Weekly News 2023/05/01-2023/05/05

 U.S. stocks closed higher on Friday. The Dow rose 546.64 points, or 1.65%, to 33674.38; the Nasdaq rose 269.01 points, or 2.25%, to 12235.41; the S&P 500 rose 75.03 points, or 1.85%, to 4136.25. The three major U.S. stock indexes were mixed this week, with the Nasdaq up less than 0.1%, the S&P 500 down 0.8%, and the Dow down 1.24%.

On Friday, regional banks were broadly higher. The SPDR S&P Regional Bank ETF (KRE) rose 6.4%. Shares of regional banking firms have been under pressure this week as traders worried that other institutions could suffer the same fate as Silicon Valley Bank and Signature Bank. Both banks collapsed in March. Liz Young, director of investment strategy at SoFi, believes that while the regional banking sector rebounded on Friday, the impact of the banking crisis is not over.

In terms of economic data on Friday, the U.S. Labor Department reported that U.S. non-farm payrolls increased by 253,000 in April. Economists polled by Dow Jones Newswires expected an increase of 180,000. The U.S. unemployment rate dropped unexpectedly to 3.40% in April, compared with 3.50% and 3.60% in the previous value and expected value; the average hourly wage in the U.S. increased by 4.40% in April, 0.2 percentage points higher than the previous value and expected value.

Before the release of the non-farm payrolls data, the Federal Reserve announced a 25 basis point rate hike on Wednesday and signaled that it would pause its interest rate hike campaign. But Fed Chairman Jerome Powell pointed out that it is too early to start cutting interest rates.

 Apples (NASDAQ: AAPL) revenue in the second quarter of fiscal year 2023 was US$94.84 billion, compared with market expectations of US$92.981 billion and US$97.3 billion in the same period last year; iPhone revenue in the second quarter was US$51.33 billion, expected to be US$48.97 billion; product revenue in the second quarter was US$73.93 billion, Analysts expected $71.91 billion.

Microsoft (NASDAQ: MSFT) is working with Advanced Micro Devices (AMD) to fund the latter's expansion into the field of artificial intelligence (AI) chips. It's part of Microsoft's multi-pronged strategy to acquire more of the coveted AI component. The two companies are teaming up as an alternative to Nvidia. Currently Microsoft is providing financial support to AMD and working with the chipmaker to develop an artificial intelligence chip code-named Athena (Athena).

The U.S. Securities and Exchange Commission (SEC) is investigating the actions of First Republic executives ahead of the bank's sale to JPMorgan (NYSE: JPM). The SEC is investigating whether First Republic executives used inside information to trade improperly.

Meta (NASDAQ: META) has poached a team from British artificial intelligence (AI) chip company Graphcore, who previously worked at Graphcore until late last year. It is reported that the team has a total of 10 people.

An Amazon (NASDAQ: AMZN) spokesman confirmed that the company is building a team to develop artificial intelligence tools to generate photos and videos for merchants to use in ad campaigns on its platform, a move that could help diversify its advertising business.

 The price of ether (ETH) surged on Friday (May 5) as investors bet on the latest cryptocurrency. Ether closed up 5.61 percent at around $1,990, according to Coin Metrics. Currently, it remains below the key $2,000 level, which it briefly breached after the Shapella upgrade in April. Earlier in the day, Ethereum rose more than 6 percent to hit a high of $1,999.59.

Bitcoin closed at $29,501.16 and is slowly recovering towards the $30,000 mark, a level it has struggled to regain since mid-April.

Market players try to bring the meme back to cryptocurrencies. At the start of the year, cryptocurrencies rallied, but largely with low volatility.

Michael Rinko, a research analyst said that “there is currently a lot of memecoin activity on the chain, which generates a lot of gas fees”, that is, transaction fees on the Ethereum network, and “promotes further deflation of ETH”, which means that Its supply is decreasing rather than increasing.

Conor Ryder, a research analyst said: “One of the main reasons for ETH's rise is due to the recovery of meme coins. Whatever you think about meme coins, the fact is that they drive users to trade on Ethereum. Transactions, which help the network earn more fees. Thanks to the return of Memecoin, Ethereum gas fees have recovered, hitting a one-year high just today.” Ethereum closed the week up 4.53%, its second straight gain and seventh out of the past eight weeks. Bitcoin ended the week up just 0.35%. It was the second straight week of gains for Bitcoin and the third in four weeks.

