned about the uptick in the inflation data in January and February, which he attributed to seasonal noise. Other economic data for the week supported hopes that the economy was continuing to expand without reigniting inflation pressures. The more significant economic news was February’s existing home sales which was reported on Thursday, surprising most observers by jumping 9.5%. A gauge of current manufacturing in the Mid-Atlantic region drew back slightly from February’s reading, although it surprised investors by signaling a second straight month of expansion. Prices paid by businesses in the region fell back to their lowest level since May 2020, sending encouraging signals to the market. The announcement by the Fed also helped to drive longer-term Treasury yields lower over the week, and consequently bond prices higher since bond prices and yields move in opposite directions.

Metals and Mining

Despite its slight gain, the price of gold ended the week somewhat heavy as the precious metal encountered some selling pressure after it hit a new record high above $2,220 per ounce. Partly, the bullish sentiment may be attributed to the most recent interest rate expectations announced by the Federal Reserve. While the central bank still sees three rate hikes this year, it is embarking at the same time on a new easing cycle as inflation is expected to remain above its 2% target. Stubborn inflation simultaneous with falling interest rates suggests that real interest rates will be headed lower and put some pressure on the U.S. dollar, thus weakening two major headwinds for gold.

The spot market for precious metals moved sideways for the week and ended mixed. Gold closed the week at $2,165.44 per troy ounce, 0.44% higher than its last weekly close at $2,155.90. Silver ended at $24.67 per troy ounce for the week, down by 2.06% from last week’s closing price of $25.19. Platinum closed the week at $898.35 per troy ounce, a drop of 4.32% from last week’s close at $938.89.  Palladium ended the week at $987.93 per troy ounce, which is 8.61% lower than the previous week’s ending price of $1,080.98. The three-month LME prices of the industrial metals were also mixed. Copper gained slightly at 0.71% from last week’s close at $8,887.50 to end this week at $8,950.50 per metric ton. Aluminum rose by 2.22% over last week’s close at $2,251.50 to end this week at $2,301.50 per metric ton. Zinc declines marginally by 0.92% from last week’s closing price of $2,548.00, thus ending this week at $2,524.50 per metric ton. Tin            descended by 1.37% from its last weekly close at $28,258.00 for a closing price this week of $27,872.00 per metric ton.

Energy and Oil

Some downward momentum for ICE Brent was created by renewed hopes of a potential ceasefire in Gaza. ICE Brent slid back to $85 per barrel as reports of the U.S. urging Ukraine to halt strikes on Russian refineries presented another opportunity to curb the existing geopolitical risk facing oil. While the current correction weighs on oil prices, outlooks for the rest of the year are getting increasingly bullish as evidenced by the EIA lifting its Brent forecast to $88 per barrel, up $4 per barrel from last month. In other news from the US’s neighbor to the north, the first-ever cargo of Access Western Blend from TMX was bought by Chinese refiner Sinochem as line fill of Canada’s Trans Mountain Expansion pipeline moves ahead. The purchase price was reportedly at a $5 per barrel discount to Brent on a delivered China basis.

Natural Gas

For the report week from Wednesday, March 13 to Wednesday, March 20, 2024, the Henry Hub spot price climbed by $0.33 from $1.24 per million British thermal units (MMBtu) to $1.57/MMBtu. Concerning Henry Hub futures, the price of the April 2024 NYMEX contract increased by $0.041, from $1.658/MMBtu at the start of the report week to $1.699 by the week’s end. The price of the 12-month strip averaging April 2024 through March 2025 futures contracts increased by $0.021 to $2.709/MMBtu. Regional natural gas spot price changes were mixed for this report week, ranging from an increase of $1.46/MMBtu at Algonquin Citygate to a decrease of $0.28/MMBtu at SoCal Citygate.

