How have global markets performed this week? Our weekly overview will underline the major highlights of this week’s forex, stocks, crypto, and commodity markets.
Forex weekly overview
The U.S. dollar struggled to gain momentum before this weekend, while the Australian dollar rose sharply after unexpectedly strong inflation data. The yen rose slightly before the Bank of Japan’s interest rate decision.
As investors wait for the Fed’s meeting next week, the currency market has generally been quiet in recent trading days.
Investors are also paying attention to the policy announcements made by the central banks of Europe, Canada, and Japan this week to find clues about the outlook for interest rates in the context of supply-side-driven global inflationary pressures.
As investors bet that inflation will raise interest rates earlier, U.S. short-term Treasury yields soared overnight and hovered slightly below these levels during European morning hours.
Standard Chartered Bank foreign exchange analysts wrote in a client report that they expect the currency market risk sentiment will be restricted before the Fed next week, and the hawkish risk is still underestimated.
The Australian dollar was flat against the U.S. dollar at 0.7504 US dollars that day
Data showed that Australia’s core inflation rate soared to a six-year high in September, 0.7536 US dollars overnight. It surprised the market, as the data prompted a spike in short-term yields.
The Reserve Bank of Australia will meet next Tuesday, and the market pricing is inconsistent with the statement that the Bank of Australia policymakers will not raise interest rates before 2024.
The U.S. dollar fell by about 0.3% against the yen, and the exchange rate was trading at 113.76-still in the near-term range and close to the four-year high JPY=EBS hit by the U.S. dollar against the yen a week ago.
The euro against the U.S. dollar EUR=EBS rose about 0.1% to 1.1606 US dollars. The European Central Bank, which is expected to meet on Thursday, will adopt a dovish stance.
The German government lowered its growth forecast for 2021 this year because semiconductor supply bottlenecks and rising energy costs have delayed the recovery of Europe’s largest economy.
As the Finance Minister announced the U.K.’s budget forecast EURGBP=D3, the pound fell 0.4% against the euro to 84.555 pence per euro.
Stocks weekly overview
Strong earnings from major companies boosted the stock market, and it moved higher by the end of the week.
The Dow Jones Industrial Average rose 175 points or 0.5%. The S&P 500 Index and the Nasdaq Composite Index rose 0.6% and 0.7%, respectively.
Ford had an outstanding performance in early trading. Its stock price rose more than 9% due to heavy earnings while also raising its guidance. The automaker said that the increase in semiconductor supply this quarter enabled it to increase production. Mastercard, Merck, and Caterpillar also moved higher due to improved earnings.
Despite the disappointing economic report released on Thursday, the stock market is still moving
The GDP growth rate in the third quarter was 2.0%, which was lower than the expected 2.8%. This reading marked a 6.7% slowdown in growth in the second quarter.
From a more positive perspective on the economy, the number of people applying for unemployment benefits for the first time every week is 281,000. Economists surveyed by Dow Jones estimate that 289,000 people will apply for unemployment benefits.
Nearly 40% of S&P 500 companies reported earnings, of which more than 80% exceeded Wall Street’s expectations. It is expected that the third-quarter profits of S&P 500 index companies will increase by about 37.6%.
There were some weaknesses in the earnings season. After disappointing quarterly reports, the shares of Twilio and eBay came under pressure on Thursday. The market will receive more significant earnings news later in the day, with technology giants Amazon and Apple releasing reports after the market closes.
Wall Street is also paying attention to events in Washington. The Democrats and President Joe Biden seem to have agreed on a $1.75 trillion social expenditure bill.
On Wednesday, the Standard & Poor’s 500 Index fell 0.5% and fell for three consecutive trading days. The blue-chip Dow fell more than 250 points, its first decline in four days.
Due to the earnings momentum this month, the major stock indexes have been rising. The S&P 500 Index rose 5.6% in October, which is expected to set its best monthly performance since November 2020. The Dow Jones Index rose 4.9% this month, while the Nasdaq Composite Index, dominated by technology stocks, rose 5.5%.
Crypto weekly overview
Just a week ago, Bitcoin hit an all-time high of nearly $67,000. But investors have been dumping the world’s most valuable cryptocurrency to support the new kid in town—or rather, the new dog—Shiba Inu.
The bitcoin price fell by more than 5% on Wednesday, and the transaction price was approximately $59,000, which was 12% lower than last week’s record level. For any other asset, such as stocks or bonds, a sharp drop in such a short period will be considered a market adjustment.
The market value of the total number of bitcoins in circulation now is 1.1 trillion U.S. dollars. This is almost half the size of the entire crypto market, valued at US$2.47 trillion.
The value of all other cryptocurrencies is much lower than Bitcoin and Ethereum.
This may not change soon, especially with the advent of Bitcoin exchange-traded funds.
ProShares Bitcoin Strategy ETF started trading last week, and Valkyrie Bitcoin Strategy ETF made its debut shortly after.
ProShares ETF has more than 1.2 billion U.S. dollars in assets under management
Tracking Bitcoin futures and not giving individual investors actual ownership of Bitcoin should push up the price of Bitcoin in the long run.
Some crypto experts believe that by the end of this year or early 2022, the price of Bitcoin may reach $100,000. In addition to more ordinary investors buying Bitcoin ETFs, several top institutional investors, such as Paul Tudor Jones and George Soros, have been accepting Bitcoin, too.
Other Bitcoin preachers predict higher price targets. Venture capitalist Tim Draper has stated that by the end of next year, Bitcoin may exceed $250,000.
But there are signs that some traders may be dissatisfied with Bitcoin and other cryptocurrencies. Asset prices cannot rise sharply indefinitely. The cost of Bitcoin, even after falling this week, has more than doubled this year.
Deeper corrections and bear markets are inevitable. The large fluctuations in Bitcoin prices over the past few days may be just the beginning.
Commodity weekly overview
Commodity exchange AFEX said on Tuesday that due to the surge in demand pressure, the price of core grains may reach higher levels in 2022, citing the widening gap between buyer demand and the supply of agricultural products that meet these needs.
The company predicted in a webinar on the outlook for four grains, cocoa, and ginger in the coming year that production levels will rise, but this will not force prices to fall. The data comes from a survey of farmers.
That its output may only increase by 3%, it is particularly vulnerable to demand pressure.
Due to the unusually long rainy season in Nigeria this year, the supply of cocoa on the market may be threatened, pushing the price from 1.3 million to 1.35 million/ton from October to December this year.
The survey involved 10,000 farmers and monitored price trends in more than 200 markets. Analysts predict that soybean production will increase by 8%, rice by 10%, sorghum by 2%, and ginger by 4%.