 Gold prices fell sharply on Friday after stronger-than-expected U.S. jobs data dampened expectations for a rate cut by the Federal Reserve. At the close, gold fell 1.61% to $2016.37. But it was up 1.3 percent for the week. Spot gold surged to $2,072.19 on Thursday, just shy of a record high of $2,072.49, after the Federal Reserve signaled on Wednesday that its rate hike cycle may be over. U.S. gold futures settled down 1.5 percent at $2,024.80.

Earlier data showed that U.S. job growth accelerated in April and wage growth was strong. “The data above won't lead to a rate hike in June, but it may serve as a warning to those fantasizing about a rate cut,” said Tai Wong, an independent metals trader. 10-year U.S. Treasury yields rose after the jobs data, denting the metal's appeal and also weighing on gold. Markets also focused on developments surrounding the U.S. banking sector and the federal debt ceiling.

Since the collapse of Silicon Valley Bank, the health problems of regional banks in the United States have been under magnified scrutiny. While the stock prices of several banks with relatively weak financial conditions have been continuously attacked, deposits have also been lost after depositors flicked away. First Republic Bank After the financial report was released at the end of April to show how alarming the speed of deposit flight, it was taken over and sold by the US government within less than a week, and the selling pressure on regional bank stocks also heated up again. Spot gold hit a record high of $2,079.38 per ounce this week.

Silver fell 1.8% to $25.60 an ounce, platinum rose 1.7% to $1,057.25 and palladium rose 3.4% to $1,496.96.

 Oil prices rose on Friday, but posted their third straight weekly loss, falling sharply ahead of a hike in benchmark interest rates earlier in the week and amid concerns that a U.S. banking crisis will slow the economy and dent fuel demand.

Brent crude futures closed up $2.80, or 3.9%, at $75.30 a barrel. U.S. crude futures up $2.78, or 4.1%, at $71.34 a barrel, after falling for four days during which the contract hit its lowest level since late 2021.

Benchmark Brent crude futures are down about 5.3% for the week, while U.S. crude futures have plunged 7.1%, despite a rebound on Friday. Both benchmark contracts fell for the third straight week, the first time since November.

“Crude oil is trying to reverse the recent price sell-off caused by rising interest rates and recession fears mainly in the banking sector,” said Dennis Kissler, senior vice president of trading at BOK Financial in New York.

“A 25 basis point rate hike is fully priced in, so the focus will be on how Fed Chairman Jerome Powell can quell the fresh panic surrounding the banking sector turmoil while maintaining the Fed's tightening line,” said Yeap Jun Rong, market analyst at IG.

A better-than-expected jobs report helped ease some fears of an imminent recession, stemming in part from renewed worries in the banking sector. Investors also widely expect the Fed to pause rate hikes at its June policy meeting.

 The dollar pared earlier gains against the euro on Friday but held firm against the yen after U.S. job and wage growth beat economists' forecasts in April, but March job gains were revised down.

The dollar has retreated from a 20-year high hit in September last year as investors adjusted for expectations that the Fed may be at or near the end of its tightening cycle, while other central banks, including the European Central Bank, have turned more hawkish.

Investors are pricing in the possibility of the Federal Reserve cutting interest rates in the second half of the year. Still, while the economy is slowing, there are still areas of strength that are making investors hesitant to be bearish on the dollar for now.

The dollar index hit a session high of 101.77 earlier, before falling back to 101.19, down 0.13% on the day. The euro fell as low as $1.0967 before bouncing back to $1.1026, up 0.11%. USD/JPY rose 0.40% to 134.79 yen.

JPMorgan technical analysts Jason Hunter pointed out on Friday that there is a bearish divergence on the EUR/USD daily chart, and that the euro's rally has stalled, but “is not decisively over.” Sustained weakness in the euro below the $1.0909 and $1.0831 levels would confirm a short-term trend reversal, while a break below $1.0762 “would suggest a more significant trend reversal is in the making,” the bank said.

The euro also fell against the pound on Friday, hitting 0.8711, its weakest since Dec. 20. Consumer price data due next week is the next major focus for the U.S. economy.

OnePro Special Analyst

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