International natural gas futures prices increased for this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.82 to a weekly average of $9.27/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.70 to a weekly average of $8.84/MMBtu. In the week last year corresponding to this report week (the week from March 15 to March 22, 2023), the prices were $13.24/MMBtu in East Asia and $13.14/MMBtu at the TTF.

World Markets

European stocks rallied this week, with the pan-European STOXX Europe 600 Index ending near a record high after climbing 1.03% in local currency terms. The buy-up was largely due to dovish signals from central banks in the member countries which boosted risk-on sentiment. Germany’s DAX surged by 1.58% while Italy’s FTSE MIB gained 1.30%. Some indexes went against the current, such as France’s CAC 40 Index which declined by 0.17%. On the other hand, the UK’s FTSE 100 shot up by 2.70%. European government bond yields fell on a weak purchasing managers’ survey for Germany and a reduction in Swiss interest rates. Bond yields in the UK also fell, mainly due to the Banks of England (BoE) striking a dovish note at its policy meeting. For a fifth consecutive time, the BoE kept interest rates unchanged at 5.25%, but the market interpreted this time around as a more dovish signal due to the 8-to-1 in favor of the move. Two policymakers who previously called for a hike in borrowing costs reversed their stance in favor of keeping the rate unchanged. In the meantime, the output of goods and services in the eurozone came close to stabilizing in March, as PMI surveys showed, with a first estimate recording only a marginal decline, as noted by S&P Global.

Japan’s stocks registered weekly gains due mainly to yen weakness resulting from the Bank of Japan’s (BoJ’s) unexpected hawkish tilt. The BoJ raised interest rates for the first time since 2007, earlier than was priced in by market participants. Both of Japan’s indexes rallied to record-high levels, with the Nikkei 225 Index gaining 5.6% and the broader TOPIX Index advancing by 5.3%. Positive investor sentiment was further generated by expectations that the U.S. Federal Reserve will cut interest rates in 2024, based on the state of inflationary conditions and the growth prospects of the economy. On fixed-income instruments, the Japanese government bond yields descended after the Bank of Japan (BoJ) took a policy shift that the market had been much anticipating and exited its negative interest rate policy. Following reports from the previous week of major companies agreeing to robust pay increases in annual wage talks, the BoJ announced that it will set a policy rate target of 0 to 0.1%, up from -0.1%. The central bank Governor Kazuo Ueda, however, affirmed that financial conditions would remain accommodative since inflation expectations were still below the 2% target. Consumer price inflation as measured by the consumer price index (CPI) annualized over February rose to a higher-than-anticipated 2.8%, a sharp rise from 2.0% in January.

Chinese equities suffered a sell-off, leading indexes southward due to concerns about the property sector slump offsetting better-than-expected economic data. The Shanghai Composite Index slid by 0.22% while the blue-chip CSI 300 declined by 0.70%. The Hong Kong benchmark Hang Seng Index lost by 1.32%. In the January-February period, property investment in China fell by 9% from a year earlier, which is an improvement over the 24% slump in December. In the first two months of the year, property sales by floor area descended by 20.5% after slumping 23% in December. Beijing’s roll-out of numerous pro-growth measures to arrest China’s yearslong real estate slump accounted for the slower pace of declines in property investment and sales. Most investors, however, chose to remain on the sidelines or approach China’s property sector with caution. Developers continue to struggle with high debt levels and weak homebuyer demand. Other data show that other segments of China’s economy were starting to pick up. Industrial production rose by 7% in January and February year-on-year which is higher than forecasted and up from 6.8% in December. Also in the first two months of 2024, fixed-asset investment grew by 4.2% year-on-year compared to 3% in December amid higher infrastructure growth. Retail sales surged for the same period, largely due to the weeklong Lunar New Year holiday.

The Week Ahead

Consumer confidence, PCE inflation data, and the second revision of the fourth-quarter GDP are among the important economic data expected to be released in the coming week.

