Weekly News 2023/05/08-2023/05/12

 U.S. stocks ended lower on Friday. The Dow fell 8.89 points, or 0.03%, to 33300.62; the Nasdaq fell 43.76 points, or 0.35%, to 12284.74; the S&P 500 fell 6.54 points, or 0.16%, to 4124.08. For the week, the Dow fell 1.1% and the S&P 500 fell 0.29%, both of which were losses for the second straight week. The Nasdaq rose 0.4% for the week, its third straight weekly gain.

Investors are still worried about the US debt ceiling crisis. According to reports, the debt ceiling meeting scheduled for Friday between US President Joe Biden and congressional leaders has been postponed until next week. The White House said on Friday afternoon that congressional staff would continue talks on the debt ceiling over the weekend. U.S. Treasury Secretary Yellen on Friday dismissed the “payment prioritization” proposal. Analysts said that this shows that if the U.S. Treasury Department has no money, it may choose to directly default on its debt.  Yellen previously said there was uncertainty about when the U.S. Treasury would run out of cash. She also pointed out that there is no good solution to the debt limit problem other than raising the debt ceiling. For now, Republicans are adamant about seeing the White House hand over proposals to cut spending.

The producer price index (PPI) released on Thursday was weaker than expected, indicating that inflationary pressures in the United States have declined, but failed to ease investors' fears of a future recession.

 On Thursday, JD.com Group (NASDAQ: JD) announced its financial report for the first quarter ending March 31, 2023. The financial report shows that JD.coms revenue in the first quarter was 243 billion yuan, a year-on-year increase of 1.4%. The net profit attributable to ordinary shareholders of the company was 6.3 billion yuan, compared with a net loss of 3 billion yuan in the same period last year.

The financial report released after the market closed on Wednesday showed that Disneys (NYSE: DIS) second-quarter net profit was lower than expected, and the number of Disney+ subscribers fell by 2% month-on-month.

On Thursday, PacWest Bancorp (NASDAQ: PACW) shares fell sharply. The report released by PacWest Bancorp on the same day stated that the bank had a sharp outflow of 9.5% of its deposits last week and planned to complete the sale of strategic assets in the second quarter to improve liquidity and capital adequacy.

Cryptocurrency trading platform Coinbase (NASDAQ: COIN) said it has created a global advisory board to strengthen the company's relationships with strategic stakeholders around the world. The first commissioners will be several former members of Congress and company executives. The committee will also work with members of Coinbase Asset Managements academic and regulatory advisory committees, including former SEC Chairman Jay Clayton.

Streaming giant Netflix (NASDAQ: NFLX) reportedly plans to cut spending by $300 million in 2023 as it continues to boost profitability in a highly competitive market. The company is looking to cut costs because plans to broadly crack down on password sharing in the U.S. and elsewhere were delayed from the first quarter to the second. The change is expected to bring new revenue.

 Bitcoin was down 9.42% for the week to $26,365 as of Friday. The world's largest cryptocurrency by market capitalization has been trading below $30,000 since April 19. Ethereum fell 7.3% this week to $1,765, losing key support at $1,800.

Investors weighed a news report that two of the largest institutional liquidity providers are cutting back on crypto trading operations in the U.S. Earlier this week, Bloomberg reported that Jane Street and Jump Crypto, two of the largest crypto market makers, will Backing off on cryptocurrency exchanges in the U.S. as U.S. regulators continue to crack down on the fledgling industry. When CNBC's “Crypto World” contacted the companies, Jane Street declined to comment and Jump did not respond.

David Wells, chief executive of Enclave Markets, said: “Overall, we will see more price volatility as many of the large market makers have significantly reduced their offerings.” He also added: “The larger market makers is the liquidity provided will increase the stability of the price. Since the order book is generally thin, you will see more frequent up and down gaps.”

At the end of February, Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued a joint statement warning banks about the liquidity risks associated with banking crypto firms. The issue of new liquidity in the market became a more important theme with the closure of Silvergate and Signature Bank, the two main fiat onramps to the crypto market.

