Weekly News 2024/01/01-2024/01/05

 U.S. stocks closed higher on Friday. The Dow rose 25.77 points, or 0.07%, to 37466.11 points; the Nasdaq rose 13.77 points, or 0.09%, to 14524.07 points; the S&P 500 rose 8.56 points, or 0.18%, to 4697.24 points. But all major stock indexes posted losses for the week on Wednesday, ending a nine-week winning streak. The Nasdaq Composite Index fell 3.25%, the S&P 500 Index fell 1.52%, and the Dow Jones Industrial Average fell 0.59%. The three major U.S. stock indexes ended their nine-week winning streak.

On Friday, the U.S. Department of Labor released the closely watched non-farm payrolls data for December. Nonfarm payrolls data showed that U.S. employers added 216,000 jobs in December, far exceeding the 170,000 average estimates of economists surveyed by Dow Jones. It also increased significantly compared with November's data. November's non-farm payrolls data was revised down to 173,000. The unemployment rate held steady at 3.7%, below expectations of 3.8%.

A hot labor market may prevent the Fed from cutting interest rates prematurely. Currently, the market expects the Federal Reserve to start cutting interest rates as early as March, but the Fed has not given a timetable for interest rate cuts. Some are also concerned that a rate cut could come later than expected.

Deutsche Bank strategists led by Jim Reid said that strong employment data has heightened doubts about the Federal Reserve's interest rate cut in March. Deutsche Bank analysts said in a research report: “By Thursday's close, market forecasts that the probability of the Fed cutting interest rates by 25 basis points in March fell to 69%, which is the lowest level since the December meeting when they announced the dot plot was more dovish than the market expected. U.S. Treasuries subsequently sold off across the board, with Treasury yields generally moving higher.”

 Tesla (NASDAQ: TSLA) recalled 1.6 million vehicles in China due to potential safety hazards in the autonomous driving system. In accordance with the requirements of the “Regulations on the Management of Recalls of Defective Automobile Products” and the “Implementation Measures of the Regulations on the Management of Recalls of Defective Automobile Products”, Tesla filed a recall plan with the State Administration for Market Regulation. The State Administration for Market Regulation stated that for vehicles within the scope of this recall, when the automatic assisted steering function is turned on, the driver may misuse the level 2 combined driving assistance function, increasing the risk of vehicle collision and posing safety risks.

Apple (NASDAQ: AAPL) is getting attention. Apple stock has suffered two downgrades in the past three days. Analysts have pointed out that the company's iPhone sales prospects are worrying. Barclays downgraded Apple's stock rating from “hold” to “underweight” on Tuesday, the first time the bank has given Apple such a rating since 2019. Barclays analyst Tim Long said in a report that iPhone sales and product mix remain weak, and Mac, iPad and wearable devices also lack momentum to rebound. On Thursday, Harsh Kumar, chief analyst at Piper Sandler, another investment bank, also downgraded Apple's rating because the sluggish macroeconomic environment will suppress iPhone demand.

Exxon Mobil (NYSE: XOM), the largest U.S. oil company, became the second large company within a week to say it would set aside impairment charges in the fourth quarter. Both companies did so for the same reason. It's because of California's problems. Exxon Mobil said in a filing Thursday that it expects impairments to be between $2.4 billion and $2.6 billion. The expected writedown is due to the idle assets of the upstream Santa Ynez Unit (SYU).

 Bitcoin prices turned higher again after a rollercoaster ride at the start of the year, recovering from Wednesday's flash plunge as investors regained confidence that U.S. regulators are close to approving the successful launch of the first U.S. Bitcoin spot exchange-traded fund (ETF). Investors' confidence in the imminent approval of ETFs that directly hold this digital asset was quickly restored. Bitcoin prices rose by more than 4% on Thursday, after recording the largest one-day decline since November 2022 on Wednesday. Bitcoin has gained more than 15% since early December as the Jan.

However, cryptocurrency analysts from Bloomberg Intelligence predicted in a subsequent report that the probability of the SEC approving a Bitcoin ETF before January 10 is as high as 90%. According to media reports it stated that the Bitcoin ETFs applied for issuance by multiple companies will be approved, and specific notices are expected to be announced in the near future.

Cryptocurrency traders are relieved by a new wave of applications from potential Bitcoin ETF issuers such as ARK Invest and 21Shares. ARK and 21Shares filed an amended securities registration document for their Bitcoin ETF. However, some analysts warned that these revised documents do not necessarily mean that the Bitcoin ETF application will be approved.

Bitcoin prices started the year trading at $42,580 and rose more than 7.5% in the first two days. This resulted in the BTC price successfully breaching the $45,000 ceiling for the first time in 20 months.

