2024.2.5 OKREBATE Global Market Weekly Report
1. Blockbuster news preview:
On Tuesday, February 6th
18:00 Euro-zone December retail sales m / m
On Wednesday, February 7th
23:30 US EIA crude oil inventories (10,000 barrels) for the week ended February 2
On Thursday, February 8th
21:30 U. S. initial jobless claims (10,000) for the week ended February 3
23:30 EIA gas stocks (BCF)
On Friday, February 9th
21:30 Canadian January (10000)
2. This week for the global markets
1. U. S. jobs data stunned the world, with yields, the dollar and stocks rising
On February 2, the employment data released by the Department of Labor and s Bureau of Labor Statistics caused a shock in global markets. Data showed nonfarm payrolls rose 353,000 in January, far exceeding expectations, breaking recent market rate cut expectations and underscoring the strong U. S. economic performance. This was followed by a surge in the benchmark 10-year Treasury yield to above 4%, a rise in the dollar against all major currencies, and a broad rally in global equities.
The move comes after Fed Chairman Jerome Powell warned in a statement on Wednesday that inflation was “still too high,” reversing market expectations of an imminent rate cut.
Meanwhile, the Meta, marking Facebook’s 20th anniversary, surged 20.3% to a record first dividend. Revenue and profit from advertising sales during the holiday shopping period also exceeded expectations.
After the US jobs data, money markets expect the Fed to cut its target interest rate by 123.8 basis points by the end of the year from the current range of 5.25% to 5.5%, down from 140.3 basis points before the data. Futures cut bets on a March rate cut to 20.5% from 36.5%, and the possibility of a 25 or 50 basis point cut in May fell to 61.8% from 91.6%.
The yield on the two-year note, which reflects interest rate expectations, surged to 4.370%, while the 10-year yield rose to 4.028%. It was the biggest one-day gain since May 2023, and the biggest gain for a 10-year Treasury note since July 2023. As the dollar rose, gold prices fell, and the rise in yields made interest-free gold less attractive.
The turmoil in the Middle East puts the oil market under pressure
Despite planned new US strikes on Iranian-backed groups, oil prices stabilized in early Asian trading on Monday following continued attempts to reach a ceasefire in the Israeli-Palestinian conflict.
Both benchmarks fell about 7% last week. Stocks fell 2% Friday as stronger-than-expected U. S. jobs data suggested rates could be more-than-expected, and progress in a cease-fire talks between Israel and Hamas.
However, investors remained cautious about the escalation of the Middle East conflict, as the United States said it would further hit Iran-backed groups in response to deadly attacks on U. S. troops in Jordan. In addition, the U. S. continued to fight Iranian-backed Houthis in Yemen, launching 36 attacks on the groups on Saturday, disrupting global oil trade routes, although supplies were largely unaffected.
“The oil market is likely to continue to reduce the risk of supply disruptions in the Middle East, which could keep Brent crude futures below $80 a barrel,” analysts said.
China’s stock market chatter, the Securities Regulatory Commission announced a severe crackdown on bad behavior
On February 5th, after falling to a five-year low, the China Securities Regulatory Commission vowed that it would take steps to prevent abnormal market volatility, but did not specify the measures. The regulator also said they would crack down on bad short selling to attract more long-term capital investment, and said they would listen carefully to investors.
Last week, China’s blue-chip CSI 300 index amid signs of panic selling and forced liquidation in leveraged trading (. CSI300) Down nearly 5%, falling to its lowest level since early 2019.
Many Chinese investors have expressed their frustration and anger through social media, including a blog account of the U. S. Embassy in Beijing.
In a statement on Sunday, the China Securities Regulatory Commission said it would step up efforts to implement measures to stabilize the market, “stabilize expectations and confidence, and resolutely guard against abnormal market fluctuations”. In addition, the CSRC said it would crack down on market manipulation, malicious short selling, insider trading and fraudulent stock issuance, and said it would “listen to investors and respond to their concerns in a timely manner.”
The China Securities Regulatory Commission has previously announced a series of measures to support a depressed stock market, including limiting corporate shareholders from selling shares, restricting short selling and slowing listings, but has so far failed to stop the market’s slide.
3. Technical analysis of gold and crude oil:
[Gold XAUUSD]
Trading strategy:
Turning point: 2005.00
Above 2005.00, bullish, with a target of 2090.00, then 2135.00.
Alternative strategy
At 2005.00, bearish, target at 1970.00 and then 1930.00.
Technical comments
The RSI technical indicators are above the 50% neutral region.
[crude oil WTI]
Trading strategy:
Turning point: 73.00
Below 73.00, bearish, with a target of 71.80, then 71.30.
Alternative strategy
On 73.00, bullish, with a target at 73.70, then 74.40.
Technical comments
A break below 71.80 will trigger a drop to 71.30.
[USDJPY USDJPY]
Trading strategy:
Turning point: 148.00
Above 148.00, bullish, with a target of 149.10, then 149.50.
Alternative strategy
At 148.00, bearish, with a target price set at 147.65, then 147.30.
Technical comments
From a technical perspective, the RSI technical index is above the 50% neutral area.