Key Topics to Watch

• Atlanta Fed President Raphael Bostic speaks
• Chicago Fed President Austan Goolsbee speaks
• New home sales for February
• Fed Gov. Lisa Cook speaks
• Durable-goods orders for February
• Durable-goods minus transportation for February
• S&P Case-Shiller home price index (20 cities) for January
• Consumer confidence for March
• Fed Gov. Christopher Waller speaks
• Initial jobless claims for March 23
• Gross Domestic Product (2^nd revision) for Fourth Quarter
• Chicago Business Barometer (PMI) for March
• Pending home sales for February
• Consumer sentiment (final) for March
• Advanced U.S. trade balance in goods for February
• Advanced retail inventories for February
• Advanced wholesale inventories for February
• Personal income (nominal) for February
• Personal spending (nominal) for February
• PCE Index for February
• Core PCE Index for February
• PCE (year-over-year)
• Core PCE (year-over-year)
• Fed Chair Jerome Powell speaks

Markets Index Wrap-Up

Stock Markets

As investors weighed the upside surprises in inflation data and signs of moderating consumer spending, stocks moved mostly lower for the week. Among the major indexes, the Dow Jones Industrial Average (DJIA) held up the best, ticking downward 0.02% while the Dow Jones Total Stock Market also slipped 0.34%. The S&P 500 Index also lost 0.13% with both midcap and small-cap issues down. The technology-tracking Nasdaq Stock Market Composite likewise lost 0.70%, as did the NYSE Composite which fell by 0.23%. All Russell indexes were down.

The CBOE Volatility Index (Vix), which is an indicator of investor risk perception, descended by 2.24% over the week. The DJIA’s performance, which was the least eroded among the indexes, was helped by the record high it reached on Wednesday before falling back to end the week only slightly down. Among the sectors, energy shares outperformed due to higher oil prices, and technology shares lagged due to weakness in NVIDIA and other chipmakers.

U.S. Economy

Consumer inflation data were released on Tuesday. The consumer price index (CPI) released by the Labor Department was modestly in line with consensus expectations, rising 0.4% in February. However, core prices (excluding food and energy) rose also by 0.4% which is slightly higher than expected, It appears that investors took the upside core surprise largely in stride, in part due likely to a continued increase in shelter costs which is generally considered a lagging indicator of overall inflation trends. Apparel costs, which remained flat over the past 12 months, jumped 0.6%.

On Thursday, producer inflation data were released and, compared to the surprise caused by their consumer counterpart, triggered greater investor concern. The producer price index (PPI) rose by 0.6% in February, the most in six months. It is also roughly double consensus estimates, and even if core producer prices rose by only 0.3%, this latter indicator also exceeded expectations, albeit slightly. Headline producer prices ascended by 1.6% year-over-year, which is well above expectations and at its highest level since September. The data appears to contradict hopes that low inflation or even deflation in producer prices would eventually result in lower prices paid by consumers.

The retail sales report, which was also released on Thursday, also surprised investors with its weakness. The Commerce Department reported that retail sales climbed by only 0.6% in February, missing expectations largely due to higher gasoline prices. It should be recalled that retail sales data are not adjusted for inflation. Even online sales notably declined by 0.1% which results in a sharp deceleration from the 6.4% increase over the past 12 months. Also increasing at a slower pace are sales at restaurants and bars which rose by 0.4%. The slower growth is largely interpreted as growing caution among consumers. As if to confirm this, the survey of consumer sentiment conducted by the University of Michigan the results of which were released on Friday indicated a modest decline in consumer expectations. The survey’s lead research concluded that Americans perceived “few signals that the economy is currently improving or deteriorating.”

Metals and Mining

The gold market consolidated this week, presumably before it resumes its upward trend after digesting its strong gains over the past weeks. Analysts have opined that gold and silver are just beginning to take off to higher levels after breaking a consolidation pattern that prevailed over the years. The reason for the market’s bullishness on these precious metals is that they have been largely ignored in the broader marketplace, making the breakout with volume much more significant. While the record highs realized by gold may partially be attributed to bullish speculation, this breakout coincides with holdings in gold-backed exchange-traded funds holding at multi-year lows. This situation in the marketplace may continue to support the long-term gold uptrend.