However, the rally was short-lived as the price faced short selling, causing it to give back all its gains. Since then, the price has been trading within a comprehensive range. Additionally, the technical indicator RSI shows a neutral trend as the moving averages continue to remain flat.

 According to the U.S. labor market data report in December, 216,000 non-farm jobs were added in the month, significantly exceeding expectations and last month's performance, while average hourly earnings also increased. The release of the US jobs report had an impact on the gold market. Gold prices fell as the labor market performed better than expected, undermining expectations for the Federal Reserve to cut interest rates quickly this year. This data indicates that the Fed may not quickly shift to ease monetary policy, which will benefit non-yielding assets such as gold. However, gold prices have given up most of their gains as the market further assesses economic conditions.

Quincy Krosby, chief global strategist at LPL Financial, said that although non-farm payroll data has been revised downward for two consecutive months, this report shows that the economic background remains solid. After the employment report was released, the market's assessment of the possibility of the Federal Reserve cutting interest rates in March dropped significantly to below 60%.

Gold prices fluctuated after mixed U.S. economic data, with spot gold closing higher on the last trading day of the first week of this year. Spot gold closed 0.09% at $2,045.30 per ounce.

Gold shows strong momentum in 2023. In a high interest rate environment, gold prices have risen more than most investments. Looking forward to 2024, industry insiders believe that gold prices may continue to strengthen and may even reach a record high. This forecast is mainly supported by factors such as the Federal Reserve's policy shift, geopolitical risks and global central bank gold purchases. However, investors also need to pay attention to the risks brought about by changes in global economic fundamentals. Technical analysis shows that gold bulls still have the overall advantage, but it is gradually weakening.

 Crude oil prices rebounded on Friday amid continued tensions in the Middle East. The international crude oil benchmark ended higher in the first week of the year, rebounding from losses triggered by a sharp build in U.S. gasoline and distillate stockpiles on Thursday.

WTI February crude oil futures closed up $1.62/barrel, or 2.24%, with a cumulative increase of more than 3.01% this week. Brent crude oil futures rose by $1.17 per barrel, an increase of 1.51%.

The conflict between Israel and Hamas has escalated, and the situation in neighboring countries has become tense. U.S. Secretary of State Antony Blinken traveled to the Middle East to try to ease tensions. U.S. Treasury Secretary Yellen said Red Sea shipping don't had a material impact on energy prices. PVM analyst Tamas Varga pointed out that risks posed by tensions in the Middle East are an important factor in the price rebound.

U.S. non-farm employment growth exceeded expectations in December, prompting financial markets to drop expectations of a March interest rate cut by the Federal Reserve. Jeffrey Roach, chief economist at LPL Financial, said the report reduced the chances of the Fed cutting interest rates in March. Views at Thursday's Federal Reserve meeting that inflation was under control raised concerns about overly restrictive monetary policy.

Bank of America expects Brent crude to trade in a range of $70/barrel to $90/barrel. However, spare capacity could steepen the oil curve, putting pressure on industry values. Bank of America also predicts that Brent crude oil price will be US$80/barrel in 2024 but may fall to US$70/barrel in the long term.

John Kilduff, a partner at Again Capital LLC, said geopolitical tensions were driving up trading premiums and strong jobs data also pointed to strong fuel demand.

 The U.S. dollar 2024 is entering with its best start since 2011. As the market has begun to reduce expectations for the Federal Reserve to cut interest rates, the U.S. dollar index has continued to rise, rising by more than 0.9% this week, and on Tuesday the first trading day of the new year hit the highest level in nearly ten months since March 7 2023.

According to data from the U.S. Commodity Futures Trading Commission (CFTC) compiled by the media, non-commercial traders, including hedge funds, asset managers and other speculative market participants, significantly increased their short U.S. dollar positions in the week ending Tuesday. Overnight, after the U.S. non-farm payrolls report was released before the U.S. stock market opened, the U.S. dollar index rose rapidly and once rose above 103.10. The gains then fell back, rising nearly 0.7% on the day; after the ISM service industry data was released, the U.S. dollar index accelerated its downward trend and quickly erased the flat gains turned into losses, falling 0.5% on the day and closing down less than 0.1%.

The strong rebound in the U.S. Dollar Index is not good news for traders who are bearish on the U.S. dollar. However, the sudden rise in the U.S. dollar also seems to make leveraged funds long in the U.S. dollar hesitant. CFTC data showed that leveraged funds cut their long bets on the U.S. dollar to about 76,100 contracts, a decrease of about 18,200 contracts from the previous week and the lowest level in 10 weeks. Leveraged funds also added to long-term, sizable net short positions in the yen while sharply reducing bearish bets on the euro.

OnePro Special Analyst

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