Weekly News 2023/11/06-2023/11/10

 U.S. stocks closed higher on Friday. The Dow rose 391.16 points, or 1.15%, to 34283.10 points; the Nasdaq rose 276.66 points, or 2.05%, to 13798.11 points; the S&P 500 index rose 67.89 points, or 1.56%, to 4415.24 points. All three major U.S. stock indexes recorded gains this week, with the Dow Jones Industrial Average rising 0.65%, the S&P 500 Index rising 1.31%, and the Nasdaq Composite Index rising 2.37%.

The future policy stance of the Federal Reserve has become the focus of market attention this week. Federal Reserve Chairman Jerome Powell, speaking at an IMF event on Thursday, said the central bank is not convinced it has done enough in the fight against inflation. Powell reiterated that the Fed would further tighten policy if necessary. But Atlanta Fed President Bostic said on Friday that policymakers can bring U.S. inflation back to target without further raising interest rates. “It's going to take some time and I don't think we need to do more to get to the 2% target,” he said.

Some investors said Powell's hawkish tilt on Thursday could be the result of recent easing of financial conditions, with yields tumbling in recent weeks.

In terms of economic data on Friday, the U.S. consumer confidence index fell for the fourth consecutive month in November as rising Treasury yields and the situation in the Middle East worried consumers.

The University of Michigan reported on Friday that a preliminary reading of the U.S. consumer confidence index fell to 60.4 in November from 63.8 in October, the weakest level since May. The consumer confidence index reflects how consumers feel about their financial situation and the overall economy. The survey found that consumer confidence fell the most among younger and lower-income Americans.

 Kumar, the global vice president of Amazon (NASDAQ: AMZN), said that front-loaded bonded warehouse logistics will save an average of 10 days compared with overseas direct mail delivery time, and can be delivered in as soon as 2 days. The bonded warehouse will cover many overseas shopping hot spots. Categories, such as health care, beauty, toys, clothing and shoes, etc. He said that China‘s Amazon Overseas Shopping is Amazon’s first localized overseas shopping store in the world. With the official completion of Amazons first pre-bonded warehouse in Ningbo, Chinese consumers will enjoy more convenient cross-border logistics services.

US technology company Palantir Technology's (NYSE: PLTR) third-quarter earnings exceeded expectations and a significant increase in trading volume. The company's quarterly report disclosed last week showed earnings per share of 7 cents and revenue increasing 16.8% year-on-year to US$558 million, both exceeding analyst expectations.

It was reported after the market closed on Monday that the U.S. government may allocate $3 billion to $4 billion to Intel (NASDAQ: INTC) for security facilities that produce chips for U.S. military and intelligence applications. In addition, Intel CEO Kissinger also said on Tuesday that the company is on track to “advance five processes in four years” as planned, and the 18A node is expected to be put into trial production early next year.

Rivian (NASDAQ: RIVN) an electric truck concept stock, disclosed that it achieved revenue of US$1.34 billion in the fiscal third quarter and an adjusted loss of US$1.19 per share, both better than market expectations. The company said it produced a record 16,304 vehicles at its Illinois production facility in the third quarter and expected to produce 54,000 vehicles for the full year, up from its previous forecast of 52,000 vehicle deliveries.

 Asset management giant BlackRock applied to launch an Ethereum spot ETF this news spurred the price of Ethereum the world's second largest cryptocurrency, breaking through the $2,000 mark, for the first time since April, and driving other cryptocurrencies. According to quotations on the CoinDesk website, Ethereum surged 10.2% on Friday to US$2,104.36. Ethereum has gained more than 75% so far in 2023. Bitcoin, the world's largest cryptocurrency by market value, once rose to US$37,970, hitting its highest level since May 2022. Later, Bitcoin's gains narrowed to 0.8%, to US$37,037.15 on Friday.

According to the website of the Delaware Secretary of States Division of Corporations, BlackRock registered the “iShares Ethereum Trust” on Thursday, making it the first step in requesting U.S. regulatory authorities to approve an Ethereum spot ETF. BlackRock registered the “iShares Bitcoin Trust” in June and August, and a week later applied to the U.S. Securities and Exchange Commission (SEC) to launch a Bitcoin spot ETF.

Clara Medalie, director of research at Kaiko, a cryptocurrency information company, said that the optimism of the Ethereum spot ETF is gradually increasing. Medali pointed out that “the cryptocurrency market has been desperately looking for catalysts in a series of bad news over the past year, and ETFs have brought a welcome respite to the market. If approved by the regulatory authorities, it is expected to usher in another strong rally. Judgment of the rally now It's still too early to get support, but it looks promising.”

Currently, several companies, including Ark Investment Management, Invesco and VanEck, have applied to launch spot Bitcoin ETFs and are awaiting SEC approval. The U.S. Securities and Exchange Commission has not approved any spot Bitcoin ETF so far. SEC Chairman Gary Gensler believes that spot Bitcoin ETFs are prone to fraud and manipulation.

