Daily Digest: Thursday 29th February
USA
US index futures slid ahead of the session as traders tested pricing prior to the PCE release. 10 minutes off the announcement S&P 500 futures were down 0.27%, while Nasdaq 100 futures fell 0.25%.
Changes in real income shocked the market coming in at a 1% increase, far from analyst expectations of 0.4%. The month-on-month PCE Price Index figures on the other hand, were relatively tame, rising 0.3 percentage points from December to January, in line with expectations. PCE figures are indicative of consumer spending across the whole economy, incorporating both the purchase of goods and services. Increases in PCE typically imply higher levels of disposable income, alongside a rise in consumer confidence. Sustainable increases in PCE are essential for economic growth, but when PCE figures exceed expectations it can force price levels of the PCE basket upwards. The PCE Price Index measures this change, and a faster-than-anticipated rise in the Price Index indicates the presence of inflationary pressures. These figures are closely monitored by the FED, influencing adjustments to its monetary policy outlook.
Index activity picked up during the session with the three major indexes we follow trading up. The S&P 500 ($SPX) rose 0.52%, Nasdaq 100 ($NDX) 0.95%, while the Dow ($INDU) trailed slightly behind rising 0.12%, marking its first day-on-day increase this week.
Europe
Germany’s DAX (€GDAXI) led index gains through Thursday’s session across Europe, closing up 0.44%, while the STOXX 600 (€STOXX) trailed behind in terms of gains, rising only €0.02, closing at €494.61. The UK’s FTSE 100 (£FTSE) also managed to close higher on Thursday, for the first session this week, rising 0.066%, trading into Friday at 7,630.
French markets experienced slightly higher volatility through the session, with selling pressure forcing the CAC 40 (€FCHI) down 0.35%.
Rest of the World
At the close, the Nikkei 225 (¥N225) was trading 0.11% lower, marking a fourth consecutive session of declines. At 8am (GMT), the Japanese Yen was trading higher against the dollar at around 149.74. However, by 1pm (GMT), it had lost ground, falling 0.4% from the previous day’s level. Note that a depreciation in the value of the Yen makes it relatively cheaper for foreign investors to invest in Japanese-listed and Yen-denominated assets, including the Nikkei index. Therefore, If Yen values continue to fall into Thursday evening, we may see a small rebound in Japanese equity prices through Friday’s session. This could occur as traders seek somewhat more accommodating market conditions outside of China, without losing their East Asian exposure.
Meanwhile, the Shanghai Stock Exchange Composite Index (¥SSE) rose by 1.94%, closing the session at ¥3,015. This marks the index’s strongest performance of the week, erasing Wednesday’s losses, as economists and regulators move to stabilise the market.
Cryptocurrencies
Upward momentum continued across crypto markets, with Bitcoin continuing its rise, up by a further 2.45%. This marked a fourth consecutive day of rises, highlighting bullish investor sentiment. Prices peaked at $63,670, but by 9pm GMT had traded off their highs to around $61,934. Ethereum also mirrored Bitcoins performance, rising 2.82% to $3,391.
Fuelling bullish sentiment, it was announced this week that Reddit, the innovative US social media forum site, owns cryptocurrencies including Bitcoin, Ethereum, and Matic. Ownership of these assets was identified as part of the pre-listing procedures that the firm face as it prepares to IPO in New York. The true effect on markets would be difficult to isolate, but Reddit’s position toward both innovative finance and digital payments may hint at a wider shift in strategy for companies across the tech space, positioning to exploit new challenges and opportunities within the market.
Commodities
Gold prices strengthened through Thursday, rising 0.49% and regaining this weeks losses. As of 9pm GMT, gold was trading at $2,052.7 per ounce. It is possible that Gold prices may test their February highs in the coming week as traders price in today’s PCE figures. Although data fell in line with expectations, stronger consumer sentiment, alongside an increase in the PCE Price Index, highlight that inflationary pressures remain ever present.
Crude traded the session down 0.35% at $78.26, likely influenced by this afternoon’s US economic data releases.
What to watch
Chinese Manufacturing PMI (Purchasing Manager Index)
US ISM Manufacturing PMI
EU Prelim Inflation
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
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