Weekly News 2023/10/23-2023/10/27

 U.S. stocks closed mixed on Friday. The Dow closed 366.71 points, or 1.12%, to 32417.59 points; the Nasdaq rose 47.41 points, or 0.38%, to 12643.01 points; the S&P 500 index fell 19.86 points, or 0.48%, to 4117.37 points. All three major U.S. stock indexes recorded losses this week, with the Dow Jones Industrial Average falling 2.14%, the S&P 500 Index falling 2.53%, and the Nasdaq Composite Index falling 2.62%. The S&P 500 index fell more than 10% from the year's high on July 31 and officially entered the correction zone. The market is paying attention to the financial reports of large technology stocks such as Amazon.

Bank of America analyst Michael Hartnett believes that the S&P 500 index has fallen below the important mark of 4,200 points and may fall further to the 200-week moving average of 3,941 points. This level means that the index may still have 5% room for decline.

Analysts at JPMorgan Chase pointed out that 78% of companies that have released financial reports so far have exceeded expectations, but more and more companies say that consumer demand has declined and the economic environment has deteriorated.

On Friday, the core personal consumption expenditures (PCE) index rose 0.3% month-on-month in September, in line with analysts' expectations surveyed by Dow Jones and higher than 8 months level of 0.1%. Institutional analysis pointed out that the PCE indicator is a measure of underlying inflation favored by the Federal Reserve. If this uptick continues, the Fed may raise interest rates in the coming months. The Fed is widely expected to keep the funds rate at a range of 5.25%-5.5%, but Fed Chairman Powell has said that a strong economy and a tight job market may give the Fed reason to raise interest rates further.

 Tesla (NASDAQ: TSLA) has raised the price of its Model Y high-performance version, and industry analysts say it is under great pressure on profits. According to industry analysts, Tesla's move is a price adjustment based on increased profit pressure, and it is unlikely to be extended to other models. “While Tesla is facing profit pressure, it is also under pressure to hit its full-year sales target of 1.8 million vehicles.”

Amazons (NASDAQ: AMZN) net sales in the third fiscal quarter were US$143.083 billion, an increase of 13% compared with US$127.101 billion in the same period last year. Net profit increased by 244% to US$2.872 billion; diluted earnings per share were US$0.94, compared with US$0.28 in the same period last year. Amazon's third-quarter revenue and diluted earnings per share exceeded Wall Street analysts' previous expectations, and the company's outlook for fourth-quarter revenue also exceeded expectations. During its earnings call, Amazon assured investors that the company's future is bright in cloud computing and generative artificial intelligence (AI).

Intel's (NASDAQ: INTC) revenue in the third fiscal quarter was US$14.158 billion, a decrease of 8% compared with US$15.338 billion in the same period last year; net profit attributable to Intel was US$310 million, a decrease of 71% compared with US$1.019 billion in the same period last year. Intel's third-quarter revenue and adjusted earnings per share both exceeded Wall Street analysts' expectations.

ExxonMobil's (NYSE: XOM) net profit in the third fiscal quarter was US$9.1 billion, ending three consecutive quarters of profit decline. Adjusted earnings per share were US$2.27, lower than market expectations. The company raised its quarterly dividend to 95 cents per share, above market expectations of 94 cents. Free cash flow in the third quarter more than doubled from the previous quarter to $11.7 billion, much higher than market expectations of $9.36 billion.

 Bullish momentum in Bitcoin (BTC) has boosted the broader cryptocurrency market this week, with all crypto sectors recording gains, CoinDesk data showed on Friday. Bitcoin has gained more than 14% over the week and has recently been consolidating around $33,700 after hitting a new yearly high of $35,000 but failing to break above that price level. Bitcoin‘s performance was broadly in line with the CoinDesk Market Index’s (CMI) gain of 14%.

Antoni Trenchev, founder of cryptocurrency lender Nexo, said: “ETF mania finally pushed Bitcoin to break through this year‘s key resistance level of $31,000 to $32,000. And this enthusiasm seems unstoppable, Bitcoin spot ETF or the U.S. Securities and Exchange Commission. It’s only a matter of time before SECs approval, and there may be a basket of spot ETFs released one after another.” The analysis pointed out that investors who are optimistic about cryptocurrency are paying attention to the Grayscale Bitcoin Trust (GBTC), which is expected to be converted into a Bitcoin spot ETF, and the Bitcoin spot ETF applications of BlackRock and other financial companies will be approved by the SEC.

The market believes that once the Bitcoin spot ETF is approved for issuance, it will pave the way for wider adoption of digital assets. However, these prospects must first pass the SEC. The regulatory agency has always had a tough attitude towards cryptocurrencies. However, it is only a matter of time before the spot Bitcoin ETF passes the review.