The spot prices of precious metals were mixed. Gold lost by 1.06% from its week-ago close at $2,178.95 to end at $2,155.90 per troy ounce. Silver, on the other hand, gained by 3.62% from its closing price last week of $24.31 to end this week at $25.19 per troy ounce. Platinum gained by 2.67% from its last weekly closing price of $914.49 to close this week at $938.89 per troy ounce. Palladium likewise gained by 5.60% from its close last week at $1,023.63 to this week’s close at $1,080.98 per troy ounce. The three-month LME prices of base metals were also mixed. Copper gained by 2.86%, from its last weekly close at $8,640.50 to its recent weekly close at $8,887.50 per metric ton. Aluminum slid by 0.07% from its closing price last week of $2,253.00 to its closing price this week of $2,251.50 per metric ton. Zinc gained by 0.51% from last week’s closing price of $2,535.00 to this week’s closing price of $2,548.00 per metric ton. Tin gained by 2.36% over the week, from last week’s close at $27,607.00 to this week’s close at $28,258.00 per metric ton.

Energy and Oil

For the first time since November, the oil markets are exhibiting bullish sentiments with the breakout of Brent futures above the $85 per barrel significant price level. This may be taken as an indication that the market is finally starting to shed its bearish cautiousness. The Ukraine drone strikes on Russian refineries this week, as well as declining U.S. inventories, appear to be motivating factors for the oil price breakthrough. According to Russia’s Energy Ministry, several large-scale drone attacks took place this week on Russian refineries in Nizhny Novgorod, Ryazan, and Novoshakhtinsk, triggering an impending rise in Russia’s crude exports in defiance of OPEC+ commitments. In the meantime, China’s offshore-focused state oil firm CNOOC announced the discovery of Kaiping South in deepwater South China Sea. The find is believed to contain more than 100 million tons of oil equivalent in recoverable volumes.

Natural Gas

For the report week spanning Wednesday, March 6 to Wednesday, March 13, 2024, the Henry Hub spot price fell by $0.42 from $1.66 per million British thermal units (MMBtu) to $1.24/MMBtu, the lowest price in inflation-adjusted terms since at least 1997. Concerning Henry Hub futures prices, the price of the April 2024 NYMEX contract decreased by $0.271 from $1.929/MMBtu at the start of the report week to $1.658/MMBtu at the week’s end. The price of the 12-month strip averaging April 2024 through March 2025 futures contracts declined by $0.142 to $2.688/MMBtu.

International natural gas futures price changes were mixed throughout the report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.09 to a weekly average of $8.45/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.23 to a weekly average of $8.15/MMBtu. In the week last year corresponding to this week (week beginning March 8 and ending March 15, 2023), the prices were $14.22/MMBtu in East Asia and $14.57/MMBtu at the TTF.

World Markets

The European stock market inched upwards this week largely on robust corporate earnings and hopes that interest rates would come down soon. The pan-European STOXX Europe 600 Index went up by 0.31% in local currency terms, in effect realizing its eighth straight weekly gain. Major indexes in the region were up. France’s CAC 40 Index gained by 1.70%, Italy’s FTSE MIB put on 1.61%, and Germany’s DAX rose by 0.69%. The UK’s FTSE 100 Index advanced by 0.94%. Due to growing confidence in Italy’s economic policy and increased demand for high-yield debt ahead of a likely reduction in borrowing costs later this year, the yield spread between German and Italian benchmark 10-year sovereign bonds narrowed significantly. European policymakers debated whether an interest rate cut may be needed in June. The European Central Bank (ECB) has signaled its preference for rate cuts to happen by midyear. They see a potential for the ECB to reduce borrowing costs at every subsequent meeting this year. While the risk of service inflation may pick up, policymakers will likely focus on slowing wage growth.

