Yesterday, the market experienced fluctuations influenced by the CPI data from Wednesday, aligned with the possibility of an interest rate cut, with inflation meeting expectations in April. Indices are in their best condition, with most stocks maintaining their positive trends. Oil traded in the $78 range, and Bitcoin, like other risky markets, started a good upward movement. Gold also reached higher levels due to the weakening of the dollar.
If you haven’t read the previous report, you can read it [here].
Economic Events:
The latest Consumer Price Index (CPI) data released on Wednesday played a significant role in shaping market movements. The inflation figures for April met expectations, reinforcing the possibility of an interest rate cut by the central bank. This anticipation led to positive momentum across various sectors, with major indices performing exceptionally well. The alignment of inflation data with market forecasts has bolstered investor confidence, contributing to the overall positive sentiment in the markets.
Today, European inflation data was released, showing a rate of 2.7%, in line with market expectations. It is likely that Europe will adjust interest rates more frequently than the US this year. The latest inflation data highlights that Europe, despite facing significant challenges over the past year—including the Russia-Ukraine war, resulting insecurities, supply chain crises, droughts, and energy crises—has been more affected than the US. However, as these issues are being addressed, the euro appears to be experiencing a soft landing. The region has seen a favorable decline in inflation and substantial economic growth. Therefore, the first rate cut could be expected in the coming months. In the short term, the EUR/USD currency pair has shown a positive trend, primarily driven by strong US economic reports and dollar pricing.
Gold (XAUUSD):
Recent research indicates that the increase in gold recovery is primarily due to central banks’ increasing reluctance to invest in US Treasury securities. However, it is predicted that gold prices will remain at current high levels and may not experience much further increase. For example, on Thursday, May 15, the future price of gold increased by 1.36% to reach $2,392.05 per ounce.
This record in gold recovery is not due to a significant increase in demand, but rather explained by buyers’ increased willingness to pay more and some speculative activities. Specifically, central banks such as the People’s Bank of China are more willing to pay, driven more by political motives than economic ones. However, this shift in direction is not as extensive as imagined.
Studies show that the People’s Bank of China, by reducing its allocation in US Treasury securities, aims to reduce dependence on the dollar and the likelihood of being subjected to sanctions. Central bank purchases keep prices at structural high levels, but do not necessarily lead to further increases.
Overall, in the medium to long term, there are greater risks than opportunities for gold, but this commodity still plays a fundamental role in protecting against economic and systemic risks in financial markets.
US30:
On Wednesday, the Dow Jones Industrial Average (DJIA) achieved a significant milestone, crossing the 40,000 mark for the first time in its nearly 128-year existence. This historic event, along with record highs for the S&P 500 and Nasdaq, marked a momentous day for the US stock market.
As of the time of writing, the DJIA reached an intraday peak of 40,004.23, while the S&P 500 and Nasdaq stood at 5,319.63 and 16,778.31, respectively. This accomplishment follows just over three years after the Dow initially closed above 30,000 in November 2020 and less than three months since it surpassed 39,000 in February 2024.
Several factors contributed to the recent surge in the DJIA. Optimism regarding potential interest rate cuts by the Federal Reserve this year and a somewhat subdued inflation report played a role. Additionally, robust performances from major companies like Walmart (NYSE: WMT) and Boeing (NYSE: BA) bolstered the index’s ascent beyond 40,000. Walmart’s impressive sales growth and improved earnings outlook led to a surge in its shares.
Moreover, shares of Chubb (NYSE: CB) saw an uptick after Warren Buffett revealed the company as his mystery stock pick.
Positive sentiment in Chinese property stocks, driven by government initiatives to purchase surplus housing, also buoyed regional stock indexes. Furthermore, strong earnings reports from companies such as Nvidia (NASDAQ: NVDA), Dell Technologies (NYSE: DELL), and Cisco (NASDAQ: CSCO) contributed to the ongoing market rally.
The Dow Jones Industrial Average, established on May 26, 1896, tracks the performance of 30 large, publicly-traded companies listed on the New York Stock Exchange (NYSE) and NASDAQ. Initially closing at 40.94 points, it is one of the oldest and most closely monitored equity indices worldwide.
Throughout its history, the DJIA has reached significant milestones. In March 1999, it reached the 10,000-point mark, taking nearly 103 years to achieve.
Since then, its growth rate has accelerated, with the Dow surpassing 20,000 in January 2017, 30,000 in November 2020, and now 40,000 in May 2024.
Foreign Exchange Market (FOREX):
The UK is set to release its latest inflation figures a day later than usual, on Wednesday. In March, the headline Consumer Price Index (CPI) dropped to 3.2%, marking its lowest level since September 2021. There has been a notable decline in core CPI as well in the initial months of 2023, and April is anticipated to continue this trend, with the headline rate expected to decrease to approximately 2.0%, aligning more closely with the Bank of England’s target. This drop is largely attributed to the base effect stemming from adjustments to the energy price cap in the UK.
Source : LSEG
Bitcoin (BTC):
Millennium Management, established by Israel “Izzy” Englander in 1989, has disclosed holding $1.94 billion in spot Bitcoin ETF shares in its latest 13F filing. As of March 2024, the firm oversees $64 billion in assets under management (AUM).
Millennium’s spot Bitcoin ETF shares are sourced from various crypto funds, including FBTC, IBIT, ARKB, BITB, and GBTC, with a significant portion held in Blackrock’s IBIT, totaling nearly a billion dollars.
With a stellar track record since its inception, Millennium has consistently delivered average annual returns of approximately 14% for investors over more than three decades, solidifying its position as one of the world’s largest hedge funds by AUM.
In a separate 13F filing to the SEC, Morgan Stanley, a prominent financial services company founded in 1935 by Henry Sturgis Morgan, also disclosed holding spot Bitcoin ETFs. The filing reveals that Morgan Stanley holds approximately $270 million in spot Bitcoin ETF shares, particularly from Grayscale’s Bitcoin Trust (GBTC).
The entrance of significant financial players like Morgan Stanley and Millennium into the Bitcoin space through ETFs has been met with enthusiasm by members of the crypto community. These firms join the ranks of established names such as Susquehanna, Wells Fargo, JPMorgan, PNC Bank, and Truist Financial in holding spot Bitcoin ETF shares.
Furthermore, it has been revealed that Edmond de Rothschild Holding S.A., associated with the French branch of the renowned Rothschild banking family, also holds spot Bitcoin ETFs, according to its 13F statement filed with the SEC. Institutional investment managers with over $100 million in qualifying assets under management are required to file with the U.S. securities regulator and disclose such holdings.
US Crude Oil WTI :
The price continues to fluctuate within the supportive and resistance channels, namely at $77.50 and $79.80. Currently, an upward momentum has been established, so expectations are leaning towards a breakthrough beyond $79.80. The upward momentum formed could serve as a pivot point to initiate an upward trend.
Disclaimer: The views and opinions expressed in the blog posts on this website are those of the respective authors and do not necessarily reflect the official policy or position of Meta Trading Club Inc. The content provided in these blog posts is for informational purposes only and should not be considered as financial advice. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. Meta Trading Club Inc shall not be held liable for any losses or damages arising from the use of information presented in the blog posts.