Alex Kuptsikevich, an analyst at broker FxPro, said that the cryptocurrency market fell rapidly last year and that this time we should be careful to see if history repeats itself. He sees the $31,000 to $46,000 range as white space without many hurdles.

 On Friday, as political uncertainty and debt concerns underpinned near-term safe-haven demand. Gold bulls have recaptured the $2,000 level. Spot gold surged to $2,006.21 per ounce, a new high since May, with an increase of 1.07%. The most active December gold futures contract on the New York Mercantile Exchange settled at $1,998.50 per ounce during the official trading session on Friday, only up $1.10, an increase of 0.05%.

Personal income increased by $77.8 billion in September, following a 0.4% increase in August and beating consensus expectations for a 0.5% gain, according to estimates released by the U.S. Bureau of Economic Analysis. Spending on services increased significantly by $96.2 billion, or 0.8%; spending on goods also increased by $42.5 billion, or 0.7%. The core PCE price index increased by 0.3% month-on-month in September 2023, the largest increase in four months, in line with market expectations, and accelerated from the 0.1% increase last month. The Fed's still preferred inflation gauge fell slightly to 3.7% year-on-year, the lowest level since May 2021, but still well above the central bank's 2% target.

Ole Hansen, head of commodity strategy at Saxo Bank, said the Fed's hawkish stance continues to support investors' purchases of gold, a key part of the market needed to support current price levels.

Edward Moya, senior market analyst at OANDA, said the market may be sensitive to the U.S. Federal announcement next week. “Will they need to issue more bonds than expected in the fourth quarter？ As more supply comes into the market, we don't know where the demand is going to come. There are some catalysts here that could cause significant problems in the bond market, which could be positive for gold.” Political uncertainty in the Middle East has pushed gold prices back up.

 The deteriorating outlook for Europe has questioning whether global oil demand will remain resilient next year. On the other hand, U.S. third-quarter GDP data exceeded expectations and continued to achieve strong economic growth. A higher dollar and an uncertain economic outlook appear to be bothering oil. Oil prices rose on Friday on concerns that tensions between Israel and Gaza could spill over into a wider conflict, disrupting global crude supplies. U.S. West Texas Intermediate crude oil (WTI) rose $2.33 per barrel, or 2.8%, to close at $85.54 per barrel. Brent crude oil futures rose $2.55/barrel, or 2.9%, to close at $90.48/barrel.

Brent's premium over WTI rose to its highest level since March, making it more attractive for energy companies to send ships to the United States to receive crude for export. Brent crude fell about 2% this week.

The U.S. crude benchmark has been volatile over the past four days, rising 2% or more one session and quickly retreating the next. WTI ended the week down 3.6%.

Developments in the Middle East have so far not directly affected oil supplies, but many are concerned about disruption to exports from countries such as Iran, a major crude producer.

Goldman Sachs analysts maintained their first-quarter 2024 Brent crude price forecast at $95 a barrel but added that falling Iranian exports could lead to a 5% rise in the benchmark price.

U.S. consumer spending surged in September but cooled in early 2024. Some economists believe the Fed has stopped raising interest rates to combat inflation, which could slow economic growth and reduce oil demand. However, economists say they expect high inflation to continue to plague the world economy next year.

 U.S. economic data continues to have an important impact on the dollar. This week, U.S. third-quarter GDP data beat expectations and showed the economy is growing at its fastest pace since mid-2012. The U.S. dollar index continued to rise this week, opening at 106.16, hitting a maximum of 106.89, a minimum of 105.36, and finally closing at 106.58, a weekly increase of 0.42, or 0.39%.

The Bank of England will hold a monetary policy meeting next week, and the market generally does not expect any changes. On the other hand, although the Federal Reserve is also expected to remain on hold, economic data has increased the prospect of potential interest rate hikes, which makes the dollar stronger than the pound. This week GBP/USD opened at 1.2164, hit a maximum of 1.2289, a minimum of 1.2070, and finally closed at 1.2121, a weekly decline of 0.0042, or 0.35%. On the other hand, the European Central Bank kept interest rates steady this week, with market consensus suggesting they are no longer raising rates. As inflation slows, the euro zone is on the brink of recession, and economic uncertainty continues to increase, the European Central Bank ends its ten consecutive interest rate hikes, so the trend relative to the dollar is similar to that of the pound. EUR/USD opened at 1.0595 this week, hit a maximum of 1.0695, a minimum of 1.0521, and finally closed at 1.0559, a weekly decline of 0.0034, or 0.32%.

Next week, financial markets will usher in a veritable “super week”, with the Bank of Japan, the Federal Reserve and the Bank of England holding monetary policy meetings. The Federal Reserve and Bank of England are likely to remain unchanged, but the Bank of Japan may adjust policy again.

OnePro Special Analyst

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