Japanese equities experienced losses for the week, with the Nikkei 225 declining by 2.5% and the broad TOPIX Index descending by 2.1%. The announcement of the highest average wage rise for members of Japan’s labor unions since the early 1990s elevated the likelihood of the Bank of Japan (BoJ) ending its negative interest rate policy in the near term. The BoJ has anchored its stance on the view that monetary policy adjustments will rely on the meeting of its 2% inflation target. This, in turn, is driven by inflation accompanied by wage growth. The consensus expectations of economists are now converging around an interest rate hike to take place in March or April. The central bank’s ultra-accommodative policy has weighed heavily on the yen and, as a result, boosted many of the country’s large-cap exporters who derive their revenues from overseas. Over the week, the yen weakened to the high end of JPY 148 versus the dollar range, from about JPY 147 at the end of the previous week. The yield on the 10-year Japanese government bond rose to 0.79% from its previous level of 0.73%, reaching its highest level in approximately three months in anticipation of the BoJ adjusting its monetary policy settings.

The Chinese stock markets climbed in response to the government’s measures aimed at market stabilization, boosting investor confidence amid a weak economic outlook. The Shanghai Composite Index advanced by 0.28% while the blue-chip CSI 300 gained by 0.71% for the week. The Hong Kong benchmark Hang Seng Index rallied by 2.25%. Economic reports revealed that China’s consumer price index exceeded consensus by rising by 0.7% in February year-over-year, reversing its January decline of 0.8%. This marks the first positive reading since August 2023 as food and services prices increased and consumption surged during the weeklong Luna New Year holiday. On the other hand, the producer price index plunged by a larger-than-expected 2.7% from one year ago, accelerating from January’s 2.5% decline and marking the 17^th monthly decline. This is the longest streak of declines since 2016. As China grapples with weak domestic demand, investors remained cautious on perceiving that deflation has bottomed out.

The Week Ahead

February housing starts, initial jobless claims, and the FOMC meeting are among the important economic data scheduled for release in the coming week.

Key Topics to Watch

• Home builder confidence index for February
• Housing starts for February
• Building permits for February
• FOMC interest rate decision
• Fed Chair Powell press conference
• Initial jobless claims for March 15
• Philadelphia Fed manufacturing survey for March
• S&P flash U.S. services PMI for March
• S&P flash U.S. manufacturing PMI for March
• U.S. leading economic indicators for February
• Existing home sales for February

Markets Index Wrap-Up

Stock Markets

Major indexes ended slightly down this week. The Dow Jones Industrial Average (DJIA) shaved off 0.93% while the Dow Jones Total Stock Market dipped by 0.21%. The broad-based S&P 500 Index came down by 0.26% while the technology-tracking Nasdaq Stock Market Composite fell even further, losing by 1.17%. On the other hand, the NYSE Composite bucked the trend to close higher by 0.91%. Investor risk perception, as measured by the CBOE Volatility Index (VIX), climbed by 12.43% in reaction to increased uncertainties in the market.

The week began with a sell-off on Tuesday, as the S&P 500 fell by more than 1% for the first time since mid-February due to disappointing policy announcements from China. Stocks regained upward momentum by midweek, however, as the large-cap S&P 500 and the S&P MidCap 400 shot to new record intraday highs alongside the Nasdaq Composite this week. The strong surge was attributable to growing expectations that the Federal Reserve may begin to cut interest rates sooner than previously speculated. Small-cap and value shares outperformed. On the contrary, mega-cap shares lagged partly due to a decline in Apple following reports that iPhone sales were slowing in China. This was also the reason that Nasdaq underperformed the broader indexes. Despite this apparent breakout, most of the market reacted to higher-than-expected unemployment reports by the week’s end.