Bitcoin broke through the $30,000 mark a month ago for the first time since June, but has struggled to sustain gains. Chartists have been looking at $25,200 as an important hurdle, a level below which would spark fears of a deeper decline.

 Gold prices hit their lowest in a week on Friday and also fell for the week, weighed down by a rise in the dollar and U.S. Treasury yields. The dollar hit a one-month high and posted its biggest weekly gain since September, making gold less attractive to buyers of other currencies. The rise in 10-year U.S. Treasury yields further weakened the appeal of non-yielding gold. However, Bob Haberkorn, senior market strategist at RJO Futures, said: “Given that we will see persistent debt ceiling issues in the next few weeks, the upside for a stronger dollar is limited, and if this continues, gold will benefit.”

U.S. Treasury Secretary Janet Yellen said the exact date for when the Treasury would run out of cash to service U.S. debt was still uncertain, but she would keep Congress updated on changes to that date, which could be as early as June 1 day.

Lukman Otunuga, senior research analyst at FXTM, said the bullish sentiment in the gold market remained strong amid expectations of a rate cut by the Federal Reserve later this year, adding that traders had already priced in a 25 basis point rate cut by September.

However, Fed Governor Bowman reiterated the Fed's stance that it will raise interest rates if necessary to combat still high inflation.

Spot silver was down 0.9 percent at $23.95 an ounce, down more than 6 percent for the week, its worst week in seven months. Platinum fell 3.5% to $1,054.93 and palladium fell 2.5% to $1,511.90.

 Oil prices ended more than 1 percent lower on Friday, posting their third straight weekly loss, as the market weighed supply concerns against renewed economic concerns about the United States. As uncertainty over the U.S. debt ceiling and monetary policy prompted a flight to safety. Uncertainty over the U.S. debt ceiling has added upward pressure on oil prices. The number of U.S. initial jobless claims rose to a one-and-a-half-year high, raising concerns about an economic recession. Oil prices may be under pressure in the short term.

John Kilduff, a partner at Again Capital LLC, said: “The lack of confidence in the economy is translating into safer dollars and is also contributing to pessimism about oil demand.”

The number of active U.S. oil and gas rigs fell to the lowest in nearly a year this week, with the weekly decline in natural gas rigs the largest since February 2016, energy services firm Baker Hughes said in a closely watched report on Friday.

The market has drawn some support from forecasts of supply shortages in the second half of the year, although Iraqi Oil Minister Abdul Ghani said Iraq does not believe OPEC+ will cut oil production further at its next meeting in June.

The U.S. Department of Energy may start buying back oil to replenish the Strategic Petroleum Reserve (SPR) after completing a release mandated by Congress in June, the U.S. energy secretary said. This also brought some support to the market.

 The dollar rose against the euro and sterling on Friday, posting its biggest weekly gain since February, as investors turned to the safe-haven greenback after consumer confidence data stoked concerns about the U.S. debt ceiling and monetary policy.

U.S. consumer confidence slipped to a six-month low in May, a survey by the University of Michigan showed on Friday, as they worried that a political wrangling over raising the federal government's borrowing limit could trigger a recession. Consumers' long-term inflation expectations jumped this month to their highest level since 2011, bad news for the Fed, which last week signaled it may pause its fastest monetary policy tightening cycle since the 1980s.

Recent data showing a slowing economy has given the Fed reason to pause rate hikes at its June meeting. Earlier data showed that the U.S. consumer price index (CPI) fell to 4.9% year-on-year in April. Moreover, initial jobless claims rose more than expected last week. But the labor market is still tight. Federal Reserve Governor Bowman said that if inflation remains high, the Fed may need to raise interest rates further.

Sterling fell 0.5% to $1.2448, while the euro fell 0.6% to $1.0851, having touched a one-month low a day earlier. The dollar index rose 0.6 percent to 102.69 and was up 1.4 percent for the week, its biggest weekly gain since February.

Joe Manimbo, senior market analyst at Convera wrote: “This week's dollar rally has been driven by multiple factors. Although stronger, it is too early to tell whether the dollar's weakness has reversed. The market needs to withdraw rate cut expectations to give the dollar meaningful upward momentum.”

OnePro Special Analyst

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