On Monday, May 1, 2023, most countries celebrated Labour Day, leading to market closures in many places around the world. The exception was Canada and the U.S. where the market remained open.
Last Friday, the U.S. stock indices continued its surge despite speculations of a Federal Reserve rate hike. The Federal Open Market Committee (FOMC) is slated to meet on May 2-3, while the U.S. jobs report for April is due out on Friday.
There are high chances that the Fed will raise the Fed Funds Rate by 25 basis points this time, marking the 10th straight rate hike by the Fed. In that case, the key rate would stand at 5%-5.25%, the highest since 2006.
The focus, however, is speculation over when the Fed will start cutting rates. U.S. bond market pricing suggests that the Fed will pause this month until November. Powell, the Fed Chair, sounding outright dovish would be a surprise, providing another tailwind for financial markets, leading to a rally of risk assets.
Last week, the Dow Jones Industrial Average rose 272 points, or 0.8%, to 34,098.16, while the S&P 500 gained 34.13 points, or 0.83%, to 4,169.48, and the Nasdaq Composite added 84.35 points, or 0.69%, to 12,226.58. The S&P rose 1.5% in April, and the Dow added 2.5%, while the Nasdaq was barely higher. For the week, the S&P rose 0.9%, the Dow’s weekly gain was in line, and the Nasdaq rose 1.3%.
In March, U.S. consumer spending remained unchanged, while underlying inflation pressures remained strong, increasing expectations of a 25 basis points interest rate hike next week by the Fed.
Personal consumption expenditures (PCE) edged 0.1% higher in March after rising 0.3% in February. In the 12 months through March, the PCE price index increased 4.2% after climbing 5.1% in February.
In the currency markets, the Dollar rose last Friday after data showed inflation growth in March. In contrast, the Japanese Yen fell across the board after the Bank of Japan decided to maintain ultra-low interest rates, as expected.
EUR/JPY was up 1.5% at 150, while EUR/USD rose 1.8% last week. USD/JPY, on the other hand, was 1.7% higher at 136.235, posting its best weekly performance since late February. The Dollar Index rose 0.2% to 101.65.
In the commodities market, the West Texas Intermediate for June delivery was up by 2.7% on Friday, closing at $76.78. For the week, it remained in the red, with a loss of 1.4%. On the other hand, London-traded Brent settled higher by 1.5%, at $79.45 on its June delivery contract. For the week, the U.S. crude benchmark remained in the red, with a loss of 1.4%.
Gold futures ended April with a slight increase, securing their second consecutive monthly gain as investors bet that the dollar would weaken again soon, with gold remaining near the key $2,000/oz mark. The final post-settlement price for gold futures for June delivery was $1,999.40/oz, up a mere dime from the previous day’s closing price of $1,999.10. However, the session high of $2,004 indicated that the market was still bullish. This is the second consecutive month that gold futures have shown gains, with five out of the last six months being positive.
Spot gold, on the other hand, closed at $1,990.06/oz, representing a 0.1% increase or $2.21. Spot gold, as well as the COMEX most-active futures, have both decreased by approximately 2.5% from their peak of roughly $2,050 on April 13. The recent selloff in gold was due to the rebound of the dollar, which is expected to occur following a quarter-point rate hike by the Federal Reserve this week.
Bitcoin (BTC) saw a 4.54% rise in April but has been trading below $30,000 since April 19. Ether (ETH) fell 0.06% over the week to $1,911. Experts predict that BTC will need to surpass $32,000 to confirm an upward trend.
Last week, the Render Network’s token (RNDR) was the most significant gainer. The token rose by 40.03% to $2.50 in anticipation of two proposals for the protocol’s expansion to the Solana blockchain, which were both approved on Wednesday. The Render Network allows idle graphics processing units to be used for the digital rendering required in fields such as 3D modeling, gaming imagery, and virtual reality.