U.S. Economy

Over the week, some vital economic data weighed on the markets. Most notably, the U.S. unemployment rate was recorded at its highest level in two years. The U.S. nonfarm-jobs report was mixed but overall, it pointed to a cooling labor market. While the total jobs added in February totaled 275,000 which exceeded the targeted 200,000, the previous month’s reading was adjusted sharply lower, from 353,000 to 229,000. Also, the unemployment rate climbed from 3.7% to 3.9%, nearing its highest in two years. The nonfarm payrolls report revealed a weaker-than-forecast February ADP private-payrolls report. This revealed a total of 140,000 jobs added, which was short of the expected 150,000.

Another report released over the week was the ISM Manufacturing and Services data. These ISM data showed a sharp pullback in the employment indexes, indicating a contraction in the manufacturing and services sectors of the economy. The ISM data are comprehensive surveys of supply-management fundamentals and are taken by analysts to be leading indicators of the economy’s manufacturing and services industries. Regarding the manufacturing sector, this is the fifth consecutive monthly contraction of the ISM Employment index, with 10 industries reporting a decrease in employment and four industries reporting employment growth in February. The ISM Employment index in the services sector showed contraction for the second time in three months. Nine industries reported a decrease while six appointed an increase, and some indicated that they intend to increase hiring later in the year.

Metals and Minin

The precious metals markets, particularly regarding gold prices, surged to a new high this week. The underlying strength in gold is attributed to the anticipation of a Federal Reserve cut in interest rates by June. This past week, Fed Chair Jerome Powell hinted at the Central Bank’s possible rate reduction in the next few months, boosting market confidence and pushing gold to a new high of $2,152 in international markets on Wednesday. Speculation on the prospective rate cuts has sparked bullish sentiments in domestic and international markets, goading gold prices even higher after breaking out beyond its long-term resistance level.

The spot prices of precious metals rallied to record highs. Gold rose to $2,178.95 per troy ounce, which is 4.61% higher than last week’s close at $2,082.92. Silver closed at $24.31 per troy ounce,        5.15% over the closing price last week of $23.12. Platinum closed this week at $914.49 per troy ounce, rising 2.95% above the previous week’s close at $888.26. Palladium ended last week at $1,023.63 per troy ounce, gaining 6.85% above the previous week’s ending price of $958.04.  The three-month LME prices of base metals followed the same trend as precious metals. Copper, which closed the previous week at $8,493.50, ended this week at $8,640.50 per metric ton, gaining 1.73% for the week. Aluminum, which last traded at $2,228.00 the previous week, closed this week at $2,253.00 per metric ton for a gain of 1.12%. Zinc, which previously closed at $2,426.00, ended this week at $2,535.00 per metric ton for a rise of 4.49%. Tin, which was previously priced at $26,556.00, had a closing price this week of $27,607.00 per metric ton for a weekly gain of 3.96%.

Energy and Oil

Oil prices continued on their flatlining this week, unaffected by positive trade data out of China, and strong Indian oil demand. The continued build-up in U.S. crude inventories and the skepticism surrounding extended voluntary cuts by OPEC+ worked to offset what would have been the positive momentum in crude. February 7 marked the date when ICE Brent futures settled outside the $80-85 per barrel bandwidth for the last time. They suggest that the price movement this week marks a month-long sideways movement for oil. In the meantime, Red Sea hostilities claimed their first casualties as three sailors died in the Houthi’s attack on the Greek-owned Barbados-flagged dry bulk tanker True Confidence. The incident occurred some 50 nautical miles off the coast of Arden.  

Natural Gas

For the report week covering February 28 to March 6, 2024, the Henry Hub spot price climbed $0.03 from $1.63 per million British thermal units (MMBtu) to $1.66/MMBtu. Regarding the Henry Hub futures, the price of the April 2024 NYMEX contract increased by $0.044, from $1.885/MMBtu at the start of the report week to $1.929/MMBtu at the end of the week. The price of the 12-month strip averaging April 2024 through March 2025 futures contracts rose by $0.012 to $2.829/MMBtu.