 Gold prices fell to more than three-week lows on Friday, with spot gold falling nearly 1% to $1,939.01 an ounce.

Several Fed officials have warned against betting that the Fed will not raise interest rates again. Weakened safe-haven demand for gold has also weighed on gold prices, as markets price the risk premium of a war between Israel and Hamas at a much lower premium.

Tai Wong, an independent metals trader in New York, said: “Powell's remarks were less dovish than expected, which prevented gold prices from rising further.” Atlanta Fed President Bostic said in comments on Friday that the central bank needs to do more work on inflation. Bostic expects spending and demand to slow down in the future, but not over a considerable period of time. This situation bodes ill for gold, as higher interest rates drive up the opportunity cost of investing in gold, which has no yield. That notion has limited gold's sharp gains this year, keeping it well below the coveted $2,000 an ounce level. But so far in 2023, gold is still trading up about 8%.

Bart Melek, head of commodity strategy said: “Gold prices could rise above $2,100 in the second quarter of 2024, and the need for the Fed to start cutting interest rates will be a catalyst.”

Ole Hansen, head of commodity strategy, also believes gold prices may rise next week. “After pulling back around $60/oz without seriously challenging key support levels which is around $1,933/oz. ”As mentioned previously, given the current need to keep financial conditions relatively tight, Powell's hawkish turn is not surprising, which explains why gold traders ignored his comments. We maintain the view that the Fed is done raising and cutting interest rates.

 As worries about global demand intensified and risk premiums on the Palestinian-Israeli conflict receded. Meanwhile, Iraq expressed support for OPEC+ oil production cuts ahead of a meeting in two weeks, and some speculators covered large short positions ahead of weekend uncertainty. WTI climbed steadily for most of Friday, closing above $77 a barrel, a gain of 1.9%. Concerns about weakening demand and increasing supply are driving a long-term downward trend in oil prices. Still, prices ended the week with a 4% loss, marking the third consecutive weekly decline.

WTI December crude oil futures closed up $1.43, or 1.89%, at $77.17/barrel, down 4.15% this week. Brent crude oil futures for January closed up $1.42/barrel, or 1.77%, to $81.43/barrel, down 4.08% this week.

Brent crude and West Texas Intermediate fell for a third consecutive week for the first time since May, although both benchmarks exited technical oversold territory.

Phil Flynn, an analyst at Price Futures Group noted to Iraq's comments, Saudi Arabia and Russia confirmed this week that they would continue to cut oil production until the end of the year.

OPEC+, the Organization of the Petroleum Exporting Countries and their allies including Russia will meet on November 26. Iraq's oil ministry said Baghdad was committed to adhering to the OPEC+ agreement to set production levels.

Capital Economics analysts said that if oil prices continue to fall, OPEC+ may further cut supply. “We stand by our forecast for Brent crude prices to close around $85 a barrel this year and next. ”

According to data from the Intercontinental Exchange (ICE) in the week, the net long position of ICE Brent crude oil held by monetary funds fell by 24,245 contracts to 176,038 contracts, a new low in the past four weeks.

 Inflation data will be released soon, and changes in market expectations for the Fed's policy are worthy of attention. Several policymakers, including Fed Chairman Jerome Powell, have expressed uncertainty about whether interest rates will be enough to curb inflation. Currently, traders generally expect the Fed to lower interest rates by about 0.75 percentage points next year. Market expectations for the Fed's policy path will be tested after the inflation data is released.

According to agency surveys, the U.S. Consumer Price Index (CPI) in October is expected to increase by 0.1% from the previous month. CPI rose 0.4% month-on-month in September due to an unexpected surge in rental costs, but core inflationary pressures eased. In addition, the October employment report showed a slowdown in the labor market, triggering market discussions about interest rates peaking. If price increases cool further, discussions about peaking interest rates may become more heated. Meanwhile, the federal government faces the risk of a shutdown if lawmakers in Washington fail to pass a stopgap funding measure by a Nov. 17 deadline.

Recently, the trend of the US dollar has been affected by market expectations for the Federal Reserve to cut interest rates. Although Federal Reserve Chairman Jerome Powell pushed back on claims that interest rates have peaked, the dollar's rebound may not be long-lasting. Analysts believe the dollar is likely to weaken before the end of the year. Currently, long positions in the U.S. dollar are being reduced, and Societe Generale believes that the U.S. dollar/yen exchange rate may fall back to around 145-150, having recently hit a high of 151.74.

Interest rate cuts are negative for the U.S. dollar, but if the U.S. economy slows down significantly and has a global impact, it could quickly boost safe-haven demand for the U.S. dollar.

OnePro Special Analyst

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