On May 9, 2023, U.S. equity markets took a pause after a strong rally on Friday, May 5. The struggle for a clearer direction comes ahead of Wednesday’s inflation reading, which is expected to show the consumer price index (CPI) likely climbed 0.4% in April after gaining 0.1% in March. Producer prices, weekly jobless claims, and consumer sentiment data are also lined up for the week. In this daily market update, we will delve deeper into the movements of various assets and their implications.
U.S. Equity Markets:
On May 8, the Dow Jones Industrial Average fell 55.69 points, or 0.17%, to 33,618.69, the S&P 500 gained 1.87 points, or 0.05%, to 4,138.12, and the Nasdaq Composite added 21.50 points, or 0.18%, to 12,256.92. The pause in the markets after last week’s rally indicates the need for more clarity on the current economic situation. The upcoming inflation reading will play a crucial role in determining the next steps for the markets.
Foreign Exchange Market:
On Monday, the dollar firmed up, shaking off earlier weakness. The Dollar Index rose 0.08% to trade at 101.38, a better showing than the one-year low of 100.78 reached last month. EUR/USD fell 0.15% to 1.1003, while GBP/USD fell 0.12% to 1.2614. The expected rate increase by the Bank of England (BoE) on Thursday will be closely watched by investors.
Crude oil prices rose over 2% overnight as recession fears eased, and some traders saw crude’s three-week slide on demand worries as overdone. Brent crude settled $1.71, or 2.3% higher at $77.01. U.S. West Texas Intermediate (WTI) crude also gained $1.82, or 2.6%, to $73.16. Alberta declared a state of emergency over the weekend in response to wildfires that have displaced nearly 30,000 people and prompted energy producers to shut in at least 185,000 barrels of oil equivalent per day, about 2% of Canada’s output. The situation in Alberta will have an impact on oil prices and supply.
Gold prices were relatively flat on Monday, holding above $2,000/oz, benefiting from steady haven demand as a string of U.S. bank collapses underlined the increasing economic pressure from high interest rates. Spot gold was relatively flat at $2,021/oz, while COMEX gold futures were marginally lower at $2,020.40/oz.
Cryptocurrency Markets Fall Amid Regulatory and Technical Challenges
Most digital assets saw a significant slump on Monday, led by bitcoin (BTC), after crypto exchange Binance temporarily suspended its withdrawals of BTC due to high volumes and increased processing fees. BTC was changing hands at $27,425, down 5% after reaching a day’s high of $28,986.
Ethereum (ETH) also fell 4% to $1,837, while BNB (BNB), the native token of the Binance exchange and the fourth-largest digital asset, slipped 3.4% to $312.85. XRP (XRP), the sixth-largest digital asset, sank 7.5%, while Cardano (ADA), the seventh largest, dropped 4.6%. Dogecoin (DOGE), Polygon (MATIC), and Solana (SOL) were down 6.6%, 7.2%, and 8.7%, respectively.
The drop in cryptocurrency prices is partly due to increased regulatory scrutiny, as policymakers around the world move to regulate the growing digital asset market. Additionally, technical challenges and concerns about market manipulation have also contributed to the recent volatility in the cryptocurrency market.