DAILY MARKET NEWS - 29-02-2024

Ariff Azraei

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The US economy reported robust growth of 3.2% in Q4 2023, possibly driven by strong consumer spending, which will be confirmed today. Despite a weak start in 2024 due to bad weather, economists remain optimistic, citing a potential rebound and tax refunds. While core inflation rose slightly, it remains near the Fed's target, while credit spreads are closely watched for estimations of Fed rate cut timing. Business investment in structures grew, but equipment investment contracted based on durable goods orders, which grew slower last Tuesday. Though the goods trade deficit widened, exports contributed positively to GDP growth.


US markets dipped slightly, digesting Fed comments ahead of key reports. Chinese markets rebounded after assurances from regulators, although Alibaba fell 4% after it cut cloud pricing. Ebay shined with strong guidance, while Bumble stumbled on weak demand and layoffs. UnitedHealth's in trouble after an antitrust probe initiated by the US Department of Justice scrutinised the impact of the company's doctor-group acquisitions on competitors and consumers.


Gold prices are holding steady near $2,036 an ounce, although its rise diverged higher compared to its positively reacting franc, both eagerly waiting for a crucial inflation reading today. A stronger figure could lessen hopes for an early rate cut, potentially pressuring gold. However, the yellow metal has surprisingly remained resilient this month, despite diminished expectations for aggressive rate cuts from the Fed, probably supported by bitcoin headwinds that retest the $60k level.


Crude oil prices initially gained, but larger-than-expected US crude stockpile reports triggered demand concerns and pulled back the price to range-bound trading. Brent crude fell to $82, and WTI dropped to $78.41 per barrel. However, a potential extension of OPEC+ production cuts and ongoing Middle Eastern tensions are seen as limiting further price declines, with analysts maintaining an $86 per barrel average price projection for Brent in 2024.


The Japanese yen surged against the dollar after a Bank of Japan member called for an end to the bank's ultra-loose monetary policy. This policy change, if implemented, could reverse the yen's two-year decline, although the recession in Japan casts some doubt over its feasibility. Bitcoin gained 9.5% on Wednesday, hitting $64,000, attributed to Wall Street's adoption of spot-based bitcoin ETFs.