International natural gas futures prices climbed this week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.10 to a weekly average of $8.36/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands rose by $0.74 to a weekly average of $8.38/MMBtu.  In the week last year corresponding to this week (the week from March 1 to March 8, 2023), the prices were $14.21/MMBtu in East Asia and $13.66/MMBtu at the TTF.

World Markets

European stocks were up this week as the pan-European STOXX Europe 600 Index climbed for the seventh consecutive week. The Index broke out to hit a record high on its way to a 1.14% gain for the week. The major indexes surged this week. Italy’s FTSE MIB added 1.43%, France’s CAC 40 Index gained 1.18%, and Germany’s DAX inched up by 0.45%. Bucking the trend was the UK’s FTSE 100 Index slid down by 0.30%. The ten-year government bond yields for Germany, Italy, and France declined in reaction to the European Central Bank (ECB) retaining its monetary policy unchanged and signaling that interest rates could be cut in June. The ECB revised its inflation and economic growth forecasts downward while leaving its key deposit rate unchanged at 4.0%. They also indicated that discussions have begun on dialing back restrictive policy later in the year. The ECB President Christine Lagarde stated that “good progress” has been realized toward the 2.0% inflation target, but also cautioned that the Governing Council still needed to confirm that the reduction in inflation was sustainable.

Japanese stocks ended mixed over the week. The Nikkei 225 Index closed 0.56% lower while the broader TOPIX Index gained 0.64%.  Artificial intelligence and solid corporate earnings drove some exuberance in the market and boosted investor confidence in the week. Speculation swirled around the Bank of Japan’s (BoJ’s) probable monetary policy trajectory. There are signs that the central bank is moving closer to raising short-term interest rates out of negative territory, about which policymakers appear to be gaining greater conviction than previously thought. A BoJ board member suggested that a virtuous cycle of prices rising in tandem with wages (a stated precondition for monetary policy tightening) was in sight. Against this development, the yield on the 10-year Japanese government bond rose to 0.73% from 0.71% at the end of the previous week. The strength of the yen weighs on Japan’s exporters as they realize significant dollar-denominated revenues. Over the past three years, Japanese stock markets have significantly gained on the back of the currency’s weakness.

Chinese stocks gained this week resulting from the government’s recent market stabilization measures. Despite an uncertain economic outlook, investor confidence was significantly lifted by the roll-out of the measures. The Shanghai Composite Index climbed by 0.63% while the blue-chip CSI 300 added 0.2%. The Hong Kong benchmark Hang Seng Index pulled back by 1.42%. At the National People’s Congress (NPC), China’s parliament which started on March 5 and will end March 11, Beijing set an economic growth target of around 5% for 2024. This target is the same as last year’s target when China’s economy officially rose by 5.2%. Analysts have expressed skepticism, however, that the country would find it difficult to match this growth rate, which benefitted from a post-lockdown rebound in early 2023. Beijing set the budget deficit at about the same target as last year, which was initially at 3% before it was subsequently raised to 3.8% to accommodate more borrowing. The government said that it would issue RMB 1 trillion in special ultra-long central government bonds to further support economic growth.

The Week

CPI and PPI inflation data for February and retail sales data are a few of the important economic data scheduled for release in the coming week.

Key Topics to Watch

• NFIB optimism index for February
• Consumer price index (CPI) for February
• Core CPI for February
• CPI year-over-year
• Core CPI year-over-year
• Monthly U.S. federal budget for February
• U.S. retail sales for February
• Retail sales minus autos for February
• Producer price index (PPI) for February
• Core PPI for February
• PPI year-over-year
• Core PPI year-over-year
• Initial jobless claims for March 8
• Business inventories off January
• Empire State manufacturing survey for March
• Import price index for February
• Import price index minus fuel for February
• Industrial production for February
• Capacity utilization for February
• Consumer sentiment (prelim) for March

Markets Index Wrap-Up